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  • Unreported Judgment

Network Distributors Pty Ltd v Proctor & Gamble Australia Pty Ltd

 

[2002] QSC 425

SUPREME COURT OF QUEENSLAND

File No 2164 of 2002

 

BETWEEN:

NETWORK DISTRIBUTORS PTY LTD

(ACN 095 746 875)

Applicant

 

AND:

PROCTOR & GAMBLE AUSTRALIA PTY LTD

(ACN 008 396 245)

Respondent

 

 

 

MOYNIHAN J – REASONS FOR JUDGMENT

 

 

DIVISION

Applications

DELIVERED ON:

17 December 2002

HEARING DATE:

2 September 2002

ORDER:

  1. Dismiss application for summary judgment
  2. Give leave to withdraw the admission
  3. Decline to grant security for costs
  4. Hear submissions as to costs

CATCHWORDS:

PROCEDURE – SUMMARY JUDGMENT – application for summary judgment in an action for loss of profits – where loss of profits is consequence of defendant’s alleged breach of contract for sale of goods – whether there was a concluded agreement – whether defendant has no real prospect of successfully defending the action.

PROCEDURE –  CROSS APPLICATION - where defendant brought a cross application for leave to withdraw an admission made in its defence – where admission is a consequence of a general admission made in paragraph 1 of the amended defence – whether leave be granted.

PROCEDURE - CROSS APPLICATION – where defendant brought a cross application for security for costs – whether security of costs be granted.

Corporations Act  2001 s1335

GST Act – The New Tax System (Goods and Services Tax) Act 1999 (Cth)

Uniform Civil Procedure Rules r671(1)(a)

Burnstrom v National Australia Bank (2002) QCA 231

Drabsch v Switzerland General Insurance Co Ltd & Ors (unreported) 16 October 1996 NSWSC

Foodco Management Pty Ltd & Anor v Go Travel Pty Ltd (2001) QSC 291

McPhee v Zarb (2002) QSC 004

COUNSEL:

P.J. Hackett for the applicant

T.J Hancock and R.J. Anderson for the respondents

SOLICITORS:

Morgan Conley Solicitors for the applicants

Norman Waterhouse Lawyers for the respondents

[1] The plaintiff applies for summary judgment in an action for loss of profits consequent on the defendant’s alleged breach of a contract for sale of goods.  The defendant brings cross applications for security for costs and for leave to withdraw an admission made in its defence.

[2] The plaintiff’s case is that there was a concluded agreement reached on either 3 September or 13 September 2001.  The defendant’s case is that there was no concluded agreement.  The resolution of the dispute turns essentially on the construction of correspondence which either reflected or overtook oral communications.

[3] It may be accepted that UCPR 292 provides a fresh point of departure for determining summary judgment applications and the expression of “no real prospect” in the rules raises consideration of whether there was a “realistic as opposed to fanciful prospect of success”; see for example Burnstrom v National Australia Bank (2002) QCA 231;  Foodco Management Pty Ltd and Anor v Go Travel Pty Ltd (2001) QSC 291; and McPhee v Zarb (2002) QSC 004.

[4] While it may not always be the case that claims advanced in the alternative are amenable to summary judgment it does not seem to me to give rise to any particular difficulty here.  The claims are mutually exclusive, the outcome turns on the constructions of the correspondence and the terms of any agreement reached on either occasion are clear.

[5] The plaintiff’s business is described as being that of the distribution of goods; I take this to include buying and selling them.  The plaintiff was placed in contact with the defendant by an intermediary, the defendant wanted to sell a superseded line of its hair treatment products and the plaintiff wanted to on-sell them at a profit.

[6] On 21 August the defendant faxed the plaintiff “info that you requested”, sought information as to where the stock was to be shipped and invited further queries.  The information supplied was a list of goods, quantities and unit prices.  On the same day, apparently later, the defendant left a phone message to the effect that the whole of the stock contained in the faxed list was not available and that “what is left . . . is what you will be receiving” and went on that the pricing “would be made available”.  The message referred to the need for the plaintiff to lodge a purchase order for the quantities available, the defendant would then raise an invoice.

[7] The plaintiff confirmed acceptance of the defendant’s requirements that none of the goods it purchased would be sold in Australia and New Zealand, asked for confirmation of prices and enquired as to the delivery date.

[8] The defendant faxed again on 22 August attaching “stock available to you for purchase”, confirmed unit prices and asked for advice as to where the stock was to be delivered.

[9] On 3 September the defendant again faxed a list of available quantities and stating “if agree please send a purchase order . . .”.  The plaintiff responded with a fax attaching a purchase order and asked the defendant not to sell any more goods.   

[10] The plaintiff’s purchase order offered $1,187,094 for the goods then understood to be available.  The figure was the product of the available units and the unit prices. 

[11] On the 5th following up on a phone call the plaintiff faxed the defendant confirming a phone conversation in which the defendant had advised it would send a “pro forma invoice for the Pantene deal”.  The fax noted that the defendant’s invoice had not been received and asked that it be sent by the close of business.

[12] On the 6th the defendant set out “the terms and conditions for your review and if acceptable to be duly executed where indicated and faxed back to us”.  The purchase price nominated was $1,217,627.40.  The difference between the two figures is the goods and services tax of 10% of the price of the transaction.  The other terms  are of no present relevance.  The $1,217,627 was subsequently reduced to $1,106,934 reflecting that some of the pricing units contained fewer items.  Nothing now turns on this. 

