Coastlink Coaches Pty Ltd v Equity Transport Group (QLD) Pty Ltd
[2012] QDC 31
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- Coastlink Coaches Pty Ltd v Equity Transport Group (QLD) Pty Ltd[2012] QDC 31
- Add to List
Coastlink Coaches Pty Ltd v Equity Transport Group (QLD) Pty Ltd[2012] QDC 31
Coastlink Coaches Pty Ltd v Equity Transport Group (QLD) Pty Ltd[2012] QDC 31
DISTRICT COURT OF QUEENSLAND
CITATION: | Coastlink Coaches Pty Ltd v Equity Transport Group (QLD) Pty Ltd & Anor [2012] QDC 31 |
PARTIES: | COASTLINK COACHES PTY LTD (Plaintiff) v EQUITY TRANSPORT GROUP (QLD) PTY LTD (Defendant) and JOHN MCKENZIE (Third Party) |
FILE NO: | 69/2009 |
PROCEEDING: | Trial |
DELIVERED ON: | 1 March 2012 |
DELIVERED AT: | Southport |
HEARING DATES: | 25, 26, 27 July, 8, 9, 10, 14, 28 November 2011 and 21 February 2012 |
JUDGE: | Judge C F Wall QC |
ORDER: | Judgment for the defendant against the plaintiff and third party for $82,595.79 plus costs. |
CASES: | BP Refinery v Hastings Shire Council (1977) 52 ALJR 20 Multinail Australia Pty Ltd v Pryda (Aust) Pty Ltd and Anor [2002] QSC 105 |
CATCHWORDS: | Contract – breach of implied term restraining party from soliciting other party’s clients – deed – restraint of trade – enforceability – tortious interference with contractual relations – damages |
COUNSEL: | Mr S Blaxland for the plaintiff and third party (25 – 27 July 2011) thereafter the plaintiff and the third party represented themselves Mr M D Alexander for the defendant |
SOLICITORS: | Muir Lawyers for the plaintiff and third party (25 – 27 July 2011) Walker Hedges & Co Solicitors for the defendant |
Introduction
- [1]The plaintiff’s claim against the defendant for $13,580.90 for coach hire is admitted by the defendant but the defendant seeks to set off that against the greater amount it says the plaintiff owes it and for which it counter-claims.
- [2]The defendant’s case is that it had a contract with Malaysian Airlines (MA) to transfer aircrew to and from Brisbane Airport and a Gold Coast hotel. The defendant used the plaintiff for this work and the plaintiff in turn used the third party’s coaches.
- [3]The defendant contends its contract with the plaintiff contained an implied term preventing the plaintiff from soliciting the defendant’s clients including MA.
- [4]The defendant says that the plaintiff and third party together unlawfully induced MA to break its contract with the defendant and call tenders for a new contract which the plaintiff won.
- [5]The defendant also says that in behaving this way the plaintiff also broke the implied term of its contract with the defendant and the third party breached a confidentiality deed he had with the defendant not to assist the plaintiff to entice clients from the defendant.
Glossary
- [6]Malaysian Airlines – MA
Plaintiff – CLC
Defendant – ETG
Third Party – JM
Julie Brewood – JB
The relationship between the parties
- [7]JB is the sole shareholder and director of CLC. She and JM are in a de facto relationship; they have been since 2003 and have lived together since the start of 2005 (T5-4). JB worked for ETG in an administrative capacity from 1999 to 2003 (T4-26). JM owns coaches and has had a working relationship with ETG or its predecessor for some 20 years. ETG provides coaches and limousines for third parties through contractual relationships it establishes with those third parties but does not itself own vehicles; it uses contractors such as CLC who own the vehicles. ETG contracts work out to contractors who perform the work on behalf of ETG. ETG pays the contractors 75% of what ETG grosses the work at and retains 25% (T2-95).
- [8]ETG had a contractual relationship with MA for some 10 - 12 years (November 1997 - April 2008 and 28 July 2007 – 10 November 2008 using contractors like JM and then CLC to do the MA crew transfers from airport to hotel and back (T3-35,41)).
- [9]Immediately before the subject contract (ex 4) MA’s crew transfers were handled by 1st Class e-Charters (between April/May 2006 and July 2007). 1st Class went into liquidation and ETG got the work back. Scott Smith, ETG’s operations manager rang JM requiring a coach to do the new transfers. JM had one.
The position of JM and JB before incorporation of CLC
- [10]The evidence suggests that JB was involved in JM’s business before incorporation. They both went to ETG to discuss the MA work; JM said “when we were picking the crew up” and “we went to see our accountant” (T4-90,92) and they were both involved, one after the other, in CLC.
- [11]On 23 August 2007 JB sent the following email from JM’s email address to Diane Bowman, ETG’s acting Queensland manager at the time, (ex 7)
“Dear Diane
We have a work agreement (M321) with Equity Transport at the Gold Coast Office. This agreement has been valid since Equity took over Gold Coast Coaches.
