Curnow Consulting Pty Limited v JPD Media and Design Pty Ltd t/a Durie Design

Supreme Court of NSW|2017-12-12|Before: Slattery J

Judgment

The Court gave its principal judgment in these proceedings on 1 September 2017: Curnow Consulting Pty Ltd v JPD Media & Design Pty Ltd t/a Durie Design [2017] NSWSC 1171. These reasons should be read with the Court's principal judgment. Events, matters and persons are referred to in both judgments in the same way.
The Court's principal judgment made findings: as to the terms of the oral Management Agreement between the parties, and including a term that no commission was payable upon revenue that JPD derived from sources introduced to JPD by Mr Sean Anderson; that the Management Agreement had not been varied in February 2012; that there was no trial period for the plaintiff to perform the Management Agreement; that the right of termination of the Management Agreement were on reasonable notice which was 60 days, which right was independent of the duration of the parallel Services Agreement between the same parties. Finally, the Court determined that JPD had wrongfully terminated, and therefore repudiated, both the Management Agreement and the Services Agreement and that Curnow Consulting had accepted that wrongful repudiation of both agreements. The Court's findings in the principal judgment are conveniently summarised in [2017] NSWSC 117 at [438] - [441].
The principal judgment foreshadowed there would be a separate quantum hearing to determine the amount of JPD's and Mr Durie's liability to Curnow. But the quantum hearing was not contemplated to involve the taking of any further oral evidence from the parties. After preliminary hearings on 4 October 2017 and 4 December 2017 the quantum hearing took place on Tuesday, 12 December 2017. The parties' submissions at the hearing focused on a number of questions of principle. For convenience the Court has posed these as questions to be answered. The Court anticipates that the answers to these questions will allow the parties to calculate the final amount of damages. These reasons contain the Court's conclusions in relation to these Court posed questions.

The Quantum Issues

The quantum hearing dealt with three broad questions. These were the following: (1) is the contract between JPD and Channel 9 within the Sean Anderson carve-out that provided for in the terms of the Management Agreement; (2) should certain otherwise unallocated payments made by JPD to Curnow Consulting be credited to JPD against Curnow Consulting's claim for damages; and (3) has Curnow Consulting proved its loss with respect to a number of small specific commission claims, where the evidence is incomplete. The Court will now deal with each of these questions in turn.

(1) The Nine Network Deal and the Sean Anderson Carve-Out

The first question posed is the following: is the contract between JPD and Channel 9 within the Sean Anderson carve-out provided for in the terms of the Management Agreement.
JPD signed a contract with the Nine Network Australia Pty Ltd ("Nine Network") on 13 December 2010. The JPD-Nine Network contract resulted in substantial revenue being earned by JPD between then and the termination of the Management Agreement and the Services Agreement. Curnow Consulting contends that the evidence does not establish that Mr Sean Anderson introduced this Nine Network deal to JPD and that it is therefore entitled to commission based on the full revenue that JPD has received from the Nine Network during the period. At one stage in the quantum hearing this commission was said to amount to $72,989. This figure may need to be adjusted.
But JPD contends that the evidence establishes that Mr Sean Anderson did introduce this Nine Network deal to JPD and that the revenue derived from it falls within the carve-out term of the Management Agreement that the Court found in the principal judgment (at [438]). That term as found was that Curnow Consulting was not entitled to commission "upon revenue derived from sources introduced to JPD by Mr Sean Anderson or entities through which he provided services".
There was a preliminary dispute about whether Mr Sean Anderson provided services through a corporate entity known as Twenty-Two Pty Ltd. But in the course of the hearing it was accepted that he did and this is no longer an issue. The parties' respective contentions on this question may be shortly stated.
Curnow Consulting points to the following undisputed facts. The JPD-Nine Network contract does not in any way refer to Mr Sean Anderson. It appears to have been prepared by JPD's external lawyers, M & K Lawyers. No evidence was led from M & K Lawyers as to the source of this deal. Mr Curnow and not Mr Anderson witnessed Mr Durie's signature on the agreement.
Curnow Consulting further contends that there is no other contemporaneous documentary or other independent evidence connecting the negotiation or finalisation of the JPD-Nine Network contract with Mr Sean Anderson. Rather, Curnow Consulting points out: that Mr Durie says his Australian talent agent, Mr Chris Giannopoulos of IMG, assisted him to obtain media talent agreements with the Nine Network to host the program Backyard Blitz; and that Mr Durie does not make clear that the JPD-Nine Network contract was introduced by Mr Sean Anderson.
On this state of the evidence Curnow Consulting contends that the Court cannot find that the JPD-Nine Network contract was introduced by Mr Sean Anderson and therefore does not come within the carve-out from JPD's liability for commission in respect of deals introduced by Mr Sean Anderson.
But JPD's answer to these submissions is persuasive. Mr Durie says that deals with the Nine Network "were obtained through my Australian talent agents and commission was payable and paid to the talent agents on all revenue received through those deals". It is clear Mr Durie is using the expression "Australian talent agents" in this context to distinguish people such as Mr Sean Anderson and Mr Chris Giannopoulos from his other US talent agents. The contemporaneous email evidence in January 2013 shows that Mr Sean Anderson has responsibility for communications between JPD and the Nine Network in relation to ongoing media productions-broadcasts involving Mr Durie.
But more importantly Mr Curnow himself has admitted that he was aware "that commission was payable on the [JPD-Nine Network] contract to Mr Sean Anderson". This admission was not qualified in any way and is a firm basis for inferring Mr Sean Anderson's involvement in the transaction as an introducing party sufficient to entitle Mr Sean Anderson to commission. This is not displaced by the absence of evidence referring to Mr Sean Anderson on the JPD-Nine Network contract itself. One would not necessarily expect Mr Anderson's name to be on the document or for him to witness Mr Durie's signature.
The Court is satisfied that the JPD-Nine Network contract was a deal introduced to JPD by Mr Sean Anderson. Curnow Consulting also contended that Mr Sean Anderson did not "cause" JPD to earn the revenue from the Nine Network. But I infer that Mr Anderson did "introduce" the deal to JPD and that is sufficient to activate the carve-out and exclude JPD's liability for commission to Curnow Consulting.
The first question posed should therefore be answered in the affirmative.

