B and L Seedgraders v Cusack
[2007] QMC 11
•2 July 2007
MAGISTRATES COURTS OF QUEENSLAND
CITATION:
B & L Seedgraders v Cusack [2007] QMC 11
PARTIES:
B & L SEEDGRADERS
(plaintiff)
v
CLAYTON CUSACK
(defendant)
FILE NO/S:
M65/06
DIVISION:
Magistrates Courts
PROCEEDING:
Claim
ORIGINATING COURT:
Magistrates Court at Dalby
DELIVERED ON:
2 July 2007
DELIVERED AT:
Dalby
HEARING DATE:
20 February 2007
MAGISTRATE:
Stjernqvist H
ORDER:
Judgment for the Plaintiff against the defendant in the amount of $6 317.20 for the claim, plus costs and interest pursuant to the Supreme Court Act 1995 (as amended).
CATCHWORDS:
CONTRACTS — BREACH OF CONTRACT — implied terms of contract in accordance with custom or trade usage — contract for the sale of wheat – whether silence can show acceptance of contract
COUNSEL:
Lippett for plaintiff
Hogan for defendant
SOLICITORS:
Carvosso & Winship for plaintiff
Sheehan & Co for defendant
The Claim.
This is a Claim heard in the Magistrates Court at Dalby on 20 February 2007 wherein the Plaintiff claims by way of its Claim and Statement of Claim the following relief:
1. Damages for breach of the agreement being the difference between the value of the wheat the Defendant had agreed to sell to Plaintiff and the value of general purpose wheat Plaintiff had to buy in, in order to honour its contractual obligations namely, $6 317.20.
2. Interest pursuant to section 47 of the Supreme Court Act.
3. Costs.
The pleadings in the Claim and Statement of Claim set out the matters and allegations relied on by the Plaintiff. Relevantly the Statement of Claim pleads loss and damages as:
50 metric tonnes of general purpose
wheat @ $170.00 per metric tonne $ 8500.00
54.880 metric tonnes of general purpose
wheat @ $180.00 per metric tonne $ 9878.40
Total $18378.40
Less original contract price 104.800 metric tonne
general purpose wheat @ $115.00 per metric tonne $12061.20
Total Loss suffered$ 6317.20
The admissions and the disclaimers to the Claim are set out in the Defence filed by the Defendant.
The onus of proving the Claim is upon the Plaintiff to the requisite standard, that standard being on the balance of probabilities.
I have had the opportunity of listening to and observing the demeanour of each of the witnesses whilst they gave their evidence and this has assisted me in arriving at my determination.
Evidence.
Tobin Cherry is a qualified agronomist with degrees in Agribusiness and Crop in Agronomy. He is employed by the plaintiff to buy and sell grain.
He gave evidence that he was given the name of the defendant as a person who might have some wheat to sell. First contact he states would have been on 8 November 2005 – further that he recalls the quantity of 300 tonnes was discussed as an estimate.
He recalls that a person, Rick Sams was discussed as the harvester and that harvesting would take place in the days after 8 November 2005.
His evidence is that he next talked to Mr Cusack on 10 November 2005 when an agreement was reached to purchase from him, 140 tonnes of wheat at $115.00 per tonne ex-farm with delivery to be arranged. He stated that the freight was to be paid by the plaintiff and that GST was inclusive of the price. The cost of freight he calculated to be about $24.00 making a total cost of the grain to the plaintiff to have been $139.00 per tonne. Mr Cherry states he completed the Purchase Agreement[1] as a result of this agreement.
[1] Exhibit 1 – Purchase Agreement.
In his opinion $115.00 per tonne at that time was a fair price for the wheat. He recalls that at this stage the grain had been harvested and in the silo.
In the course of business Mr Cherry on-sold the defendant’s grain on 16 November 2005 to a company called Ridley Agri Products for the price of $150.00 per tonne. His evidence is this contract materialised in the normal way, that is, verbally over the phone and then a faxed and signed Purchase Agreement.[2]
[2] Exhibit 3.
Mr Cherry stated that he would have, as it is his practise when purchasing grain, repeated the terms to Mr Cusack during the phone call, received agreement to the terms and as a result completed a purchase agreement which he then forwarded to the seller, in this case Mr Cusack.