We were advised by phone on the 27th July, 2007 that we now have to be a registered Company. This is after we had a meeting with Scott Smith at the Gold Coast Equity Office only half an hour before and nothing was mentioned to us about being a Company.
We find it hard to understand that we have been working for Equity for such a long time and not once did anyone advise us that we had to be a Company. We would of [sic] thought this would be normal practice to advise when a working contract is put in place as you are a Quality Assured Company.
Today 23rd August we receive another phone call from Graham Gins from the Gold Coast base advising us that if we are not a Company by 31st August it may have effect on payment on this date.
Finally, our accountant has requested that you put in writing to us that you require us to be a Company with your terms and conditions. The current work agreement we have mentions nothing about having to be a registered Company.
We would appreciate your earliest response.
Regards
Julie Brewood & John MacKenzie
(M321) Gold Coast”
The highlighting is mine.
M321 was the ETG work agreement number. This letter is ex “C” to JB’s affidavit filed 25 May 2010.
- [12]In evidence JB said that this was written on behalf of JM but she could not satisfactorily explain why she said “we” (T4-75,76). In para 14 of the affidavit she deposes as follows:
“14. The matter of incorporation came to a head in September 2007 when the Defendant informed John, he informs me and I verily believe, that if he did not incorporate he would not be paid. John further informed me and I verily believe that Mr. Scott Smith of the Defendant informed John of where he could obtain a company. John incorporated the company and I then consulted our accountants at the time, AC Accountants. As I recall I saw Mr Andrew Callahan as a matter of urgency and he immediately advised me it would be much more tax effective if John operated the operational side of the business through his existing business name of Southport Tours and Charters (hereinafter referred to as John) which provided buses and drivers whilst I operated the company as its Director and Shareholder. The company, which was the Plaintiff, would then become the administrative side of the business as the booking agency. I was to run the Plaintiff company whilst John ran the actual transport part of the business. I then became the sole Director and Shareholder of the Plaintiff and the plan was instigated immediately. The accountant requested that we ask Equity to put in writing to us that we are required to be a company with their terms and conditions. I requested this from Diane Bowman on the 23rd August, 2007. Now produced and shown to me marked with the letter “C” is a true copy of the request. No reply has ever been received.”
- [13]JB could not explain why she said only she saw the accountant when her evidence was (as was JM’s) that they both went to the accountant.
The confidentiality deed
- [14]ETG required JM to enter into a confidentiality deed (ex 2, doc 4) which he did. He was an individual contractor when he signed the deed on 27 July 2007. I am satisfied that he knew what he was signing. For quality assurance purposes ETG required JM to incorporate if he wanted to retain the work. He didn’t want to but had to if he wanted the work. He commenced the work under the deed as an individual contractor and after his company was incorporated it took over the work using his coaches. He had about 6 coaches at the time (T4-93).
Incorporation
- [15]CLC was incorporated on 25 September 2007 with JM as the sole shareholder and director. Its registered office has always been 47 Brolga Avenue where JM and JB live. I accept the evidence of JM and JB that on the advice of their accountant and for income splitting reasons JM on 10 October 2007 ceased to be and JB became CLC’s sole shareholder and director. JB said CLC was a booking agent, the same as ETG. CLC didn’t own any vehicles. CLC used JM (Southport Tours and Charters) as a sub-contractor (T4-34).
JM’s position after incorporation vis a vis the confidentiality deed
- [16]So far as is now relevant the deed provided:
“*The contractor (JM) hereby covenants and undertakes that the contractor will not during the course of the contractor’s association with (ETG) and for a period of 12 months thereafter
- canvas, solicit or endeavour to entice away from (ETG) any persons who are clients or customers of (ETG);
- ….
- counsel, procure or otherwise assist any person to do any of the acts referred to in clause 3(a)….”
The highlighting is mine.
The clauses of the deed are not numbered but by reference to asterisks the clause I have set out appears to be clause 3 (a) and (c); at least no argument to the contrary was advanced at trial.
- [17]In my view JM ceased, for the purposes of the confidentiality deed, to be a contractor of ETG on the date CLC was incorporated. CLC then took over as the contractor but never signed a like confidentiality deed. The preponderance of the evidence is to this effect. Mr Demetre, ETG’s general manager said ETG required every contractor performing work for ETG to be incorporated (T2-63); Mr Smith, ETG’s operations manager said contractors had to be incorporated (T3-43,44,50) and Diane Bowman said all ETG’s contractors had to be incorporated (T3-66,67).
- [18]In my view JM’s obligations under the deed ended on 24 September 2008 which was 12 months after he ceased to be a contractor of ETG, i.e. 12 months after CLC was incorporated.
Novation
- [19]I am not satisfied that the confidentiality deed was novated to CLC as contended for by ETG. Both JB and JM expected ETG to require CLC and perhaps one of its officers to sign such a deed after CLC’s incorporation, but this didn’t happen. ETG’s practice was for its contractors to sign such a deed. The onus was on ETG to ensure this happened and it didn’t do so.