(2) Unallocated Payments

The second question posed is the following: should certain otherwise unallocated payments made by JPD to Curnow Consulting be credited to JPD against Curnow Consulting's claim for damages.
Mr Curnow's primary evidence was that few of the payments that JPD made into the plaintiff's bank account identified the relevant invoices to which the payments relate, with the consequence that in his case in chief he could not identify which Curnow Consulting invoices specifically were being paid. Curnow Consulting called an expert accounting witness, Mr Shanley who correlated some payments to some invoices. But before the hearing and as at 14 December 2015 there were a large number of payments from JPD to Curnow Consulting totaling the sum of $155,300.16 which Mr Shanley could not cross-reference to specific invoices. Mr Shanley called these the "unallocated receipts" which he deducted from the amount Curnow Consulting claimed.
Mr Shanley has since adjusted the quantum of unallocated receipts up to $181,748.60 following further MYOB material that JPD provided for the purposes of the quantum hearing.
But Curnow Consulting now seeks to claim this figure for unallocated receipts, reversing the position that had previously been taken by Mr Shanley. JPD says that that reversal is not now open to Curnow Consulting but if it were open JPD has a substantive answer to the point taken.
JPD's case is that its liabilities to pay Curnow Consulting can only have arisen under either the Management Agreement or the Services Agreement. The only reasonable inference JPD says is that all of its payments to Curnow Consulting were intended to be in reduction of those liabilities for commission. JPD says that there is no basis for Curnow Consulting now to receive the value of the unallocated receipts again and that to do so would be a windfall.
This dispute is to be resolved in several stages. The parties addressed the threshold question as to whether the position initially by Mr Shanley was an admission from which Curnow Consulting would now need leave to depart. But Mr Gor's submissions are persuasive that the position Mr Shanley took should not be construed as admission. He is not the legal representative of Curnow Consulting to make it admissions. Moreover he is clearly undertaking an accounting exercise as an expert trying to work out an amount due and has merely made an accounting judgment. Furthermore JPD itself (see Exhibit L) did not treat Mr Shanley's calculations as an admission, in my view. It is possible now to deal with the substantive issue.
On the substantive issue, Curnow Consulting contends that the odd nature of many of these payments indicates that they are most likely reimbursements for expenses. Curnow Consulting contends that the way to check that is to go through the receipts which JPD has and to correlate them with Mr Curnow's expense claims. But Curnow Consulting submits, as is the fact, that JPD has not brought forward any evidence to explain these unallocated payments, and it says, the Court can infer that its failure to do so would therefore not have assisted its case.
Curnow Consulting supports this argument by pointing to Mr Curnow's evidence that he identified staff members of JPD to whom he gave physical copies of his invoices with receipts attached evidencing the expenses that needed to be reimbursed. He says that these receipts should still be in the possession of the first defendant. Curnow Consulting then further supports its case by pointing to Mr Bryks as evidence that "no cash left [JPD] account by mistake" once Hall Chadwick at least was involved. It is not disputed that the unallocated payments that JPD made from at least March 2012 onwards (when Hall Chadwick became involved) amount to about $127,138.17.
But JPD's case is more persuasive on this issue. One must stand back and ask the question: in what character did Curnow Consulting receive payments from JPD? It must either be in the form of commission or reimbursement of expenses. Mr Gor sought to suggest there may have been other dealings as well but in my view it has not been established that there were, or that such dealings would have amounted to the figures that are in question on this issue.
Mr Neggo's oral submissions concerning Mr Curnow's affidavit of 14 December 2015 in my view are a powerful answer to Mr Curnow's case on this issue.
Mr Curnow in quite a thorough-going way attached to his affidavit of 14 December 2015 a colour coded compilation of invoices given to JPD by various means, either by email or by hand. He colour codes in pink in the compilation all the deliveries of invoices by hand, which are almost wholly invoices for the reimbursement of expenses. And I accept Mr Neggo's calculation that those amounts colour coded in pink which represent the reimbursement of expenses add up to $10,909.90.
I accept Mr Curnow did create invoices, attach the receipts and hand deliver them as he says. This was a sensible system but it is one which should have left him with a copy of the invoices. And his system makes it very difficult to explain how it was that he could submit $10,909.90 worth of invoices for reimbursement of expenses but somehow overlook the preparation of the further $170,000 worth of receipts and invoices he now claims. If this balancing figure was for the reimbursement of invoices one would expect not only JPD to have copies of the invoices and the receipts but for Mr Curnow to have them as well. The Court is not prepared to accept that the balance of the $170,000 is in respect of the reimbursement for expenses.
No other satisfactory explanation has been provided for these unallocated receipts being on some other account. In my view the position Mr Shanley originally took is the correct one but an adjustment should be made in Curnow Consulting's favour of $10,909.90 for the reimbursement of expenses that Curnow Consulting has proven.
The second question posed should be answered in the affirmative.