The Purchase Agreement[3] completed by the witness was tendered in evidence and is dated 10 November 2005 and particularises the following:
[3] Exhibit 1.
Name (seller) Clayton Cusak
Commodity GP Wheat
Price $115.00 Ex Farm
Quantity Approx 140 m/t
Quality/Spec’s GP Standards non screenings applicable
Delivery Period November
Freight Buyers Call
Weights Reg W/B Final
Payment 30 Days EDW Delivery.
His evidence is that in the grain industry all dealings are primarily a verbal agreement, then the contract is completed and faxed or posted out to the seller. In this case his evidence is that, on 10 November 2005 he faxed the purchase agreement to the two fax numbers provided by the defendant – one to the residence on the property at Condamine and to another address in Mt. Isa. The two fax numbers are written by the witness on the rear of the purchase agreement.
Mr Cherry stated he had another conversation with Mr Cusack on 14 November 2005 regarding collection of the grain and was informed by Mr Cusack that he was going to Mt. Isa for a number of weeks and that the plaintiff would not be able to pick the grain up until he returned. His evidence is that Mr Cusack said nothing about not accepting the price.[4]
[4] Page 7 transcript.
The witness states that despite subsequent attempts to contact Mr Cusack there was no response and no response arising out of the two the faxes. Mr Cherry states he was later told by his boss, Mr Wilkins that he had a conversation with Mr Cusack on 29 December 2005.
The witness stated he continually tried to get in contact with Mr Cusack including sending him two faxes[5] on 9 January 2006 and 13 January 2006 respectively, again there was no response from the defendant.[6]
[5] Exhibit 2.
[6] Page 9 transcript.
In January 2006 the contract between the plaintiff and Ridley’s (on-selling the defendant’s grain) was still outstanding. It is the evidence of Mr Cherry that Ridley’s were asking for the grain. As a result of not having the defendant’s grain, Mr Cherry purchased grain from a company called Dalgrains. Two contracts dated 17 January 2006 and 14 February 2006 for 50 tonnes each shaped this deal.[7]
[7] Exhibit 4.
The cost particularised on each contract was $170.00 per tonne and Mr Cherry states that $10.00 per tonne was paid for delivery of the grain. It was the evidence of Mr Cherry that $170.00 per tonne was at the time a very fair price and that the period November through to February was a rising market.
Mr Cherry states that at no time did Mr Cusack tell him that there was not a contract between them and at no time did he say he would not be selling the grain to the plaintiff. His evidence is that if he had been told he would not have sent the two faxes in January 2006.[8]
[8] Page 13 transcript.
In cross examination it was put to Mr Cherry that he did not speak with the Mr Cusack on 8 November 2005 and that his diary entry[9] referring to the defendant was made by him as a result of something his boss, Mr Wilkins told him. Specifically Mr Cherry states he did have a conversation with Mr Cusack and that he stated he could have had 300 tonnes of wheat for sale. He did admit that a reference to someone in his diary might also mean that someone else had spoken to the person and he had just taken a note of it.
[9] Exhibit 5.
Mr Cherry was then directed to an entry in his diary on 14 November 2005,[10] specifically:
[10] Page 20 transcript.
Clayton Cusack, 140m/t @$115.00 ex farm $24 freight, del Halls.
Relevant to that entry and the fact the contract[11] was dated 10 November 2005, Mr Hogan (Counsel for the defendant) asked the witness to explain why there was no diary entry for the 10th and the entry for the 14th seem to refer to the contract dated the 10th. It is the evidence of Mr Cherry that he did not make a diary entry on the 10th and the entry on the 14th refers to a conversation he had with Mr Cusack regarding taking delivery of the grain.
[11] Exhibit 1.
During cross-examination he stated the initial conversation with the defendant occurred on 8 November 2005 and that there might be about 300 tonnes of wheat. Further that by the time the grain was harvested by a Mr Sams on 10 November it was established that there was only about 140 tonnes of grain.
Mr Cherry did not recall the defendant stating he was ‘as green as’ when it came to selling grain but did admit that this was his first dealing with him.[12] It was also put to the witness that Mr Sams did not harvest the grain – to which he replied he believes he did.
[12] Page 23 transcript.
