Allied Express Transport and Allied Overnight Express Pty Ltd v Rowa Australia Pty Ltd
[2007] NSWLC 14
•15/06/2007
Local Court of New South Wales
CITATION: Allied Express Transport and Allied Overnight Express Pty Ltd v Rowa Australia Pty Ltd [2007] NSWLC 14 JURISDICTION: Civil PARTIES: Allied Express Transport (1st plaintiff)
Allied Overnight Express Pty Ltd (2nd Plaintiff)
Rowa Australia Pty Ltd (Defendant)FILE NUMBER: 101078/06 and 101079/06 PLACE OF HEARING: Downing Centre Local Court DATE OF DECISION:
06/15/2007MAGISTRATE: Magistrate H Dillon CATCHWORDS: Contracts – Construction of contract – Whether defendant bound by written contract – Whether written contract varied orally – Construction of terms concerning applicable charges for deliveries carried out by plaintiff for defendant – Whether terms agreed had retrospective effect -- Whether requirement that plaintiff provide proof of delivery an essential term of contract -- Basis for quantification of damages. LEGISLATION CITED: CASES CITED: BP Refinery (Westernport) v Hastings Shire (1977) 52 ALJR 20
Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130
Codelfa Constructions Pty Ltd v State Rail Authority (1982) 149 CLR 337
Foley v Classique Coaches Ltd [1934] 2 KB 1
Jones v Dunkel (1959) 101 CLR 298
L’Estrange v Graucob [1934] 2 KB 394
Port Jackson Stevedoring Pty Ltd v Salmond & Spragon (Aust) Pty Ltd (1977) 139 CLR 231
Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444
Thorby v Goldberg (1964) 112 CLR 597
Toll v Alphapharm (2004) 219 CLR 165REPRESENTATION: Mr J. Hassett (Counsel for Plaintiff)
Hassett Dixon (Solicitors for Plaintiff)
Mr J. Clifton(Counsel for Defendant)
Ziman & Ziman (Solicitors for Defendant)ORDERS: Verdict for the plaintiff with quantum to be assessed. Costs reserved.
Judgment
1 In February 2005, the plaintiffs, Allied Express Transport Pty Ltd and Allied Overnight Express Pty Ltd, related transport and courier companies, submitted a joint proposal to Rowa Australia Pty Ltd, the defendant, for the provision of transport services. Allied Express operates a Sydney metropolitan carrier service and Allied Overnight operates a long-distance or regional service. They operated, in effect, as arms of the same organisation. It is convenient, therefore, at most points in these reasons to refer to the plaintiffs as “Allied”. Where it is necessary to differentiate them that will be done. With the covering letter sent by Mr Ray Persini, Allied also provided a document setting out the various services available and the relevant rates applying to them. In August 2005, the parties entered a written agreement. Allied provided transport services to Rowa until about the end of October 2005.
2. The claim by Allied Express is to a sum of $15,587.53 in respect of eight invoices served on Rowa for services rendered. The claim by Allied Overnight is to a sum of $8880.25 in respect of seven invoices. It is agreed by Rowa that the sums claimed have not been paid. It concedes liability in respect of all but for a sum of $4818.92. Construction of the contracts and quantum are the main issues for determination.
3. Background and issues
4. Most of the facts in the matter are not disputed. During February 2005 Rowa sought to replace its previous carrier with another firm. Among others, it obtained a proposal from Allied. Between February and August 2005, Mr Persini of Allied and Mr Robert Nati of Rowa discussed the proposal.
5. On 12 August 2005, Rowa needed a transport job done urgently and requested that Allied carry it out. Messrs Persini and Nati met. On that day, Mr Nati signed a “customer acceptance form”, a standard form produced by Allied recording the terms upon which it supplied services to its clients and their acceptance of the terms. Various blank parts of the form were filled in. On the page of the form headed “Acceptance”, in a block of writing above Mr Nati’s signature, was the following:
I hereby acknowledge and accept the above rates and terms presented herein on Quote number S-7170 on behalf of Rowa Australia Pty Ltd. Once accepted please fax this page to [Allied]. This fax will ensure that your rates and services are correctly entered into our computer system.
