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Bamford v Investments Solutions (Aust) Pty. Ltd.[2015] QDC 12

Bamford v Investments Solutions (Aust) Pty. Ltd.[2015] QDC 12

DISTRICT COURT OF QUEENSLAND

CITATION:

Bamford & Ors v Investments Solutions (Aust) Pty Ltd & Ors [2015] QDC 12

PARTIES:

NEIL RAYMON BAMFORD and SANDRA DALE BAMFORD AS TRUSTEES FOR THE BAMFORD FAMILY TRUST

(plaintiff)

v

INVESTMENTS SOLUTIONS (AUST) PTY LTD (ACN120264833) AS TRUSTEE FOR THE FLEMING INVESTMENT TRUST

(first defendant)

and

DONALD PERRY FLEMING

(second defendant)

FILE NO/S:

D150/09

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

District Court at Southport

DELIVERED ON:

3 February 2015

DELIVERED AT:

Southport

HEARING DATE:

12, 13 August 2014

JUDGE:

McGinness DCJ

ORDER:

  1. Judgment for the Plaintiffs against the First Defendant in the sum of $147,222.63
  2. Judgment for the Plaintiffs against the Second Defendant in the sum of $30,055.50

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – AGREEMENTS CONTEMPLATING EXECUTION OF FORMAL DOCUMENT - Oral Contract – existence of an oral contract to provide services – oral contract collateral to written contract for sale of business – where buyer denies existence of oral contract – where seller alleges breach of oral contract

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES — DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH — PERFORMANCE — where contract for sale of business — where buyer alleges that telephone lease liability was not disclosed – whether telephone lease was adequately disclosed

CONTRACTS — DAMAGES – BREACH OF CONTRACT – breach of oral contract to provide services – loss of future commission

TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS - MISLEADING OR DECEPTIVE CONDUCT GENERALLY – whether statements made were misleading or deceptive – where statements made on reasonable grounds

Trade Practices Act 1974 (Cth), ss 51A, 52.

Competition and Consumer Act 2010 (Cth) sch 2.

Sellers v London Counties Newspapers [1951] 1 KB 784.

Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (in liq) (1936) 54 CLR 361.

Masters v Cameron (1954) 91 CLR 631.

COUNSEL:

T Matthews QC for the plaintiff

The defendant is self-represented

SOLICITORS:

Roberts Law for the plaintiff

Introduction

  1. [1]
    The plaintiffs, Mr and Mrs Bamford, as trustees for the Bamford Family Trust (“the Bamfords”) sold their franchise business ‘Mortgage Choice Robina’ (“the business”) to the first defendant, Investment Solutions (Aust) Pty Ltd as trustee for the Fleming Investment Trust (“Investment Solutions”). The second defendant, Mr Fleming, was a director, authorized representative and guarantor of Investment Solutions. He commenced running the business after settlement of the sale on 11 December 2008.
  1. [2]
    Mr Bamford claims that, as part of his discussions with Mr Fleming concerning the sale of the business, he entered into an oral contract (“services contract”) with Mr Fleming in July 2008 that Mr Bamford remain working in the business after the date of settlement, by way of providing services as a loan writer. Mr Bamford alleges a number of issues arose between Mr Fleming and Mr Bamford in January 2009. Mr Bamford claims that on 29 January 2009 Mr Fleming attempted to vary the conditions of the service contract, and when Mr Bamford refused to agree, he told Mr Bamford to leave the business. Mr Bamford also claims Mr Fleming breached the business contract by failing to pay rent adjustment for December 2008 and failing to take over the business’s telephone lease payments.
  1. [3]
    The Bamfords claim:
  • Moneys payable to them pursuant to the terms of the sale of business contract;
  • Damages for breach of the oral services contract;
  • In the alternative, damages for misleading and deceptive conduct pursuant to s 52 of the Trade Practices Act 1974 (Cth) (“TPA”) in respect of representations said to be made by Mr Fleming at the time of entry into the services contract.
  • Mr Fleming is liable as guarantor of the first defendant’s obligations under the sale of business contract, and for liability and alternatively for liability as an accessory under s 75 TPA.
  1. [4]
    Investment Solutions counterclaims for damages suffered due to breaches by the Bamfords of Clause 20.1 and Item U of the business contract. Investment Solutions claims the Bamfords breached conditions of the business contract by:
  • Failing to provide training, tuition and assistance to the business;
  • Unlawfully terminating the sellers tuition period, in breach of Clause 20.1 of the business contract;
  • Failing to identify and introduce Investment Solutions to valuable referral sources
  1. [5]
    Mr Fleming appeared self-represented during the proceedings, and on behalf of the Investment Solutions, by leave of the court.

Issues

  1. [6]
    The plaintiffs’ outline of submissions helpfully summarises the issues for determination in the trial as follows:
  1. (a)
    whether Investment Solutions is indebted to the Bamfords for rental paid on the leased premises which was not adjusted at the date of settlement (“Rent Adjustment Issue”);
  1. (b)
    whether the First Defendant is liable to the Plaintiffs in respect of the payment of telephone system lease instalments subsequent to the settlement of the SBC (sale of business contract) and until the expiry of the term of the lease on 8 February 2013 (“Telephone Lease”);
  1. (c)
    whether Mr Fleming’s guarantee under the business contract extends to the guarantee of such sums as might be found to be owing to the Plaintiffs in issues (a) and (b) above;
  1. (d)
    whether Mr Bamford’s services on behalf of the Plaintiffs were engaged by an oral contract of employment collateral to the business contract and if so, on what terms (”the Services Contract”);
  1. (e)
    if there was a contract for the engagement of the services of Mr Bamford, then whether and in what circumstances that contract was terminated and if the same constituted a breach of contract or wrongful termination (“Breach of Contract”);
  1. (f)
    if so, the quantum of damages that flow from such wrongful act by Investment Solutions (“Damages for Breach of Contract”);
  1. (g)
    whether Investment Solutions through Mr Fleming made representations concerning the services contract which were misleading and deceptive under the TPA (“the TPA Claim”);
  1. (h)
    if Investment Solutions engaged in misleading and deceptive conduct contrary to s 52 of the TPA, whether Mr Fleming is liable pursuant to s 75B TPA; and
  1. (i)
    if misleading and deceptive conduct was engaged in by Investment Solutions concerning the employment of the services of Mr Bamford as a loan writer, then what loss and damage is assessable pursuant to s 82 TPA for such conduct (“TPA Damages”);
  1. (j)
    whether the Bamfords were in breach of any condition of the business contract to provide tuition and instruction for the agreed period of 90 days after settlement, including an obligation to introduce Investment Solutions, through Mr Fleming, to referrers of business, and what damages flow therefrom; in particular the alleged loss of referral business from Beachsea Pty Ltd.
  1. [7]
    Before considering the issues, it is appropriate to summarise the relevant evidence.

Mr Bamford’s Evidence

Background

  1. [8]
    Mr and Mrs Bamford were proprietors of the Mortgage Choice franchise at Robina. As at 2008 they had owned the franchise for approximately 15 years. Mr Bamford first met Mr Fleming in 1996, when Mr Bamford secured a home loan through Westpac Bank where Mr Fleming then worked. Mr Bamford and Mr Fleming stayed in touch over the years.  They attended social activities together and on occasions played golf, usually at The Glades Golf Club at Robina.  After the Bamfords bought the Mortgage Choice franchise, they approached Mr Fleming and requested he refer business to them through his employment at Westpac.  The Bamfords subsequently referred business to Mr Fleming after he left the bank to work as a mortgage broker. 
  1. [9]
    In January 2008 Mr Bamford was approached by a salesman from Queensland Communications Company Pty Ltd (“Queensland Communications”), who had dealt with other Mortgage Choice franchisees in relation to the lease of telephone communications equipment. Queensland Communications used a number of companies to provide services. One of the companies was Axis Telecoms, which provided the telephone billing services.  The other company was Quikfund, an external finance company which financed the deal.
  1. [10]
    Mr Bamford agreed to lease a telephone communications system.  The lease was for 60 months at a rental of $360 per month plus GST i.e. $396 a month.  He signed both contracts on 8 February 2008.[1] He also signed a loan contract with Quikfund. Mr Bamford confirmed in evidence this loan contract was part of the overall documentation he signed with Queensland Communications. 
  1. [11]
    Sometime in early 2008, the Bamfords decided to put their business on the market. Mr Bamford wanted to sell the business to take less responsibility, however he still wished to work as a loan writer for the business to help pay off the mortgage on the family home.  Mr Bamford intended to remain working for the Mortgage Choice Robina franchise, if possible, because he knew that a restraint of trade clause would be part of any contract of sale.

Discussions between Bamford and Fleming re: sale of business and alleged creation of oral services contract