- [20]I accept JB and JM that only a copy certificate of incorporation was given or shown to ETG. JB said that after incorporation she sent Mr Smith “a copy of the company certificate from ASIC just to prove that it was a registered company” (T4-36). ETG was only interested in the fact of incorporation. I cannot accept the evidence of Mr Demetre and Mr Smith that upon incorporation they were aware that JM was CLC’s sole director; at best this may have been an assumption they made as a result of the requirement that JM incorporate. I prefer the evidence of Mr Berther that the issue about directorship only arose after ETG lost the MA contract to CLC (T3-11). Mr Smith also seemed to concede that his understanding of this aspect was a matter of “impression”; he said the requirement was for incorporation not incorporation with JM as a director (T2-52,61). He also said ETG didn’t do a paid ASIC search to see who the directors were (T3-53). In these circumstances it is no answer for him to say that he trusts ETG’s contractors to advise of any change of directorships (T3-54) when there was no requirement that they do so. Ms Bowman said what was required was “paperwork” to prove incorporation (T3-68). JB said no one at ETG told her “she had to advise ETG of any change of directorship” (T4-51). The Recipient Created Tax Invoice Agreement dated 1 November 2007 (ex 2, doc 6) does not assist ETG. I am satisfied that JB signed that on behalf of CLC and her signature was witnessed by JM. JM did not also sign on behalf of CLC. Also a fax to ETG from CLC dated 19 August 2008 (ex2, doc 24) is signed by JB “Company Director” and did not prompt any response from ETG.
Did CLC and JM know there was contract between ETG and MA for them to interfere with?
- [21]CLC and JM were providing a coach each day for the crew transfers on behalf of ETG.
- [22]I am satisfied that JB (and therefore CLC) and JM knew that this was as a result of a contract which ETG had with MA:
JB said the MA contract was being done by 1st Class e-Charters until it went into liquidation. She and JM knew then that the contract was up for renewal or re-tender and advised Mr Smith that if ETG got the work JM wanted to do it (T4-27)
when deciding whether to purchase a 48 seat coach JB said “we” requested a copy of the MA contract to see that it was a “confirmed contract” before “we” bought the coach (T4-33)
JB said “we bought that coach on the say so from ETG that MA wanted a 48 seater for the aircrew for 2 years” (T4-31)
In the letter ex 7, JB referred to the “working contract”
JM said 1st Class e-Charters held the MA contract. They went broke and ETG got the MA work back. Mr Smith rang to say ETG “managed to get the contract back” (T4-89)
JM said Smith said he needed a coach “for the contract” and JM said “We’ve got the coach available and we can start tomorrow night” (T4-89)
JM said ETG had a contract with MA; it was a fairly loose contract (T4-95,96)
In questioning their witness, Bill Egerton, JB referred to the “contract” with MA (T5-39)
- [23]The contract was initially for the period 28 July 2007 to 31 July 2008. This was replaced by a contract from 1 March 2008 to 28 February 2010 (see ex’ s 3 & 4, ex 2, doc 28 and Berther diary note ex 2, doc 26). CLC performed the crew transfer work required by both contracts.
Was there a contract between ETG and CLC for the MA work?
- [24]In my view there was an oral contract by which ETG would use coaches provided by CLC for the MA crew transfers.
- [25]The existence of such a contract is supported by the CLC fax dated 19 August 2008 and the ETG letter dated 2 April 2008 in relation to the 48 seat coach (ex 2, doc 24).
- [26]The relationship between ETG and CLC is described in CLC’s Amended Answer, para 23 as one whereby CLC
“… simply worked for ETG from time to time as requested by the defendant”
but I am satisfied it was more formal than that until MA terminated the contract it had with ETG (ex 3) on 7 October 2008 with effect 10 November 2008 (see ex 2, doc 30. See also the letter written by JB, ex 7).
- [27]During its course from 28 July 2007 until the contract was terminated the relationship between the parties was not always happy, particularly that aspect involving a change of coaches from 24 to 48 back to 24 seaters. See also the evidence of Mr Berther at T3-23,24 and JB at T4-29,30,32,33. Nevertheless there was a contract; no one else did the crew transfers, only JM then CLC for the whole period 28 July 2007 – 10 November 2008.
- [28]But for MA’s termination of its contract with ETG I am satisfied that CLC would have continued to do the crew transfers until ETG’s contract with MA ended in the normal course of events.
- [29]I agree with ETG that it was an implied term of that contract that CLC would not, for the duration of the contract solicit ETG’s clients and customers including MA.
- [30]Such a term, in my view, satisfies the conditions referred to in BP Refinery v Hastings Shire Council (1977) 52 ALJR 20 at 26 viz:
- it is reasonable and equitable;
- it is necessary to give business efficiency to the contract; the contract would not be effective without it;
- it is so obvious that it goes without saying;
- it is capable of clear expression; and
- it does not contradict any express term of the contract.
