Blaze Advertising Pty Ltd v Momentum Accounting Pty Ltd

1. [1]

   HIS HONOUR: UCPR 29.7 provides as follows:

2. [2]

   When this matter was called on before me at 10am on Monday 29 July 2019, there was no appearance for either the second defendant or the fourth defendant. Mr Knowles of counsel for the plaintiff then indicated that he wished to proceed to have the matter dealt with under this rule and he applied for judgment pursuant to UCPR 29.7(3).

3. [3]

   Prior to the matter commencing on that day, my Associate received an email on the subject of the proceedings sent at 12.51am on 29 July 2019 from the fourth defendant in the following terms:

4. [4]

   Ms Lucy Tindal, a solicitor employed by the plaintiff’s solicitors Somerville Legal, was copied in on that email.

5. [5]

   At 10.30am on 29 July 2019, I adjourned the court so that Ms Tindal could attempt to contact Mr Carroll by email and attempt to ascertain his whereabouts or his attitude to the proceedings and whether he wished to appear. Ms Tindal wrote to Mr Carroll at 10.38.38 in the following terms:

6. [6]

   When the matter returned to court at 11.30am on 29 July 2019, no response from Mr Carroll had been received by Ms Tindal. My Associate has also received no further communication from him. That position endures.

7. [7]

   Blaze Advertising Pty Ltd sues to recover professional fees incurred by it in performing services as an advertising agency for the defendants. The claim against the first and third defendants has been settled. This is referred to later in these reasons.

8. [8]

   Cardinal House Pty Ltd and Paul Carroll were until recently represented by solicitors. Notices of ceasing to act for these parties were served and filed on 5 July 2019 in accordance with the rules. Neither Cardinal House nor Mr Carroll has since appointed any other legal representatives to appear for them.

9. [9]

   Blaze alleges that on or about 16 June 2016, it entered into an agreement with the first and second defendants whereby it would produce advertising and place media in relation to the Make A Wish Lottery. Mr Carroll was a director of the second defendant. The agreement is said to arise out of or to be evidenced by a letter from Cardinal House dated 20 May 2016 as well as from conversations between Chris Billings on behalf of Blaze and Mr Carroll in May and June 2016. The letter is in the following terms:

10. [10]

    Shortly thereafter, by email dated 29 July 2016, Mr Carroll forwarded a signed guarantee to Mr Billings as follows:

11. [11]

    The statement of claim filed on 9 May 2017 alleges that Cardinal House and Mr Carroll owe the sum of $994,943.97. Both Cardinal House and Mr Carroll have filed a defence maintaining that they do not owe that sum or any sum and that they are not liable for that amount. Each has filed a cross-claim replicating the terms of their respective defences and the basis for defending the claim made by Blaze. Two principal areas of dispute are raised.

12. [12]

    First, it is asserted that Blaze failed to carry out its work with reasonable care and skill, and also failed to ensure that the advertisements produced complied with relevant industry codes and standards. Secondly, it appears from the evidence filed by them that Cardinal House and Mr Carroll wish to contend that it was a term of Blaze’s engagement that it would only receive payment if and when sufficient funds were generated by ticket sales in the Make A Wish Lottery. That contention of a conditional payment obligation appears to extend to include both payment for Blaze’s professional services and reimbursement for disbursements incurred by Cardinal House and paid by Blaze to media companies for the advertising in question.

13. [13]

    To the extent that Cardinal House and Mr Carroll purport to maintain these defences and cross-claims, they rely upon affidavit evidence of conversations between them or their representatives and Blaze or its representatives. To the extent that it is presently relevant, the conversations that are relied upon would appear in terms to suggest some kind of variation to the written terms of the letter of appointment or the guarantee. The terms of these conversations, or any variation said to arise from them, are denied by Blaze.

14. [14]

    With respect to the first matter raised in defence of the statement of claim, Blaze anticipates that it relies upon a finding made by the Australian Standards Board that a single television advertisement for the lottery contravened the Wagering Advertising and Marketing Communication Code. Blaze disputes that contention. In any event, Cardinal House and Mr Carroll have led no evidence in an attempt to establish that Blaze’s work failed somehow to meet or to conform to some identified standard. Moreover, their evidence does not suggest that the alleged failure of the lottery was caused by the finding of the Advertising Standards Board. Rather, it suggests that the lottery was not generating sufficient ticket sales well before the finding was made or notified to the parties.

15. [15]

    With respect to the second contention, the evidence by Mr Billings filed on behalf of Blaze is to the effect that it was agreed that Blaze would not issue an invoice until after the advertising for the lottery commenced, not that payment of the invoices was conditional upon the success of the lottery in general, or upon the sale of a certain number of tickets in particular.

16. [16]

    Mr Carroll separately denies any liability for the debts or obligations of Cardinal House, notwithstanding that he signed the guarantee. The basis of his denial is not apparent from the evidence and is presumably based upon the contention that Cardinal House is not liable to Blaze in any way and that he is therefore not liable as its guarantor.

17. [17]

    Blaze relies upon the affidavits of Christopher Billings sworn 21 November 2017 and Emily Washbrook sworn 24 November 2017. Ms Washbrook deposes at [28] to the fact that the monies claimed have not been paid. All of the invoices relied upon, addressed to Mr Carroll at Cardinal House, are exhibited to Ms Washbrook’s affidavit.