  1. [12]
    On 28 June 2008 Mr Bamford had dinner at Mr Fleming’s house, where Mr Fleming raised the subject of the franchise business being for sale. Mr Bamford told Mr Fleming he could not discuss selling the business because business brokers, Hallmark Business Sales, had an exclusive agency from 25 March 2008 to 25 July 2008.
  1. [13]
    On or about 28 July 2008 Mr Fleming telephoned Mr Bamford and said he was interested in buying the business. They arranged to meet a few days later. Mr Bamford believes that, either on 30 July 2008 or a week later, he met Mr Fleming at The Glades Golf Club, Robina. During a round of golf, Mr Fleming and Mr Bamford discussed different aspects of the business including that it would be advantageous to Mr Fleming to combine his current business with the Mortgage Choice Robina business.  Mr Fleming said that if he were to buy the franchise, he would want Mr Bamford to stay on as his loan writer.  Mr Bamford recalled Mr Fleming said he would like Mr Bamford to remain with the business for three years, but if all went well, five to 10 years.[2]  On the eighth tee, Mr Fleming said, “What would you like to be paid as my loan writer?” to which Mr Bamford replied, “The same level of commission as our existing loan writer, Steve McMillan … that is 65 per cent of the Mortgage Choice commission, and nine per cent superannuation; not as a PAYG employee, but as a contractor.”  Mr Fleming replied, “Seventy-four per cent?”  Mr Bamford said, “No, it’s not seventy-four…Sixty-five per cent plus nine per cent of that equates to 70.85 per cent.  Rounded up to 71 per cent. I’d accept 71 per cent plus GST of my payment.”  Mr Bamford said Mr Fleming replied, “I agree.”  Mr Bamford agreed he would work as Mr Fleming’s loan writer for at least three years.[3]  On the sixth tee, he and Mr Fleming negotiated the business sale price to $750,000, which Mr Fleming accepted.[4] Mr Bamford originally had the business on the market with Hallmark Business Sales for $945,000.
  1. [14]
    Sometime after the meeting at The Glades, Mr and Mrs Bamford emailed Mr Fleming a draft business contract based on an earlier business contract saved on their computer which related to a previous unsuccessful sale in 2006.[5] 
  1. [15]
    Mr Bamford gave evidence that he would not have accepted the drop in sale price for the sale of the business unless he was to be employed as the business’s loan writer. He relied on Mr Fleming’s offer of employment and his acceptance of that offer when he accepted the purchase price of $750,000.[6]  For this reason Item W, a restraint of trade clause, was included in the contract nominating restraint of trade for a period of 36 months in a 100 kilometre radius.  Mr Bamford also included a clause in the business contract to the effect he and Mrs Bamford would provide tuition and assistance in the business for a period of 90 days after settlement.[7]
  1. [16]
    Mr Bamford provided Mr Fleming with copies of tax returns and other financial statements to do with the business as of 30 June 2008, prior to entering into the business contract.
  1. [17]
    On 14 August 2008 the parties executed the business contract. The terms of the contract were, that for consideration of $750,000, the Bamfords would sell to Investment Solutions its assets, stock in trade and goodwill in the business. Schedule A to the contract listed the office fixtures, fittings and equipment owned by the Bamfords. Schedule B provided details of the lease of a telephone system for the business.
  1. [18]
    On the same day, Mr Bamford sent Mortgage Choice Queensland an email advising them he had sold the franchise.  He and Mr Fleming subsequently attended a meeting at Mortgage Choice Queensland on 26 August 2014 during which he heard Mr Fleming tell Mr Ways from Mortgage Choice Queensland Head Office that Mr Bamford would be staying on as loan writer, and be paid 65 per cent plus nine per cent superannuation as the loan writer.  Mr Bamford heard Mr Fleming also advise another employee at Head Office, Mr Childs, that Mr Bamford would remain as loan writer after settlement of the business contract.
  1. [19]
    The original date for settlement was 25 October 2008. In September 2008 Mr Fleming approached Mr Bamford to discuss vendor finance as he had trouble coming up with $125,000 to complete the sale. The Bamfords agreed to provide vendor finance. The settlement date was moved to 11 December 2008. On 27 November 2008 Mr Fleming emailed Mr Bamford to thank him for the $125,000 finance.  In the email he confirmed that he wanted Mr Bamford to stay on as a loan writer after settlement.[8]  Also on 27 November 2008, Mr Bamford emailed Mr Fleming and attached a ‘Mortgage Choice contractor agreement.’[9] He stated in the email that Mr Fleming may wish to use the agreement “with me”. Mr Bamford believed at some stage he and his wife would receive a written service contract from Mr Fleming, which Mortgage Choice Queensland required.

Mr Fleming takes over the business

  1. [20]
    In early December 2008 Mr Fleming visited the Mortgage Choice Robina office almost daily to talk about the settlement with Mr Bamford. Mr Bamford contacted Queensland Communications and requested the documents necessary to transfer the phone lease to Mr Fleming.  He received the transfer documents on 7 December 2008. On 10 December 2008 Mr Bamford received an email from Mr Fleming which seems to confirm that Mr Fleming was given the above information prior to settlement.[10]  The email relevantly states:

“….when I contacted Quikfund to change the Phone system rental, they refused to speak to me. They suggested you need to contact them… and advise you have sold the Business and that the new Owner would like to take over the rental of the Phone systems.”

  1. [21]
    In response to Mr Fleming’s suggestion that he contact Quikfund about the phone system, Mr Bamford told Mr Fleming he would need to complete a document transferring the Quikfund agreement to Investment Solutions.
  1. [22]
    The business contract settled on 11 December 2008.
  1. [23]
    After settlement Mr Bamford and Mr Fleming discussed the transfer of the phone, electricity and other utilities.[11] Queensland Communications sent the Quikfund lease agreement to Mr Bamford.  He photocopied and gave a copy to Mr Fleming so he could contact Quikfund.  He also gave Mr Fleming a copy of the electricity bill, a Telstra bill for the internet connection and a telephone bill for Clear Telecoms. 
  1. [24]
    On 15 December 2008, Mr Bamford completed the part of the transfer document he was required to, as guarantor under the phone lease. It was witnessed by a staff member, Ms Trebilco.  Mr Bamford then put the document on Mr Fleming’s desk, the same day, for him to execute and send off to Quikfund.  [12]  After he left it on Mr Fleming’s desk, he had no further conversations with Mr Fleming concerning the transfer of the phone lease to Mr Fleming’s company until after the Christmas break when Mr Fleming returned from a training and induction course with Mortgage Choice in Sydney on 19 January 2009.[13]
  1. [25]
    On 17 December 2008 Mr Fleming and Mr Bamford had a meeting at Mr Fleming’s request, during which Ms Trebilco printed out a copy of the referral database which contained a list of the businesses which referred business to Mortgage Choice Robina.  Mr Fleming asked Mr Bamford to go through the list and explain details of the referrers and referrals, which he did.  During the meeting Mr Fleming decided which referrers he would look after himself, and which of the referrers he would leave to Mr Bamford to manage. Mr Fleming left approximately 60 per cent of the referrers to Mr Bamford to look after.  Mr Fleming also told Mr Bamford he would no longer employ the marketing assistant Ms Cullum, to work for the business. 
  1. [26]
    On 19 January 2009 Mr Fleming returned from Mortgage Choice training in Sydney.  He called a meeting.  Those present at the meeting included Mr Bamford and Ms Trebilco.  Mr Fleming told staff he was making changes to the way he ran the business.  He stated that all inquiries from new and existing clients for finance were, from that time on, to be directed to him, rather than to Mr Bamford. Mr Bamford was to tell anyone who rang and spoke to him that someone would return their call in two to three hours’ time.  Mr Fleming told Mr Bamford he was not to contact clients. 
  1. [27]
    On 19 January 2009 Mr Fleming handed Mr Bamford a list of debits and credits for various utilities in order for them to reconcile what each owed over the period spanning the settlement. On 21 January 2009, Mr Bamford provided a list to Mr Fleming.[14] The list included amounts Mr Bamford owed Mr Fleming, ($144 for a conference; $301 for the phone lease for the portion of December post settlement, and $473 for newsletters).  It also included amounts Mr Fleming owed Mr Bamford ($1883 for rent adjustment for December post settlement, and $396 payable to Mr Bamford for the monthly telephone lease.)
  1. [28]
    Investment Solutions never paid these amounts to the Bamfords. Mr Bamford also provided Mr Fleming with an invoice for 71 per cent of the up-front commissions for loans settled in December 2008. On 22 January the Bamfords received the sum of $3,285.14 from Investment Solutions as payment for loans settled in December.[15] 
  1. [29]
    On the afternoon of 21 January 2009, Mr Fleming came into Mr Bamford’s office and queried the basis for the payment of $369 to Quikfund. Mr Bamford told Mr Fleming it was the monthly phone lease payment for the phone system. Mr Fleming replied he did not know anything about it. Mr Bamford told Mr Fleming the phone lease was disclosed in the business contract, which Mr Fleming denied. The following day Mr Fleming asked Mr Bamford to show where the phone lease was mentioned in the contract. He showed Mr Fleming Schedule B[16] which relevantly states:

“Lease arrangements/ Telephone Lease with Queensland Communications Company Pty Ltd/ Lease commenced on 8 February 2008. Expires 8 February 2013” 

  1. [30]
    Details of the phone lines, fax line, mobile phones and other information are also listed in the schedule. Mr Fleming became aggressive, maintained the schedule did not disclose a phone lease and said words to the effect that something would have to be done[17].
  1. [31]
    Mr Fleming requested Mr Bamford contact Quikfund to seek an estimate of the payout figure. It was $20,000. Mr Fleming then told Mr Bamford he refused to pay this amount and that Mr Bamford should bear the cost. Mr Bamford gave evidence the Bamford Family Trust ended up paying the $396 per month on the lease until expiration of the lease agreement in 2013.
  1. [32]
    On 27 January 2009 Mr Fleming told Mr Bamford he refused to take over the phone lease. Mr Bamford was concerned to maintain his employment, so he drafted a settlement agreement between Mr Fleming and himself to the effect they both pay half of the estimated cost of the payout figure for the phone lease. He took the draft agreement to his solicitor for advice. The evidence suggests he did not pursue this course with Mr Fleming.[18]
  1. [33]
    On 27 January 2009 Mr Bamford sent an email to Investment Solutions in which he offered for Mrs Bamford to come into the office to provide tuition to Mr Fleming’s wife Ann about marketing. In response to the email Mr Fleming told Mr Bamford “I’ve done the course, I know all about marketing and there is no need for Sande (Mrs Bamford) to come in”.[19] 
  1. [34]
    On 28 January 2009 Mr Fleming told Mr Bamford he was not to take his laptop home from that day forward.

Events of 29 January 2009 when Mr Bamford leaves Mortgage Choice Robina

  1. [35]
    On 29 January 2009 when Mr Bamford arrived at work, Mr Fleming directed Mr Bamford to brief him on the status of each loan application. Mr Fleming wished to know the names of the borrowers, the details of each application, the status of each application, and any problems that were occurring with each application. Mr Bamford stated in evidence:[20] 

“I knew at that time that that was the end of it.  He was going to take over all the loans.  He could manage them himself.  He was trained and accredited by Mortgage Choice.  He no longer needed me and he was going to take over running all the loans.”