[13] There had been no specific mention of GST until it emerged as the explanation of the difference between the $1,217,627 and the $1,187,094.

[14] The contract was clearly one which was subject to GST.  GST is dealt with by the GST Act – The New Tax System (Goods and Services Tax) Act 1999 (Cth).   The legislation provides for the payment of an amount calculated at 10% of the “price” obtained for the “supply” of goods payable to the Commonwealth by the suppliers (s9-40 of the Act).  The definition of the price on which the tax is to be calculated is that “consideration is expressed as an amount of money”, (s9-75).

[15] Although the seller is accountable for GST there is nothing to prevent the parties having a contractual arrangement effecting which party bears the cost.  A sale price may be inclusive of GST or GST may be in addition.

[16] In my view the transaction in this case was one whereby the defendant provided information and invited the plaintiff to make an offer by way of purchase order with its acceptance signified by the raising of the invoice in the amount of the purchase order.  The defendant rejected the plaintiff’s offer and made a counter offer involving the plaintiff paying an additional amount reflecting the amount of the GST on the sale price.  The plaintiff took the position there was a concluded agreement at a figure reflecting the products, of the unit prices and the number of units but no GST and did not accept the counter offer.

[17] I turn to the question of whether there was a later contract consequent upon the plaintiff’s acceptance of a counter offer by the defendant.  I note that this is not pleaded in a statement of claim but is raised rather by way of an amended requirement.  Be that as it may what occurred is as follows;

 

The plaintiff’s solicitors wrote to the defendant on 9 September contending there was a concluded contract on the 3rd subject to the non-contentious reduction in price to reflect the variation in quantities.  The letter offered to pay the “full agreed price of $1,106,934” if the goods were “immediately forwarded to a nominated destination”.  The letter concluded with an invitation to supply an address for service in Queensland with a view to commencing litigation.  It seems that the defendant provided such an address. 

[18] An exchange of correspondence followed between the solicitors.  On the 13th the plaintiff’s solicitors wrote to the defendant stating that their client was making a calculation of the profits on the contracts on sale into which it had entered and noted that the defendant was offering the goods to other parties.  The letter went on:

“Unless you confirm that your client will proceed to settle and forthwith out client reserves the right to terminate the contract and sue your client for damages including the losses suffered by our client.  `Our client accepts your client’s offer to sell the product at that price, however does so without prejudice to its rights under the first agreement’.

 

Our client nominates 12 noon Monday 17 September 2001 for completion to occur.  Our client has clear funds available to tender to your client the whole amount in question (ie $1,217,627.40) under protest”.

[19] The defendant’s solicitor’s responded to this maintaining the position that there was no contract and stating that the defendant was no longer prepared to deal with the plaintiff.

[20] Assuming the defendant to have made a counter offer capable of acceptance, which is doubtful, the plaintiff’s solicitor’s response introduced an additional term by reserving the plaintiff’s rights under the “first agreement”.

[21] Given the considerations, I have canvassed, it cannot in my view be said that the defendant has “no real prospect of successfully defending the action”.  I dismiss the application for summary judgment.

[22] I turn to the defendant’s applications under UCPR 188 to withdraw an admission that one McPherson was the duly authorised servant or agent of the defendant.  The admission is a consequence of a general admission made in para 1 of the amended defence. 

[23] The plaintiff opposes the application for leave to withdraw the admission pointing to the decision of Santow J in Drabsch v Switzerland General Insurance Co Ltd & Ors (unreported) 16 October 1996 NSWSC and adverting specifically to a number of considerations.

[24] The admission relates to a paragraph of the statement of claim alleging that three identified individuals were “duly authorised servants or agents” of the defendant.  It is true that the material is scant as to an explanation of the admission being made and that the pleading was settled by counsel.  It may nevertheless be inferred that it was inadvertent or without proper consideration of the position of each of the individuals names. 

[25] It seems that McPherson was an intermediary or a representative who placed the plaintiff in contact with the defendant although again it is probably correct that there is no “admissible evidence” that the admission is incorrect. 

[26] There is no suggestion that the plaintiff changed its position in reliance on the admission or that there is any adverse consequence which cannot be dealt with by an order that the plaintiff is entitled to any costs thrown away by its being made and withdrawn.

[27] The defendant brings a cross application for security for costs pursuant to either UCPR 670 or 671(1)(a); or alternatively s 1335 of the Corporations Act.  It does not suggest that the test under either regime is any different from that under the other.  It points to the fact that the plaintiff is a $2.00 company with a sole director and shareholder owning no real property and it did not respond to requests in respect of its capacity and has provided limited material in respect of the issues. 

[28] The plaintiff’s material shows that it is a trading corporation with fluctuating balances in the order of $400,000-odd in its bank accounts at the time of which it speaks.  I am not persuaded that the defendant’s solicitors estimate of the likely costs in the amount of $169,914 is realistic should the matter proceed to trial and I am not prepared at this stage to make an order for security for costs.

[29] I dismiss the application for summary judgment.

[30] I give leave to withdraw the admission.

[31] I decline to grant security for costs.

[32] I will hear submissions as to costs.

Close

Editorial Notes

  • Published Case Name:

    Network Distributors Pty Ltd v Proctor & Gamble Australia Pty Ltd

  • Shortened Case Name:

    Network Distributors Pty Ltd v Proctor & Gamble Australia Pty Ltd

  • MNC:

    [2002] QSC 425

  • Court:

    QSC

  • Judge(s):

    Moynihan J

  • Date:

    17 Dec 2002

Litigation History

No Litigation History

Appeal Status

No Status