6. Below the signature block, Mr Nati also wrote two non-standard terms or notations onto the form at the time he signed it: first, “This is only temporary for the previously [sic] deliveries & to set up account. New terms & conditions to be agreed”; and, second, “Note. This is only to set up account & new terms & conditions to be agreed on for future deliveries.” Allied executed the contract.
7. On 6 September 2005, Messrs Nati and Persini met once more and negotiated the terms of the contract as foreshadowed in the August document. It is common ground that the parties agreed on a “pallet rate” rather than an hourly rate or a distance rate. There are, however, a number issues of fact and law, that remain in dispute:
- What were the terms agreed upon for the 12 August transaction?
- Was Allied entitled to charge “flagfall”?
- Was Allied entitled to charge travel time?
- Was the agreed “pallet rate” was $46 for the first pallet and $23 per pallet for each subsequent pallet or $23 per pallet if two or more pallets were carried?
- Was the agreed hourly rate for a semi-trailer was $70 or $82.50?
- Was a fuel levy of 2.9 per cent applicable to all transactions?
- Did the intrastate pallet rates negotiated on 6 September 2005 apply to transactions earlier than that date or did the standard terms apply?
- Was Allied obliged by the terms of its contract to provide a copy of a Proof of Delivery document (“POD”) before it could request payment?
- Has Rowa miscalculated the sum outstanding in any event?
What were the terms negotiated on 12 August?
8. Both Messrs Nati and Persini agree that during their discussions leading up to 12 August 2005, Mr Persini insisted that he preferred a pallet rate rather than an hourly rate as suggested by Mr Persini. Mr Nati conceded, however, that for the 12 August transaction, because of the urgency of the job and the fact that no contract had yet been finally agreed between Allied and Rowa, he had accepted an hourly rate for that job only.
9. Mr Persini’s evidence about the 12 August meeting was that he had opened an account for Rowa to enable the delivery to be done. He said that Mr Nati agreed to pay an hourly rate for deliveries done to that time. He also agreed with Mr Nati’s evidence that rates for future deliveries would be negotiated further. He said that Mr Nati had made some notes on the customer acceptance form and agreed with Mr Nati that at the time Mr Nati had signed the document the box for the charges had not been filled in.
10. Mr Persini’s evidence was that he had met Mr Nati on 6 September 2005 “to finalise the charges”. On that date, they had discussed the competing offer Rowa had received from another firm and concluded an agreement on a pallet rate.
11. By 12 August, Rowa had had the Allied proposal, setting out its various services and rates for about six months. The plaintiff submits that Rowa agreed to those terms by virtue of Mr Nati signing the customer acceptance form on that date, subject to the proviso that further negotiations may lead to a variation of the contract or a new contract. It submits that until a new contract was formed, Allied and Rowa were bound by the terms of the 12 August written agreement.
12. Rowa contends, on the other hand, that the understanding between the parties on 12 August was that the written contract applied only to a one-off job which it needed done urgently and that the written agreement was signed so that Allied could establish an account for Rowa pending the negotiation of a new agreement. Its submission is that the parties agreed that all further services provided by Allied were to be subject to the terms of the new agreement. In short, Rowa contends that the new contract was to have retrospective effect. That, it argues, is consistent with the notations placed by Mr Nati on the written agreement of 12 August and accepted by Mr Persini.
13. The other major question concerning the terms agreed in August is whether the written terms of the document provided to Rowa in February were varied orally. The plaintiff argues that the defendant is bound by the written document whereas the defendant contends that in relation to at least some of the terms, oral variations were agreed. It is convenient now to turn to the specific issues.
Was Allied entitled to charge “flagfall”?
14. In Allied’s rates and services document, sent to Rowa for consideration on 22 February 2005 Ex 1., hourly rates for various types of vehicles available from Sydney Taxi Trucks (part of Allied’s operation) were listed. Below the table outlining the vehicle sizes, charges and minimum periods of hire was the following note: “Please note: A flag fall of half an hour will apply for all jobs”.