  1. [36]
    After this discussion about the loans Mr Fleming stood in the doorway of Mr Bamford’s office and waved in his hands a piece of paper, and said, “this is your employment agreement.”  Mr Fleming told Mr Bamford that the agreement was going to change as of that day and that his commission from that point on would be 65 per cent plus GST and within 12 months it would reduce to 50 per cent of the commission received by Mortgage Choice plus GST.[21]  Mr Bamford told Mr Fleming he was not happy about that arrangement and would discuss it with him that afternoon.
  1. [37]
    That afternoon, Mr Fleming returned to Mr Bamford’s office. He complained that Mr and Mrs Bamford had kept the phone lease a secret from him, which Mr Bamford denied. Mr Fleming said words to the effect, “So what are your thoughts about the employment?” Mr Bamford told him he would not accept a reduction in commission, because that is not what they had agreed to.  After some further discussion, Mr Fleming said to Mr Bamford words to the effect, “Well if you don’t wish to write any more loans at that rate of commission, there’s no need for you to be in the office.”  Mr Bamford replied that he needed to be in the office because he needed to provide training and assistance because this was part of the contract.  Mr Fleming replied it did not matter, and repeated there was no need for Mr Bamford to be in the office. Mr Bamford replied, “Well if that’s your attitude, I’d better leave”, and collected his belongings.  At this point Mr Fleming’s demeanour changed and he said, “Well I’m sorry about this, Neil, but this is just business.  I hope we remain friends.”  Mr Fleming then escorted him to the front door, shook his hand and said, “Goodbye.”
  1. [38]
    Later that day, after he left the business, Mr Bamford sent an email to Mr Fleming. The email reminded Mr Fleming that the Bamfords were required to carry out the tuition and assistance pursuant to Item U of the contract.[22]  Mr Bamford told Mr Fleming:

“Sande or I are available daily to assist you and give you tuition in relation to the conduct of the business, to introduce you to clients and referral sources, and use our best endeavours to retain for you the benefit of the goodwill of the business. Please confirm what hours you would like us to attend the business to provide this Tuition/Assistance.”

Further relevant evidence from Mr Bamford

  1. [39]
    When Mr Bamford left the business on 29 January 2009, all the files he was working on were up to date although they hadn’t all settled. Mr Bamford agreed under cross-examination, that when he left on 29 January 2009 he did so without a written service contract in place. Mr Bamford said he hadn’t signed a service contract because he was waiting for Mr Fleming to provide one to him after Mr Bamford had earlier emailed Mr Fleming the precedent ‘Mortgage choice contractor agreement’ on 27 November 2008.[23]
  1. [40]
    Mr Bamford maintained, under cross-examination, that he was happy to work at Mortgage Choice after settlement. Mr Bamford admitted he became concerned on 19 January 2009, when Mr Fleming told him at the staff meeting he was no longer to handle initial enquiries from prospective borrowers; however Mr Bamford was prepared to see how things progressed as a result of that discussion. After the meeting of 19 January 2008, Mr Bamford continued to write loans and maintain the loan applications that were already in progress. He continued to submit loans until 29 January 2009. Mr Bamford estimated he had settled approximately $1.3 million of loans in December 2008 and January 2009, and he had $14.6 million in loans approved and awaiting settlement.
  1. [41]
    Mr Bamford maintained, that consistent with industry practice, if he prepared a loan, and his identification number was listed on the loan application, he was entitled to be paid the agreed commission, even if the loan did not settle until after he left the business.[24] Mr Bamford followed this practice with Mr McMillan, who was employed as loan writer by the Bamfords at Mortgage Choice Robina, until he left their employment in October 2008. Mr McMillan wrote three loans which were approved in September/October, but did not settle until December 2008. Mr Bamford payed Mr McMillan commission on 19 December 2008, once the loans settled and Mortgage Choice Queensland had paid Mortgage Choice Robina commission.[25]
  1. [42]
    Mr Bamford explained that the $396 monthly payments on the telephone lease were offset by credits on the phone accounts, so the net effect was no extra cost to the business. Mr Bamford said he did not mention Quikfund in schedule B because the Quikfund document was part of the telephone package and contract Mr Bamford had with Queensland Communications, which was disclosed in Schedule B. Mr Bamford, under cross-examination, pointed out that Mr Fleming had never asked to see the telephone contract.[26] 
  1. [43]
    Mr Bamford denied he bought a new mobile phone prior to 29 January 2009. He bought a phone only after Mr Fleming had taken his office mobile phone from him on 29 January 2009 and told him to leave. Mr Bamford agreed he and Mr Fleming played golf in 2008 almost every week on Wednesday mornings. Mr Bamford agreed that he emailed Mr Fleming a pro-forma ‘Mortgage Choice contractor agreement’ in late 2008.[27]  Mr Bamford agreed that he and Mr Fleming may have had a conversation concerning attending to the service contract prior to Christmas however he could not specifically recall if this occurred.
  1. [44]
    Mr Bamford denied the suggestion that, from 19 January 2009, after Mr Fleming had returned from the Mortgage Choice Sydney conference, until 29 January 2009, Mr Fleming approached him to try to resolve the service agreement.

Mitigation of loss

  1. [45]
    The Second Amended Defence does not plead any defence of failure by the Bamfords to mitigate loss. Mr Fleming however briefly cross-examined Mr Bamford on this issue. Mr Bamford stated that, after he stopped working for the business, he was unable to work in physical labour intensive industries due to lack of training, and due to a number of injuries which precluded him undertaking physical labour. He couldn’t work as a mortgage broker because he had a restraint of trade for 100 kilometres from the marketing area for a period of three years. He tried to have his solicitor mediate with Mr Fleming in March 2009 however Mr Fleming refused to participate.

Victoria Marie Trebilco

  1. [46]
    Ms Trebilco was employed as the loan administrator for Mortgage Choice at Robina from February 2004 until 23 January 2009. As part of her role, Ms Trebilco gathered relevant supporting information for the loan applications, and submitted them to the lenders by way of fax. Ms Trebilco would often have contact with customers to request information or let them know the progress of each application.
  1. [47]
    Ms Trebilco saw Mr Fleming visit the Mortgage Choice Robina office on a few occasions in the month or two prior to settlement. After the date of settlement Mr Fleming advised Ms Trebilco that she would remain the loans administrator. Mr Fleming also told Ms Trebilco that Mr Bamford would be the loans consultant.
  1. [48]
    During December 2008 and while Mr Fleming was at the Mortgage Choice training course in Sydney in early January 2009, Mr Bamford and Ms Trebilco, on behalf of Mr Bamford, submitted a number of loan applications. Sometime in mid-December 2008, Ms Trebilco noticed in the Discovery program that the field of principal loan writer had been changed from Mr Bamford’s name to Mr Fleming’s name.
  1. [49]
    On the morning of 19 January 2009, following Mr Fleming’s return from the Mortgage Choice training course, Mr Fleming called Ms Trebilco and Mr Bamford into his office. He told them that all enquiries and new applications were to go through Mr Fleming, and Mr Bamford would only be continuing with any existing loans that he had on foot at the time. Any current customers who had enquiries were to be directed to Mr Fleming. When Ms Trebilco informed clients that Mr Fleming would be the person to speak to about a new loan instead of Mr Bamford, their reaction was uncertainty. Ms Trebilco went on sick leave from 23 January 2009 and never returned to work at Mortgage Choice at Robina.

Geoffrey Malcolm Clark

  1. [50]
    Mr Clark, a licensed real estate agent was employed by Robina Realty for 7 years. Mr Clark knew the Bamfords during the time they operated Mortgage Choice at Robina. When Mr Clark’s customers were looking for mortgage advice he would refer them to Mr Bamford and Mortgage Choice. Mr Clark liked the fact that Mortgage Choice operated by commission: He met with Mr Bamford and was impressed.
  1. [51]
    Mr Clark had known Mr Fleming for approximately 10 years. Mr Fleming would visit Mr Clark’s employer on occasion.
  1. [52]
    Mr Clark knew the Bamford’s were selling the business. He received a letter from Mr Fleming introducing himself as the new proprietor of Mortgage Choice Robina. The letter explained Mr Fleming’s work experience and stated, in effect, “don’t worry, Neil Bamford will be staying on in the business, you can deal with Neil, and Neil will be an asset”.[28] After receiving the letter, Mr Clark contacted Mr Bamford, who assured him that he was staying on at Mortgage Choice. A few months later Mr Clark rang Mortgage Choice on behalf of one of his customers and asked to speak to Mr Bamford. Mr Clark was advised that Mr Bamford no longer worked there. Mr Clark’s customers did not go ahead with the purchase. Mr Clark inferred that he stopped referring purchasers to Mortgages choice because he had contact with another Mortgage provider. He maintained he had nothing against anyone at Mortgage Choice Robina.

Kenneth John Graeme Tandy

  1. [53]
    Mr Tandy, a licenced real estate agent operated Tandy’s Somerset Realty at Mudgeeraba. Mr Tandy first met Mr Bamford when Mr Bamford was a real estate agent working at The Professionals Mudgeeraba. When Mr Bamford went into the finance field, Mr Tandy respected his integrity and recommended Mr Bamford to people if they needed finance.
  1. [54]
    Mr Tandy first met Mr Fleming when Mr Bamford introduced them at the Mortgage Choice Robina office. Mr Bamford told Mr Tandy, in Mr Fleming’s presence, that he was taking a step back, Mr Fleming would be taking over the administration side of the business and Mr Bamford would be writing loans.
  1. [55]
    Mr Tandy continued to refer business to Mortgage Choice Robina after Mr Bamford sold the business. Mr Tandy utilised Mortgage Choice Robina to obtain two loans. With respect to the second loan Mr Tandy took some documentation to Mr Fleming’s residence on two occasions. Nothing came of the meetings with Mr Fleming, so Mr Tandy contacted Challenger Finance directly. Challenger Finance knew nothing of Mr Tandy’s instructions to Mr Fleming. As a result Mr Tandy dealt with Challenger Finance directly. Following this experience and when Mr Tandy found Mr Bamford no longer worked for the business, he went elsewhere with finance enquiries.

Roy Hall

  1. [56]
    Mr Hall, the director of a company, Beachsea Pty Ltd, conducted property development activities around the Gold Coast and south east Queensland and sold properties. As a part of that business, Beachsea Pty Ltd sometimes referred potential purchasers to mortgage brokers. When Mr Hall first started the company in June 2007, he met Mr Bamford. Mr Hall was impressed with Mr Bamford and Mortgage Choice. Accordingly he dealt solely with Mr Bamford for 18 months.
  1. [57]
    Mr Hall became aware of the sale of Mortgage Choice at Robina after receiving a letter from Mr Fleming advising he had acquired the business. Mr Hall phoned Mr Fleming immediately because he had ongoing business with Mortgage Choice. During this conversation Mr Fleming assured Mr Hall that it would be business as usual. He gave Mr Hall an assurance that Mr Bamford would continue to be their loan writer and that nothing had changed. On a later date, Mr Fleming called to organise a meeting with Mr Hall. On 28 January 2009, Mr Fleming attended a meeting at Beachsea Pty Ltd’s office at Bundall with Mr Hall and his business partner. Mr Fleming notified Mr Hall that Mr Bamford was no longer working with him. Mr Fleming said that Mr Hall should not be concerned. Mr Fleming indicated that he would continue to be Mr Hall’s direct contact person within Mortgage Choice. Mr Hall recalled the date and time of the meeting because he recorded it in his diary as 28 January 2009 at 11am.[29]
  1. [58]
    Mr Hall continued to refer work to Mortgage Choice at Robina for a period, however during 2009 the service levels deteriorated and he wasn’t getting the results that he achieved with Mr Bamford. In about March 2009, Mr Hall had an opportunity to enter into a joint venture with a mortgage broking company, LJ Hooker Financial Services, and there was no need to be referring business to a mortgage broker. Mr Hall said that whether Mr Bamford had stayed on at Mortgage Choice or not, he would have taken the opportunity to invest in the mortgage company, and to cease his business relationship with Mortgage Choice.