Tortious interference with contractual relations
- [31]This is alleged against each of CLC and JM. It is alleged that CLC, encouraged, counselled and assisted by JM, caused MA to terminate the contract it had with ETG. Thereafter tenders for a new contract were called. Tenders included ETG, CLC, one of Mr Egerton’s companies and, it is thought, others. CLC was the successful tenderer and was awarded the new contract for the period 1 December 2008 to 30 November 2010, see ex 2, docs 15, 16 & 22.
- [32]Relevant principles were summarised by Chesterman J (as his Honour then was) in Multinail Australia Pty Ltd v Pryda (Aust) Pty Ltd and Anor [2002] QSC 105 at paras [23] and [24] as follows:
“[23] According to Jordan CJ in Independent Oil Industries Ltd v Shell Co of Australia Ltd (1937) 37 SR (NSW) 394 at 414-5:
‘To establish this tort it is not sufficient to prove that a third party has in fact done something which had the effect of inducing a party to a contract to break it. It must be proved that the breach was knowingly and intentionally procured . . . It is necessary to establish the third party knew of the contract, knew that the doing of a particular act by one of the parties to it would be a breach of it, and with that knowledge procured the party to do the act.’
In Short v The City Bank (1912) 12 SR (NSW) 186 Street J said (202):
‘ . . . I think that a person complaining of a breach of contractual relations brought about by these means must show that the person whose actions are complained of did something in the nature of effectually persuading or prevailing upon the other party to the contract to violate his obligations under it. The persuasion may take the form of advice or friendly solicitation, or it may take the form of intimidation or molestation, but in every case I think that it must be shown that the defendant deliberately intervened between the contracting parties either with the express design of depriving the plaintiff of the benefit of his contract, or under such circumstances that he must have known that the effect of his intervention would be to deprive the plaintiff of that benefit.’
The High Court dismissed an appeal, Short v The City Bank of Sydney (1912) 15 CLR 148. Isaacs J said (160):
‘But to constitute that cause of action, the defendant must have induced or procured the doing of what he knew would be a breach of contract. A bona fida belief reasonably entertained that it was not a breach of contract would be fatal to the claim. If the defendant did not know of the existence of the contract, he could not induce its breach; if he reasonably believed it did not require a certain act to be performed, his inducing a party to the contract to do something inconsistent with it could not be regarded as an inducement or a procurement knowingly to break the contract; . . . if he believed on reasonable grounds that the contract had been rescinded, or performance waived, when in fact it had not, he could not be said to knowingly procure its breach.’
In Allstate Life Insurance Company v Australia & New Zealand Banking Group Ltd (1990) 58 FCR 26 Lindgren J (with whom Lockhart and Tamberlin JJ agreed) said (43):
‘In my opinion, the authorities establish conclusively that the gravamen of the tort is intention. Although the treatment of knowledge of the contract is sometimes discussed as if it was a separate ingredient of the tort, it is in fact an aspect of intention. The requirement that the alleged tortfeasor have ‘sufficient knowledge of the contract’ is a requirement he have sufficient knowledge to ground an intention to interfere with contractual rights.’
[24] To make out its claim the plaintiff must prove:
- (i)that the defendants intended to induce Campbells to break the plaintiff’s contract;
- (ii)the defendants did induce Campbells to break the plaintiff’s contract, i.e., that their conduct in fact caused Campbells to break the contract;
- (iii)that the plaintiff has suffered loss as a consequence.”
- [33]In the present case ETG must prove:
- (i)that CLC and JM knew of the contract between ETG and MA;
- (ii)that CLC and JM did something which caused MA to break the contract;
- (iii)that CLC and JM intended to induce MA to break the contract, that they intended to deprive ETG of the benefit of the contract; and
- (iii)that ETG has suffered loss as a result.
What did CLC do?
- [34]JB said that as a result of a mix up with the crew transfer on 1 September 2008 Andrea at MA Brisbane and Sandra Sinclair, MA Brisbane’s ground staff manager learned that CLC were doing the crew transfer work for ETG (T4-29). For present purposes I accept that this was how MA learned of CLC’s link with ETG. About a week or so later Ms Sinclair rang JB and asked what “we would charge to do the transfers?” (T4-29). As a result there was then correspondence between CLC and MA as follows (ex 2, docs 8, 9, 10 and 11)
- [35]Doc 8. CLC fax from JB to MA, Attn Sandy re ‘Malaysian Air Crew’ dated 15 September 2008
“Dear Sandy
We would like to make a proposal on doing Malaysian Aircrew on a nightly basis departing from Holiday Inn, Surfers Paradise at 2050 to Brisbane International Airport (MH140) and then taking inbound crew at 2145 from Brisbane International Airport to Holiday Inn, Surfers Paradise.
Coastlink Coaches Pty Ltd is currently doing the Malaysian Aircrew work via Hughes Limousines and know the procedures extremely well. We have been in the Coach industry for 17 years. All our Coaches are seat belted and air-conditioned.