15. Mr Nati gave evidence that he was unaware of the provision for flagfall in the contract he signed on 12 August. He said that he was unaware of any other transport company imposing such a condition. He said that it had not been brought to his attention before he signed the contract.
16. That, in my view, makes no difference. In Toll v Alphapharm (2004) 219 CLR 165, the High Court affirmed the principle set out in L’Estrange v Graucob [1934] 2 KB 394. It said (at [45] & [47]):
It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it…
Legal instruments of various kinds take their efficacy from signature or execution. Such instruments are often signed by people who have not read and understood all their terms, but who are nevertheless committed to those terms by the act of signature or execution. It is that commitment which enables third parties to assume the legal efficacy of the instrument. To undermine that assumption would cause serious mischief.
17. Mr Nati signed a written commercial contract on behalf of Rowa. Absent fraud or misrepresentation or unconscionable conduct on Allied’s part or some other vitiating factor, of which there has been no evidence, Rowa must be bound by the terms of that contract. Rowa must be liable in respect of the flagfall claimed by Allied at least in respect of the job done by Allied for it on or about 12 August 2005.
Was Allied entitled to charge travel time?
18. The evidence concerning this question from the plaintiff’s point of view is, once again, Allied’s terms of trade sent to Rowa on 22 February and the written contract signed by Messrs Nati and Persini for their respective companies. The same list of services and charges referred to in relation to the flagfall issue is relevant here.
19. Regarding hourly rates the terms set out in the contract were as follows:
Rates are based on the above grid. A relocation time of half an hour for all vehicles between one and five tonne, and one hour between six and eight tonne, will apply. A depot to depot charge will apply for all vehicles 8 tonne and over, and for all vehicles with specialised equipment.
20. Once again, this was a term that Mr Nati appears to have overlooked in his haste to obtain the services he required from Allied. The conclusion must be the same as it was in relation to flagfall: by signing the contract Mr Nati accepted the condition whether or not he was aware of it or had it specifically brought to his attention by Allied.
What was the agreed pallet rate?
21. Allied had three categories of charges: an hourly rate, a distance rate and a “pallet” rate. The pallet rate referred to the delivery of numbers of pallets of goods. According to Allied’s terms, pallet rates were negotiable. It is the undisputed evidence that Allied initially suggested that Rowa accept an hourly rate but that Mr Nati had refused this and sought a pallet rate, the ultimate charge being more predictable. It is common ground that, some time after 12 August 2005, the parties agreed upon a pallet rate. The agreed rate, however, is in dispute.
22. According to Mr Persini’s statement, when he met Mr Nati as Allied’s agent on 12 August 2005, Mr Nati and he had agreed “that rates for future deliveries were to be finalised and [Mr Nati] said words to the effect [that] ‘I want good prices per pallet.’” He said that Mr Nati had annotated the written acceptance form and signed it. He said that “accordingly the charges on the Customer Acceptance Form within the agreement were not filled in.” Ex 6. Mr Persini was not cross-examined.
23. Mr Nati gave evidence that in the course of negotiations concerning the pallet rate, Mr Persini had, in about June 2005, presented him with a document headed “Rowa Distribution Cost Analysis”. That document outlined three alternative methods of charging. One of these was a pallet rate of $40 for the first pallet and $27.50 for subsequent pallets. This was described by Allied as “Charge A”. Mr Nati said that he had told Mr Persini that other companies could offer a better rate and that he would not accept the proposal. He said that Mr Persini had asked for the rates others had offered to see whether Allied could match them.
24. Mr Nati gave evidence that on 6 September 2005 he had met Mr Persini. He told Mr Persini that he had received a quotation from VIP Transport that he considered to be too high. That quotation had proposed a rate of $35 per pallet for up to four pallets and a reduction thereafter. He said that he had also showed Mr Persini a quotation from RPM Freight & Logistics and asked Mr Persini whether Allied could match the rate offered by RPM. RPM’s rate was $23 per pallet, with a minimum charge of $23. In his witness statement, Mr Nati does not record Mr Persini’s response and Mr Persini was not called to give oral evidence.