Mr Fleming’s Evidence

  1. [59]
    Mr Fleming gave evidence that during mid 2008 he and Mr Bamford played golf every Wednesday morning. They started discussing the sale of Mr Bamford’s business. Over many weeks Mr Fleming asked Mr Bamford many questions concerning the franchise business because he was looking to buy the business and knew he would have to spend a lot of money to purchase it. He said, although he had been in the mortgage industry for the prior 25 years and had some idea of the business model, he needed to obtain further information.[30]  Mr Fleming spoke with Mr Bamford about the office staff and duties they performed.  He found it difficult to determine the market value of the business because it was, in his words, a “very niche industry”.[31]  After completing due diligence, he negotiated a purchase price with Mr Bamford of $750,000.  He said he and Mr Bamford did discuss Mr Bamford staying on as a loan writer within the business.  Mr Fleming said it was always his intention that, because Mr Bamford had run the business for 10 years, he would be an integral part of the changeover in business ownership because the business’s clients were currently Mr Bamfords. 
  1. [60]
    Mr Fleming gave evidence he and Mr Bamford did not agree on any formal employment or services contract, rather they just discussed different issues over a number of weeks. Mr Fleming said during these informal meetings they discussed the percentage of commission the previous loan writer was being paid.
  1. [61]
    On 11 December 2008, the date of settlement, Mr Bamford handed Mr Fleming a document headed ‘Quikfund’, to sign. He didn’t recognise the name of the company. Mr Fleming said he questioned Mr Bamford about the document which listed a payment figure of $360 per month plus GST ($396), which was open ended. He asked Mr Bamford what the document was for and Mr Bamford replied it was for the phone system; “it’s in the contract. Go on read the contract, it’s all in there.”[32]  Mr Fleming said when he read the contract he found no mention of Quikfund, or the payment of $396 a month for lease of the telephone.
  1. [62]
    Mr Fleming said the business closed over the Christmas period and he was due to fly to Sydney for two weeks training with Mortgage Choice at Head Office. During this period he carried out investigations into Quikfund, Queensland Communications, Clear Telecoms, and the value of the telephone systems.  During his research he ascertained that the three companies provided incentive to business owners who took up the telephone facilities by providing a catalogue of consumer goods so that they could redeem rewards, for example, television sets based on points they accumulated per month spent on the system.  Mr Fleming formed the view that this was why Mr Bamford had made no specific mention of Quikfund or the $396 per month in the business contract. 
  1. [63]
    When he returned from Sydney he confronted Mr Bamford to discuss the telephone system and to discuss Mr Bamford’s employment agreement.  Mr Fleming stated that Mr Bamford avoided discussing these issues on a daily basis.  Mr Fleming formed the view Mr Bamford had tried to “slip it under the radar just to get me to sign the telephone lease transfer document”.[33] 
  1. [64]
    Mr Fleming considered a service contract with Mr Bamford would of necessity include conditions addressing business targets, performance levels, leads and a business plan. Mortgage Choice required Mr Fleming to provide a three year business plan, cash flow figures and projections of how he was going to perform and make the business succeed. Mr Fleming said a service contract could not work unless there were conditions to ensure Mr Bamford would actively participate in the success of the business. This meant that it was inevitable they would have to negotiate Mr Bamford’s goals, targets, performance levels and clawback commission before entering into a service contract.

Events of 29 January 2009

  1. [65]
    On 29 January 2009, Mr Bamford said he was ready to talk about these issues. He told Mr Fleming “you’ve broken my trust, you’ve accused me of not being open and honest and not disclosing all of the details of the contract”.  Mr Fleming replied that Mr Bamford had not been up front about the telephone lease contract.  Mr Bamford then handed Mr Fleming his laptop, his phone and key, and said “I’m going”.[34]  Mr Bamford then walked out and left the office.  Mr Fleming had owned the business for less than two weeks and still had to learn about the software.  Even though he had come out of training in Sydney he was still left in a mess.  He received an email from Mr Bamford that evening seeking to satisfy the tuition clause in the contract which stated that the sellers were to provide tuition and training to the business for a period of 19 days.  Mr Bamford left a number of files in a mess. After 29 January 2009 Beachsea Pty Ltd stopped referring work to the business. These events caused the business to suffer financial loss which is the basis of Mr Fleming’s counterclaim.  Mr Fleming covered no other issues during evidence-in-chief. 

Cross-examination

  1. [66]
    When shown a copy of the franchise agreement between Mortgage Choice and Investment Solutions, Mr Fleming conceded he had signed the agreement and signed a statement of guarantor acknowledging that the attached franchise agreement had been explained to him by a solicitor on 9 December 2008.[35]  Mr Fleming denied reading the warning statement contained in annexure D of the franchise agreement which recommended he obtain legal advice in relation to the franchise agreement and the business, prior to completing an acknowledgments/representations certificate.[36] The questions on the certificate address whether any representations or promises had been made to Mr Fleming about the costs of operating the business, the time for the business to break even, customer numbers for the business or any other representations upon which he relied entering into the franchise agreement.  The boxes are ticked to indicate no such representations were made. Mr Fleming’s signature appears on the document. Mr Fleming could not recall ticking any of the boxes, or answering any of the questions on the certificate.
  1. [67]
    Mr Fleming agreed that he had sent a letter dated 16 September 2008 to Mr Taylor at the Commonwealth Bank of Australia and that its contents were true.  He accepted that the letter was a loan application for finance to purchase Mortgage Choice Robina. He agreed the letter stated that Mr Bamford was to stay on in the business as a loan writer for some two to three years.[37]
  1. [68]
    Mr Fleming could not explain why, at page 2 of the letter, he had written:[38]

“we have agreed that Neil will be paid up-front commission of 65 per cent plus super for all deals he writes, and I have factored into the cash flow the number of deals he writes slowly decreasing.” 

  1. [69]
    Mr Fleming could not remember when he had agreed that Mr Bamford would be paid up-front commission of 65 per cent plus superannuation because he and Mr Bamford had never entered into a services contract. When it was put to Mr Fleming that such an agreement must have occurred prior to 16 September 2008 (the date on the letter), Mr Fleming maintained, that even though he had made the statement in the letter to the bank, no such agreement between him and Mr Bamford ever occurred. Mr Fleming maintained that his intention was for Mr Bamford to stay on in the business, however they had never reached the point of agreeing on the finer details of an employment contract.[39]  Mr Fleming would not concede that, if there was no agreement, then he lied to the bank that such an agreement existed.  Mr Fleming became evasive during this area of cross-examination. He stated he could not remember why he had written this in the letter to the CBA.
  1. [70]
    Mr Fleming agreed that Mr Bamford gave him a form relating to Quikfund on 10 or 11 December 2008.[40] When he was handed the application form and saw that it was an open ended agreement for payment of $360 plus GST he contacted Quikfund.  Mr Fleming maintained he knew nothing of Quikfund before he was handed the Quikfund document on the day before settlement.[41] Mr Fleming conceded he sent an email on 10 December 2008[42] to Mr Bamford informing him he had contacted Telstra, Origin, Clear Telecoms, but when he contacted Quikfund to change the phone system rental, they refused to speak to him. Quikfund suggested Mr Fleming arrange for Mr Bamford to contact them in order to advise that he had sold the business and the new owner would like to take over the rental of the phone system.[43] When he asked Mr Bamford prior to settlement, about the equipment in the business, Mr Bamford claimed all equipment was unencumbered.  The suggestion was put to Mr Fleming that, as part of his due diligence, he could have queried schedule B of the business contract (Lease of Telephone Equipment). Mr Fleming replied he had no reason to make further enquiries because Mr Bamford had told him that all the business equipment was unencumbered. 
  1. [71]
    Mr Fleming had no idea why he would have told Mr Hall on 28 January 2009 that Mr Bamford was no longer working for the business, because it was not until 29 January 2009 that Mr Bamford walked out of the business. When it was suggested to Mr Fleming that the business had paid Mr Bamford 71% up-front commissions for transactions written in December (proof that, in December 2008 there was an agreement to pay Mr Bamford 71% commission), Mr Fleming became evasive and said he couldn’t remember because of the passage time.

Credibility and Reliability of the Evidence

  1. [72]
    It is necessary to state my conclusions as to the reliability of the respective witnesses’ evidence. Mr Fleming was not an impressive witness. On occasions his evidence was inconsistent with the documentary evidence. For example, the contents of the letter he wrote to Mr Taylor at the Commonwealth Bank and the deposit into Mr Bamford’s bank account for December commissions were inconsistent with his evidence that he and Mr Bamford had reached no agreement with respect to what commission Mr Bamford would be paid. His evidence was inconsistent with other documents, for example Schedule B attached to the business contract. He was evasive when it was clear that any direct answer to a question would damage his case. He said he could not recall material events such as when he determined how much commission to pay Mr Bamford. His evidence that he did not intend to terminate Mr Bamford’s services was inconsistent with Mr Hall’s evidence that Mr Fleming told him on 28 January 2008 that Mr Bamford was no longer with the business. Mr Fleming had no recollection of numerous conversations and events that in my view were quite significant.
  1. [73]
    On the other hand, I accept Mr Bamford’s evidence as reliable and credible. The documentary evidence supported his oral evidence. His evidence was largely unchallenged. His evidence was materially consistent with the other plaintiffs witness’ evidence. His evidence did not change under cross-examination. His version was logical and had the ring of truth. His actions over the relevant period were consistent with an intention to form an agreement with Mr Fleming to work for him for a period of at least 3 years, at an agreed rate of commission; for that agreement to have been reached at the same time the details of the business sale were discussed; to attempt to continue working in the business under Mr Fleming despite the problems that arose between them after the date of settlement.
  1. [74]
    Where Mr Bamford’s evidence is inconsistent with Mr Fleming’s evidence, I prefer Mr Bamford’s evidence. I also found the evidence of the plaintiff’s other witnesses to be credible and reliable. Where their evidence conflicted with Mr Fleming’s evidence, I prefer their evidence.

