Groupe Couleur v Emerald Inn on Takapuna Beach Limited
[2012] NZHC 1323
•12 June 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2011-404-3772 [2012] NZHC 1323
BETWEEN GROUPE COULEUR Plaintiff
ANDEMERALD INN ON TAKAPUNA BEACH LIMITED
Defendant
Hearing: 5 - 8 June 2012
Appearances: J Hunter for the plaintiff
S A Grant and S Gilmour for the defendant
Judgment: 12 June 2012
JUDGMENT OF GILBERT J
This judgment was delivered by me on 12 June 2012 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date: ………………….
Counsel: J Hunter, Auckland: [email protected]
S Grant, Auckland: [email protected]
Solicitors: Agmen-Smith & Co, Auckland: [email protected]
Harmos Horton Lusk Limited, Auckland: [email protected]
GROUPE COULEUR V EMERALD INN ON TAKAPUNA BEACH LTD HC AK CIV 2011-404-3772 [12 June
2012]
Introduction
[1] This proceeding arises out of a contract between the plaintiff, Groupe Couleur, and the defendant, Emerald Inn on Takapuna Beach Limited (Emerald Inn), regarding accommodation for French media during the Rugby World Cup in 2011. Each party claims that the other breached the contract and each sues for the loss it claims to have suffered as a result of the other’s breach.
Background
[2] Groupe Couleur is a travel agent and tour operator based in Lyon. It specialises in providing package tours to world sporting events. In the case of major sporting events, Groupe Couleur will often secure accommodation before obtaining commitments from its clients. To this extent, Groupe Couleur takes calculated risks that it will be able to fill the accommodation with confirmed bookings or renegotiate its arrangements with the accommodation providers.
[3] Groupe Couleur has many clients including a number of media clients such as French TV1 (TF1), France 2, Canal Plus, RMC (Monte Carlo radio) and various French newspapers. Groupe Couleur assisted TF1 with travel arrangements for the FIFA Confederations Cup in South Africa in 2009. Whilst at that event, David Chevalier, a director of Groupe Couleur, discussed accommodation for the 2011
Rugby World Cup with Isabelle Labonde of TF1. Thereafter Mr Chevalier started working on domestic and international flights, accommodation and other likely needs of TF1 for the Rugby World Cup.
[4] Mr Chevalier was aware that the French rugby team was going to be based at the Spencer on Byron Hotel in Takapuna on Auckland’s North Shore. Journalists are not permitted to stay in the same hotel as the players so Mr Chevalier looked for accommodation for TF1 nearby. Emerald Inn, situated on The Promenade at Takapuna, suited Mr Chevalier’s requirements because it is close to Spencer on Byron and offered accommodation of a standard suitable for media representatives. Emerald Inn is owned and operated by the defendant.
[5] Mr Chevalier had stayed at Emerald Inn in April 2009 and inspected the available accommodation. He had also made enquiries about bookings for the Rugby World Cup during the course of this visit.
[6] Mr Chevalier again inspected the available accommodation at Emerald Inn in August 2009. On this occasion he was accompanied by an associate director of Groupe Couleur, Yohann Bellevegue.
[7] Following this inspection, Mr Bellevegue corresponded during the period
22 October 2009 to April 2010 about pricing and other details with Janice Heffernan, the manager of Emerald Inn. Agreement was eventually reached in April 2010 that Groupe Couleur would take all but two of the rooms at Emerald Inn for two periods of stay, together totalling 42 days. These were from Monday 5 September 2011 to Monday 3 October 2011 and from Monday 10 October 2011 to Monday 24 October
2011.
[8] Payments due under the agreement were staggered and Groupe Couleur was confident of securing a commitment from TF1 before all but the initial deposit would have to be paid. Groupe Couleur had other media clients who were likely to be interested in the booking if TF1 did not proceed. From Emerald Inn’s perspective, this was a major booking and secured an attractive return for virtually all of its accommodation for a six week period.
[9] Having committed virtually all of its accommodation to Groupe Couleur, Emerald Inn would not be able to take other bookings for this six week period during the Rugby World Cup when premium prices could be expected for its accommodation. For these reasons, and given that Emerald Inn was contracting with an overseas party with whom it had not previously dealt, it was important for Emerald Inn to secure a substantial deposit to protect it in the event of default. To that end, Emerald Inn successfully negotiated for 50% of the total accommodation cost to be paid in three non-refundable “deposits”, the last of which was to be paid on or before 30 September 2010, approximately 12 months before the start of the Rugby World Cup.
[10] The parties’ agreement was recorded in a document described as a “Group Reservation Form” dated 6 April 2010. The agreement detailed the accommodation required, the number of guests, the arrival and departure dates, and the costs for each type of room and breakfast for each guest. The agreement recorded that the rates were based on the stated occupancy and that any changes would incur additional costs. The additional cost for a second person sharing the accommodation was agreed at $65.00 per night plus breakfast if required.