Mr Cherry denied that Mr Cusack told him that the grain was owned by his parents and that he would have to talk to them about the sale. The witness agreed that Mr Cusack told him he was going to Mt. Isa and that as a result, gave him the two facsimile numbers after the defendant agreed to the terms particularised in the contract dated 10 November 2005.
In cross examination Mr Cherry states he recollects a conversation with Mr Cusack, possibly on his mobile, regarding him travelling to Mr Isa and that the grain would not be able to be picked up for a few weeks. It was put to the witness that he did have a conversation with Mr Cusack on 5 of December to which the witness replied there was no contact after 14 November but that he could have called the defendants mobile and left a message and that he in fact left many messages on the mobile phone of the defendant.
In re-examination Mr Cherry was referred to his diary notes[13] and in particular an entry on 8 November 2005:
LEE/KEV OFFERED $368 farm or $400 del Dalby, freight $32.
[13] Exhibit 5.
He stated that this signified he only offered the price to the growers and that there was nothing purchased at that stage in that there was no contract completed.[14]
[14] Page 30 transcript.
Mr Murray Wilkins gave evidence that he is the principal of B & L Seedgraders and has been such for 11 years.
He stated he first became aware of the defendant Mr Cusack through a person by the name of John Chaplain from Miles and that as a result of being told by Chaplain that Mr Cusack had some grain to sell, he gave Cusack’s name to Tobin Cherry. Specifically he stated that he told Cherry that Mr Cusack may have some grain to sell and that he should get in contact with him to see if they could do some business.[15]
[15] Page 34 transcript.
Mr Wilkins then told the court that Mr Cherry subsequently informed him that he had purchased some grain from Mr Cusack and that it was about the same quality as Mr Chaplain’s grain.
In relation to normal business practices Mr Wilkins gave evidence that grain traders contact growers of grain by phone, that price and quantity is discussed, and if the price is accepted the business is then closed on the price and the quantity. He states that sometimes contracts are sent and other time never. His evidence is that ninety-nine percent of business is done by telephone.[16]
[16] Page 34 transcript.
It was the evidence of Mr Wilkins that he only had contact with Mr Cusack on one occasion after Mr Cherry was having trouble contacting him. He stated he called Mr Cusack from his own home phone because Mr Cherry had tried so many times from the work number that he thought Mr Cusack might purposely be not answering that number.
It was 29 December 2005 when Mr Wilkins made that contact with Mr Cusack and his evidence is that Mr Cusack told Mr Wilkins that the grain had been treated with a poison and that it was put into storage and could not be taken out for three months.[17]
[17] Page 35 transcript.
He then stated that there was further discussion about the need to get the grain in order to fill a contract and that he did not know of any poison that if put on grain would cause it to be held for three months and that Mr Cusack just said he would not be able to shift it for that period.
In cross-examination Mr Wilkins also denied that Mr Cusack told him he would not be selling the grain to him. He also denied that Mr Cusack told him that even if he wanted to sell him the grain he could not because it had been treated. He did agree that the period mentioned was 13 weeks.
It was put to the witness that the conversation happened on 5 December 2005 to which the witness replied he was positive it was 29 December 2005.[18]
[18] Page 37 transcript.
Mr Wilkins stated that in relation to the grain being quarantined he contacted the manager of CRT in Dalby and made inquires and that he would not have made such an inquiry if the information from Mr Cusack had been that he was not going to sell the wheat to the plaintiff.
Mr Charles Henry gave evidence for the plaintiff that he is the manager of Dalgrains in Dalby and that he has been in the grain industry for about 25 years.
Mr Henry was shown two contracts[19] and he stated they related to the sale of grain from his company to the plaintiff company. It is the evidence of the plaintiff that this sale was required to fill the contract entered into between the plaintiff and Ridley’s as a result of the defendant not supplying the grain the subject of the original contract.[20]
[19] Exhibit 4.
[20] Exhibit 1.
Mr Henry gave evidence that the price of the grain at $170.00 per tonne was a fair price relevant to the then market and further that the contracts are predominately entered into as a result of a phone call between the grain traders and the farmer.
Mr Todd Jorgensen also gave evidence that he is a grain merchant with Jorgensen Seeds in Dalby and that he has been in the industry for 15 years.