Consideration of Issues

Rent Adjustment

  1. [75]
    The plaintiffs plead that notice of requirement of payment of the sum of $1,883.00 as a rental adjustment was given to the defendants prior to the date of settlement, and that the plaintiffs paid the rent for the whole of December 2008.[44] The plaintiffs submit that, pursuant to Clause 29 of the business contract, the non-payment of the rental adjustment constitutes a failure to comply with the terms and conditions of the business contract, and permits the plaintiffs to affirm or terminate the contract, in addition to rights they have in law or equity. The plaintiffs submit that Clause 29.3 allows the plaintiffs to recover the rent adjustment as a debt due by the defendants to them.
  1. [76]
    The defendants plead the plaintiffs failed to give notice prior to the date of settlement, as required under clause 16.8 of the sale of business contract, therefore they are not entitled to an order for payment.[45] The defendants also plead the plaintiffs have not issued the defendants with a tax invoice.
  1. [77]
    The defendants did not address this issue in written submissions.

Consideration

  1. [78]
    I accept Mr Bamford’s evidence that the plaintiffs had paid rent for the period up to and including 31 December 2008. The sum of $1,883.00 was calculated by Mr Bamford as the amount from settlement date (11 December 2008) up to and including 31 December 2008.[46]
  1. [79]
    On 21 January 2009, Mr Bamford gave Mr Fleming a handwritten adjustment note.[47] The rent was the only adjustment on the sale of the business.[48] Mr Flemming did not dispute this evidence during the trial. He did not give evidence concerning the unpaid amount.
  1. [80]
    Relevantly, Clause 16 of the Business of Sale Contract headed ‘Debtors and Creditors’, provides as follows:

“16.1Subject to clause 16.9 the Seller agrees to pay, satisfy and discharge in the proper time all debts and liabilities of the Business incurred before Completion and agrees to indemnify, and keep indemnified, the Buyer with respect to all claims arising from those debts and liabilities.

16.2The Buyer is solely responsible to all creditors of the Business for debts and liabilities incurred by the Buyer on and from the date of Completion and agrees to indemnify, and to keep indemnified, the Seller against all claims in relation to those debts and liabilities.

16.8Where the Seller has on or before the date of Completion paid any amount of outgoings or expenses in connection with the Business which relates to a period after Completion and has given notice specifying those payments to the Buyer on or before the date of Completion, the Buyer agrees to pay to the Seller that amount at Completion to the extent that it relates to the period after Completion.”

  1. [81]
    According to clause 16.2, the first defendant as the buyer, was responsible for all debts incurred by the Bamford Family Trust after 11 December 2008, the date of completion, and agreed to indemnify the Bamford Family Trust.
  1. [82]
    Mr Bamford’s evidence was that he gave notice to Mr Fleming when he provided Mr Fleming with ‘the handwritten note’ on 21 January 2009 which listed a figure of “$1,883 rent” which was the rent adjustment figure for month of December 2008. Mr Fleming did not challenge Mr Bamford’s evidence on this issue.
  1. [83]
    Clause 29.3 of the sale of business contract provides:

“If the Seller affirms this Contract under clause 29.1, the seller may:

  1. a)
    sue the buyer for either:
  1. i.
    Damages or breach; or
  1. ii.
    Specific performance and damages in addition to or instead of specific performance;
  1. b)
    Recover any unpaid part of the Deposit received.”
  1. [84]
    Mr Fleming is therefore liable as guarantor pursuant to Clause 35 of the business contract to pay the debt of $1,883.00 and interest from 11 December 2008 of $1,043.27.

Telephone Lease

  1. [85]
    The telephone lease arrangement is described in the contract as “Telephone lease with Queensland Communications Company Pty Ltd”. The telephone agreement that Mr Bamford signed was a complex contractual arrangement. Pam Carey from Queensland Communications described the contractual arrangement between Queensland Communications, Quikfund, AXIS Communications and Clear Telecoms as:[49]

“1.Qld communication are the seller/supplier and maintainer.

  1. 2.
    Clear Telecoms bought out Axis Telecoms (all stayed the same) your call provider.
  1. 3.
    Quikfund was the External Finance Company who financed the deal.”
  1. [86]
    The unchallenged evidence is that Queensland Communication Company Pty Ltd provided the telephone equipment to the Bamford Family Trust for use in Mortgage Choice Robina. This telephone equipment is described in the Quikfund transfer document (that Mr Bamford gave Mr Fleming) as:[50]
  • “Panasonic TDA30 Main equipment
  • Panasonic display handsets
  • Panasonic voicemail system
  • Nokia N73 Mobile Phone”
  1. [87]
    The arrangement appears to be that the Bamford Family Trust would pay for the acquisition of the equipment through lease finance. The lease finance was provided by Quikfund Pty Ltd, by some arrangement between the companies.
  1. [88]
    Clause 15 of the Standard Conditions of Sale concerns contracts and hire agreements. It relevantly states:

“15.1With the consent of the owner or service provider, as the case may be (but not otherwise), the Seller assigns to the Buyer and the Buyer accepts as at the date of Completion the benefit and burden of:

  1. (a)
    The agreements set out in Items N(b) and N(c);
  2. (b)
    Any other agreement connected with the supply of services in respect of the conduct of the Business by the Seller at the date of this Contract.

The agreements in this clause 15 shall be known as the “Service Agreements”.

15.2Where Clause 15.1 does not apply:

  1. (a)
    With the consent of the owner or service provider the Seller may terminate any or all of the Service Agreements and in that event on notification in writing to the Buyer, the Buyer may enter into agreements with the owner or service provider in substitution for the Service Agreements;
  2. (b)
    And where clause 15.2(a) applies, the seller agrees to surrender to deliver to the owner or service provider (or as it or they may direct) any goods to which the service agreement relates.

15.3If any Service Agreement is not terminated by the date of completion and if clause 15.1 does not apply then:

  1. (a)
    The Buyer agrees to perform the Service Agreement on behalf of the Seller; and
  2. (b)
    The buyer must indemnify the Seller against all liability arising from any such Service Agreement in respect of any act, matter or thing which occurs on or after the date of completion.

15.6The Seller and the Buyer must execute all transfers or other instruments and do all other acts necessary to give effect to clause 15. The indemnities contained in this clause 15 survive Completion.

15.7All monies paid or payable in respect of the Service Agreements by the Seller for any period after the date of Completion shall be adjusted at the date of Completion.”

  1. [89]
    The telephone lease is first referred to in the contract of sale under item N “Plant & Equipment”. It states “Leased – refer to Schedule “B”.” Schedule B then refers to the lease arrangements. Schedule B states:

“Lease arrangements

Telephone lease with Queensland Communications Company Pty Ltd

Lease commenced on 8 February 2008. Expires 8 February 2013.

Phone lines are:

07 55620748

07 5562 0827

07 55620725

07 55621451 (fax)

Mobile Phones

0412 116 100

0402 802 676

0402 804 239

0409 272 477

0434 690 610

The lease covers Panasonic system KX-T7630

Telstra

Big Pond Internet Broadband ADSL 2”

  1. [90]
    There are some hand written notes on the schedule. There was no evidence of when the notes were written, but I note a handwritten date of 28/1/09, which is the day before Mr Bamford left the business, which suggests the notes were written on or after that date. Mr Bamford did not suggest in his evidence that the notes were written prior to the contract settling.
  1. [91]
    The defendants plead that the first defendant is not in breach of clause 15.6 of the business contract because:[51]
  • Schedule B does not refer to an agreement with Quikfund;
  • The plaintiffs failed to disclose to the defendants, prior to completion, any tax invoice or rental schedules for debits of $396 per month with Quikfund;
  • They returned the phone system by post to Clear Telecom in the first week of February 2009, so never received any benefit of the system.
  1. [92]
    Mr Fleming now submits, on behalf of the defendants, I should accept his evidence that, at no time prior to 10 December 2008, did Mr Bamford disclose any encumbrances over the business equipment. He submits his evidence is supported by the absence of any reference, in the business contract, to monthly payments of $360 plus GST to Quikfund as part of the liability under the telephone lease. Mr Fleming submits that I should accept his evidence that, on the day prior to settlement, on 10 December 2009, Mr Bamford first showed him a loan application to Quikfund which required payments of $396 per month for an indefinite period, and which Mr Bamford asked him to sign in order to take over the telephone lease payments. Mr Fleming, in effect submits that the plaintiffs intentionally failed to disclose this “liability” to him in the business contract.[52]

Consideration

  1. [93]
    I accept Mr Bamford’s evidence that, after he commenced negotiating the sale of the business with Mr Fleming, he advised him of the existence of the telephone communications lease.  Even absent this evidence, Schedule B of the business contract on its face refers to the existence of the telephone lease, even though it does not specifically refer to Quikfund.
  1. [94]
    The business contract containing Schedule B was executed by the parties on 14 August 2008, therefore Mr Fleming had almost 4 months prior to settlement on 11 December 2008 to make enquiries concerning the conditions of the telephone lease.
  1. [95]
    I find, on the evidence,[53] Mr Fleming was a business man of many years, with experience in dealing with financing and leasing. The onus was on him to investigate the actual terms of the telephone lease, which was disclosed in Schedule B.
  1. [96]
    It is clear on the evidence that the “Seller”, the Bamfords, assigned the “Buyer”, Investment Solutions, the benefit and burden of the telephone lease which was disclosed in schedule B. In the context of this agreement, as a matter of construction, this involved an assignment of the arrangements in place in respect of the telephone system. The fact that Quikfund was not mentioned expressly in Schedule B is therefore irrelevant.
  1. [97]
    On the undisputed evidence, Mr Fleming refused to fill out any agreement to transfer the telephone lease to Investment Solutions. In those circumstances, the service provider did not provide consent to assign the telephone lease to Mr Fleming. Therefore, clause 15.3 of the business contract applies.
  1. [98]
    Clause 15.3 states that:

“(a)The Buyer agrees to perform the Service Agreement on behalf of the Seller; and