[11] The agreement contains a payment schedule as follows:
Immediate 10% non refundable on accommodation as above NZ$68082.00
This booking is not confirmed until the deposit is received into our bank account
On or before 30 June 2010 - 10% non refundable deposit NZ$68082.00
On or before 30 September
2010 - 30% non refundable deposit NZ$204246.00
On or before 30 January 2011 - 20% NZ$136164.00
On or before 30 April 2011 - 20% NZ$136164.00On or before 30 July 2011 - 10% NZ$68082.00
[12] Reservation details were to be provided by Groupe Couleur as follows:
Reservation details to be provided:
Onacceptance 10 April 2010: All requirements specific to this group to be advised in writing to The Manager, Emerald Inn on Takapuna Beach
60 day review: 10 June 2011 - details of breakfast times and full details of all requirements specific to the group to be verified.
30 day review: 10 August 2011 - full rooming allocations and update of group requirements to be confirmed.
7 days prior: 03 September 2011 - final arrival timed to be notified.
[13] The following special conditions were also agreed:
Travel Agent’s or Organiser’s Responsibility: It is the responsibility of the agent to meet the above conditions; reminders of the review and option dates will not be sent to you. Non-compliance with any review and/or option dates and/or any other conditions will result in cancellation of confirmed motel space without notice. The space will automatically be placed on a ‘wait list’ basis pending reinstatement request.
Cancellations Clause: Cancellation notice must be in writing, direct to motel. Cancellations received after the payment of the 50% deposit are subject to forfeiture of the deposit. Any subsequent cancellation that arises will be subject to an administration fee equivalent to the rooms that are unable to be let as a result of the late notice unless the motel management approve.
Remarks: This quote is specific to this gr oup “Fr ench Media Gr oup” and no substitutions are permitted without the express written permission of The Emerald Inn on Takapuna Beach.
[14] On 13 April 2010, following receipt of the agreement signed by Groupe Couleur on 12 April 2010, Miss Heffernan signed the agreement and sent it back with an invoice for the initial deposit of $68,082. Immediate payment of this deposit was required in terms of the agreement.
[15] Payment was not made immediately and so Miss Heffernan sent an email to Mr Bellevegue on 19 April 2010 asking when the first instalment would be received and reminding him that payment was required to secure the booking. This appears to have prompted Mr Bellevegue to request a bank transfer later that evening. This was actioned by the bank on 20 April 2010 and Emerald Inn received confirmation from its bank on 22 April 2010 that the funds had been transferred.
[16] On 3 May 2010 Miss Heffernan sent an invoice for the second 10% deposit which was due for payment on or before 30 June 2010. Miss Heffernan sent a further reminder to Mr Bellevegue on 19 June 2010 which she copied to Mr Chevalier.
[17] This payment was also not made on the due date. On 1 July 2010, Miss Heffernan sent a further email to Mr Bellevegue and Mr Chevalier advising that the payment due on 30 June had not been received and asking whether it had been processed. She asked for a response by return with advice as to the date the payment was made. When no response was received, Miss Heffernan sent a further email on 5 July 2010 to Mr Bellevegue and Mr Chevalier requesting their urgent advice as to when payment could be expected. She marked her email as having “high importance” and asked for the matter to be given their urgent attention. Mr Bellevegue responded that Mr Chevalier was the only person who could order a bank transfer and that he would attend to this as soon as he arrived back from South Africa the following day.
[18] The payment had still not been received by 10 July 2010 so Miss Heffernan sent a further email to Mr Chevalier which she copied to Mr Bellevegue as follows:
Subject: VERY overdue instalment [sic]
Importance: High
URGENT !!!!
The second instalment is now 10 days overdue.
In order to hold the reservation you have with us this payment must be received no later than two weeks after the due date – Wednesday 14th July 2010.
Emerald Inn on Takapuna Beach
[19] Mr Chevalier requested the bank transfer late on 12 July 2010 and advised Miss Heffernan that he had done so early the next day. Emerald Inn received confirmation from its bank on 15 July 2010 that the payment had been made.
[20] On 8 August 2010 Miss Heffernan sent an invoice for $204,246 being the third instalment which was due on or before 30 September 2010. She sent a further email on 4 September reminding Mr Bellevegue and Mr Chevalier that the third instalment was due to be paid on or before 30 September 2010. She asked them to acknowledge receipt of the invoice and to advise the date that payment would be made into Emerald Inn’s bank account. Mr Bellevegue responded on 8 September
2010 advising that the payment would be made before the end of September. On
25 September 2010 Miss Heffernan sent a further reminder that the payment was due in the next five days. Despite Mr Bellevegue’s earlier advice, this payment was not made by the due date either.
