AVS Catering Pty Ltd v Brisbane Broncos Corporation Pty Ltd

[1] By a contract dated 23 February 1994, ('the Catering Agreement'), the defendant granted to the plaintiff 'the sole and exclusive right to provide the Catering Services and licence to use the Catering Areas at ANZ Stadium for all Events...' during the term of the Catering Agreement.

[2] 'Catering Services' were defined to mean the provision of food and beverages of all kinds within the catering areas, including the provision of services described in a schedule to the Catering Agreement. 'Catering Areas' was defined to mean 'fixed, temporary and portable areas used for the preparation, serving, sale and consumption of food and beverages of all kind ... within ANZ Stadium ...'. excluding corporate boxes and the corporate box restaurant in the Western Stand at the stadium, and an area known as 'Conrad's Club'.

[3] The Catering Agreement defined 'ANZ Stadium' unhelpfully, but it is the former sporting stadium located at Nathan, a Brisbane suburb. 'The events' were defined to include rugby league football matches played by 'the Broncos A Grade Rugby League Team at ANZ Stadium ...'.

[4] The consideration paid by the plaintiff for the right to provide catering services was a fee calculated as a percentage of its gross receipts from the sale of food and drink.

[5] The defendant occupied ANZ Stadium, at least on the days on which an 'Event' occurred, pursuant to the terms of a Hiring Agreement made between it and the Brisbane City Council, the owner of ANZ Stadium.

[6] By another clause of the Catering Agreement the plaintiff was obliged to pay the Brisbane City Council also a percentage of its gross receipts.

[7] By clause 9.1 of the Catering Agreement the plaintiff had, with one exception, the 'absolute right to determine which Products and which suppliers of Products are used by it in the provision of the Catering Services provided that those products supplied are of the best quality and are the genuine article of the brand supplied.' The exception was that the plaintiff was obliged to sell products from three nominated suppliers: two of beverages and one of confectionery.

[8] The term of the Catering Agreement was for the period commencing

14.1 This Agreement shall terminate ... upon the occurrence of any of the following events:

...

(iv) Upon the (defendant) giving notice in writing to (the plaintiff) of its decision to cease using ANZ Stadium and move to a new location.

14.2 Any termination of this Agreement pursuant to clause 14.1 shall be without prejudice to any rights which may have accrued to either party at the time of such termination.'

'16. Relocation of catering services

16.1 If the (defendant) decides to cease using ANZ Stadium prior to the expiration of the Term of this Agreement and move to a new location, then the (defendant) shall;

(i) serve upon (the plaintiff) a notice of termination pursuant to clause 14.1(iv);

(ii) together with the notice referred to in clause 16.1(i) above, serve upon (the plaintiff) a notice in writing offering (the plaintiff) the right to provide catering services at the new location (the 'Catering Offer Notice');

(iii) make no agreement for the provision of catering services with any other person until it receives an answer from (the plaintiff) in accordance with clause 16.2; and

...

16.2 (The plaintiff) shall notify the (defendant) of its decision to accept or reject the offer to provide catering services at the new location within 30 days of its receipt of the Catering Officer Notice.'

[11] Early in the year 2003 the defendant decided not to play its football matches at

ANZ Stadium but to play them instead at the new Suncorp Stadium at Milton. The defendant did not give the plaintiff the notice referred to in clause 16.1(ii) of the Catering Agreement.

[12] The plaintiff has commenced proceedings seeking damages against the defendant for breaches of a number of terms of the Catering Agreement. The present application concerns only that part of the claim which asserts a breach of clauses 14 and 16. The amended statement of claim pleads, relevantly:

'9. Further, in breach of the Catering Agreement in clause 16.1 thereof, the defendant, upon termination of the Catering Agreement failed to offer the plaintiff the right to provide catering services at the new location, being Suncorp Stadium, as and from the date of the defendant's relocation to that Stadium on or about 18 May 2003.

10. By reason of the breach of the Catering Agreement referred to in para 9 ... the plaintiff has suffered loss and damage.

PARTICULARS

The loss of a catering agreement upon the same terms and conditions as the Catering Agreement for the remaining term of the Catering Agreement to February 2013. This loss has been assessed as having a net present value of $7,645,798. ...