  1. (b)
    The buyer must indemnify the Seller against all liability arising from any such Service Agreement in respect of any act, matter or thing which occurs on or after the date of completion.”
  1. [99]
    The plaintiffs have proved to the requisite standard, Mr Fleming failed to execute the transfer of the telephone lease into the defendants’ names, in breach of Clause 15.6 of the business contract. The plaintiffs are therefore entitled to damages for breach of contract in respect of this failure.
  1. [100]
    Under the terms of the business contract, Mr Fleming, as guarantor,[54] is required to indemnify the plaintiffs against all liability arising out of the Service Agreement, being the telephone lease with Queensland Communications.
  1. [101]
    The plaintiffs submit that the defendant should pay the sum of $20,196 to the plaintiffs who have paid out the telephone lease; ($1,188.00 for December 2008, January 2009 and February 2009, plus the balance of 48 months @ $396 per month, paid by the plaintiffs of $19,008) together with interest of $11,107.80 as pleaded.
  1. [102]
    The plaintiffs in fact paid out the lease, and its damages are therefore the contract amount paid out in respect of the period after the date of settlement. At $396 per month, this amounts to $20,196.00 less $38.30 for the period 8 December 2008[55] until the date of settlement (11 December 2009) being $20,157.70. The plaintiffs are also entitled to interest on this sum, which for convenience should be allowed from the midpoint of the period over which the total amount accrued to the date of judgment, being $6,971.53.[56]

Oral Services Contract

  1. [103]
    The plaintiffs submit that, on or about 30 July or 6 August 2008, Mr Bamford and Mr Fleming entered into a contract on The Glades Golf Course, whereby the parties agreed:
  • Mr Fleming would employ Mr Bamford to provide services as a loan writer, which would commence from the date of settlement of the business contract and would continue for a period of 3-5 years;
  • The Bamford Family Trust would be paid 71% plus GST of all monies received by Mortgage Choice Robina as commissions on loans written by Mr Bamford.
  1. [104]
    The plaintiffs plead the contract amounted to a concluded oral contract, separate and distinct from the business contract, therefore the terms of item U and Schedule D of the business contract have no relevance to the oral contract of employment. For the same reason, the other terms and conditions of the business contract did not apply to the oral services contract.
  1. [105]
    The defendants plead,[57] that no such agreement was entered into on the above dates and in any event there was no services contract created which was collateral to the sale of business contract for the following reasons:
  • By clause 39.1 of the Standard conditions of sale, the plaintiffs and the defendants expressly agreed that oral pre-contractual statements were non-binding, and that the sale of business contract executed on 14 August 2008 was the entire contract;
  • By clause 39.1 the plaintiffs are estopped from proving the existence of the alleged oral terms;
  • Alternatively, even if the oral terms were agreed, they are unenforceable because they are inconsistent with the terms of the business contract;
  • The plaintiff’s dealings with the defendants business after the date of settlement did not include employment, rather only extended to the plaintiffs providing training and assistance to the defendants for a period of 90 days after settlement as specified in Item U of the sale of business contract.
  1. [106]
    The defendants also plead that the plaintiffs breached clause 20.1 and Item U of the sale of business contract because they failed to provided training and assistance after 29 January 2009 (less than the 90 day period referred to in Item U)
  1. [107]
    Mr Fleming, on behalf of the defendants, has provided no written submissions concerning this issue apart from the assertion that the parties did not enter into any contract of employment. His evidence was to the effect that there had been only generally discussions about Mr Bamford staying on as loan writer.

Conclusion regarding the existence of oral services contract

  1. [108]
    Having accepted Mr Bamford’s evidence I am satisfied, to the requisite standard, that Mr Bamford and Mr Fleming entered into an oral contract, during their meeting at the Glades Gold Club on or about 30 July 2008. The contract was for Mr Bamford to provide services as a loan writer to the Mortgage Choice Robina business after the defendants purchased the business.
  1. [109]
    The terms of the contract agreed to were those discussed at the Gold Club which included:
  • Mr Bamford would provide services as a loan writer for the defendants’ business;
  • Mr Bamford, on behalf of Bamford Family Trust, would provide the services as a contractor;
  • The remuneration would be 71% plus GST of all upfront commissions received by the business from Mortgage Choice on loans written by Mr Bamford;
  • The contract would continue for a term of at least 3 years.
  1. [110]
    Mr Bamford and Mr Fleming both intended that the contract was to be formalised by way of a written contract at some point in the future.
  1. [111]
    The scope of the oral agreement was limited to the matters discussed on the golf course. Mr Fleming submits there was no contract because it did not include other conditions usually contained in an employment agreement. No other conditions are necessary in order for the contract to be complete. The agreement can function as is, although it would be expected that a formal written contract would contain additional terms including such matters[58]. A written contract was not entered into, therefore any particular terms proposed by Mr Fleming are irrelevant because the written contract was never entered into by the parties.
  1. [112]
    I am not persuaded on the evidence that there was any agreement between the parties that Mr Bamford would work for Mr Fleming longer than the 3 years. In fact Mr Bamford’s evidence was to the effect that Mr Fleming said he would like Mr Bamford to stay on for three years, but if all went well, five to 10 years and Mr Bamford agreed to this.[59]

How did the Contract come to an end: Breach of Contract?

  1. [113]
    The plaintiffs submit that on 29 January 2009, Mr Fleming varied Mr Bamford’s services contract by reducing the percentage of commission Mr Bamford would receive. When Mr Bamford refused to accept Mr Fleming’s variation, Mr Fleming dismissed him. Therefore the plaintiffs suffered loss or damage.
  1. [114]
    The plaintiffs submit there was no breach of Item U and clause 20.1 because the plaintiffs offered to provide tuition and assistance the defendants on 27 and 29 January 2009,[60] but Mr Fleming did not require their assistance. The plaintiffs submit the plaintiffs were thereby discharged from their obligations under item U and clause 20 of the sale of business contract.
  1. [115]
    The defendant pleads that Mr Bamford unilaterally decided to leave the business on 29 January 2009, not to return, therefore Mr Bamford no longer intended the plaintiffs would be bound by item U and clause 20.1 of the business contract to provide 90 days tuition and assistance to the defendants, therefore the defendants are not indebted to the plaintiffs.
  1. [116]
    The defendant further pleads, in the alternative, any contract of employment entered into would have been between Mr Bamford in his own right and Mr Fleming, therefore any loss suffered would have been in his own right, and the plaintiff, being Bamford Family Trust, suffered no loss. However, I accept Mr Bamford’s evidence that the oral agreement was to the effect that Mr Bamford’s services would be provided as a contractor on behalf of Bamford Family Trust.
  1. [117]
    Mr Fleming, on behalf of the defendants, submits I should accept his evidence that on 29 January 2009 Mr Bamford said he could no longer work for Mr Fleming, because Mr Fleming had questioned his integrity; Mr Bamford handed over his phone laptop and office keys , and left. Therefore the plaintiffs breached clause 20 and Item U of the sale of business contract.
  1. [118]
    Mr Fleming submits I should accept his evidence that Mr Bamford continually refused to discuss an employment agreement from the time Mr Fleming returned from training on 19 January 2009 until Mr Bamford’s departure on 29 January 2009. Mr Fleming submits it is clear on the evidence Mr Bamford:
  • Did not enjoy the transition from owner of the business to an “employee”[61] and took offence to any changes the new owner made;
  • Decided he did not want to remain in the business and planned his departure sometime during the Christmas period when the office was closed for business, and before Mr Fleming returned from Mortgage Choice training in Sydney on 19 January 2009.
  1. [119]
    Mr Fleming submits it makes no sense that a person in Mr Bamford’s position, with Mr Bamford’s business experience, would continue in the business without any formal contract of employment, and without any further rules, guidelines, sales targets, hours of work and remuneration agreed to.
  1. [120]
    Mr Fleming submits that before an employment contract could be executed, the parties would necessarily have to address a myriad of issues which Mr Fleming outlines in his written submissions[62] but did not address in his evidence.

Consideration

  1. [121]
    I am satisfied on the evidence that the relationship between Mr Fleming and Mr Bamford started to deteriorate before 29 January 2009, particularly after Mr Fleming returned from Sydney. I infer this from the evidence of:
  • Discussions at the meeting on 21 January 2009, when Mr Fleming told staff all enquiries were to be referred to him and not to Mr Bamford;
  • The disagreement between Mr Bamford and Mr Fleming concerning the transfer of the telephone lease, which commenced on approximately 15 December 2008;
  • Mr Bamford’s evidence that he contacted his solicitors prior to 29 January 2009, and then sent an email to Mr Fleming on 27 January 2009 reminding him of the Bamfords’ obligations and willingness to provide tuition and assistance. This evidence is indicative of his concern about his relationship with Mr Fleming and future position in the business.
  1. [122]
    The evidence also suggests that Mr Fleming was having second thoughts about Mr Bamford’s role in the business as loan writer. It appears on the evidence that Mr Fleming came back from Mortgage Choice training in Sydney with the intention he would handle all loan enquiries, reduce Mr Bamford’s role as loan writer, reduce Mr Bamford’s commission, thereby enabling the business to make more money, and correspondingly, Mr Bamford to make less.
  1. [123]
    I accept Mr Bamford’s evidence that, on 29 January 2009 Mr Fleming advised Mr Bamford that he was going to reduce Mr Bamford’s commission from the previously agreed 71% plus GST to 65% plus GST, and, within 12 months, further reduce his commission to 50% plus GST. I note that Mr Fleming did not dispute that this part of the conversation occurred. I also accept Mr Bamford’s evidence that, when he refused to agree to a reduced commission, Mr Fleming told Mr Bamford that, if he didn’t intend to write loans at the reduced rate of commission, there was no need for Mr Bamford to remain in the office.[63]
  1. [124]
    I consider this course of conduct was fundamentally inconsistent with the performance of the oral service agreement according to its terms, and amounted to repudiation of the service contract by Mr Fleming, which was accepted.
  1. [125]
    I accept Mr Bamford’s evidence that he reminded Mr Fleming that Mr Bamford had to remain in the office because the contract provided he had to provide training and assistance for 90 days after settlement, Mr Fleming replied it didn’t matter, and there was no need for him to remain in the office, then stood aside to allow Mr Bamford to leave.[64] In these circumstances, the first defendant cannot complain of any breach of the plaintiffs’ obligation to provide tuition.

