Sunrise Education v Camnet Finance

THE HEARING AND THE EVIDENCE

1. The hearing was conducted by telephone.
2. Sunrise was represented by Mr R Killalea. Camnet was represented by Mr F Anwar.
3. Sunrise relied upon a statutory declaration of Alex Tang, the Manager of Sunrise. Camnet relied upon an affidavit of Brendan Clarke, a Collections and Billing Team Leader at Camnet. There was no cross-examination of either of the witnesses.
4. Both parties made oral submissions and Camnet also relied upon written submissions filed and served a few days prior the hearing.

THE FACTS

1. It was not in dispute that Sunrise and Camnet entered into an agreement on or about 7 July 2017 to finance the rental of various items of photocopying equipment (the Agreement). Although the parties signed the Agreement on 14 June 2017, the first page of the Agreement provided that "THIS AGREEMENT is made on the Date of Acceptance referred below …" It was not in dispute that the "Date of Acceptance" was 7 July 2017.
2. It was also not in dispute that, after the Agreement commenced, Sunrise received regular monthly tax invoices from Camnet.
3. On about 28 June 2019, Sunrise received a tax invoice from Camnet, with tax invoice number MI-C099493, which included the following: Please be advised that as of your next invoice, an increase will be applied to your cost per copy charge
4. Mr Tang gave evidence, which I accept, that, upon receiving tax invoice number MI-C099493, he was concerned about the price rise and, on 12 July 2019, sent a facsimile to Camnet which comprised a copy of the tax invoice number MI-C099493, a copy of a business card for Sunrise's solicitor and a handwritten message which said: price change, please call our solicitor first !!!!
5. Mr Tang also gave the following evidence by way of his statutory declaration: 8. After that date I rang the accounts officer at Camnet on a number of occasions and I said to him words to the effect of: "I am very upset about the price going up. Why is the price going up?" 9. The accounts officer used [sic] respond [sic] in words to the effect of: " I will send someone to give you an explanation". 10. I had dealt with Camnet for about 15 years and trusted that Camnet would give me such an explanation. 11. On or after about 11 September 2019 Richard Millar, a salesperson for Camnet called at our shop at 306 Marrickville Road, gave me a document ... and said to me words to the effect of: "This is the latest contract report. The contract will run until eighteen of february twenty one only"
6. I accept the evidence of Mr Tang referred to in the preceding paragraph. That is for several reasons. First, Mr Tang was not cross-examined. Second, no affidavit, statutory declaration or witness statement from Mr Millar was adduced by Camnet, nor was there any explanation as to why Mr Millar did not give evidence. I infer that any evidence from Mr Millar would not have assisted Camnet: Jones v Dunkel (1959) 101 CLR 298 at 320.
7. According to the affidavit of Mr Clarke, the document referred to at paragraph 11 of the statutory declaration of Mr Tang was a document produced by software used by Camnet. It seems, from the details on the bottom of the document, that it was generated from this software by Mr Millar on 11 September 2019 at 9:48am. Importantly, for the purposes of these proceedings, at the top of the document it referred to a "Start Date" of 7 July 2017 and an "Expiry Date" of 18 February 2021. It also said that the "Time Remaining" was 17 months and 6 days, being the time between 11 September 2019 and 18 February 2021.
8. After receipt of the invoice dated 28 June 2019, and between July 2019 and February 2020, it was not in dispute, and I find, that Sunrise continued to receive monthly tax invoices from Camnet, with an increased cost per copy charge, which it paid.
9. It was also not in dispute, and I find, that, in March 2020, Sunrise notified Camnet that it would be shutting its business and requested that the photocopying equipment it had rented be collected by Camnet.
10. On 31 March 2020, Mr Clarke sent an email to Mr Tang which contained, inter alia, the following: Further to your conversation with Derrick, Camnet will recover your equipment and store it temporarily in our warehouse. The recovery will occur tomorrow or Thursday and we'll touch base again once the scheduling is arranged. Your billing will continue however for a period of 3 months we won't request any payment. In 3 months' time we'll contact you and try to come to an arrangement depending on your circumstances.
11. It was not in dispute, and I find, that the photocopying equipment was collected by Camnet from Sunrise in about April 2020.
12. Between March 2020 and August 2020, Camnet issued a further five invoices to Sunrise. It was not in dispute, and I find, that these invoices were not paid.
13. On 1 June 2020, Mr Clarke sent an email to Mr Tang which contained, inter alia, the following: I hope you have been able to work through the COVID restrictions and continue to trade. I understand you contacted Teresa today to seek clarity on your billing. Please review the correspondence sent to you on 31.03.2020. To summarize, Sunrise Education will still be invoiced and we'll contact you early next month so the equipment can be delivered back to you. Your agreement remains on foot however Camnet is storing you're [sic] equipment for you temporarily as per your request.
14. On 3 July 2020, Mr Clarke sent an email to Mr Tang which contained, inter aia, the following: Just a quick e-mail touching base to see how your business is travelling? Are you able to accept the return of the photocopiers? We'd greatly appreciate payments to commence again.
15. There was subsequently an exchange of emails between Mr Tang and Mr Clarke and, on 5 August 2020, Mr Tang informed Mr Clarke that Sunrise no longer wanted to rent the photocopying equipment from Camnet.
16. On 18 August 2020, Camnet served a notice on Sunrise terminating the Agreement within 7 days of the notice being issued and demanding payment of the sum of $34,494.45 including GST within 7 days.