...

11. In the alternative to paragraphs 9 and 10 herein, by reason of the terms of the Catering Agreement referred to in paragraphs 4(f) and 4(g) herein the defendant has, in breach of the Catering Agreement, deprived the plaintiff from providing catering services at the ANZ Stadium in Brisbane for the Events referred to in the Catering Agreement from 18 May 2003 to 10 February 2013.

12. By reason of the breach referred to in paragraph 11 herein the plaintiff has suffered loss and damage.

PARTICULARS

The net present value of the business conducted by the plaintiff at ANZ Stadium estimated to the expiry of the Catering Agreement on 10 February 2013 is an amount of $6,517,221. ...'

Clauses 4(f) and (g) of the amended statement of claim reproduce clause 14.1(iv) and clause 14.2 of the Catering Agreement.

[13] The defendant has applied for summary judgment pursuant to Uniform Civil Procedure Rule 293 which provides:

'(2) If the court is satisfied -

(a) the plaintiff has no real prospect of succeeding on all or a part of the plaintiff's claim; and

(b) there is no need for a trial of the claim or the part of the claim;

the court may give judgment for the defendant against the plaintiff for all or the part of the plaintiff's claim and may make any other order the court considers appropriate.'

[14] The only safe principle to apply when dealing with applications by defendants for summary judgment is that which I expressed in Gray v Morris [2004] QCA 5; [2004] 2 Qd R 118 at 126: '[A] claim ... which has "no real prospect of succeeding" is one which is "hopeless" or one which is "bound to fail".' Any other approach runs the risk that judgment will be given undeservedly, as a trial would have demonstrated. Those who see in the terminology of the rule 'a new philosophy' have yet to give content to it, and to explain why it values expedition more highly than justice. Likewise, those who profess to be able to determine, summarily, whether a claim has a real prospect of success, or only a fanciful one, have yet to describe how they do so.

[15] The plaintiff has claims that go beyond the alleged breaches of clause 16 of the Catering Agreement. The application for summary judgment is limited to the claims set out in paragraphs 9, 10, 11 and 12 of the amended statement of claim.

[16] The defendant accepts, for the purposes of the application, that, by a letter dated

30 April 2003, it gave notice to the plaintiff under clause 14.1(iv) of the Catering Agreement. The defendant also accepts, for the purposes of the application, that it gave the plaintiff a notice of termination as provided for in clause 16.1(i). It was also accepted by both parties that the defendant had not given the plaintiff any such notice as clause 16.1(ii) appears to require, and that the defendant had not made an agreement with any other party for the provision of catering services at

Suncorp Stadium. It was, I think, also common ground that the owner or manager of Suncorp Stadium had an agreement with a company called Spotless Catering Pty Ltd ('Spotless'), by which that company provided catering for all football matches, not just the defendant's, at Suncorp Stadium. There is evidence that the defendant has not made any agreement with Spotless. There was no evidence to show whether the defendant has made an agreement with the owner or manager of

Suncorp Stadium with respect to the provision of catering services at the stadium on the occasions when its team plays there. Such an agreement, though not made with the caterer, would probably be an 'agreement for the provision of catering services' within the meaning of clause 16.1(iii) of the Catering Agreement.

[17] The defendant has two points with respect to the claim articulated in paragraphs 9 and 10 of the amended statement of claim, and a third point with respect to the alternative claim advanced in paragraphs 11 and 12. It is convenient to deal, initially, with the last point because it can be disposed of briefly.

[18] Paragraph 11 of the pleading, which I set out, is unintelligible; it does not identify any basis for the claim for damages, which is advanced in paragraph 12. In oral submissions counsel for the plaintiff explained that the claim is predicated upon the notion that the termination of the Catering Agreement, pursuant to the provisions of clause 14.1, constituted a breach of the Catering Agreement giving rise to a right to claim damages, which was reserved by clause 14.2. This misconceives the structure of the Catering Agreement. It was to endure for 20 years, but could be terminated earlier by reason of any of the events which the Catering Agreement itself specified, including notice given pursuant to clause 14. There was no promise by the defendant that it would not bring the Catering Agreement to an end before 2013. The ending of the Catering Agreement pursuant to clause 14.1 was not a breach of the terms of the Catering Agreement and gave no rise to damages. Clause 14.2 preserved any right to damages the plaintiff might have arising from a breach of the contract committed prior to its termination. It does not provide that the plaintiff should have a right to damages by reason of the termination effective pursuant to clause 14.1.