Consideration

1. [18]

   Blaze appeared at the hearing but neither Cardinal House nor Mr Carroll did so. Blaze sues for a liquidated sum calculated by reference to invoices raised for work done by it for Cardinal House. I am satisfied that neither Cardinal House nor Mr Carroll has paid any part of the amount claimed. Mr Carroll is liable for the same liquidated amount upon proof that Cardinal House has defaulted on a claim made by Blaze for payment of the sum claimed. I am satisfied on the evidence that the amount due to Blaze is $719,943.97, being the amount due to it in respect of the cause of action for which the proceedings were commenced, less the sum of $275,000 paid by the first and third defendants. Mr Carroll is liable to Blaze for the same sum in accordance with the terms of his guarantee.

Interest

1. [19]

   Blaze also seeks interest upon the principal amount claimed up to and including 29 July 2019. As already noted, that principal sum has been reduced by $275,000 on account of a payment by the first and third defendants in settlement of Blaze’s claim against them. That sum was paid on 6 July 2018 so that receipt of the sum of $275,000 on that day has been taken into account in the interest calculations upon which Blaze relies. Blaze therefore claims interest upon the balance of $719,943.97.

2. [20]

   In support of the claim for interest, Blaze reads the affidavit of Lucy Tindal affirmed on 29 July 2019. The total amount of interest claimed is $127,123.52. Ms Tindal has set out her workings in the body of her affidavit and has exhibited a copy of the print outs of her calculations between pages 54 and 82 of the exhibit LT-1 to her affidavit.

3. [21]

   Blaze is entitled to interest in the amount claimed in the sum of $127,123.52.

Costs

1. [22]

   Blaze seeks costs up to and including 1 July 2019 on an ordinary basis and thereafter on an indemnity basis. The latter claim is based upon a letter dated 1 July 2019 from Blaze’s solicitor to Nino Odorisio at Hopwood Ganim, the former solicitors for Cardinal House and Mr Carroll. That letter is in these terms:

2. [23]

   The Offer of Compromise to which that letter referred is in these terms:

3. [24]

   Neither Cardinal House nor Mr Carroll responded to that letter.

4. [25]

   In accordance with the evidence in Ms Tindal’s affidavit, and taking account of the further submissions of Mr Knowles updating the relevant calculations, the total costs and disbursements claimed by Blaze up to and including 29 July 2019 are said to be $103,383.20. Of that sum, $77,646 was incurred prior to 1 July 2019. Blaze claims two thirds of that sum as if assessed on a party/party basis or $51,764. Costs incurred after 1 July 2019 in the sum of $25,737.19 are claimed on an indemnity basis. The total costs claimed by Blaze therefore amount to $51,764 on an ordinary basis plus $25,737.19 on an indemnity basis or the (rounded) sum of $77,500.

5. [26]

   In my opinion, Blaze is entitled to recover costs incurred by it after 1 July 2019 on an indemnity basis. The letter and offer of compromise are clear. The defendants ignored the letter and Blaze was entitled to proceed to the hearing in anticipation that the matter would be defended. The costs that it incurred in doing so could have been entirely avoided if the offer had been accepted. The result achieved by Blaze is uncontroversially no less favourable than the terms of the offer. It is unnecessary to consider whether the Offer of Compromise complies with the rules as it quite plainly operated as a Calderbank offer in the circumstances.

Gross sum costs order

1. [27]

   In addition to an order for the payment of its costs, Blaze seeks a gross sum costs order in accordance with s 98 of the Civil Procedure Act 2005. That section is relevantly as follows:

2. [28]

   I had cause to deal with this issue in an application pursuant to s 98(4)(c) in some detail in Hamod v State of New South Wales (No 13) [2009] NSWSC 756. The principles that I discussed remain relevant for the purposes of the present proceedings:

3. [29]

   In the present case, I have not been provided with expert or other evidence deposing to the reasonableness or otherwise of the costs claimed by Blaze. I hasten to observe that in my experience, the costs calculated and claimed by Blaze appear to me to be particularly appropriate, if not in fact somewhat on the low side, having regard to litigation of this type in this Court. I am also mindful of the fact that the assessment process would itself be certain to incur further costs for which one or other of the parties would ultimately be liable, depending upon the outcome of that process. Blaze does not appear to have foreshadowed an application for a gross sums costs order in any correspondence with Cardinal House of Mr Carroll with which I have been provided.

4. [30]

   However, if fairness is the touchstone of this provision, and having regard to the overriding purpose in s 58 of the Civil Procedure Act 2005, there is very little to be said for declining to make the order sought. There can be no doubt both that costs follow the event and that Blaze is entitled to a proportion of those costs on an indemnity basis. The amount claimed by Blaze for costs up to 1 July 2019 has already been discounted by one third in anticipation of such a reduction on a party/party assessment being made. In my opinion, that discount is more than reasonable.

5. [31]

   Having regard to the material before me, I consider that it is not necessary further to reduce the amount of the costs claimed by Blaze. All of Blaze’s solicitor’s costs and disbursements are set forth in invoices attached to Ms Tindal’s affidavit. As I have already indicated, the costs charged by Somerville lawyers seem to me to be entirely reasonable and appropriate.

6. [32]

   In my opinion, Blaze should be entitled to a gross sum costs order in the amount of $77,500.

Orders

1. [33]

   I make the following orders:

   1. (1)

      Judgment for Blaze Advertising Pty Ltd against Cardinal House Pty Ltd and Paul Carroll for $719,943.97 together with interest up to judgment in the amount of $127,123.52.

   2. (2)

      Order Cardinal House Pty Limited and Paul Carroll to pay Blaze Advertising Pty Ltd’s costs of the proceedings, which I specify as a gross sum pursuant to s 98(4)(c) of the Civil Procedure Act 2005 in the amount of $77,500.