Coastlink Coaches Pty Ltd drivers are always in uniform and have Queensland Accreditation, Driver’s Authority and licences in accordance with Department of Queensland Transport.
Please find below prices for the following coaches:
Coach Size | Coach Description | Price Per Night | Total Price per month (30 nights) | Plus Gateway Road Tolls (30 nights) | Plus Airport Tolls (30 nights) | Total per month (inc GST) (30 nights) |
24 seats | High back seats, seat belts, Air-conditioning | $500.00 | $15,000.00 | $432.00 | $240.00 | $15,672.00 |
32 seats | Reclining High backseats, seat belts, Air-conditioning, Toilet | $600.00 | $18,000.00 | $174.00 | $315.00 | $18,489.00 |
48 seats | Reclining High backseats, seat belts, Air-conditioning, Toilet | $670.00 | $20,100.00 | $174.00 | $315.00 | $20,589.00 |
Malaysian Airlines could save $489.00 to $672.00 per month if Coastline Coaches Pty Ltd travelled on the Inner City Bypass instead of using the Gateway Bridge saving the cost of Gateway tolls. Whether Coastlink Coaches travel on the Gateway or via the Inner City Bypass the time difference is minimal.
Gateway Tolls- Bus 2 axles with Trailer $ 7.20
Bus 3 axles with Trailer $ 7.20
BAC Airport Tolls- Limousines $ 3.00
Van up to 12 people $ 5.50
Bus 13 to 29 people $ 8.00
Bus 30+ people $ 10.50
Please contact me with any questions whatsoever and I will be quite willing to accommodate Malaysian Airlines wherever possible.
Look forward to your response soon.
Regards
Julie Brewood
Company Director.”
- [36]These rates were below what ETG was charging MA.
- [37]JB conceded the word “proposal” which she used in the fax dated 15 September 2008 (para [35]) was the wrong word to have used (T4-57). She denied she was canvassing or soliciting MA as a client (T4-58) but I consider she was and that JM was helping her. She admitted that the “entirety” of her focus and the reason for these letters was to get MA as a client of CLC but “it was not a marketing ploy”. She said she was “suffering financially at the time and (was) attempting to obtain more work” (T4-65,66,67). In fact JM, the owner of the coaches, was also suffering financially at the time. She said she didn’t know she wasn’t entitled to take MA away from ETG. She said CLC didn’t have a confidentiality agreement. In my view she and JM assumed that absent such an agreement CLC (assisted by JM) could do what it liked in relation to obtaining the MA work.
- [38]Doc 9. MA letter to JB, CLC from Sandra Sinclair dated 17 September 2008.
“Dear Julie
Thank you for your quotation for our Crew Transfers. Our Area Manager is looking favourably at it.
Could you please confirm the cost of the Gateway Road Tolls for a 24 seater being $432.00 for 30 nights as the 32 and 48 seater is only $174.00.
You also advised that the Inner City By Pass would be a minimal time difference. Do you know approx how much time would be added to the trip to use the bypass.
Thanks for your assistance.
Regards
Sandra Sinclair”
- [39]Doc 10. CLC fax from JB to MA, Attn Sandra, re “Malaysian Air Crew” dated 19 September 2008
“Dear Sandra
As per our phone conversation on Wednesday 17th September, 2008 please find below answers to your questions on your fax.
Break up of the tolls charged by Queensland Motorways and the Brisbane Airport Corporation.
Gateway Tolls- Bus 2 axles with Trailer $ 7.20
Bus 3 axles with Trailer $ 7.20
BAC Airport Tolls- Limousines $ 3.00
Van up to 12 people $ 5.50
Bus 13 to 29 people $ 8.00
Bus 30+ people $ 10.50
In relation to your question about travelling on the Inner City Bypass, we believe that the time factor is much the same but if you allowed an additional 5-10 minutes we would be covered.
Please contact me with any questions whatsoever and we would be quite willing to accommodate Malaysian Airlines.
Look forward to your earliest response.
Regards
Julie Brewood
Company Director”
- [40]Doc 11. CLC fax from JB to MA, Attn Sandra, re: “Malaysian Air Crew” dated 3 October 2008
“Dear Sandra
Just a short note to ask if you have heard anything from Kuala Lumpar in relation to the prices I faxed to you on the 15th September, 2008.
Look forward to your earliest response.
Regards
Julie Brewood
Company Director”
What did MA then do?
- [41]What happened then between MA and ETG was that MA first tried to get ETG to reduce its crew transfer charges as follows (ex 2, docs 27 and 28):
- [42]Doc 27. Letter from MA to ETG (Jim Berther) dated 19 September 2008
“Dear Jim
As you are no doubt aware, the rising cost of fuel has impacted heavily across society through 2007 and 2008. At Malaysia Airlines we have experienced dramatic increases in operating our fleet as a result on this on-going cost spiral.
Senior Management has ordered a review of all overseas stations to determine where costs associated with flight operations can be reduced. They have given specific targets for cost reductions that must be met.