[21] On 4 October 2010 Miss Heffernan asked Mr Bellevegue for urgent confirmation that the payment had been processed. Mr Chevalier replied that day:
Don’t worry Janice and please stop a bit your pressure you will be paid, the
RWC is in a year time.
[22] Miss Heffernan replied immediately apologising and saying that she was not intending to pressure him but pointing out that the agreement required payment of the deposit on 30 September 2010. She asked Mr Chevalier to advise when the payment would be made. There was no reply to this email. Although he did not tell Miss Heffernan this at the time, Mr Chevalier did not pay the third instalment
because, contrary to his earlier expectation, TF1 had not yet committed and nor had any other media client.
[23] There was no further communication from Groupe Couleur until Mr Chevalier sent an email to Miss Heffernan on 12 October 2010 advising that he was in Auckland and wanted to talk to her. He asked for free accommodation for his daughter and him until Monday 18 October 2010 while they would be in Auckland. Miss Heffernan agreed to this and they arranged to meet at 3.00 pm on 13 October
2010, the following day.
[24] Miss Heffernan was very concerned about the non-payment of the third instalment, which was a substantial sum. She had received numerous enquiries from other potential customers but had not pursued any of them because of the commitment she had made to Groupe Couleur. Miss Heffernan discussed her concerns with Diane Foreman, a director of Emerald Inn. Mrs Foreman was also concerned about the position. She decided that she would also attend the meeting with Mr Chevalier so that she could make her own assessment about whether he was genuine and would honour his commitments.
[25] Mr Chevalier had not heard from Miss Labonde of TF1 for some time. He sent her an email at 7.02 pm on 12 October 2010 as follows:
I am in New Zealand and I have not had any news from you. The situation is more critical here in terms of accommodation.
I have received interesting offers regarding our hotels stocks [sic] from foreign journalists.
Can you let me know where you are at in your consideration as I will have to make a decision very quickly.
[26] Miss Labonde replied immediately:
Sorry to have not replied but I lose notion of time and thought you were still in New Zealand. I have received indeed your new tariffs. The SEBELL remains beyond budget whereas with the EMERALD INN we are getting closer.
Are you sure not to be able to better that price in Takapuna? At that stage, if we confirm for rooms (bookings) in Takapuna. That will be for the film crews. booking for 6 rooms. [sic]
...
[27] Mr Chevalier replied to Miss Labonde later that evening:
Thank your [sic] for your reply.
I have already done the most I could in respect of the rates at the Emerald
Inn.
Can you give me precise dates so that we can work out the closest flights?
We would be very happy to look after the booking of the 6 bedrooms but what about the other journalists? ...
[28] Prior to the 3.00 pm meeting on 13 October 2010, Mr Chevalier advised Miss Heffernan that he wanted to split the booking into two groups, with one group staying for only 35 nights rather than 42 nights as originally agreed. Miss Heffernan was keen to make the contract work for Mr Chevalier and to ensure that it proceeded but she made no commitment at this stage given that she and Mrs Foreman were to meet with Mr Chevalier later in the day.
Was the agreement varied on 13 October 2010?
[29] Mr Chevalier duly met with Mrs Foreman and Miss Heffernan at 3.00 pm that day. There is no dispute that Mr Chevalier explained that the delay in payment was because the French media group had been slow to commit to their accommodation requirements and had not yet confirmed their stay at Emerald Inn. However, there is a critical dispute about what else was said at this meeting and, in particular, the terms of any variation agreement reached.
[30] Mrs Foreman says that she asked Mr Chevalier whether Groupe Couleur had “bought the rooms” or simply regarded the arrangement as an option. Mrs Foreman was quite clear that Mr Chevalier confirmed that he had bought the rooms and that the deposits had been delayed only because the French media had been slow in confirming their position to him. Mrs Foreman said that she asked whether Mr Chevalier would want to cancel the booking if the media clients did not confirm.
She said that Mr Chevalier gave her his word that he would not cancel the booking. Mrs Foreman accepted this assurance and Mr Chevalier’s further assurance that he would pay the outstanding deposit overnight.
[31] Having received these assurances, Mrs Foreman said that she was content to leave it to Miss Heffernan to negotiate any changes to the agreement to accommodate Mr Chevalier’s new requirements. As manager of Emerald Inn, Miss Heffernan had authority to vary the agreement and there was no need for Mrs Foreman to be involved in the detail of this. Mrs Foreman left the meeting at that stage with a clear understanding that the contract was going to proceed and that, although some changes were likely to be made, a further instalment would be paid immediately so as to bring the total payments to 50% of the total accommodation cost.
[32] Miss Heffernan also recalls Mr Chevalier assuring Mrs Foreman that he would honour his commitments and promising that he would pay the outstanding deposit immediately. Mr Chevalier did not dispute this. He acknowledged his discussion with Mrs Foreman about paying the deposit overnight.