25. In his statement, Mr Nati asserted that agreement was reached that Allied would charge $46 for the one pallet; $23 each for up to four pallets; $21 each for four to six pallets; $18 each for six to ten pallets and a flat rate of $13.64 for each pallet returned, these charges all being for the Sydney metropolitan area. Mr Nati made a contemporaneous note of the agreement at his meeting with Mr Persini. They also agreed upon a charge of $75 per pallet for deliveries to Wollongong, Gosford and Newcastle and $80 for Canberra. In his oral evidence, Mr Nati added that the rates applied to single destinations. So, for example, one pallet from A to B would cost $46 and a pallet from A to C would also cost $46 (even if delivered by the same truck).
26. Mr Persini’s record of the agreement is slightly but significantly different from that of Mr Nati’s. His evidence was that the agreement was that for Sydney metropolitan deliveries charges were as follows: “1 pallet at $46; 2 to 4 pallets at $23.00 each; 4 to 6 pallets at $21.00 each; 6 to 8 pallets at $18.00 each; and [a] flat rate of $13.64 for each pallet returned.” His note reads: “1 pallet → $46; 2-4 →$23; 4-6 → $21; 6-10 → $18.” Those rates were bracketed and beside the bracket he placed a note “P/PALLET”.
27. The plaintiff’s case is that Allied was entitled to charge $46 for the first pallet and $23 (or a lesser sum depending on the number of pallets) for successive pallets delivered. The defendant’s contention is that the rate of $46 applied only when only one pallet was being delivered to a particular destination, otherwise the lesser rate applied depending on the numbers of pallets delivered.
28. In my view, it is plain from Mr Persini’s own note that he intended to offer a rate on the basis asserted by the defendant. The bracketing of the rates on his file note with the annotation “P/PALLET” (which obviously means “per pallet”) must be read as applying a rate of $46 for one pallet but $23 per pallet if two pallets are delivered. This is the obvious and commonsense reading of that note and Mr Nati’s. It is also consistent with the Allied seeking to compete with RPM for Rowa’s business and Rowa attempting to drive a reasonably hard bargain with Allied. RPM was offering a rate of $46 for two pallets. Why, if Rowa was trying to get a competitive rate from Allied would it accept a rate of $69 for two pallets, as the plaintiff now asserts, when it could have RPM deliver three for that price? Mr Persini must have perceived this and sought to offer a rate that was very close to RPM’s. In any event, if there is an ambiguity, the contra proferentum rule would apply and the defendant’s construction be preferred to the plaintiff’s.
Was the agreed hourly rate for a semi-trailer was $70 or $82.50?
29. The next issue for consideration is the hourly rate agreed for a semi-trailer. The plaintiff alleges that the defendant is bound by the terms of the written conditions sent to Rowa on 22 February 2005. That document provided that the hourly rate for semi-trailers was $82.50. Mr Persini gave no direct evidence of any discussion about the semi-trailer rate. The highest his evidence goes is that Mr Nati had agreed to pay an hourly rate for the urgent work done for Rowa on or about 12 August 2005. As noted previously, Mr Persini was not called to give oral evidence.
30. Mr Nati gave evidence that on 12 August 2005, when he was discussing the urgent job moving televisions, he had worked out a pallet rate and had offered Mr Persini an hourly rate of $70.00 for the use of a semi-trailer. He said that, after some haggling about the rate, Mr Persini had agreed.
31. Apart from the document upon which it relies, the plaintiff, having failed to call Mr Persini to give oral evidence on this point, has no evidence to contradict Mr Nati’s account. Mr Nati, on the other hand, was subjected to cross-examination and maintained his evidence. Unfortunately, neither Mr Nati or Mr Persini thought fit to make a note of this aspect of their agreement.