[19] The consequence is that the claim, which paragraph 11 must be understood as advancing, has no prospect of success. The conclusion follows from a construction of the Catering Agreement itself.

[20] The defendant has, as I said, two points with respect to the claim made in paragraph 9 of the amended statement of claim. That paragraph is itself sparsely worded and does not clearly indicate the case which the plaintiff wishes to advance. By reference to the particulars for damage which appear in paragraph 10, the defendant understands that the plaintiff's case is that the defendant should have offered it 'the right to provide catering services at the new location...' on the very same terms and conditions as were contained in the Catering Agreement. If this be the plaintiff's claim it cannot succeed for the reasons identified by counsel for the defendant. The Catering Agreement is inapplicable and will not 'fit' the defendant's occupation and use of Suncorp Stadium.

[21] The first is that the catering services, which the plaintiff was to provide at

ANZ Stadium, excluded designated areas. These were essentially the private boxes in the western grandstand. The Catering Agreement had a geographical limitation, which was specific to the configuration and layout of ANZ Stadium.

Suncorp Stadium is different in configuration and layout as well as size. It has a number of corporate boxes and restaurants not generally available to the public. It is impossible to determine from the Catering Agreement what parts of

Suncorp Stadium the plaintiff should have the right to provide catering services.

[22] The second point concerns the rights conferred by the Catering Agreement on the Brisbane City Council. It was to receive a percentage of the plaintiff's gross receipts from the sale of food and drink. As well the Council was to provide some specified services and facilities ancillary to the plaintiff's catering services. There is no scope for these provisions of the Catering Agreement to operate at

Suncorp Stadium at which the Brisbane City Council has no presence and in which it has no interest.

[23] If the plaintiff's case is truly that clause 16.1(ii) required the defendant to offer the plaintiff the right to provide catering services at Suncorp Stadium on the very same terms and conditions as it enjoyed at ANZ Stadium, the case is untenable.

[24] Counsel for the plaintiff did not concede this to be so but was not disposed to argue against it. I am not sure it accurately reflects what was meant by the paragraph 9, which is not specific.

[25] This leads to the defendant's second point, which was the most significant of the points argued. The defendant's submission is that clause 16 is uncertain, in the sense of being incomplete, and is therefore void. The whole Catering Agreement does not fall because clause 20 provides that any provision, which is determined by a court to be unenforceable or void, may be severed, leaving the balance of the Catering Agreement intact. The clause is said to be incomplete because neither it, nor any other term of the Catering Agreement, identifies what terms were to be offered by the defendant in the Catering Offer Notice. The argument is that (i) because acceptance of the offer gives rise to a contract the terms of that contract must be certain and complete; and, (ii) those terms must have been agreed at a time antecedent to the giving of the notice, which must set them out. It is clear that no such terms have been agreed.

[26] The defendant's first proposition may be accepted. I think it is clearly right. The offer, which the notice is to contain, must be one capable of immediate acceptance by the plaintiff giving rise to a valid Catering Agreement between the parties. It must, therefore, contain sufficient terms to be certain and capable of performance. The second proposition does not find support in the words of the clause. There is nothing in the language of clause 16 which makes a pre-existing agreement as to the terms of the offer necessary for the offer to comply with the clause. It is for the defendant to formulate the offer which it must make if clause 16 becomes operable. The plaintiff may or may not accept the offer. If it does a new binding agreement will have been made.

[27] As I read clauses 16.1(ii) and (iii), upon the occurrence of the events which made the clause operable, the defendant must serve on the plaintiff a notice setting out the terms on which it is prepared to contract with the plaintiff for the provision of catering services at the new venue. The notice must constitute an offer, which is capable of acceptance by the plaintiff giving rise to an immediately binding contract. The notice must be served before the defendant makes an agreement for the provision of catering services at the new venue with any person other than the plaintiff. The defendant may not make such an agreement unless the plaintiff rejects the offer, or does not accept it within 30 days.