Damages for breach of contract

Damages for loans written prior to 29 January 2009

  1. [126]
    The plaintiffs submit they are entitled to damages for unpaid commission on loans Mr Bamford wrote before he left the business. Mr Bamford gave evidence he wrote a number of loans prior to leaving on 29 January 2009, for which he had not received the agreed commission.[65] He sent a tax invoice to Investment Solutions on 15 October 2010 for unpaid commission totalling $24,270.97. The plaintiffs submit the date of 15 October 2010 goes to timing of the demand.
  1. [127]
    Mr Bamford compiled a list of loans written by Mr Bamford and settled after 1 January 2009 from memory and reference to disclosed financial documents.[66] The table lists the relevant details, including name of borrower, amount borrowed, date the loan was approved, date the loan settled, commission received by Mortgage Choice Robina, and commission the Bamfords claim they are entitled to.[67]
  1. [128]
    All of the loans were ‘written’ by Mr Bamford prior to 29 January 2009. All the loans, except two, were not approved or settled until after Mr Bamford ceased work on 29 January 2009. The plaintiffs submit that the Bamford Family Trust is entitled to receive the commissions of 71% plus GST on the loan contracts written by Mr Bamford which did not settle until after his departure. The plaintiffs submit that commission should be paid to a loan writer based on loans written, even if the loans settled after the date the loan writer no longer works for the business. The plaintiffs rely on Mr Bamford’s evidence that he paid his former loan writer, Mr McMillan, for loans Mr McMillan wrote for Mortgage Choice Robina, but which did not settle until after Mr McMillan left the business in October 2008. The plaintiffs tendered a tax invoice sent to Mr McMillan which listed three loans written by Mr McMillan, which did not settle until after Mr McMillan left the business, for which he was paid $2,200 commission on 19 December 2008.
  1. [129]
    Mr Fleming did not challenge Mr Bamford’s evidence that he wrote the loans set out in Exhibit 13. He did not dispute that the amounts of commission listed in Exhibit 13 were accurate. Rather, he submitted that Mr Bamford was not entitled to be paid commission for loans he wrote, but which had not settled prior to him leaving the business on 29 January 2009. He said Mr Bamford left a lot of the loans in a mess. He submitted the Bamfords should only be entitled to commission for loans which settled prior to 29 January 2009.

Conclusion

  1. [130]
    I am satisfied to the requisite standard, Mr Bamford wrote the loans listed in the table, and did everything required of him as loan writer to earn the commission. Once Mr Bamford had done everything required to write the loans, the fact that the commission does not become payable until a later date, even where it is contingent upon other parties doing something such as settling the contract, does not matter. Mr Bamford is entitled to commission. The right to the commission survives termination of the service contract in the absence of an agreement to the contrary.[68] Commission should be paid to Mr Bamford on the loans that he processed and were ultimately ‘settled’, that amount being $24,270.97 plus interest of $8,972.60.[69]

Damages for loss of commission for three to five years after settlement

  1. [131]
    The plaintiffs claim, as a result of the defendants’ breach of the service contract, Mr Bamford has suffered loss of $5,322 commission per month for a period of 60 months. The plaintiffs submit the calculation is on the basis of “the average monthly inclusive of GST remuneration paid by the business over the financial year ending June 2008 to Mr McMillan of $5,322”.[70]
  1. [132]
    The plaintiffs submit evidence of Mr McMillan’s tax return for 2008 provides a reasonable and proven basis for the assessment of the damages which flow from the defendants’ breach of contract. In addition, the plaintiffs submit the evidence of Messrs Clark, Tandy and Hall supports a finding that, had Mr Bamford’s services been retained, it is probable he would have written a significant number of loans.
  1. [133]
    The plaintiffs submit, having regard to the above factors, the court should assess additional damage to the plaintiffs at a sum equivalent to at least three years’ loss, or up to five years loss at $5,322 per month.
  1. [134]
    Mr Fleming cross-examined Mr Bamford about why he had not obtained alternative employment.[71] The plaintiffs correctly submit, the Second Further Amended Defence does not plead failure to mitigate loss.

Consideration

  1. [135]
    In principle, the plaintiffs are entitled to damages for loss of the benefit of the contract, although assessed on the basis that it operated for the minimum term, i.e. three years from the date of settlement. The question is, what income would the plaintiffs have received if Mr Bamford had stayed working in the business for that time. I must take into account what actually happened to the business over the three year period. This is difficult to assess because the defendants did not provide evidence of how the business has fared, except that the defendant lost business from Messrs Hall, Tandy and Clark. It is probable that the business would have continued to succeed on some level if Mr Bamford had remained.
  1. [136]
    It is also relevant to have regard to the rate of earnings Mr Bamford achieved as a loan writer prior to leaving the business, and the rate at which Mr McMillan wrote loans, less a discount for the possibility of business reducing or failing.
  1. [137]
    Mr Bamford estimated that Mr Clark from Robina Realty referred him approximately half a million dollars’ worth of business in the 12 months prior to settlement. I infer from Mr Clark’s evidence that one of the reasons he ceased referring work to Mortgage Choice was because he commenced a business relationship with another mortgage broker, and that he had nothing against Mortgage Choice Robina after Mr Bamford ceased working there.
  1. [138]
    Mr Hall from Beach Sea Pty Ltd referred approximately seven million dollars’ worth of business in the twelve months prior to settlement. However, Mr Hall gave evidence he would have ceased referring business to Mortgage Choice Robina, even if Mr Bamford remained working there after settlement, because of his new broker arrangement with LJ Hooker which commenced in March 2009.
  1. [139]
    The loss of Mr Hall’s referrals would have significantly reduced the amount of loans Mr Bamford would have written if he remained with the business, and would have significantly reduced the amount of commission Mr Bamford earned.
  1. [140]
    On the other hand, Mr Tandy ceased referring work to Mortgage Choice Robina because he was unhappy with the service Mr Fleming provided.
  1. [141]
    I have calculated that Mr McMillan earned an average of $3,225.00 per month commission inclusive of GST, over the financial year ending 30 June 2006, and $3,626.00 per month commission inclusive of GST, over the financial year ending 30 June 2007, and over the financial year ending 30 June 2008, Mr McMillan earned an average of $5,322.00 per month commission inclusive of GST.[72] It is necessary to look at the previous three years of Mr McMillan’s earnings, not just 2008, in order to ascertain Mr Bamford’s likely earnings if he was to have retained his employment as loan writer for Mr Fleming.
  1. [142]
    While working as loan writer with Mortgage Choice Robina, Mr Bamford was paid $3,285.14 in commission for the loans settled in December 2008, on 22 January 2009[73]. With respect to the loans written by Mr Bamford and settled after 1 January 2009,[74] I have calculated that he earned $3,870.09 in commission for six loans that settled in January 2009, $3,826.65 in commission for seven loans that settled in February 2009, $12,840.35 in commission for one loan that settled in March 2009 and $1,527.43 in commission for two loans that settled in April 2009.
  1. [143]
    Having regard to the commission earned by Mr McMillan in the three years prior and the commission earned by Mr Bamford from December through to April, the plaintiff’s claim of $5,322.00 per month commission inclusive of GST is at the top of the range of Mr Bamford’s potential income into the future.
  1. [144]
    If the business had continued with Mr Bamford working as a loan writer, these figures are of some assistance in determing the appropriate level of damages. However, there is also a possibility that the business under Mr Fleming’s management may have not fared so well.
  1. [145]
    Having regard to all these contingencies, although evidence of Mr McMillan’s earnings provides some guidance, the plaintiff’s submissions as to quantum are based on the assumption the business would have continued as it was under the management of Mr Bamford. Business had in fact dropped off. There is no evidence as to what extent, because the defendants have failed to provide any evidence of how the business fared. In light of Mr Hall’s evidence, one of the principle sources of work ceased in any event. To assume the level of business would have remained the same, if Mr Bamford stayed on as a loan writer, is optimistic.
  1. [146]
    If the amount claimed were discounted by 50%, this would produce an award of $2,661 per month for 36 months,[75] totalling $95,796. Even this may overstate the damages. In the absence of evidence as to what actually happened, it is appropriate to make a global award. In view of Mr Hall’s evidence, at best the business and hence Mr Bamford, would have faced a drop in earnings. The position could well have been much worse than this, particularly if there were continuing ill feelings between the parties, as was likely anyway. Doing the best I can to allow for the uncertainties and contingencies, I assess damages at a global sum of $60,000. That is about one third of the plaintiff’s claim. I allow interest on that sum from 1 July 2010 which, from the calculator, comes to $23,923.56.[76]
  1. [147]
    The service contract was independent of the contract of sale, and it was not a condition of the service contract that Mr Fleming would guarantee the first defendants’ liability for damages for breaching it. Therefore only the first defendant, Investment Solutions is liable for damages for breach of the service contract.

Trade Practices Act

  1. [148]
    The plaintiffs plead an alternative cause of action for damages for misleading and deceptive representations, as to future matters[77], made in contravention of section 52 of the Trade Practices Act 1974 (Cth) (“TPA”). Although the TPA ceased to have effect from 31 December 2010, contraventions alleged to have occurred prior to that date are still covered by section 52.[78]
  1. [149]
    Sections 51A and 52 of the TPA provide:

“51AInterpretation

  1. (1)
    For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.
  1. (2)
    For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.
  1. (3)
    Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.

52Misleading or deceptive conduct

  1. (1)
    A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
  1. (2)
    Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1).”
  1. [150]
    The plaintiffs submit Mr Fleming’s statements on the golf course on 30 July 2008 were representations in trade or commerce because they related to negotiation by the first defendant of its existing mortgage broking business (conduct in trade or commerce), and were representations in relation to the intended retention of Mr Bamford’s services in the future (representations as to future matters).
  1. [151]
    The plaintiffs submit the first defendant has failed to discharge its onus to establish it had reasonable grounds for making representations as to the engagement of Mr Bamford’s services after settlement of the business contract. The plaintiffs submit I should infer from certain evidence that it was never Mr Fleming’s intention to retain Mr Bamford as loan writer on the terms discussed. I will address the circumstances upon which the plaintiffs suggest the representations were misleading.
  1. [152]
    Mr Fleming’s evidence that he wished to expand his mortgage business is equally consistent with his intention as at the date of the agreement on the Glades Golf Course, that Mr Bamford, with his contacts and experience would remain with the business. Mr Fleming and Mr Bamford were both remiss in failing to execute a written service contract, which ideally should have occurred before the business contract was executed. Their failure to do so is consistent with poor business practice, as opposed to any intention on Mr Fleming’s part to intentionally refrain from doing so. I consider that by the time of the staff meeting on 19 January 2009, Mr Fleming had decided, or was considering, Mr Bamford’s role with the business should change or cease; however, there is no evidence to suggest Mr Fleming had formed this view prior to the disagreement about the phone system, or prior to training in Sydney. Equally, Mr Fleming’s meeting with Mr Hall on 28 January 2009 is consistent with Mr Fleming having a change of heart in late December or January about Mr Bamford’s role in the business.
  1. [153]
    I consider Mr Fleming’s evidence clearly establishes that, when he spoke to Mr Bamford on the golf course on 30 July 2008, it was his intention that Mr Bamford would provide services as a loan writer after the business contract settled, and it was not until his relationship with Mr Bamford started to deteriorate after settlement, and until after Mr Fleming had attended the training course in Sydney in January 2009, that he had a change of heart with respect to Mr Bamford’s position within the business.
  1. [154]
    I therefore consider that at the time the service contract was entered into by the parties, Mr Fleming had reasonable grounds for making the representations, and they were not misleading or deceptive. This part of the case is not made out.