32. The plaintiff asserts that the defendant, having signed a written contract, must be bound by its terms. As I have already pointed out above, ordinarily that would be the case. Here, however, there is reasonable and plausible evidence from Mr Nati to suggest that, notwithstanding the terms of the written document, it was the intention of Messrs Persini and Nati, as agents for their respective companies, to bind them to a rate different from that set out in the document sent as an offer by Mr Persini to Mr Nati in February. Mr Nati had been, it is conceded by the plaintiff, negotiating the deal that ultimately crystallised in September 2005 for several months. Mr Persini was clearly keen to obtain a long-term account and ultimately did so. It may well have been perceived by Mr Persini that it was in Allied’s interests, therefore, to offer an incentive to Rowa by discounting its usual semi-trailer rate on a one-off basis.
33. There is no direct evidence to contradict Mr Nati’s account of what had happened during that discussion. No further evidence was called from Mr Persini after the service of Mr Nati’s second statement raising the claim that the agreed semi-trailer rate had been $70 per hour. That raises an inference that his evidence on this point would not have assisted the plaintiff. See Jones v Dunkel (1959) 101 CLR 298.
34. Although the signed written contract is prima facie evidence of the terms of the contract, it is more probable than not, in my view, that Mr Persini made the concession asserted by Mr Nati. If that is so, Allied must be estopped by its conduct from enforcing the term upon which it now relies to the extent that it seeks to do so. Rowa, of course, concedes that it is liable in respect of $70 per hour for the use of the semi-trailer.
Was a fuel levy of 2.9 per cent applicable to all transactions?
35. The plaintiff’s standard terms and conditions provided for the application of a fuel levy to all transactions of 2.9 per cent. It stated: “Please be advised that until further notice a fuel surcharge of 2.9% is currently being charged for all Allied Express services…” It is upon this term in the written contract that the plaintiff relies. Once again, Mr Persini gave no direct evidence on the topic. It is to be noted from the quotations from other carriers obtained by Mr Nati that it appears to be standard industry practice to apply a fuel surcharge to carrier’s invoices. VIP added five per cent and RPM applied a 10 per cent margin.
36. Mr Nati, however, gave evidence that in the course of his negotiations with Mr Persini concerning the use of the semi-trailer he had discussed the fuel levy with Mr Persini, had told Mr Persini that he wanted a total price with no surprises and that he had been given a fixed rate of $70.00 per hour covering all charges. There is no evidence, apart from the written terms of the contract itself, to contradict this.
37. In my view, exactly the same arguments apply in relation to this question as to previous issue and the determination must be the same.
Did the 6 September 2005 rates apply to transactions earlier than that date or did the standard terms apply?
38. This is possibly the most difficult of the issues to determine from the evidence. The plaintiff’s case is that, pending the formation of a fresh agreement on 6 September 2005, any services provided by Allied were supplied subject to the standard terms and conditions. As I understand the defendant’s position it is either that the agreement made on 12 August 2005 was that, pending the formal agreement then under negotiation, any services provided would be charged for on the basis of the terms to be agreed, in particular, a reasonable pallet rate or that it is putting the plaintiff to proof that the rate charged was the appropriate rate.
39. I was not referred to any authority by either party nor was I addressed in relation to the principles to be applied. It only became apparent to me when I considered the parties’ submissions more closely after the decision was reserved that, on one view, never expressly argued by the defendant, its version of events on this point possibly raised an issue of promissory estoppel. See Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130. It claims that a promise was made to it that the hourly would apply only once (to the Kalamazoo job) and that, for all future jobs, Allied would apply a pallet rate still to be negotiated and implied by its argument that Allied should not be permitted to claim the hourly rate rather than the pallet rate for deliveries made before 6 September 2005. If that is what the defendant was in fact arguing, it is not an issue that this court can take up because that is a claim for equitable relief, outside this court’s jurisdiction. It also occurred to me that although the case was not put expressly on this basis, the defendant may have been arguing that the contract was conditional. It may be overly scrupulous of me, as it is not entirely transparent that these issues have been raised, but, lest I do the defendant an injustice I will deal with that question below.
40. How then is the court to approach the problem? In Toll v Alphapharm (2004) 219 CLR 164 the High Court set out the proper approach to the construction of the contract. It said (at [40]):
It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.