In relation to how he buys grain from farmers he stated:
“Generally speaking it’s done over the phone. The – backwardsing and forwardsing to get to the point of negotiating a price is done, and then it’s either, yes, I accept that price or no I don’t from both parties. Once that’s done, the deal is done and we send out a confirmation or purchase in the mail.”[21]
[21] Page 42 transcript.
Mr Brendan Kelly gave evidence on behalf of the Plaintiff that he is employed by Ridley Agriproducts in Toowoomba and that he has worked in the industry for about 17 years.
His evidence is that he entered into a contract[22] with the plaintiff to buy 200 metric tonnes of grain on 16 November 2005. He stated that Mr Tobin had informed him there was some problem getting delivery of the grain from the seller and that ultimately:
“…Ridley’s got some wheat and to my recollection there was approximately 183 ton (sic) delivered against that contract. In general industry terms, delivery – the contract - there’s a five per cent tolerance on any given contract …… for the small amount of tonnage left, we released them of that in a commercial transaction.”[23]
[22] Exhibit 3.
[23] Page 45 transcript.
The defendant, Clayton Cusack himself gave evidence that he is an electrician by occupation. He stated the property on which the grain was grown is owned by himself and his parents and that it was being used to grow wheat and cattle. He states the property was purchased in 2004 and that he had no previous experience with the agriculture side of cattle or wheat.[24]
[24] Page 48 transcript.
His evidence is that the subject crop of wheat was planted in June 2005 and was due for harvest in November 2005. He stated that as November approached:
“..I was trying to sell it. I was trying to work out what was the deal with this item, where you would sell it, how you would sell it. I didn’t know whether it was – for me I didn’t know what it was, I just knew that it was grain and that it was to be sold to someone. I didn’t know who to sell it to …… I made a lot of inquiries. I rang my neighbours … feedlots ….”[25]
[25] Page 48 transcript.
His evidence is that he recalls having a conversation with Tobin Cherry and that it was his recollection that the first conversation took place on 10 November 2005. He states it recalls it being the 10th as that was the date of the contract[26] and the day before he left to go to Mt. Isa.
[26] Exhibit 1.
Specifically, his evidence in relation to the conversation is:
“I just explained to him about – that I was green, I didn’t know about the wheat, I didn’t know what item I had to sell. I didn’t know the pricing …… he gave me a price of $115.00 a tonne …. I made no commitment to it ….”[27]
[27] Page 48 transcript.
He stated that the grain had been harvested by 10 November 2005. His evidence is that a person named Dave from Gilgandra did the harvesting and that all the grain was put into a 100 tonne silo and a further 10 tonne in a bin. He denies ever telling Mr Cherry that he had about 300 tonne or 140 tonne to sell.
Mr Cusack gave further evidence that it was the first offer he had ever seen and that he told Mr Cherry to send the contract through and also to send on through to the Mt. Isa number of his parents which he admits to giving Mr Cherry. His evidence is that he then left to go to Mr Isa on Friday 11 November 2005 in order to do some electrical work for the Government.
His evidence is that he arrived in Mt. Isa on that same day, 11 November 2005 and that the first time he ever saw the contact or purchase agreement[28] was when he arrived back in Condamine on or about 24 November 2005. In relation to the contract he states that he looked at it and:
“Well …… I hadn’t signed it and ….. we didn’t accept it.”[29]
[28] Exhibit 1.
[29] Page 50 transcript.
Mr Cusack’s explanation for not seeing the faxed contract at Condamine the day it was faxed through on 10 November 2005 is that he was already in Miles en-route to Mt. Isa and that he did not see the contract in Mt. Isa. He states that the first he was aware there was a fax in Mt. Isa was when his mother called him two or three days later, and told him there was a fax that had arrived.
His evidence is that by the time he had returned to Condamine on or about 24 November 2005 he still had done nothing about selling the grain and had not spoken to or returned any calls or messages from the plaintiff. Specifically he denies the telephone conversation alleged by Mr Cherry on 14 November 2005 stating he was in Camooweal. He did state however:
“.. that he had messages that were relayed to me saying there’s messages from those people to ring them and that was it … that I just treat it like a telemarketer. If I’m going to get all these messages and I end up with 50 phone calls a day I don’t have time to answer my phone calls to everyone. I’m there to work from 7 till 7 at night, and that’s it, not to be answering phone calls all day.”[30]
[30] Page 52 transcript.