[33] Mrs Foreman went to the meeting for the sole purpose of seeking these assurances from Mr Chevalier. Without receiving such assurances in clear and unequivocal terms, I have no doubt that Mrs Foreman would not have authorised Miss Heffernan to negotiate changes to the agreement to suit Mr Chevalier’s new requirements. Mrs Foreman would have brought the agreement to an end, forfeited the deposits that had been paid and immediately set about re-letting the accommodation. There would have been no point in making significant price concessions in relation to the existing unconditional agreement unless timely future performance of any amended agreement was assured.
[34] After Mrs Foreman withdrew from the meeting, Mr Chevalier and Miss Heffernan discussed Groupe Couleur’s desired amendments to the agreement. TF1 had still not confirmed its booking and nor had any other client. It was therefore not a matter of Groupe Couleur tailoring the agreement to suit confirmed requirements. Rather, Mr Chevalier was looking for ways of preserving the booking
with Emerald Inn, retaining the benefit of the deposits paid, but reducing the amount of the further immediate payment required. Miss Heffernan was prepared to accommodate Mr Chevalier within reasonable limits because she still wanted to preserve this important booking. This was the context for the negotiations.
[35] The meeting was amicable. Mr Chevalier and Miss Heffernan both emerged from it believing that they had reached an agreement to vary the contract but each has a different recollection or understanding about what was agreed.
[36] Immediately following the meeting, Miss Heffernan prepared an amended accommodation and payment schedule. This split the original accommodation schedule into two groups with 23 rooms, cottages or villas being booked for 42 nights and 15 rooms for 15 nights. This represented a significant concession by Emerald Inn. The change reduced the total cost of the accommodation from
$680,820 to $638,680 and reduced the amount required to complete the 50% payment from $204,246 to $183,176. Miss Heffernan prepared an invoice for this sum recording that it was “due now”. She sent both documents to Mr Chevalier by email at 5.51 pm on 13 October 2010. Miss Heffernan’s email read as follows:
Subject: Amended Invoice for 3rd installment [sic]
Attachments: RWC invoice 30 Sept.pdf
Good evening David
I have attached a schedule of the amended accommodation requirements as per the discussions this afternoon.
The corresponding GST tax invoice for the balance of the 50% installment
[sic] required is also attached.
I thank you for your attention to this. Many thanks and regards
Janice
[37] Mr Chevalier says that he asked Miss Heffernan to print the amended accommodation schedule. He said that it did not reflect his understanding of what he had agreed with her. He thought that the agreement was for 15 rooms, villas and cottages for 42 nights and 23 rooms for 35 nights, whereas Miss Heffernan’s schedule had these groups the other way around. Mr Chevalier made handwritten notations on the schedule showing the changes to the groups that he thought were required to reflect the agreement and he says that he gave this to Miss Heffernan and
discussed it with her at breakfast. He thought that this was on 14 or 15 October
2010. He said that Miss Heffernan acknowledged that she had made an error and agreed to prepare an amended invoice and send this to him.
[38] Miss Heffernan did not agree with Mr Chevalier’s account. She did not accept that she had made a mistake. She did prepare a further revised accommodation schedule to take account of the changes to the groups as requested by Mr Chevalier and the deletion of the breakfast cost for each guest. Miss Heffernan could not recall when she prepared this further amended schedule which showed that the total accommodation cost would reduce from $680,820 to
$582,400 and the third instalment from $204,246 to $155,036. Miss Heffernan said that she was not prepared to agree to these changes and this is why she did not provide the amended schedule to Mr Chevalier or prepare any new invoice. She did not advise Mr Chevalier at any stage that the changes were acceptable.
[39] There is a direct conflict between the two accounts giving rise to three possibilities. The first is that at the meeting on 13 October 2010 Mr Chevalier and Miss Heffernan agreed to vary the contract in accordance with the accommodation schedule and invoice prepared by Miss Heffernan immediately following the meeting. The second possibility is that they agreed to vary the contract on the basis contended for by Mr Chevalier, in which case Miss Heffernan made an error when she prepared the accommodation schedule and invoice immediately after the meeting. The third possibility is that Mr Chevalier and Miss Heffernan were at cross-purposes at the meeting and there was a genuine misunderstanding. In that case, they never reached agreement at all and the contract was never varied.
[40] Miss Heffernan and Mr Chevalier both had difficulty recalling exactly what was said at the meeting and the subsequent sequence of events. This is understandable. I need to determine which of the three possible scenarios is most likely, taking into account all of the evidence and the background circumstances.
[41] Miss Heffernan impressed me as a careful and honest person. I consider that it is very unlikely that she would renege immediately on an agreement she had negotiated. In my view, the accommodation schedule and invoice created by Miss
Heffernan straight after the meeting provides the most reliable evidence of what she understood had been agreed at the meeting.