41. Mr Persini and Mr Nati are largely consistent in their accounts of what was said and done on 12 August 2005 when Mr Nati signed the contractual document and made his annotations. To reiterate the evidence, Mr Nati signed the following acknowledgement:
I hereby acknowledge and accept the above rates and terms presented herein on Quote number S-7170 on behalf of Rowa Australia Pty Ltd. Once accepted please fax this page to [Allied]. This fax will ensure that your rates and services are correctly entered into our computer system.
42. He also wrote: “This is only temporary for the previously [sic] deliveries & to set up account. New terms & conditions to be agreed” and “Note. This is only to set up account & new terms & conditions to be agreed on for future deliveries.”
43. Concerning the 12 August meeting, Mr Persini stated that Mr Nati “agreed to pay on an hourly charge for deliveries made up to that time. Further we agreed that rates for future deliveries were to be finalised and [Mr Nati] said words to the effect ‘I want good prices per pallet’.” At about the same time Mr Persini saw Mr Nati make notes to that effect on the customer acceptance form. He said that he had met Mr Persini on 6 September 2005 “to finalise the charges.” At this time the pallet charges discussed above were agreed.
44. For there to be a binding contract, the essential terms and conditions must be clear and certain. It was said by the High Court in Thorby v Goldberg (1964) 112 CLR 597 (at 607):
It is a first principle of the law of contracts that there can be no binding and enforceable obligation unless the terms of the bargain, or at least its essential and critical terms, have been agreed upon. So, there is no concluded contract where an essential or critical term is expressly left to be settled by future agreement of the parties. Again, there is no binding contract where the language used is so obscure and incapable of any precise or definite meaning that the court is unable to attribute to the parties any particular contractual intentions.
45. Describing what they call “a special form of conditional contract”, the learned authors of Cheshire & Fifoot’s Law of Contract (7th Aust edn) tell us that “it is possible to make a pre-contractual agreement which will ripen into contract on the happening of a given event.” Butterworths, Sydney 1997 p.201. They draw this proposition from some observations of Barwick CJ in Port Jackson Stevedoring Pty Ltd v Salmond & Spragon (Aust) Pty Ltd 139 CLR 231 (at 243-244):
As I see it, we have here an arrangement, a compact with agreed conditions to attend the performance of certain acts, which are not promised to be done. True enough that, until such performance, the consensus has nothing upon which to operate. But that is its essential characteristic, to provide an agreed consequence to future action should that action take place: to attach conditions to a relationship arising from conduct. If one desires to use the terms, it could be said that the arrangement is mutual: it is bilateral: to it there are two parties both agreeing to the terms of the intended consequence, on the one hand the consignor and on the other the stevedore acting through its authorized agent, the carrier. The performance of the contemplated act both supplies the occasion for those conditions to operate and the consideration which makes the arrangement contractual. The document containing the basic terms and conditions for stevedoring at Sydney to which I earlier referred is another instance of an arrangement made between parties to regulate their relationship in the event that one of them in fact became the stevedore of the other's ship.
46. He went on, however, to say that “there is a fundamental difference between providing consideration to support a consensual arrangement otherwise made and the acceptance, by performance of an act, of an offer not otherwise accepted.” Port Jackson Stevedoring Pty Ltd v Salmond & Spragon (Aust) Pty Ltd (1977) 139 CLR 231 at 246. Barwick CJ’s judgment was upheld by the PC: see Port Jackson Stevedoring Pty Ltd v Salmond & Spragon (Aust) Pty Ltd (1979) 144 CLR 300.
47. It is common ground between the parties that on 6 September 2006 the parties entered a binding agreement based on a pallet rate. Clearly, before that could be done, an agreement was needed in relation to the pallet rate to be charged by Allied. This was an essential condition, critical especially to Rowa.
48. Between 12 August and 6 September 2005, Allied provided carrier services to Rowa on a number of occasions. For them it appears that Allied charged Rowa the hourly rate (the parties not having negotiated a pallet rate at that time). Mr Nati’s evidence was somewhat opaque on this point. His statement is to the effect that he considered that Allied had overcharged Rowa in this period but does not explain how he arrived at the conclusion. This may have been from a comparison of pallet rates and hourly rates but the evidence is not clear on this point. His evidence was that he had challenged the relevant invoices and had received no satisfaction. He said that he had made three attempts to have the invoices corrected by Allied but, again, was not explicit about what needed to be corrected or why.