(3) The Onus of Proof - Diversified and Victorian Major Events

The third question posed is the following: has Curnow Consulting proved its loss with respect to two small specific commission claims, where the evidence is incomplete.
JPD contends that Curnow Consulting has failed to prove its claims for commission under the Management Agreement referable to two small transactions, or "deals" as they were referred to in submissions. These were transactions which JPD undertook with two named third parties. Curnow Consulting claimed that it was entitled to the commissions on the following two deals: (a) Diversified Exhibitions Australia ("Diversified") - $2,062.50 in commission; and (b) Victorian Major Events ("VME") - $1,093.18 in commission. But at the quantum hearing the evidence as to what the precise arrangements were between JPD and those two third parties was very limited.
At the commencement of the quantum hearing the claimed commission on three other small deals was also in dispute: one in relation to a transaction between JPD and Home Beautiful, another on a transaction between JPD and Penguin and the third on a transaction between JPD and Oakstand. These transactions were said to be the subject of agreement during the course of the quantum hearing and the Court need not consider them further. The parties should deal with each of them in the parties' mutual calculations.
Curnow Consulting is not entitled under the Management Agreement to commission upon revenue derived from sources introduced to JPD by Mr Sean Anderson or by entities through which he provided services (principal judgment at [438]).
The Parties' Submissions. Curnow Consulting contends that the Diversified and VME deals do not involve any introduction by Mr Sean Anderson and that it is therefore entitled to commission on them both. But it concedes that there is incomplete evidence of the arrangements between JPD and these two entities.
JPD has itself not adduced evidence that the Diversified and VME transactions are deals that Sean Anderson introduced to JPD but it contends that they were so introduced. JPD contends that in those circumstances, there is therefore no evidence directly relevant to establishing that these deals are not Sean Anderson-introduced deals, as Curnow Consulting contends.
JPD says that it will not be commercially justifiable to allow these matters now to be the subject of further contested evidence, cross-examination and argument. JPD contends that Curnow Consulting has the onus to prove and has failed to prove these claims and that they should not now form part of the judgment sum. Given that the Court gave clear warnings that no further evidence would be permitted in the quantum phase of the hearing, JPD says this is the appropriate and just result. JPD submits it has made a substantial number of concessions as to deals which are not Sean Anderson-introduced deals and on which commission is therefore payable to Curnow Consulting.
Analysis. The position with each of Diversified and VME is different. They will be analysed separately, commencing with Diversified.
No contract or agreement between JPD and Diversified was produced by JPD in the proceedings, and no such agreement has made its way into the evidence. JPD appears otherwise to have produced, in response to various notices to produce, court orders and subpoenas, and copies of all agreements entered into with third parties in respect of which JPD received the payment of remuneration. There are apparently only accounting entries showing the amounts paid to JPD from Diversified. But this is sufficient for Curnow Consulting to quantify its claim for commission.
The plaintiff's contentions about Diversified are not persuasive. It submits that the lack of evidence about the Diversified contract means that there is no evidence on which the Court can infer that this deal was introduced by Mr Sean Anderson. But in my view the state of the evidence could equally support the inference that the deal was not brought in by Mr Sean Anderson.
Curnow Consulting contends that JPD's failure to produce the underlying Diversified contract assists the inference for which it contends. But the absence of production of the Diversified contract really does not allow the Court to decide this question either way. JPD's lack of production is not obviously connected with or an indicator of whether the deal was, or was not, associated with Sean Anderson. In the absence of Curnow Consulting being able to establish that it was more likely that the Diversified documents would not be produced if the deal was associated with Sean Anderson, the Court cannot infer that the fact of non-production is a basis to conclude that the deal was not associated with Mr Sean Anderson. Apart from the fact of non-production, neither party could point to any other indicators as to whether or not Mr Sean Anderson was involved in introducing this deal.
The Court is not prepared to infer that this deal was not brought in by Mr Anderson. Nor is it prepared to infer that it was. Apart from non-production of the underlying contract, nothing else in the proven circumstances is a basis to infer either way whether or not Mr Sean Anderson was involved. The matter is simply unresolved on the evidence.
The plaintiff bears the burden of proving its damages for breach of contract: Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286, at 301 and Waribay Pty Ltd v Minter Ellison (1991) 2 VR 391 at 397. It must establish that the commission it claims falls within the scope of the Management Agreement as found by the Court. That involves Curnow Consulting proving that the Diversified deal was not a Sean Anderson-introduced deal. It has failed to do this and has therefore failed to show its entitlement to any commission on the Diversified deal.
The position with the VME deal is different. A formal contract between JPD and VME was produced. That agreement dated 9 February 2012 does appear to have been prepared by the internal design team at JPD and it makes no express reference to Mr Sean Anderson. The agreement indicates that the commission paid by VME to JPD relates to work carried out with respect to the Melbourne International Flower and Garden Show. There is no evidence in the proceedings connecting Mr Sean Anderson with the Melbourne International Flower and Garden Show. Mr Durie's own evidence indicates that one of his talent agents, Mr Chris Giannopoulos of IMG assisted Mr Durie to obtain a services and endorsement contract with the Melbourne International Flower and Garden Show.
The available evidence therefore seems just sufficient to support an inference that Mr Sean Anderson was not involved with this VME contract.
This inference is further strengthened by the way the case was conducted. In its particulars prepared in November 2015, Curnow Consulting contended that this deal (along with many others) was not subject to a commission payable to any third party. Despite being on notice of that contention, JPD did not advance any evidence connecting Mr Sean Anderson with VME. So the Court infers that the VME deal was not introduced by Mr Sean Anderson and Curnow Consulting is entitled to commission on it.
The third question that the Court has posed for itself should therefore be answered in the negative with respect to Diversified and in the affirmative in respect to VME.