[42] I also consider that Miss Heffernan is unlikely to have agreed to such a substantial concession as that suggested by Mr Chevalier. She was not obliged to make any concession at all because she had the benefit of an unconditional contract and a substantial deposit of over $136,000 that could be forfeited immediately. Although she was keen to make the contract work, I doubt that she would have been prepared to agree to a price reduction of almost $100,000.
[43] I find that she did not agree to the arrangements indicated by Mr Chevalier with his handwritten notations on the schedule. Had she agreed to this at the meeting and made a mistake in preparing the schedule, I am confident that she would have acknowledged her error, made the necessary changes to the schedule, prepared a new invoice and sent it to him. She did not do so.
[44] I conclude that Miss Heffernan did not make any error when she prepared the accommodation schedule and invoice following the meeting. That leaves two possibilities. Either Mr Chevalier also agreed to these terms at the meeting or he mistakenly believed that Miss Heffernan had agreed to the terms he suggested.
[45] It is possible that Mr Chevalier and Miss Heffernan were at cross-purposes during the meeting on 13 October. Although Mr Chevalier’s English is good, it is not his first language. He may have misunderstood Miss Heffernan’s position. If so, there would not have been any consensus and the contract would have remained unchanged.
[46] Having given the matter careful consideration, I have come to the conclusion that there was no misunderstanding and that the agreement was varied in the manner reflected in Miss Heffernan’s amended accommodation schedule and invoice. There are several reasons why I consider that this is what occurred despite Mr Chevalier’s contrary belief.
[47] Miss Heffernan spoke to Mr Chevalier around mid-day on Friday 15 October
2010. Following that telephone discussion she sent an email to Mrs Foreman in the following terms:
(Subject: Money will be here next week! Good morning Diane
I have just called our French friend to check on the payment – he has told me it takes 5-6 days and will be here next week.
Should be $183176.00
I have contacted three other agents – may be able to sell some of the rooms for the dates he no longer requires ..... lets hope!
[48] It is clear from this, that Miss Heffernan was still expecting that payment was being arranged in the amount she had agreed to at the meeting. She would not have been expecting this payment if Mr Chevalier had told her at breakfast the day before that she had made a mistake and an amended invoice was required.
[49] Mrs Foreman did not share Miss Heffernan’s optimism. She wrote back
saying:
Not sure how much I trust this guy. If the money not in by the end of next week I think we should meet and go through the contract but my feeling would be to cancel, keep the money and remarket immediately!
[50] Mr Chevalier forwarded Miss Heffernan’s email of 13 October 2010 with the
attached accommodation schedule and invoice to Mr Bellevegue without comment at
10.38 pm on Friday, 15 October 2010. It is unlikely that he would have done this if he had told Miss Heffernan at breakfast the day before that the invoice was wrong and needed to be amended. If he was expecting to receive an amended invoice and accommodation schedule, he would have waited for these rather than sending the incorrect documents to Mr Bellevegue.
[51] On Monday, 18 October 2010 Miss Heffernan sent an email to Mrs Foreman having just spoken to Mr Chevalier. This email was sent at 8.27 am and reads as follows:
Dear Diane
You are right ... our friend would like to change things again!
... now no breakfast to be included and numbers changing again. He said we should not have included breakfast – he has been doing this work for 17 years and no other property includes breakfast. I was able to show him his company email asking for rate including breakfast. He made some comment as he walked off that we would have trouble if we don’t change – so have done that for him and have a meeting with him in one hour!
He said the money will be delayed a couple of days as the email in his office in France is not working for the next 2 days! I wonder???
Never mind will keep on with him and let you know how I get on later today. Janice
[52] This email followed the breakfast discussion that Mr Chevalier recalled. I find that this discussion took place on 18 October 2010, not on 14 October 2010, as Mr Chevalier suggested. This was the day Mr Chevalier checked out of the motel.
[53] It is apparent from the email that this is when Miss Heffernan discovered that Mr Chevalier was looking for further changes. This email is consistent with Mr Chevalier having given Miss Heffernan his copy of the accommodation schedule at breakfast that morning with his handwritten notations showing the further changes he wanted. It also indicates that Miss Heffernan prepared the draft further amended accommodation schedule after this meeting and intended to discuss it with Mr Chevalier at about 9.30 that morning. There is no mention by Miss Heffernan that she had made a mistake and had agreed to issue an amended invoice. On the contrary, it is clear that she had not agreed to the changes and instead had indicated resistance to them. This can be the only explanation for her advice to Mrs Foreman that Mr Chevalier had threatened that there would be trouble if they did not agree to the changes. It also explains why she intended to meet with Mr Chevalier at 9.30 am that morning to discuss the matter further.
[54] At 11.30 am on Monday 18 October 2010 Mr Chevalier sent an email to a number of his contacts, including Miss Heffernan, advising that Groupe Couleur’s IT networks were undergoing maintenance and that an alternative email address or telephone number should be used for the next three or four days. Miss Heffernan responded a short time later saying that she looked forward to receiving the amended details of his requirements. This indicates that nothing had been agreed at the
9.30 am meeting that day.