49. I have referred to Port Jackson Stevedoring because, although that case was not specifically referred to by the parties, I gleaned from the submissions that the position taken by Rowa is or may be that it considers that the Allied overcharged it by not applying the pallet rates agreed on 6 September 2006 to earlier transactions. That submission, if I understood it correctly, is that when Mr Nati annotated the customer acceptance form on 12 August 2006 both parties understood that the agreement related only to the one-off job (referred to as the “Kalamazoo job”) and that any future transactions were to be based on a pallet rate to be determined by negotiation some time in the future. This appeared to me to raise the question whether the parties had entered a conditional agreement.
50. In Port Jackson Stevedoring, however, all the terms were well understood by the parties before the contract was triggered. That is not the case here. While negotiations had commenced and the prospects of reaching agreement on a pallet rate were good, the terms as to the charge had not been agreed and would not be until 6 September. The parties were not awaiting an event to generate or crystallise the contract. Unless fundamental terms had been agreed and were certain, it seems to me that not even a conditional contract could have been formed by parties in the circumstances of this case.
51. Both parties agree that they between 12 August and 6 September 2005 they were contractually bound to each other. There is no suggestion that Allied provided its services as some form of gratuity to Rowa. If that is so, it seems to me that, from an objective point of view, the consideration agreed upon from Rowa’s point of view was either to pay what Allied charged in accordance with its standard terms or, by virtue of an implied term of the contract See generally BP Refinery (Westernport) v Hastings Shire (1977) 52 ALJR 20; Codelfa Constructions Pty Ltd v State Rail Authority (1982) 149 CLR 337., to pay a reasonable, but unspecified, sum. See, for example, Foley v Classique Coaches Ltd [1934] 2 KB 1 and Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444.
The two things may be synonymous in the circumstances.
52. At one point in his cross-examination, Mr Nati conceded that he had “given in” to the hourly rate for the one-off Kalamazoo job. He did not elaborate on this admission but it was a significant piece of evidence. At that time, Rowa needed work done urgently because its previous carrier, Kalamazoo, had gone or was about to go into liquidation. The progress of Rowa’s discussions with Allied suddenly accelerated. Rowa abruptly needed a carrier and needed certainty as to the costs of those services. In the meantime, the key issue for Rowa must have been to maintain its supplies to its customers to preserve its good commercial relations with its clients.
53. In those circumstances, pending the settlement of the pallet rate, it seems more likely than not that Rowa accepted whatever reasonable terms Allied offered. Absent other more cogent evidence, those appear to have been its standard terms and conditions as set out in its document of 22 February. Mr Nati had signed an acknowledgment and acceptance of those terms and, in my view, there was no other contractual limitation placed upon them. No specific oral discussion of them appears to have taken place other than on 12 August.
54. It was, on or after 6 September 2005, open to the parties to come to an agreement retrospectively to deal with the deliveries between 12 August and 6 September by varying the implied terms and ratifying the variations but that did not happen. This would have required some unambiguous conduct on the parts of both parties. Quite the reverse was the case.
55. As was noted above, the High Court’s decision in Toll v Alphapharm affirms the objective approach to the construction of contractual terms. A consideration not only of the text of the standard terms, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction is necessary to construe the agreement accurately.
56. It seems implicit from that evidence that the parties intended that the standard terms operate unless expressly varied, pending the conclusion of their dealings concerning the pallet rate. There were no other terms under discussion. It follows that between 12 August and 6 September 2005 those were the relevant terms of the contract. Given that the only charges under active consideration by either party were the hourly rate and the pallet rate, and that the pallet rate had not been agreed, it appears to me that the reasonable construction of the agreement – regardless of the subjective intentions of Mr Nati and Rowa – is that the hourly rate set out in the standard terms was to apply (but varied in the case of the use of the semi-trailer for the one-off Kalamazoo job).