In short his evidence is that he did not return the plaintiff’s phone calls.
Mr Cusack then stated that he did have a conversation with Mr Tobin in early December and that he told him he was not going to sell him the grain and that Mr Tobin informed him that his boss would get in contact with the defendant which subsequently occurred on 29 December 2005.
His evidence is that he told Mr Cherry’s boss, I presume Mr Wilkins, that he was not selling the wheat to him and that it had been fumigated and that he was told to sell it to no one and specifically that the defendant was told that no one could have it for a period of 13 weeks.[31] The defendant then denied receiving the two faxes[32] on 9 and 13 January 2006 respectively.
[31] Page 54 transcript.
[32] Exhibit 2 (fax from plaintiff to defendant requesting contact).
In cross-examination the defendant stated that the grain subsequently got fed to cattle and that he sold about 20 tonne of it but he could not remember who he sold it to. He further gave evidence that despite there being a written agreement for that sale he could not remember how much the grain was sold for. When asked if he sold it to a person name Peter Blue from Max Grains in Brisbane he stated that – although the name ‘rang a bell’ he could not remember how he met Mr Blue or how he came to sell the wheat to him and was still also unable to say how much he sold the grain for.[33]
[33] Page 58 transcript.
Specifically in respect of the property at Condamine, the defendant stated it was a family enterprise in that he was in a one third partnership with his mother and father. He stated that his parents help run the property and that they paid for the planting and harvesting of the grain and that he was responsible for the reimbursement to them of all of the costs. He stated that at the time he owed them about $80 000.00 and that he probably (at the time of the trial) still owed them money although when asked how much, he stated he did not know how much he had paid to them.
When challenged about the veracity of that information he stated he made the curious statement, in view of his previous claim that his parents pay all the costs that:
“ … I run an electrical business that pays for that blooming property..”[34]
[34] Page 60 transcript.
Mr Cusack further denied knowing that the price of wheat had gone up from November 2005 through to 2006. He denied being offered more that $115.00 per tonne as at 10 November 2005 and denied being given more that $115.00 per tonne by Max Grains, although again he could not recall how much he did receive per tonne.
He stated in cross examination that he only started making inquiries about the harvesting of the grain just prior to it being harvested and that he talked to people at CRT and his neighbour Mr Chaplain.[35] With respect to the harvest he stated that Dave from Gilgandra was driving past right at the time when the grain needed to be harvested and that he actually drove in and spoke to the defendant who then told him to ‘go for it’.[36]
[35] Page 62 transcript.
[36] Page 63 transcript.
In relation to the contact he had with Mr Cherry, the defendant stated he agreed that there was a telephone conversation on 10 November 2005 and that a price was discussed but he had no recollection of any discussion about quantity, or if there was he would have told Mr Cherry he had 100 tonne and denied he told him he had 140 tonne. Specifically in relation to the price, it was put to Mr Cusack that Mr Cherry told him he would buy the grain for $115.00 and he then stated:
“I don’t know what I suggested to him. That’s what he offered me ….. you can send your contract through. If we’re happy with it, we’ll go ahead”[37]
[37] Page 65 transcript.
Mr Lippett then asked Mr Cusack why he did not afford Mr Cherry the courtesy of phoning him and letting him know he did not want to go ahead with the deal, given he had asked him to fax the contract to two numbers to which he replied:
“… 'cause I made it clear at the start that if we were happy with it we were going to sign it and send it back”[38]
[38] Page 70 transcript.
He further explained that when he did return and look at the contract he did not pay any attention to it or read it. It was then put to him that his reason for saying that, was because he knew it stated that if the contract was not returned to the plaintiff within 7 days the content will be deemed acceptable to which he replied:
“That wasn’t explained to me. If he knew I was going away, why didn’t he explain that to me … before I got it.”[39]
[39] Page 70 transcript.
Mr Cusack’s explanation taking the call on 29 December 2005 as opposed to not taking the previous calls, was that it was more convenient to him at that time. It is not contested that this is the first occasion the fumigation and quarantining of the grain was discussed. In cross examination he also stated that he fumigated the grain the first day it went into the silo and then for about 10 days after this and that he was told about the 13 week withholding period by his neighbour a Mr Mundall, although he does not recall the date.[40]
[40] Page 74 transcript.