THE ISSUE IN DISPUTE

1. I did not understand it to be in dispute that, as at 18 August 2020, Sunrise had committed a "Default Event" under clause 12.1 of the Agreement in that it had failed to pay on time five tax invoices issued by Camnet to Sunrise between March 2020 and August 2020 as follows: Date Invoice # Amount (AUD) 24/03/2020 MI-C129686 $1,156.82 23/04/2020 MI-C132821 $1,156.82 26/05/2020 MI-C136607 $1,156.82 24/06/2020 MI-C139612 $1,156.82 04/08/2020 MI-C143196 $1,156.82

1. However, insofar as it is in dispute, I find that a "Default Event" had plainly occurred as at 18 August 2020. Although Camnet had agreed in March 2020 not to demand payment from Sunrise for three months, it made it clear that Sunrise would still be invoiced and that the Agreement remained on foot. Pursuant to clause 4.6 of the Agreement, Sunrise was obliged to pay the applicable charges under the Agreement in advance and within 7 days of the date of the invoice. As at 18 August 2020, the three month moratorium had come to an end and each of the five invoices was more than 7 days overdue.
2. Accordingly, pursuant to clause 13.1 of the Agreement, Sunrise was deemed to have repudiated the Agreement and Camnet was entitled to terminate the Agreement by written notice. Again, I did not understand it to be in dispute that the Agreement was validly terminated by Camnet pursuant to clause 13.1 of the Agreement, however, insofar as it is in dispute, I find that Camnet validly gave notice of termination of the Agreement, pursuant to clause 13.1, on 18 August 2020 and that the Agreement came to an end seven (7) days later on 25 August 2020.
3. It was not in dispute that it was a term of the Agreement that the maximum term of the Agreement was "60 months after the last day of the calendar month of the Date of Commencement". The "Date of Commencement" was not contained on the first page of the Agreement, or anywhere else, and the "Commencement Date" was blank on the first page of the Agreement. However the parties accepted at the hearing that the "Date of Commencement" was the same as the "Date of Acceptance". Accordingly, it was not in dispute that it was a term of the Agreement that the maximum term of the Agreement was 60 months after 31 July 2017, being 31 July 2022.
4. The sole issue in dispute between the parties was whether the maximum term of the Agreement was varied by the document referred to at paragraph 11 of the statutory declaration of Mr Tang, and which I have referred to above in these reasons.
5. The importance of this issue becomes apparent when one has regard to clause 13.2 of the Agreement, which provided that: Upon such termination of this Agreement, You are immediately liable to pay us, without need for any prior demand, and both by way of liquidated damages arising from the Default Event and from the early termination of this Agreement, the Recoverable Amount, together with any other amounts payable under this Agreement.
6. Clause 21.1 of the Agreement defined "Recoverable Amount" as: (a) The sum of the Print Charges and any other monies then due and owing to us but not paid; plus (b) The sum of the Agreed Print Charge's for the remaining term (had this agreement not been terminated), but not yet due, (after deduction of any stamp duty and a deduction of our estimated likely savings for maintenance we will no longer be required to provide to you, calculated using the average service costs for the type of Goods, if any), discounted by applying a discount rate which when applied to the Agreed Print Charges for the balance of the term ensures that we receive the same rate of pre-tax profit after discounting that we would have received from this Agreement if all Agreed Print Charges were paid on their respective due dates; plus …
7. Camnet calculated the "Recoverable Amount" to be $31,495.45. Assuming the remaining term of the Agreement was until July 2022, this amount was not challenged by Sunrise. However, Sunrise submitted that the maximum term of the Agreement had been varied to 18 February 2021 and therefore the "Recoverable Amount" payable by Sunrise to Camnet under clause 13.2 was a lesser amount.