[28] There is nothing objectionable about such a construction. It is in substance no different to the contractual rights or pre-emption or first refusal which the courts have recognised as effective. See, for example, Woodroffe v Box & Anor (1954)

[1954] HCA 22; 92 CLR 245 at 257 and Mackay & Anor v Wilson & Anor [1947] NSWStRp 7; (1947) 47 SR (NSW) 315 at 325. This latter passage was approved by Goff LJ in Pritchard v Briggs & Ors [1980] Ch 338 and forms the statement of the law in Halsbury's Laws of England 4th ed., vol 42, paragraph 26. The contractual obligation to first offer a property to the promisee is not dependent upon the terms of the offer being the subject of prior agreement. The promisor has a discretion as to the terms on which the property is offered.

[29] The defendant's response is that a contract, which leaves to the discretion of the promisor what terms should be offered the promisee, is illusory and, for that reason, void. Reliance was placed upon the judgment of Kitto J in

Placer Development Ltd v The Commonwealth [1969] HCA 29; (1969) 121 CLR 353. His Honour said (at 356):

'... [T]he general principle is ... that wherever words which by themselves constitute a promise are accompanied by words showing that the promisor is to have a discretion or option as to whether he will carry out that which purports to be the promise, the result is that there is no contract ... The succinct statement of the principle in Leake on Contracts ...: "Promissory expressions reserving an option as to the performance do not create a contract" ...'

Placer was a case in which a term in a contract obliged the Commonwealth to pay, in specified circumstances, amounts 'determined by' it. The Commonwealth had a discretion whether or not it would perform that term of the contract which appeared to oblige it to make payments. The case contemplated by clause 16 is quite different. It confers a discretion on the defendant as to the terms of the offer it must make. Those terms must be capable of acceptance giving rise to an immediately binding contract. If the contract be formed, both parties must perform it or be liable for breach. Once formed there is no discretion in the defendant whether or not it will perform the contract.

[30] It is possible to read paragraph 9 of the amended statement of claim as alleging a breach of clause 16.1(ii), as I have construed it. The paragraph lacks clarity and precision, but it may include such a case. If it does, the defendant is not entitled to summary judgment. In any event, if, by amendment the statement of claim, the plaintiff could advance a case that the defendant was obliged to, but did not, make an offer to the plaintiff, which it could have accepted, giving rise to a new catering agreement, the plaintiff should not be precluded from prosecuting such a claim by judgment given summarily on pleadings which could be rescued.

[31] The defendant objects that there will be insuperable difficulties in proving an entitlement to any more than nominal damages should the defendant have breached clause 16. That may be so, but an answer may be found in the implication of terms. It may be appropriate to infer a term that the offer be made bona fide and, perhaps, that it contain reasonable terms. Whether such implications should be made, and what 'reasonable terms' would include, are matters that can only be determined when the plaintiff pleads its case properly. The implication of terms may also depend upon questions of fact. In any case I cannot give summary judgment on a case that has not yet been pleaded.

[32] One further matter should be mentioned. The defendant argues that its move to Suncorp Stadium where it has no rights over the choice of caterer has frustrated

clause 16 of the Catering Agreement. The parties accepted that this argument could not be disposed of summarily. It will, to some extent, depend upon questions of fact.

[33] The upshot of all these considerations is that the defendant has not demonstrated that it is entitled to summary judgment. It has, however, demonstrated serious deficiencies in the plaintiff's pleading, which has not come to grips with the contractual subtleties to which its claim necessarily gives rise. I intend, therefore, to treat the application as one to strike out paragraphs 9, 10, 11 and 12 of the amended statement of claim, and I make an order that those paragraphs be struck out. I give the plaintiff leave to re-plead to make claims for a breach by the defendant of

clauses 16.1(ii) and/or (iii) of the Catering Agreement between them, dated

23 February 1994. The plaintiff should pay the costs of the application, to be assessed on the standard basis, because the inadequacy of its pleading had to be addressed and because those inadequacies invited the application for judgment.