He did however state that he asked his neighbour about the withholding period after being asked by a person from the feedlot if it had been treated with anything, specifically:
“When that wheat – there’s wheat there got sold to someone in Max Grain, a fellow from the feedlot asked me had it been treated with something, and I said yes, and he told me. So I asked Gordon Mundall is this true ….”[41]
[41] Page 75 transcript.
As a result of this statement it was then put to the witness that the grain must have been sold to Max Grains prior to the conversation with Mr Wilkins on 29 December 2005 to which he replied – “yeah”.[42]
[42] Page 76 transcript.
Submissions.
Mr Hogan submits that the diary notes[43] made by Mr Cherry is not evidence that a conversation took place between Mr Cherry and Mr Cusack regarding his grain. Mr Hogan’s submission has some merit given the evidence of Mr Cherry that he did not talk to all persons named in the diary on 8 November 2007 and that it was his boss Mr Wilkins who first informed him of the existence of Mr Cusack and the possibility he might have some grain to sell. Further support for this position is the quantity of 300 tonnes particularised in the diary when ultimately there was only approximately 110 tonne on the evidence of Mr Cusack.
[43] Exhibit 5.
Mr Hogan also submits that Mr Cherry’s evidence regarding his conversations with the defendant is unreliable in the absence of any diary entry on 10 November when, as I have said, it is conceded there was a conversation between Mr Cherry and Mr Cusack.
Mr Hogan further submits that the discrepancies in the evidence regarding the weight of the grain, that is 300 tonnes to 140 tonnes against the fact that the defendant ultimately only had about 110 tonnes, suggests that Mr Cherry had to have obtained that information from another source and not from the defendant.
It is ultimately the submission of Mr Hogan that the defendant did not agree to sell his grain to the plaintiff. In this regard I was referred to the purchase agreement[44], in particular the particulars of freight, weight and delivery period (November). Mr Hogan submits that there is no evidence that these were specific issues which were talked about on the telephone (between the parties).[45]
[44] Exhibit 1.
[45] Page 92 transcript.
That agreement provided for the defendant to sign and return it to the plaintiff, specifically; it stated:
PLEASE SIGN THIS CONTRACT AND RETURN A COPY TO B & L SEEDGRADERS
If not received within 7 days will be deemed acceptable.
Mr Hogan has submitted that this is in fact an offer as it needs to be signed and returned and as such goes beyond the (contents) of the telephone conversation.[46] Further that being the case he submitted that the plaintiff can not rely on silence as acceptance. Referring to Cheshire and Fifoot’s law of Contract[47] he stated:
“An offeror may not arbitrarily impose contractual liability upon an offeree merely by proclaiming that silence shall be deemed consent.”[48]
[46] Page 92 transcript.
[47] 8th Australian Edition, Para 3.40;
[48] Page 92 transcript.
He is of course referring to the law in Felthouse v Bindley[49] and Empirnall Holdings v Machon Paull[50] both of which dealt with offers not followed up by the requisite acceptance.
[49] (1862) 142 ER 1037
[50] (1988) 14 NSWLR 523.
The then law was protection against persons sending goods to unwitting recipients and more recently enacted into Commonwealth and State legislation which essentially provide that there will be no liability arising for goods which are not ordered.[51]
[51]Para 2.3.5 Butterworths Tutorial Series – Contracts 2nd Edition 1999.
I was also referred by Mr Hogan, to the cases of Keith v Multiplex[52] and Woolworths v Heritage Properties[53] both of which considered the Masters v. Cameron[54] principles or ‘classes of contract’. Relative to this matter Mr Hogan draws my attention to Justice Moynihan’s assessment of his then assignment in Woolworths v Heritage Properties;
“The cases involve the object of determination of the intention of the parties from a consideration of a series of communications exchanged by them in the context of their dealings over a period of time. The actual communications are the best evidence on the issues to be determined”.[55]
[52] John R Keith Pty Limited v. Multiplex Constructions (NSW) Pty Limited & Anor (2002) NSWSC 43.
[53] Woolworths (Q’land) Pty Ltd v Heritage Properties Commercial Pty Ltd SCQ 1833/99.
[54] Masters v Cameron (1954) 91 CLR 353.
[55] Page 93 transcript.