As a key partner of Malaysia Airlines, I am writing to ask if you can review you existing cost structure and charges relating to the provision of Air Crew transfers. Our aim is to reduce expenses, without compromising safety or punctuality.
Your continued support of Malaysia Airlines will be greatly appreciated.
Yours sincerely
Wan Othman Mohd Noor
Area Manager Queensland”
- [43]Doc 28. Reply from ETG dated 22 September 2008
Dear Mr Mohd Noor,
Ref: Costs
Thank you for your letter of 19th September 2008 in relation to the rising cost of fuel, and requesting Equity Transport review our existing cost structure for crew transfers.
Equity Transport has too suffered significantly with the rising cost of fuel, and effective from 1st September 2008 we had already agreed in good faith to reduce the size of the coach to transport Malaysian crews from a (48 seat coach and vary the signed contract agreement that was in place for the period 1st March 2008 until 28th February 2010) to a 24 seat coach which equated to saving to Malaysian Airlines of $192.40 or 24.71% per return trip per day of operation.
I trust that you understand that we are not in a position to reduce this cost any further.
Yours faithfully
Jim Berther
State Manager Qld”
- [44]When this attempt to reduce crew transfer charges proved unsuccessful, MA then terminated the contract by letter dated 7 October 2008 to ETG (Jim Berther) (ex 2, doc 30)
“Dear Jim
I refer to my correspondence of September 19 and your subsequent response of September 22, regarding Malaysia Airlines crew transfer costs.
As per the terms and conditions of the existing contract (clause 1.3) I give 30 days formal notice to Equity Transport of Malaysia Airlines intention to terminate the agreement. This termination is to take effect as of Monday, November 10, 2008.
I would like to thank Equity Transport for their conduct in supplying transport for our aircraft crew and wish your organization success in future endeavours.
Yours sincerely
Wan Othman Mohd Noor
Area Manager Queensland”
What did JM do?
- [45]In my view he provided the coach details and charges and details of tolls and airport charges used by CLC in the correspondence referred to in paras [35] and [39] knowing that they would be used by CLC in its correspondence and dealings with MA.
- [46]It is inconceivable in my view that he did not, as the provider of coaches for CLC, know what CLC was doing. In my view he was aware of the fax to MA dated 15 September 2008 and the costings in it were provided by him. His involvement in the tender for the new crew transfer contract by CLC supports this conclusion. CLC also used JM’s email address and his office (T5-28). At all times I consider JB (and then CLC) acted in accordance with JM’s wishes and instructions.
- [47]When JB said in the fax dated 15 September 2008 (and in CLC’s tender dated 15 October 2008, see para [53])
“We have been in the coach industry for 17 years”
she meant to include JM and he knew he was included; he was, I consider, a party to the fax. CLC had only been in business since 25 September 2007. In evidence she said
“I was trying to sell our business.”
- [48]The close working relationship which existed between CLC and JM is also supported by JB’s evidence, not disputed by JM, that when deciding whether to purchase a 48 seat coach “we” (she and JM) requested a copy of the MA contract and “we bought that coach”. JM’s evidence that he said to Mr Smith “We’ve got a coach available, we can start tomorrow night” is to the same effect. See para [22]. See also paras [10], [11], [12], [13] and [37].
- [49]JM said he was not involved in CLC’s tender, had no input whatsoever, played no role in it, had nothing to do with it, didn’t assist and was not aware JB was corresponding with MA (T4-96, T5-4,8,25,28,29,30,32,33). I do not believe him.
Re-tender
- [50]After terminating its contract with ETG, MA called tenders for a new 2 year crew transfer agreement commencing on 10 November 2008.
- [51]ETG was invited to tender and so was CLC and Mr Egerton’s company. The letters to ETG and CLC inviting them to tender are in identical terms, see ex 2, docs 12 and 13, each dated 14 October 2008.
- [52]CLC submitted its tender by email the following day, 15 October 2008 and the rates quoted were in identical terms to its fax dated 15 September 2008 (para [35]).
- [53]CLC’s tender was addressed to Wan Othman Mohd Noor and was in these terms (ex 2, doc 14)
“Dear Wan
Received your letter today with thanks inviting Coastlink Coaches Pty Ltd to tender for the Coach Transfers between Brisbane Airport and The Holiday Inn, Surfers Paradise and return in a 24 seat coach as of the 10th November, 2008.
We would like to submit our tender on doing Malaysian Aircrew on a nightly basis departing from Holiday Inn, Surfers Paradise at 2050 to Brisbane International Airport (MH140) and then taking the inbound crew at 2145 from Brisbane International Airport to Holiday Inn, Surfers Paradise.
Coastlink Coaches Pty Ltd is currently doing the Malaysian Aircrew work via Hughes Limousines and know the procedures extremely well. We have been in the Coach industry for 17 years. All our Coaches are seat belted and air-conditioned.
Coastlink Coaches Pty Ltd drivers are always in uniform and have Queensland Accreditation, Driver’s Authority and licences in accordance with Department of Queensland Transport.