Conclusions and Orders

The Court has resolved the issues of principle that the parties wish it to decide. On the first issue, the Court has decided that the Nine Network contract revenue was introduced by Mr Sean Anderson through his company, 22 Pty Limited, or personally and that is sufficient to exclude liability to Curnow Consulting for commission based on the receipt of that revenue.
On the second issue, the Court concludes that the better inference in the circumstances is that the unallocated payments made by JPD to Curnow Consulting should be treated as payments of commission and should be accounted for, as Mr Shanley first did, in reduction of the commission due to Curnow Consulting. But there should be an adjustment in Curnow Consulting's favour on this account of $10,909.90.
Finally, Curnow Consulting has not established its entitlement to commission on a deal involving Diversified but has established its commission entitlement with respect to the VME deal.
All that is now required is for the parties to use the Court's conclusions in these reasons to inform the parties' final calculations of loss and damage in this case. The parties should now be in a position to bring those final calculations to Court for the making of consent orders on issues of quantum. The Court will give the parties a little over one month to finalise these calculations. The matter will be mentioned at that time with a view to consent orders then being available. The proceedings will then move to any remaining disputes about costs.
If there are any other quantum disputes that remain outstanding the parties will be granted liberty to apply to re-list the proceedings to resolve those disputes during a continuation of the quantum hearing.
The orders and directions of the Court will therefore be as follows: 1. Direct the parties to bring in agreed short minutes of order to give effect to these reasons, which short minutes are to include final calculations of the quantum of damages due by the first defendant, JPD, to the plaintiff, Curnow Consulting; 2. Adjourn the quantum hearing to 8 March 2018 at 9:30am for further directions; 3. Vacate the further directions listing on 6 February 2018 at 9.30am; and 4. Grant liberty to apply.

Amendments 07 February 2018 - coversheet- parties inserted DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 February 2018

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