[55] I do not accept Mr Chevalier’s evidence that Miss Heffernan acknowledged error on her part and promised to issue an amended invoice for only $155,036 for the third instalment. For the reasons given, I consider that Mr Chevalier is mistaken about this.
[56] Mr Chevalier knew when he left Emerald Inn on 18 October 2010 that he had to act very quickly if he wanted to keep the contract alive. He already knew this when he wrote to Miss Labonde on the evening of 12 October 2010, before his meeting with Mrs Foreman and Miss Heffernan. He evaluated where he stood with his sales. He was still waiting for an answer from TF1 and the other media clients. He was not prepared to make an immediate payment of $183,176 without commitments from these clients. He decided to try a new approach which he thought might be tempting to Miss Heffernan. He sent an email later that evening setting out a completely new proposal. This was to be mainly for corporate clients and did not include the more expensive accommodation available in the Emerald Cottage or the Emerald Villas. He proposed that the door be left open for the media group in the event that they confirmed their booking. The proposal was as follows:
Dear Janice,
thanks a gain [sic] for your hospitality.
I work on the plane and instead to wait the journalist reply I propose you the following:
Couleur is able to BUY and pay full payment after your reply on:
12 x studio
12 x 2 bedroom suite
3 X studio Spa suite
The only thing we ask you is not to surcharge at all the 65$ per pax supp. of course we will pay the breakfast.
Dates requiered : [sic]
07 to 11/9/11 4 nights
16 to 19/9/11 3 nights
21 to 26/9 5 nights
28/9 to 3/10 4 nights
14 to 21/10 10 nights
Total 26 nights.
I believe that it is only a first step!!! But I understand that it will secure the business for you and accommodation request for our guest. This DO NOT MEANS AT ALL that we will not do the journalist!!! We are in very good contact with them but they are slow. They already visit the Emerald Inn and like it. Means that when they will confirm we will extend the number of
nights maybe take the houses ... I hope that you will think like me that’s at
this stage this is the better ++ combination.
As soon as I will receive your invoice without breakfast☺ I will send you the full payment and the copy of that.
Best regards, David Chevalier
[57] Mr Chevalier confirmed that the invoice that he was referring to in this email was an invoice for the amount that would be due if this offer was acceptable to Emerald Inn.
[58] I note that there is no suggestion in this email that Mr Chevalier was waiting for an amended invoice so that he could make the agreed payment of the third instalment due for the media group. On the contrary, it appears that he intended to go ahead with the media group only if they confirmed.
[59] Miss Heffernan was not at all impressed with this proposal or the fact that the third instalment had still not been paid. She spoke to Mrs Foreman and the two of them prepared a letter to Mr Chevalier which was signed by Mrs Foreman and sent on 20 October 2010. The email copy of this letter was not delivered at the time but the letter was also sent by facsimile to Groupe Couleur’s office in Lyon. Counsel advised that it was an agreed fact that the facsimile was received by Groupe Couleur at 1.05 am Lyon time. The letter read as follows:
Dear Mr Chevalier,
I have been informed by the Manager of the Emerald Inn that you have not paid the further deposit of $204,246.00 which was due on the 30 September
2010 and that you now wish to completely change the booking and delete a substantial number of rooms.
We entered into this contact in good faith and as a result have lost many opportunities to sell these rooms during the peak Rugby World Cup season.
When we met last week I agreed to some very majors [sic] changes in your booking to allow you more flexibility. At that time you assured me that the outstanding balance of the deposit would be paid the next day. Despite your assurance you have not paid the outstanding deposit and it’s my understanding that you now wish to dramatically down scale your booking.
This is not acceptable to us and unless the deposit $204,246.00 is paid by Friday the 22nd October 2010, you will forfeit all monies paid (as per our contract) and we will look to resell the rooms. We reserve the right to sue
you for any difference between the amount of our contract and any sales we get to mitigate our loss.
Yours sincerely
Diane Foreman
EMERALD GROUP LIMITED
[60] Mr Chevalier says that he did not receive this letter at the time because he was unable to access his emails until about 23 October 2010. However, Mr Bellevegue rang to tell him about the letter on 21 October 2010. Mr Chevalier said that he was “very astonished” to receive this letter. He said that he rang Miss Heffernan to express his surprise that this letter had been sent. He said that he reminded Miss Heffernan that the tax invoice was incorrect because it did not reflect the variations agreed on 13 October 2010. Mr Chevalier’s evidence was that Miss Heffernan assured him that he should not worry, it was just a formal letter and that she would send the correct invoice soon. Mr Chevalier says that she left him with the clear understanding that he should ignore the letter.