Please find below prices for the following coaches:
Coach Size | Coach Description | Price Per Night | Total Price per month (30 nights) | Plus Gateway Road Tolls (30 nights) | Plus Airport Tolls (30 nights) | Total per month (inc GST) (30 nights) |
24 seats | High back seats, seat belts, Air-conditioning, Luggage trailer | $500.00 | $15,000.00 | $432.00 | $240.00 | $15,672.00 |
32 seats | Reclining High backseats, seat belts, Air-conditioning, Toilet, Luggage bins | $600.00 | $18,000.00 | $174.00 | $315.00 | $18,489.00 |
48 seats | Reclining High backseats, seat belts, Air-conditioning, Toilet, Luggage bins | $670.00 | $20,100.00 | $174.00 | $315.00 | $20,589.00 |
Malaysian Airlines could save $489.00 to $672.00 per month if Coastline Coaches Pty Ltd travelled on the Inner City Bypass instead of using the Gateway Bridge saving the cost of Gateway tolls. Whether Coastlink Coaches travel on the Gateway or via the Inner City Bypass the time difference is minimal.
Please find below the break up of tolls:
Gateway Tolls- Bus 2 axles with Trailer $ 7.20
Bus 3 axles with Trailer $ 7.20
BAC Airport Tolls- Limousines $ 3.00
Van up to 12 people $ 5.50
Bus 13 to 29 people $ 8.00
Bus 30+ people $ 10.50
If you have any further queries whatsoever you can contact me on 0408 900 089 or email [email protected].
Coastlink Coaches Pty Ltd await your favourable reply.
Regards
Julie Brewood
Company Director.”
- [54]In my view again, it is inconceivable that JM would not have been involved with CLC in this tender. A coach of his was to be used and he was to be paid.
- [55]ETG was unaware that CLC was tendering for the work.
- [56]On 17 October 2008 Mr Berther telephoned JB and advised her that MA
“were giving us 30 days notice to terminate the current agreement effective Monday 10 Nov 2008, and I advised Julie that we would be asked to re-tender. I asked Julie if they would be happy to go into the new tender at the current rates, effective 1 Sept, and she advised that they would be.”
See ex 2, docs 32 and 38 and JB T4-68.
- [57]JM said JB would have taken it upon herself that he would do the MA work for the same price he had been doing it for (T5-29). Again I don’t believe him. He said he didn’t know until October 2008 that CLC had tendered for the MA work (T5-30,31,32). I don’t believe him. In my view he was a party to the fax of 15 September 2008 and to CLC’s tender.
- [58]JB didn’t tell Mr Berther that CLC already knew of the termination of the “current agreement” and had tendered for the new agreement. She said she didn’t tell him because CLC had been terminated from doing the MA work and she didn’t need to tell him (T4-55). Presumably she meant that CLC was terminated when ETG’s agreement with MA was terminated by MA.
- [59]For the purposes of its tender ETG required photos of the coach which CLC would use. CLC provided these by email from JM’s address on 24 October 2008, see ex2, docs 33, 34. JM is shown in one of the photos. Again JB didn’t tell Mr Berther that CLC had already tendered. Presumably also the coach shown in the photograph is also the relevant coach for CLC’s tender.
- [60]ETG submitted its tender to MA on 24 October 2008 using the rates provided by JM and CLC, see ex 2 doc 36.
- [61]CLC’s tender was less that ETG’s. ETG’s tender (ex 2, doc 36) for a one-way trip was $297.19 ($256.36 + $25.63 (GST) + $8.00 (Brisbane Airport charge) + $7.20 (bridge toll)). CLC would have received 75% of $297.19, viz $222.89. CLC’s tender (ex 2, doc 14) was $258.00 ($250.00 including GST and toll charges) + $8.00 (Brisbane Airport charge))
- [62]JB said CLC’s tender was “higher than what I got paid by ETG” (T4-37) and this is so but CLC (and JM) nevertheless undercut ETG.
New contract
- [63]By letter dated 30 October 2008 MA advised CLC that it had been “selected to provide crew transfers from 11 November 2008 to 10 November 2010” and attached the agreement to be signed, see ex 2, doc 15. The attached agreement was for 1 December 2008 to 30 November 2010.
- [64]MA indicated in an email to CLC on 31 October 2008, that
“whilst the contract is effective 1 December 2008 we would like to have Coastlink commence in your own right as of 11 November 2008.”
- [65]CLC returned the signed agreement by letter dated 31 October 2008, see ex 2, docs 18 and 22.
- [66]In the meantime MA advised ETG by letter dated 30 October 2008 that
“the tender had been awarded to another company.”
See ex 2, doc 37. The letter was from Wan Othman Mohd Noor.
- [67]On or about 14 November 2008 ETG learned that CLC was doing the MA work “themselves”, see ex 2, doc 38.
