Gardner Corporation Pty Ltd v Zed Bears Pty Ltd & Ors [2001] WASC 106

Gardner Corporation Pty Ltd v Zed Bears Pty Ltd & Ors [2001] WASC 106 - WASC 2001 case summary — Zoe

[20]

8 The defendants say that the claimed sum "for products sold and supplied as per invoices" refers to goods sold and supplied by the plaintiff to its franchisee and that these phone charges do not fall within that category. Counsel for the plaintiff says, that following a request for particulars, the plaintiff gave particulars of the invoices referred to in its schedule of damages given on 28 November 1996. Those particulars list the plaintiff's numerous invoices on a month by month basis between April 1995 and July 1996 in attachment "B1" to the particulars. That attachment is simply a list of several hundred invoices with date, number of invoice and the amount. It is only a search of those particular invoices which would reveal the seven invoices for the $10 telephone charges. Paragraph 9A of the defendants' defence admit that the defendants ordered and received the goods the subject of the plaintiff's invoices particularised in attachment "B1" of the plaintiff's schedule of damages, save and except, and here they number 21 invoices which are the 21 invoices I have referred to and which include the seven telephone invoices which I am concerned with at the moment. The pleaded defence makes a specific mention of the $10 telephone charges in par 3(h)(ii) and (C). I need to refer to that mention in context. The relevant pleading is that Mr Gardner handed Mr Stenning a document entitled "Electronics Franchise" containing certain representations which included one that the plaintiff would charge the franchisee a flat royalty fee of $395 per week, which was not tied to turnover, and only increased or decreased annually, based on CPI plus 2 per cent, and that the franchisee would have to pay that flat royalty fee, and the advertising levy, but no other fees or royalties whatsoever. Contrary to that, the defendants say that the plaintiff charged the franchisee a flat royalty fee of $479.51 per week, plus further fees, royalties or moneys in the form of excessive mark-ups on goods purchased from the plaintiff, sales commissions that were received by the plaintiff from stock suppliers on stock purchased by the defendants and a further sales commission charged to the defendants by the plaintiff of a $10 charge for each and every mobile phone which the defendants connected to a telecommunications carrier through their franchise.

[32]

14 I will consider, next, item 19 in the schedule which is invoice No 1, annexure "F28", dated 24 April 1995 for $22,033.13. According to Mr Gardner this was for opening stock recorded on stock sheets. According to Mr Gardner's first statement tendered to me ("P1"), the stock sheets were written up in hand writing by the plaintiff's Mr Kim Pollock when the goods were supplied, namely, towards the end of April 1995. Mr Gardner recalls the circumstances in which the goods were supplied to the defendants as he was personally involved in the process. Mr Stenning called at the plaintiff's headquarters at that time when neither Mr Gardner or to his knowledge, members of his staff, were expecting him. He stated his purpose was to collect stock to start the operation of the franchise earlier than originally planned, that is, he personally by van collected the goods from the bulk store: "I was there when this large consignment of goods were collected". The standard practice when a new franchise was starting, which was also followed in respect of the Fremantle franchise, was to go through the storeroom and start putting aside stock which would be required by the new franchise. As new lines arrived at the bulk store, they too were added to the existing pile. One or two days before the franchise was due to open, the new franchisee was invited to seek what stock had been allocated and to make amendments if required. Mr Stenning and one of his staff made two or three trips to the bulk store adding and returning stock which they felt was not suitable. Mr Gardner said that he anticipated this new franchise would be a busy one, so there was a very large pile of stock stacked in one corner of the storeroom for Mr Stenning. As the stock was put into cartons it was marked on a current, at the time, blank stock sheet. In the case of Fremantle, some of the stock was put into cartons but most was loaded directly into Mr Stenning's van. Mr Gardner cannot recall exactly if it was the same day, or, perhaps, the very next day. Mr Stenning and one of his staff returned some items that they felt were not suitable. Mr Gardner recalls this specifically because it was the first time any franchisee had returned stock before they had even opened the store. The stock sheet was then used to enter into the computer what was invariably a large order. Unfortunately, Mr Gardner has been unable to locate the stock sheets, nor are the list of items collected at that time stored on the computer. By way of analogy, Mr Gardner has produced the typed stock sheet for the opening of the franchise at Morley in November 1990. It is "F36" in "P3". It covers some 11 pages with approximately 50 items on each page and totals $44,586.96. I can learn from that that a similar stock sheet for goods worth $22,000 would cover about five and a half typed pages and include about 250 to 300 items.

[34]

16 Mr Stenning, in his evidence, denies that he received these goods. He said he was most careful in checking off all goods received and advising his wife who was his bookkeeper of any missing items and that he never received this invoice nor the goods said to be represented by it. He says he purchased $49,592.01 worth of opening stock from the plaintiff, as shown in the plaintiff's other invoices for April 1995. The other invoices for April number 28 and are numbered consecutively 47751 to 4779 and cover various dates between 24 April and 28 April. They are listed at page 13 of Exhibit "P3" and are not disputed by the defendant. I have no doubt that Mr Gardner is telling the truth in saying that he and his staff collected some goods together for the start of the new business at Fremantle and that those goods were listed on a worksheet by Mr Kim Pollock. In other words, the goods were not collected pursuant to an order from the Fremantle franchise, as was later the normal case. I also accept Mr Gardner's evidence that it was normal practice to issue sometimes four or five or more invoices to a store on the one day. As goods were found they would be written up on an invoice. A later phone call or query might come in on another matter and the staff member would be interrupted. When he later attended to the task of meeting the order for this particular franchisee he would grab a new invoice form and fill out some more items on this. So, it was not an unusual practice to issue numerous invoices on the one day. Of the 28 invoices mentioned between 24 and 28 April, excluding invoice No 1, four were issued on 24 April, 19 were issued on 27 April and five issued on 28 April. I consider Mr Stenning's evidence firm, reliable and credible on this matter. I accept his evidence that his normal practice was to check carefully new stock coming in against the invoice which was supplied with it and to note any missing items. I accept his evidence that he never saw a detailed invoice or work sheet listing all the goods to support invoice No 1. I also accept his evidence, indeed it is undisputed, that this invoice was generated in October 1995. I consider it most likely that all the goods which were collected by Mr Gardner and his staff commencing on Monday 24 April for the new franchise are those invoiced in the 28 invoices mentioned. In the absence of the worksheets supporting invoice No 1, and the absence of Mr Kim Pollock, and in the light of the fact that this invoice has a special number and was not produced until months later from a computer which was, admittedly, seriously faulty, I am not willing to accept the plaintiff's evidence on this. I consider the plaintiff's claim for payment for this invoice is unproved.

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Court

Decision date

Before

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Judgment (73 paragraphs)

Gardner Corporation Pty Ltd v Zed Bears Pty Ltd & Ors [2001] WASC 106 (27 April 2001)

Parties

Legislation Cited (1)

Cases Cited (2)