DETERMINATION

1. I do not accept the submission of Sunrise that the maximum term of the Agreement was varied to 18 February 2021.
2. The Agreement contained no requirements with respect to how variations were to be effected. For example, it did not require that variations be in writing.
3. The only clause of the Agreement to which the Sunrise drew my attention was clause 9.8, which provided that: If our expenses in connection with this Agreement increase (including cost per print toner costs and service costs) we may vary our charges accordingly by giving you notice.
4. Plainly that clause does not assist Sunrise as it says nothing about any variation to the maximum term of the Agreement.
5. As Brereton J (as his Honour then was) said in Moratic Pty Ltd v Lawrence James Gordon & Anor [2007] NSWSC 5; (2007) NSW ConvR 56-172; (2007) ANZ Conv R 198; (2007) Aust Contract Reports 90-255 at [21] to [24]: The terms of a contract may be varied by implied agreement arising from a course of dealing between the parties, and a party that seeks to rely on a term incorporated as a result of a course of dealing need not show that the other had actual knowledge of the term [Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31, 90, 104-105, 130; Proprietors Strata Plan 30102 v Energy Australia (NSWCA, 29 September 1997, BC9704799, p5], because the issue depends not on the actual subjective intentions of each party, but on what each was reasonably entitled to conclude from the attitude of the other [McCutcheon v David MacBrayne Ltd [1964] 1 WLR 125 (Lord Reid); Chattis Nominees Pty Ltd v Norman Ross Homeworks Pty Ltd (1992) 28 NSWLR 338, 343-4 (Cohen J); Pondicil Pty Limited v Tropical Reef Shipyard Pty Limited (FedCA, Cooper J, 1994, BC9406064; Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1967] 1 WLR 287 (Lord Diplock)]. Nonetheless, more is required to produce this result than mere failure to insist upon performance of a contractual obligation, even if protracted: a party to a contract does not lose its contractual rights by omitting immediately, or even promptly, to demand strict performance - unless there has been some event which amounts to a repudiation or waiver or founds an estoppel [Amherst v James Walker Ltd [1983] 1 Ch 305, 315 (Oliver LJ)]. Moreover, contractual variation requires a mutual intention to vary the existing contractual terms, and consideration. It is one thing to find that, in the absence of a written contract, the parties have by a course of dealing objectively adopted certain terms (as occurred in Proprietors Strata Plan 30102 v Energy Australia), but where the parties have recorded their agreement in writing and in detail, a mutual intention to vary the contract by omitting one of its express written terms is not lightly to be inferred from a course of conduct when the parties do not advert to the relevant term ... … Finally, consideration is required to support a contractual variation. Here, the suggested variation would have been exclusively for the benefit of the lessee, but it was entirely unsupported by any consideration moving from the lessee.
6. Here there was no conversation between Mr Tang and Mr Millar, or any other representatives of the parties, pursuant to which the parties expressly agreed to vary the terms of the Agreement to reduce the maximum term to 18 February 2021.
7. The evidence, at its highest, is that there was a unilateral statement by Mr Millar to the effect that the contract would "run until eighteen of february twenty one only". However, read in the context of the document he was referring to, and which he handed to Mr Tang, this statement was no more than expression of Mr Millar's understanding of what the information in that document meant. Plainly, Mr Millar's subjective understanding can have no bearing on whether, objectively, the parties varied the terms of the Agreement.
8. Further, there is no apparent connection between this unilateral statement and Mr Tang's concern about Camnet increasing its charges, which it was entitled to do pursuant to clause 9.8 of the Agreement. There is no suggestion that the parties agreed to reduce the maximum term to 18 February 2021 if, for example, Camnet did not increase the monthly charges payable by Sunrise under the Agreement. As set out above, after 18 September 2019, Sunrise continued to receive monthly tax invoices from Camnet with increased charges, which invoices it paid up until February 2020.
9. I am also unable to find the conduct of Camnet enough to warrant implication of an agreement to vary the terms of the Agreement to reduce the maximum term to 18 February 2021. I am not satisfied that the parties intended to vary the Agreement simply by virtue of Camnet providing the document to Sunrise and Mr Millar making a unilateral statement that was no more than expression of Mr Millar's understanding of what the information in that document meant.
10. Finally, as Brereton J said in Moratic Pty Ltd v Lawrence James Gordon & Anor (supra), consideration is required to support a contractual variation. Here, the suggested variation would have been exclusively for the benefit of Sunrise but was entirely unsupported by any consideration moving from Sunrise.
11. Accordingly, I reject the submission that there was a contractual variation of the Agreement to the effect that the maximum term was reduced to 18 February 2021: there was no mutual intention to vary the Agreement to that effect; and there was no consideration for any such variation.