Was Allied obliged to provide a Proof of Delivery document?
57. The plaintiff’s standard terms document stated, “Allied Overnight Express are happy to provide you with Proof of Deliveries [“PODs”] and copies of assignment notes on request. Please be advised that extensive requests will attract a service charge of $10.00 per Proof of Delivery. This fee will be waived if service failure had occurred.”
58. The customer acceptance form, signed by Mr Nati, notes that “An insurance claim is not a reason to withhold payment. A Proof of Delivery is not a requirement for invoice payment.”
59. It is common ground that four consignments were not paid for by Rowa. According to Mr Nati, this was because Allied had not provided PODs. Mr Nati stated that Rowa had requested PODs, running sheets or other documents to substantiate deliveries on a number of occasions without success.
60. His evidence was that he had made clear to Allied from the time discussions began in February 2005 that Rowa would require proof of delivery for all consignments. He said that he had told Mr Persini that Rowa would not pay for a delivery unless a POD was supplied. He said that he had been unaware that Allied would charge for PODs but that he had not thought about that issue because of the need for PODs in all cases. In cross-examination, he conceded that he had not discussed with Mr Persini what would happen if a POD was not provided by Allied.
61. He agreed that a number of deliveries had been made without a POD and without an complaint from Rowa’s clients that no delivery had taken place. He explained that, nevertheless, Rowa had required a POD so as to obviate any such complaints or claims against it. Given the importance apparently attached by Rowa to PODs, it seems more likely than not that Mr Nati requested Allied to provide a copy of a POD in every case. There is no evidence to contradict his. The standard terms certainly provide for the possibility that a customer may request PODs in every case but implies that such an approach would result in Allied charging for them. Whether or not Mr Nati told Mr Persini that Rowa would not pay Allied if it did not get a POD for every delivery, that took place in the course of negotiations. It may have been Mr Nati’s subjective intention that the provision of a POD be an essential condition of the contract but that is not what he signed. Once Mr Nati signed the document, Rowa was bound by it. While I accept that there was an oral variation of the contract to the effect that Allied would provide PODs (or some equivalent) in respect of all deliveries, it was also a term they would pay for that service. Unlike the charges and fuel levy, which were clearly fundamental terms and which had been varied by sums certain, the provision of PODs could not be characterised as a fundamental term of the contract, notwithstanding any subjective intentions Mr Nati may have had.
62. Two things must be noted. First, the notes to the customer acceptance form clearly indicate that a failure to provide a POD would not result in a fundamental breach of contract and relieve a customer of Allied’s of its obligation to pay for the services provided. Second, even if that is incorrect, Allied would have a right to a quantum meruit for the services it provided pursuant to the contract.
63. Allied had no contractual obligation to provide a POD except on request. On the evidence before me, it is more likely than not that it became an oral term of the contract that Allied would provide PODs in respect of all deliveries carried out for Rowa and would charge the agreed service for it. This was an amplification of the terms in the written contract and did not transform the POD term into a fundamental condition of the contract. Accordingly, Allied’s failure to provide PODs as agreed did not entitle Rowa to refuse payment. Its remedy, such as it was, was to seek damages for the alleged breaches of a non-essential term. By refusing to pay for the services provided on the basis that a POD had not been provided, Rowa itself breached the contract in a fundamental way and gave Allied the right to terminate the contract and seek damages.
64. No cross-claim has been filed by Rowa and the evidence of Mr Nati was to the effect that in practice Rowa had not suffered any loss as a result of Allied failures to provide PODs on some occasions.
Quantum
65. In the course of argument, each party made submissions as to quantum, criticising the other’s calculations. It is evident from my findings above that those calculations have gone by the board as I have found for the plaintiff in relation to some questions and for the defendant in relation to others. I propose to request that, if possible, the parties agree upon the correct figure or, failing agreement, provide short written submissions within 14 days.
Verdict
66. There will be a verdict for the plaintiff with quantum to be assessed.
67. I reserve the question of costs.
Hugh Dillon
Magistrate
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