[61] Miss Heffernan strongly disputed Mr Chevalier’s evidence about this. She said that she did not tell Mr Chevalier that he should disregard Mrs Foreman’s letter. Miss Heffernan had worked for Mrs Foreman for over 12 years. I accept her evidence that she would not tell anybody to disregard a letter from Mrs Foreman and that she said no such thing to Mr Chevalier.
[62] In any event, it appears that Mr Chevalier did not ignore the letter. He attempted to contact Mrs Foreman on 21 October 2010, the same day he heard about the letter, but he was unable to speak to her. He left a message for Mrs Foreman but she did not return the call.
[63] Mr Chevalier sent a new offer to Miss Heffernan by email on Wednesday
27 October 2010. This was for accommodation to the value of $485,260. Mr Chevalier said that if this offer was acceptable “you will receive the full payment this week!!”. Miss Heffernan did not reply.
[64] Mr Chevalier telephoned Miss Heffernan on 8 November 2010 to get her response to his latest offer. Miss Heffernan had run out of patience with
Mr Chevalier. She told him that she could not accept the very substantial reduction in the booking, the agreement was at an end and the deposits that had been paid were forfeited. Mr Chevalier said that he was “very cross” to be told this. He considered that Miss Heffernan was not entitled to retain the deposits and that it would be dishonest for her to do so. Miss Heffernan rejected this allegation. She told Mr Chevalier that all she ever wanted was for him to keep to the agreement he had signed. She said that his failure to keep to the agreement did not make her dishonest. At that point, Mr Chevalier threatened to take steps to ensure that Emerald Inn would not be able to re-let the rooms. He then hung up. Miss Heffernan was sufficiently unsettled by this conversation that she made a note of it at the time.
[65] My conclusion that Mr Chevalier agreed on 13 October 2010 to the terms recorded in the accommodation schedule and invoice sent by Miss Heffernan that day is reinforced by Groupe Couleur’s Statement of Claim which includes the following allegations:
...
7.The Plaintiff and Emerald confirmed their variation of the contract by exchange of emails dated on or about 13 October 2010 (“the varied contract”).
8.Contrary to the terms of the varied contract, Emerald demanded a third deposit which was in excess of that agreed by virtue of the varied contract and was in fact the sum that would have been the third deposit pursuant to the original contract.
9.Despite the Plaintiff drawing the error to the attention of Emerald’s staff and duly authorised agents, Emerald failed to correct their error and in reliance on the non-payment of the third deposit incorrectly demanded of the Plaintiff, unilaterally cancelled the varied contract, and retained the Plaintiff’s deposit.
...
[66] The allegation in paragraph 7 tends to confirm Emerald Inn’s position that the
variation agreement is as recorded in the email Miss Heffernan sent on 13 October
2010. That is the email with the accommodation schedule and invoice. There was no other email between the parties that day. The allegation in paragraph 8 is consistent with Mr Chevalier taking issue with the amount demanded in Mrs Foreman’s letter of $204,246 rather than $183,176 as agreed. This is the error referred to in paragraph 9.
Subsequent events
[67] Groupe Couleur did not have any confirmed bookings from its clients for Emerald Inn. Accordingly it did not have to cancel any existing agreements as a result of the Emerald Inn agreement being terminated. It was not ultimately successful in securing any media client. However, it made accommodation arrangements for other clients at Quay West and the Sebel. It claims that it was forced to pay higher rates for this accommodation.
[68] Groupe Couleur instructed solicitors in New Zealand who wrote to Miss Heffernan on 4 February 2011 claiming that Emerald Inn was not entitled to cancel the agreement unilaterally while negotiations were still in progress and that this was a breach of the agreement. However, they advised that Groupe Couleur accepted that the agreement was at an end. They sought repayment of the deposit, additional damages for Emerald Inn’s breach of the agreement in the sum of
$202,840 and their legal costs. Emerald Inn responded through its solicitors rejecting this claim and advising that Emerald Inn had suffered losses in excess of the deposit and would counterclaim for these if proceedings were issued.
Was time of the essence?
[69] Having found that the agreement was varied on the terms set out in the amended accommodation schedule prepared by Miss Heffernan on 13 October 2010, I now need to consider whether the parties expressly or impliedly agreed that the time for payment was of the essence.
[70] The parties agreed the dates for payment of all instalments due under the original agreement. Apart from the initial payment which was due immediately, all payments were required “on or before” the specified date. Mr Chevalier was well aware that Emerald Inn had sought strict compliance with these agreed payment dates. The existing agreement required payment of the third instalment on or before
30 September 2010. As I have already noted, Mrs Foreman made it clear to
Mr Chevalier that she was only prepared to allow variations to the agreement on
13 October 2010 if he promised to make immediate payment of the third instalment
and bring the total payments to 50% of the agreed accommodation cost. Mr Chevalier acknowledged the discussion about making the payment overnight. I consider that both parties operated on the clear understanding that this was an essential term of the variation agreement. Miss Heffernan’s invoice, prepared immediately following the meeting, correctly recorded that the payment was “due now”. I consider that the time for payment of the third instalment was of the essence and there was accordingly no need for Emerald Inn to give any notice to make time of the essence.