Relative to contractual disputes Justice Moynihan subsequently stated:
“The principles to be applied in cases where parties negotiate with the common intention that at some stage they will enter into contractual arrangement and then, without formal documentation having been executed, fall into dispute about whether or not they concluded a binding contract, have been extensively canvassed and applied in numerous cases. Each turns on its own facts.”[56]
[56] At para 22.
Relative to a consideration of the communications between these parties it is the ultimate submission of Mr Hogan that the contract has not been accepted and therefore it would not be a completed contract.[57] Further, if there was such a contract there are no conditions implied by usage.[58]
[57] Page 94 transcript.
[58] Page 94 transcript.
Mr Hogan further submits that this transaction or sale (of wheat) is covered by the Section 52 of the Sale of Goods Act.[59] Section 52 provides:
[59] (1896).
Section 52 – Damages for non-delivery.
1. When the seller wrongfully neglects or refuses to deliver the goods to the buyer the buyer may maintain an action against the seller for damages for non-delivery.
2. The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the seller’s breach of contract.
3. When there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered, or, if no time was fixed, then at the time of the refusal to deliver.
Relevant to these provisions Mr Hogan submits that (if I find that there is a contract) the damages must be calculated as the market price of wheat in November 2005 and not January 2006. That being the case, the evidence is that $115.00 per tonne for wheat was the market price in November so there is no loss.[60]
[60] Page 96 transcript.
In support of this argument Mr Hogan has referred me to the case of Francis v Lyon[61] that involved a contract for the purchase of sheep in which the seller refused to deliver. What is relied upon by Mr Hogan is the majority (Isaacs J. & Higgins J) determination of the application of section 52(2). Specifically:
“….. assuming that such a market existed, and the sheep were procurable, their market price was less than the contract price, he cannot recover substantial damages on the basis of an available market. In the absence of a market he is entitled to recover as general damages the difference between the contact price and the value of the sheep on the day when and at the place where they should have been delivered”[62]
[61] Charles Decimus Francis v john Lyon (1907) HCA 12. (1907) 4 CLR 1023 at 1036.
[62] Isaaca J.
And:
“On the question of damages, I concur in the view that the findings of the jury sufficiently established that the plaintiff had suffered no substantial damage from the refusal of the defendant to deliver. Therefore, if the plaintiff lost these sheep, he lost an amount equivalent to not more than 6s per head; and as he would have had to pay 6s per head for them, he lost nothing in the net result. The value must be based on what a purchaser would give on that date, at that place…”[63]
[63] Higgins J.
Mr Lippett submits that on the question of damages must be determined having regard to all the surrounding facts of the case and particularly that as at the time in early January 2006 the plaintiff was still trying to fulfil his obligation (to deliver the on-sold grain).[64]
[64] Page 98 transcript.
In relation to silence Mr Lippett submits that silence can constitute acceptance and again it depends on the facts of the case.[65]
[65] Page 99 transcript.
In respect of whether or not an agreement was reached between the parties during the phone conversation/s Mr Lippett has urged me to accept the evidence of Mr Cherry and the other witnesses for the plaintiff. Specifically he submits that given the experience of Mr Cherry and the general industry practice it would not make sense for Mr Cherry to complete and fax the Purchase Agreement[66] to the two fax numbers if there had not been an agreement reached.
[66] Exhibit 1.
Mr Lippett further submits that Mr Cusack’s evidence is not believable given he admits to having a $80 000.00 debt to his parents and has not bothered to consider or even see the purchase agreement at Condamine or Mt. Isa at the address of his parents. Further that despite this being his first grain crop, his evidence that he did not know how much he sold it for or when it was sold – is not credible.
Credit findings.
The primary issue for my determination is whether or not the parties, specifically the agent of the plaintiff, Mr Cherry and the defendant Mr Cusack entered into an agreement for the plaintiff to buy the defendants wheat crop in November 2005.
To decide the matter I have to determine what was the intention of the parties from an objective assessment and consideration of the initial phone conversation/s and subsequent preparation of the purchase agreement and faxing of it to the two fax numbers.
As I have just mentioned, the two relevant witnesses are Mr Cherry and the defendant Mr Cusack. Which version of the conversations, events and intentions of the parties that I find more likely than the other will influence the outcome, along with of course a proper application of the relevant law.