Counterclaim

  1. [155]
    The defendants plead the plaintiffs breached Clause 20.1 and Item U of the business contract because they failed to introduce Beachsea Pty Ltd’s business to Investment Solutions, failed to provide tuition and training, and failing to give information to the defendants necessary to maintain the good will of the business.
  1. [156]
    Clause 20.1 of the business contract provides:

The Seller or a nominee of the Seller familiar with the Business must attend at the Business on and from the date of Completion for the number of Business Days set out in Item U(b) during normal business hours or such other hours as may be agreed at no cost to the Buyer to give tuition to the Buyer in relation to the conduct of the Business and to introduce to the Buyer the customers and clients of the Business and suppliers of goods, services and stock-in-trade used in the Business and generally to use his, her or its best endeavours to retain for the Buyer the benefit of the goodwill of the Business.

Failure to introduce customers and clients to Investment Solutions and failure to provide tuition and assistance

  1. [157]
    Mr Bamford complied with Clause 20 of the business contract by introducing Mr Fleming to Messrs Hall, Tandy and Clark prior to Mr Fleming repudiating the service contract. Mr Bamford also reminded Mr Fleming in two emails that he and Mrs Bamford remained available to provide tuition and training in the business, even after Mr Fleming told Mr Bamford on 29 January 2009 his services under Clause 20 were no longer required.
  1. [158]
    Mr Fleming, having told Mr Bamford to leave the business, and having failed to respond to Mr Bamford’s offer to provide tuition and assistance, in effect prevented the Bamfords from performing the conditions of Clause 20 of the business contract, although the Bamford’s were willing and able to comply with their obligations. The counterclaim fails on this issue.

Loss of Beachsea Pty Ltd’s Business

  1. [159]
    Mr Fleming submits that during the trial Mr Roy Hall admitted, “had the plaintiff remained involved with Mortgage Choice @ Robina, the relationship could have continued”[79]. Mr Fleming’s interpretation of the Mr Hall’s evidence is incorrect. Mr Hall gave evidence, that in about March 2009, he had an opportunity to enter into a joint venture with a mortgage broking company, LJ Hooker Financial Services, and there was no need to refer business to Mortgage Choice Robina. Mr Hall said that, whether Mr Bamford had stayed on at Mortgage Choice or not, he would have taken the opportunity to invest in the mortgage company, and to cease his business relationship with Mortgage Choice. I accept Mr Hall’s evidence.
  1. [160]
    The first defendant has failed to prove that it is more probable than not that the reason Mr Hall ceased business with Mortgage Choice Robina was because of any act or omission by the Bamfords. Mr Hall was entitled to take his business elsewhere at any time.
  1. [161]
    Mr Clark took his business elsewhere because he commenced contact with another mortgage provider. Mr Tandy took his business elsewhere because he was unhappy with the service Mr Fleming provided on a number of loan applications.
  1. [162]
    The first defendant has failed to prove the Bamford’s breached the terms of Clause 20 of the business contract. In any event, the first defendant provided no evidence of any loss suffered by the first defendant. The counterclaim fails, and is dismissed.

Order

  1. [163]
    I give judgment for the plaintiffs against the first defendant for the following matters:
  1. Rental adjustment: $2,926.27 (inclusive of interest);
  2. Telephone lease: $27,129.23 (inclusive of interest);
  3. Commission on loans written prior to 29 January 2009: $33,243.57 (inclusive of interest);
  4. Damages for breach of the oral employment contract: $83,923.56 (inclusive of interest).
  1. [164]
    I give judgment for the plaintiffs against the second defendant, only for damages relating to the rent adjustment and for damages relating to the telephone lease, in the sum of $30,055.50 (inclusive of interest).
  1. [165]
    I will hear submissions about costs.

Footnotes

[1]  Transcript 1-25 lines 1-10.

[2]  Transcript 1-31 lines 22-25.

[3]  Transcript 1-31 lines 20-45.

[4]  Transcript 1-31 lines 8-10.

[5]  Exhibit 5.

[6]  Transcript 1-33 lines 40-43.

[7]  Exhibit 3; Item U business contract.

[8]  Transcript 1-38 at 10-20; Exhibit 7.

[9]  Exhibit 7.

[10]  Exhibit 8. 

[11]  Transcript 1-41 lines 40-50.

[12]  Exhibit 9.

[13]  Transcript 1-43 lines 30-40.

[14]  Exhibit 10.

[15]  Exhibit 16 shows Westpac bank statement with deposit.

[16]  Attachment of Business Contract Exhibit 3.

[17]  Transcript 1-44 lines 30-40.

[18]  Transcipt 1-69 lines 40-50.

[19]  Exhibit 15.

[20]  Transcript 1-70 lines 22-30.

[21]  Transcript 1-70 line 40 - Transcript 1-71 line 5.

[22]  Exhibit 18.

[23]  Exhibit 7.

[24]  Loan contracts written by Mr Bamford in this period, but not settled before 29 January  were tendered and marked Exhibit 12.

[25]  Exhibits 17.

[26]  Transcript 2-3 line 30-Transcript 2-4 line 30.

[27]  Exhibit 7.

[28]  Transcript 2-32 lines 10-20.

[29]  Transcript 2-57 lines 5-10; Transcript 2-59 lines 15-25.

[30]  Transcript 2-63.

[31]  Transcript 2-63 line 27.

[32]  Transcript 2-64 line 25.

[33]  Transcript 2-66 lines 25-30.

[34]  Transcript 2-67 lines 10-12.

[35]  Exhibit 6, page 524.

[36]  Exhibit 6, pages 527-530

[37]  Exhibit 1.

[38]  Exhibit 1, page 2, para 6.

[39]  Transcript 2-72 lines 5-10.

[40]  Exhibit 9 is a document relating to Quick Fund which was signed by Mr Bamford and witnessed by Ms Trebilco on 15 December 2008.

[41]  Transcript 2-76 lines 25-40.

[42]  Exhibit 8.

[43]  The email confirms Mr Fleming already had a copy of the telephone lease documents and Mr Bamford              had already advised him that the telephone lease was funded by Quikfund. 

[44] Amended Reply and Answer, paragraph 18 filed 20 June 2013.

[45] Second Further Amended Defence, paragraph 25 filed 30 July 2013.

[46] Transcript 1-67 line 40.

[47] Exhibit 10.

[48] Transcript 1-67 line 20.

[49] Exhibit 20.

[50] Exhibit 9.

[51] Second Further Amended Defence filed 30 July 2013.

[52] Defendants’ written outline of submissions pages 1-2.

[53] Mr Flemings evidence; Exhibit 1, page 4, Mr Fleming’s Curriculum Vitae provided to CBA.

[54] Clause 35 of the business contract.

[55] Telephone lease commenced on 8 February 2008.

[56] Calculated in accordance with the Courts website calculator from 10 January 2011 (midpoint of 11 December 2009 and 8 February 2013) until the date of Judgment.

[57] Second Further Amended Defence, paragraphs 27-30.

[58] The present contract clearly falls within the first class referred to in Masters v Cameron (1954) 91 CLR 631 at 635-636.

[59] Transcript 1-31 line 44.

[60] Exhibits 15 and 18.

[61] Defendant’s written submissions page 3, point 3.

[62] Defendant’s written submissions pages 3-4.

[63] Transcript 1-71 lines 15-25.

[64] Transcript 1-72 line 5.

[65] Transcript 1-45 lines 33-35; Transcript 1-64 lines 1-3.

[66] Transcript 1-51 line 34 – Transcript 1-64 line 5; Exhibit 12.

[67] The list is replicated from Exhibit 13, the tax invoice compiled by Mr Bamford after the Plaintiffs obtained disclosure of relevant documents, not from the defendants, but on non-party disclosure from Mortgage Choice.

[68] Sellers v London Counties Newspapers [1951] 1 KB 784; Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (in liq) (1936) 54 CLR at 379-380.

[69] Interest calculated in accordance with the Courts website calculator from 15 October 2010 until the date of Judgment.

[70] Exhibit 14: Mr McMillan’s tax returns for 2006-2008 inclusive; Plaintiffs written submissions para 62.

[71] Transcript 2-22 lines 5-45.

[72] Exhibit 14.

[73] Exhibit16.

[74] Exhibit 13.

[75] Strictly speaking this should be 34.5 months since Mr Bamford did work for 1½ months after the business was sold.

[76] Interest calculated in accordance with the Courts website calculator from 1 July 2010 until the date of Judgment.

[77] Trade Practices Act 1974 (Cth), Section 51A.

[78] Competition and Consumer Act 2010 (Cth) Schedule 2; transitional provisions.

[79] Written outline of submissions Part B, page 1, point 2.

Close

Editorial Notes

  • Published Case Name:

    Bamford & Ors v Investments Solutions (Aust) Pty. Ltd. & Ors

  • Shortened Case Name:

    Bamford v Investments Solutions (Aust) Pty. Ltd.

  • MNC:

    [2015] QDC 12

  • Court:

    QDC

  • Judge(s):

    McGinness DCJ

  • Date:

    03 Feb 2015

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Masters v Cameron (1954) 91 CLR 631
2 citations
Jump To
Cite 1 - (1954) 91 CLR 631
Cite 2 - (1954) 91 CLR 631
Sellars v London Counties Newspapers [1951] 1 KB 784
2 citations
Jump To
Cite 1 - [1951] 1 KB 784
Cite 2 - [1951] 1 KB 784
Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361
2 citations
Jump To
Cite 1 - (1936) 54 CLR 361
Cite 2 - (1936) 54 CLR 361

Cases Citing

Case NameFull CitationFrequency
Caduceus Enterprises International Pty Ltd v Complete Lending Pty Ltd [2015] QDC 1592 citations
1

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