Bartercard Ltd v Myallhurst Pty Ltd
[2000] QCA 445(Judgment by: Ambrose J)
Bartercard Ltd
vMyallhurst Pty Ltd
Judges:
Davies JA
Thomas JA
Ambrose J
Subject References:
CONTRACTS
CONSTRUCTION AND INTERPRETATION OF CONTRACTS
PENALTIES AND LIQUI-DATED DAMAGES
GENERAL PRINCIPLES
respondent operated business facilitating trade bar-tering between members
appellant company's membership terminated in circumstances where it had a negative trade dollar balance
whether contractual provision requiring payment of negative trade dollar balance in actual currency amounted to a penalty
where appellant received goods and services of substantial value
whether windfall to respondent
whether 30 day period for trading out of debt inadequate
genuine pre-estimate of the loss when precise estimation impossible
Case References:
Acron Pacific Ltd v Offshore Oil NL - (1985) 157 CLR 514
AMEV-UDC Finance Ltd v Austin - (1986) 162 CLR 170
Campbell Discount Co v Bridge - [1962] AC 600
CRA Ltd
&
Anor v New Zealand Goldfields Investments
&
Anor - [1989] VR 873
Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd - [1915] AC 79
Esanda Finance Corp Ltd v Plessnig - (1988) 166 CLR 131
Export Credits Guarantee Department v Universal Oil Production Co - [1983] 2 All ER 205
O'Dea v Allstates Leasing System (WA) Pty Ltd - (1983) 152 CLR 359
Judgment date: 27 October 2000
Judgment by:
Ambrose J
[30] I have had the advantage of reading the draft Reasons for Judgment of Thomas JA with which I agree.
[31] I wish only to make some additional remarks.
[32] Thomas JA has dealt with the terms of cl34(a) of the Trading Rules and Regulations of Barter Card Ltd.
[33] At the outset of the Barter Card Trading Rules and Regulations booklet, their purpose is stated in the following terms:-
"The purpose of the following Rules and Regulations is to facilitate trading among members by promoting a system of good business practice and understanding of the guidelines."
[34] Under cl7, BCL may make trade dollar credit lines available to any member and take collateral security for the member's indebtedness.
[35] Under cl9, BCL is required to maintain "bad debt reserve funds". It may elect to take the surplus of any fund which holds more than the anticipated need either as income for itself or for redistribution to its "members in good standing".
[36] I draw attention also to cl14 which inter alia provides:-
"14 SPECIAL TRADE PROCEDURE
The following procedures apply to transactions involving special orders, construction jobs, service work or long term leases and other work-in progress transactions.
- A
- Buyers should obtain a written estimate before authorising work to begin.
- B
- Before starting if appropriate seller should obtain a deposit or down payment in trade dollars in the same manner as a cash transaction. This is done with a completed BCL transaction voucher and authorisation number from BCL Credit Clearance if the amount exceeds $100.00. Seller should include in its contract that if buyer does not have sufficient trade dollars in its account when authorisation is requested, the difference must be paid in CASH TO THE SELLER. BCL will only issue an authorisation for the amount in the account and remaining useable credit line facility."
[37] I draw attention also to:-
"17 SURCHARGE
As an exception to the rule that trades will be made at prevailing prices (defined as normal or customary cash price), surcharges may be authorised by BCL in certain categories such as food, petrol, appliances, electronics and others where the gross margin of profit is relatively low. BCL will arrange the surcharge with each individual member. Members will be informed of any applicable surcharges."
[38] These provisions indicate that the agreement on its face seems not to differentiate between cash and BCL credit in trade dollars.
[39] The fact that some members may (contrary to the Rules and Regulations) sometimes transfer BCL trade dollars to others for a sum in cash less than their dollar currency equivalent, to my mind is of no assistance in determining the issues debated upon appeal.
[40] The conclusion to which Thomas JA has come, is supported in my view, by the terms of cl42 of the Rules and Regulations which reads as follows:-
"42 DISSOLUTION
If the BCL Barter Programme terminates or BCL otherwise ceases to do business all members in a negative trade dollar position will pay amounts they owe in cash (one trade dollar being equal to one dollar in cash in Australian currency) into a fund. The fund less expenses will be distributed pro-rata to all members who are in a positive trade dollar position. Thus, all members having a positive balance will receive cash for their trade dollars to the extent that the funds permit. BCL shall not be liable to any member for cash or trade dollars beyond the distribution of such funds as aforesaid."
[41] The essential contention of the appellant is that in effect it cost the respondent nothing to extend credit to the appellant because it was the members of the Barter Card system who provided the services on the Barter Card credit extended by the respondent at no cost to it. On the other hand, the respondent necessarily had an interest in maintaining the integrity of its Barter system and would be prone to financial loss in the event that members did not provide services in exchange for the credit which they were extended - albeit that the respondent would not suffer any direct or immediate loss should the credit be used up by a member who then failed to provide reciprocal services to other members of the Association. Non payment of the cash value of services rendered upon the credit extended to the appellant by the respondent might involve eventual resort to the "bad debt reserve funds" maintained by BCL under cl9.
[42] I agree with the observations of Thomas JA on this point that indeed, if the integrity of the system be not preserved in accord with cl34(a) it would put the maintenance of the whole barter scheme at risk.
[43] In the event that a member had its membership terminated with a negative trade balance any consequent resort to "the bad debts reserve funds" would or might deprive BCL of a profit to which it might otherwise be entitled under cl9.
[44] I agree that the appeal should be dismissed with costs to be assessed.