FRUSTRATION

1. Although not referred to in its application, it seems that, at some point prior to the hearing on 26 March 2021, the applicant indicated that it intended to argue that the Agreement was discharged due to frustration. However, this submission was sensibly not pressed at the hearing and therefore I do not need to determine it.

Section 79O of the FTA

1. For the reasons set out above, pursuant to section 79O of the FTA: 1. I dismiss the claim made by the Applicant; and 2. I order the Applicant to pay the Respondent the sum of $31,495.45 immediately.
2. I do not consider that any of the factors referred in subsection 79U(2) of the FTA are material to the particular circumstances of this case.
3. Pursuant to subsection 79U(1) of the FTA, I am satisfied, having regard to all of the matters I have set out above, that these orders will be fair and equitable to all the parties to the claim.

Interest

1. The Tribunal does not have power to award interest on damages in the usual way as a Court would under the Civil Procedure Act 2005 (NSW).
2. However, clause 4.3 of the Agreement provided that Sunrise must pay Camnet interest, at the interest rate payable on default judgments under the rules of the Supreme Court of New South Wales, on any monies payable under the Agreement which may from time to time be overdue and also on any damages which Sunrise may be liable to pay to Camnet.
3. Rule 16.6 of the Uniform Civil Procedure Rules 2005 (NSW) provides that, for default judgment on a debt or liquidated claim, judgment may be given for a sum not exceeding the amount claimed, interest up to judgment and costs.
4. Practice Note No. SC Gen 16 sets the rate of pre-judgment interest that may be awarded under subsections 100(1) and (2) of the Civil Procedure Act 2005 (NSW) in the Supreme Court of New South Wales.
5. Accordingly, pursuant to section 79O of the FTA, I order the Applicant to pay the Respondent interest on the sum of $31,495.45, calculated in accordance with Practice Note No. SC Gen 16, immediately.
6. I do not consider that any of the factors referred in subsection 79U(2) of the FTA are material to the particular circumstances of this case.
7. Pursuant to subsection 79U(1) of the FTA, I am satisfied, having regard to all of the matters I have set out above, that this orders will be fair and equitable to all the parties to the claim.
8. To the extent necessary, I give both parties liberty to relist these proceedings before me for further directions to give effect to this order.

Costs

1. As these proceedings are in the Consumer and Commercial Division and the amount claimed or in dispute in these proceedings is more than $30,000, the Tribunal may award costs even in the absence of special circumstances warranting such an award: rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW).
2. As the Appeal Panel summarised in Carlson v ARA Engine Reconditioning Pty Ltd (No 2) [2020] NSWCATAP 39 at [32] to [35]: Clause 38 gives the Tribunal a wide discretion to make an order for costs. It does not specify the factors that must be taken into account in exercising the discretion, although the discretion to make such an order must be exercised judicially: see, for example, Ruddock v Vadarlis [2001] FCA 1865 at [9]. Where proceedings have been heard and determined on the merits and Clause 38 applies, the appropriate starting point for the exercise of the discretion is not that the parties are to pay their own costs. Rather, it is the well-established position at common law; that is, that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that a party who is successful is entitled to an order for costs in its favour, subject to exceptions generally involving misconduct on the part of that party: Latoudis v Casey [1990] 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11. In BNT Constructions Pty Ltd v Allen [2017] NSWCATAP 186, the Appeal Panel, having set aside a costs order made in the Consumer and Commercial Division, decided to re-exercise the costs discretion. Clause 38 was the applicable costs provision in that case. At [67] the Appeal Panel noted the following principles relevant to the exercise of the discretion: (1) the starting point is that a successful party should be entitled to an order for costs in his favour; (2) an award of costs is by way of an indemnity and not as punishment; (3) there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party; (4) the factors to be considered are not to be confined as to do so would constrain the general discretion; (5) the relative success of the parties on different issues and the time taken to determine them may be relevant; (6) the nature of the proceedings is relevant; (7) the proper exercise of the discretion requires a decision maker to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary and capricious.
3. The Respondent has been wholly successful. There is no reason why costs ought not follow the event.
4. Accordingly, I also order that the Applicant pay the Respondent's costs of these proceedings, on the ordinary basis, as agreed or assessed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 05 August 2021