Was Emerald Inn entitled to cancel?
[71] The ‘travel agents or organiser’s responsibility’ clause contemplates automatic cancellation without notice in the event of non-compliance with any review or option dates or any other condition of the agreement. It provides that any such non-compliance “will result in cancellation of confirmed motel space without notice” and that “the space will automatically be placed on a ‘wait list’ basis pending reinstatement request”. The effect of the clause is that travel agents reserving accommodation on behalf of their clients will lose priority over their bookings if they do not meet the terms of the agreement relating to review or option dates. Their bookings will be reinstated on request but this will be subject to any intervening confirmed booking. Despite the literal meaning of this provision, which extends to include non-compliance with any condition of the agreement, I do not consider that it could operate as an automatic cancellation of the entire agreement if, for example, Groupe Couleur had paid 90% of the accommodation cost but then failed to provide details of breakfast times by the stated date.
[72] I do not consider that the ‘cancellations clause’ of the agreement applies either. It is only relevant to cancellations notified in writing by the party booking the accommodation, in this case, Groupe Couleur. It also only applies after payment of the 50% deposit has been made.
[73] In my view, Emerald Inn’s cancellation rights are governed by the
Contractual Remedies Act 1979.
[74] Groupe Couleur was required to take immediate steps following the meeting on 13 October 2010 to arrange the necessary bank transfer. It breached an essential term of the agreement when it failed to take this step on 14 October 2010. Emerald Inn became immediately entitled to cancel the agreement at that point.
[75] Emerald Inn was not required to give any notice to Groupe Couleur before exercising its right to cancel the agreement. It chose to do so by writing the letter dated 20 October 2010 advising Groupe Couleur that the monies paid would be forfeited and the rooms re-let unless the third deposit was paid by Friday 22 October
2010. In view of my findings that the agreement was varied and that the third instalment was $183,176, Emerald Inn demanded more than it was entitled to in this letter by seeking payment of $204,246. This did not relieve Groupe Couleur of its continuing obligation to pay the agreed third instalment for which it had been invoiced. In my view, the incorrect demand did not affect Emerald Inn’s entitlement to cancel the agreement when the payment was not made by the date stated in the notice.
Did Emerald Inn cancel?
[76] Miss Heffernan advised Mr Chevalier on 8 November 2010 that the agreement was at an end. There was no dispute that the agreement was brought to an end at the latest on that date.
What losses did Emerald Inn suffer?
[77] Miss Heffernan re-let the accommodation but did not recoup the same revenue as she would have received from Groupe Couleur if it had performed the agreement as amended on 13 October 2010. The shortfall, after giving credit for the two paid deposits, was $58,658.85. There was no dispute about this figure.
Did Emerald Inn fail to mitigate?
[78] Groupe Couleur argued that Emerald Inn failed to mitigate its loss. In particular, it criticised Emerald Inn for reselling some of the accommodation to TF1
at a rate which was approximately 30% below that agreed with Groupe Couleur. This is in contrast to the cottage which was re-let for a substantially higher rate than that agreed with Groupe Couleur.
[79] As I have noted, Miss Heffernan has over 30 years’ experience in the accommodation sector of the hospitality industry and had been working as the manager of Emerald Inn for over 12 years. I can see no reason why she would not have done her best to achieve the greatest possible return from all of the accommodation which became available following termination of the agreement with Groupe Couleur. There is no evidence that TF1 would have been prepared to pay a higher price. Its failure to commit to Emerald Inn through Groupe Couleur indicates that it was not prepared to pay the price sought at that stage. Miss Labonde’s email sent on 12 October 2010 supports this conclusion. The higher price secured by Miss Heffernan for the cottage shows that she was seeking the highest price she could negotiate in the circumstances. I am not prepared to find that she failed to take reasonable steps to mitigate Emerald Inn’s losses following Groupe Couleur’s default.
Conclusion
[80] I conclude that Emerald Inn validly cancelled the agreement following Groupe Couleur’s breach of an essential term. After giving credit for the paid deposits, the loss it suffered as a result of Groupe Couleur’s breach amounts to
$58,658.85.
Result
[81] Judgment is entered for the defendant on the plaintiff’s claim.
[82] Judgment is entered for the defendant on its counterclaim in the sum of
$58,658.85.
[83] The defendant is entitled to interest pursuant to s 87 of the Judicature Act
1908. The interest is to be calculated from the dates payments would have been
made in accordance with the varied agreement to the date of judgment and must take into account all receipts from re-letting the accommodation.
[84] The defendant is entitled to costs calculated on a 2B basis.
M A Gilbert J
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