Liability
- [68]I am satisfied that CLC breached the implied term of its contract with ETG referred to in paras [3] and [29]. It did so by soliciting MA as a customer for itself away from ETG. This is the effect of JB’s evidence referred to in para [37] and the correspondence referred to in paras [35], [38]-[40] and [53] regardless of the result of the re-tender process. CLC was trying to get the MA work. As a result of what CLC did MA broke its contract with ETG and ETG has suffered loss.
- [69]I am also satisfied that CLC and JM tortiously interfered with ETG’s contractual relations with MA. They knew of the contract. By engaging in the correspondence referred to in paras [35] and [53] they caused MA to break that contract. They intended to induce MA to break the contract; they intended to deprive ETG of the benefit of the contract. As a result ETG has suffered loss.
- [70]I am also satisfied that JM breached his obligations under the deed by assisting CLC to canvass, solicit and entice MA, a client of ETG, away from ETG and caused MA to break its contract with ETG as a result of which ETG has suffered loss. This breach is also evidence of JM’s tortious interference with ETG’s contractual relations with MA. JM’s involvement in CLC’s correspondence with MA up to 24 September 2008 breached the deed, notwithstanding that MA did not terminate its agreement with ETG until after that date.
- [71]JM contended that the deed is unenforceable and void as a restraint of trade. JM as owner and driver of coaches used by ETG to convey its clients or their employees was in a position to take advantage of that position and relationship. The underlying purpose of the deed was to protect ETG’s business. JM was a person well placed to compete effectively, as was the company he was involved with, CLC. In my view the provisions of the deed relied on by ETG are reasonable in relation to time, location and extent. The time is for 12 months, the location is effectively Gold Coast to Brisbane, the area where JM operates, and the extent is limited to conduct which entices clients away from ETG.
- [72]In each case ETG’s damages are the same.
Damages
- [73]There was but is not now any real dispute about figures.
- [74]The contract which MA terminated with effect 10 November 2008 had until 28 February 2010 to run. In all probability ETG would have completed the contract but for the termination.
- [75]ETG claims it would have earned $73,377.94 for the remaining term of the contract and it claims this amount in relation to that contract less the plaintiff’s admitted claim of $13,580.90 plus interest at 9%. There was initially some confusion or disagreement relating to this amount and the figures provided by JB for CLC in ex 14, but on 21 February 2012 she and JM reluctantly accepted the figures in doc 23 and the calculations based on them ($73,377.94). The figures provide an historical basis for this part of ETG’s claim. They cover a 12 month period. Based on those figures the way the claim is calculated for 15 months (being 1 November 2008 – 28 February 2010) is as follows:
$234,809.42 x 25% = $58,702.35 ÷ 12 = $4,891.86 x 15 = $73,377.94
The termination of ETG’s contract was to take effect from 10 November 2008 not 1 November 2008 (see para [44]).
$4,891.86 ÷ 30 days = $163.06 x 10 days = $1,630.60.
$73,377.94 - $1,630.60 = $71,747.34,
and this is the amount I will allow.
Interest will be calculated on $58,166.44 ($71,747.34 - $13,580.90) from 28 February 2010 to judgment, viz 2 years. This amounts to $10,469.95.
- [76]ETG also claims that it lost the chance of securing a further 2 year contract with MA from 1 March 2010 – 29 February 2012. That contract is for crew transfers from Brisbane Airport to a Brisbane hotel and back. The parties agree that earnings on that contract had ETG secured it would have amounted to $23,660.00. Interest is also claimed at 9% on the amount relating to the period up to judgment.
- [77]These contracts are not very secure. They are terminable on 30 days notice, usually by the airline because of changed schedules or aircraft. This is apparent from changes from a 24 to 48 to 24 seat coach in less than 12 months. Mr Egerton said “contracts change if things changed. Nothing is really concrete. Contracts can change if circumstances change” (T5-40). Any change would invariably be one which benefited the airline. This is an additional factor to take into account in assessing ETG’s lost chance.
- [78]ETG had, until CLC and JM interfered with its contractual relations, a good and somewhat long standing relationship with MA. In the circumstances I think its chance of obtaining a renewal of the ex 3 contract and retaining it at its initial rate was about 50%. Mr Alexander submitted ETG’s chances would have been higher mainly because of its past relationship with MA, but in the circumstances I think 50% represents the realistic chance it had in competition against other tenderers. 50% of $23,660 is $11,830. Interest at 9% on that amount for 2 years amounts to $2,129.40.
- [79]ETG is therefore entitled to damages as follows
- (a)Broken contract$ 71,747.34
- (b)Less plaintiff’s claim$ 13,580.90
Sub-total$ 58,166.44
- (c)Interest on $58,166.44$ 10,469.95
- (d)Loss of a chance –
future contract$ 11,830.00
- (e)Interest on (d)$ 2,129.40
Total$ 82,595.79
- [80]I give judgment for the defendant against the plaintiff and third party for $82,595.79 plus costs to be assessed on the standard basis unless agreed.
- [81]I give the parties liberty to apply on 3 days notice in respect to my calculations.