I find it unlikely that the defendant did not see the fax of the purchase agreement before he left Condamine, given he initially stated he left for Mt. Isa on 11 November 2005 and despite subsequently saying he was in Miles on 10 November 2005.
Extremely unlikely is his evidence that he did not see or discuss the document in Mt. Isa with his parents on 11 November when he arrived despite asking for it to be faxed there. His request to Mr Cherry to fax it to that address would accord with his evidence that it was his parents he was in partnership with, and in fact it was his parents who had funded the planting and harvesting of the crop.
Further unlikely is his evidence that his mother called him about the existence of the fax in Mt. Isa two or three days after it arrived and then they have no discussion about it. That evidence is contrary to his evidence that the first time he knew of it (ie., the purchase agreement) or laid eyes on it was back in Condamine on 24 November 2005. It further belies belief that he would not ask about the nature of the fax and discuss the matter with his parents given his evidence that the grain was theirs to sell and not his and that was the very reason he had asked Mr Cherry to fax it there in the first place.
I do not accept the submission of Mr Hogan that Mr Cusack’s evidence that he never told Cherry how much grain he had or that it was never discussed, is credible and evidence of Mr Cherry having obtained the quantity of 140 tonnes from some other source. Given a consideration of the nature of the conversation, I find it more likely that quantity would be discussed and I think the evidence of the defendant on this matter is indicative of his self serving and selective recollection of that and other conversations.
Mr Cusask’s evidence and reasons for not returning the plaintiff phone calls and messages is farcical and nonsensical considering his evidence that he at no time considered there was an agreement in existence. He asked for the faxes to be sent – his own evidence is that he said
“…. send them, we will consider them and if happy with it we’ll go ahead.”
He does not even then say he then looked at it, discussed it and decided he was not happy with the terms and conditions. His position is one of – I though no more about it until I saw the purchase agreement upon returning to Condamine on 24 November 2005. Then – despite knowing the plaintiff was trying to contact him he treated the plaintiff like some sort of telemarketer that he had no time for.
Also farcical is the fact, not with standing that this sale of wheat to Max Grains was not only his first but on his own evidence his last, that he did not know how much he received for the sale either as a lump sum or per tonne. On top of that he is adamant that at the time he owed his parents $80 000.00 for the planting and harvesting of the grain. Specifically he stated in cross examination that he took no interest in how the price of wheat was going[67] despite on his own evidence he had at least 110 tonne of it sitting on his property.
[67] Page 61 transcript.
Further, despite his evidence he had 110 tonne, I feel it curious evidence from Mr Cusack that when pressed in cross examination after initially saying there was no discussion about the quantity of grain he had, that if there was he would have told Mr Cherry he had 100 tonne – this is of course the amount he relies on as having being harvested because it fitted neatly into his 100 tonne silo. [68]
[68] Page 65 transcript.
Mr Lippett put to the defendant – that he only stated he did not read the contract upon his return to Condamine because he knew the agreement stated:
“If not received within 7 days will be deemed acceptable.”
Curiously in response, the defendant stated:
“That wasn’t explained to me. If he knew I was going away, why didn’t he explain that to me …. before I got it.”[69]
[69] Page 69 transcript.
This is hardly a denial of the accusation and further damages the credibility of the evidence given by the defendant. Further it strengthens my belief that the defendant has just outright ignored the purchase agreement and subsequent attempts by the plaintiff to contact him in the hope that the matter would just go away.
The monumental discrepancy in his story is telling Mr Wilkins in late December that the grain was quarantined and therefore he could not have it and then admitting in cross examination at the hearing that the grain had been sold to Max Grains by that time because it was someone from Max Grains who first raised the issue of whether the grain had been treated or not.
Mr Cusack had many opportunities, from 11 November 2005 through to at least 12 January 2006 to tell the plaintiff he did not feel he had an agreement and that he was not going to sell them the grain – I find on the evidence he never took that opportunity but instead tried to put the plaintiff off by concocting stories such as the quarantine issue.
I do not believe his evidence that he told Mr Cherry in early December 2005 that he was not going to sell his grain to the plaintiff. I do not believe him because it took until late December 2005 for Mr Wilkins to contact Mr Cusack when the unlikely story of the grain being quarantined first surfaced despite his evidence that he poisoned the grain immediately after it was harvested early in November 2005.
Relative to the conversation that shaped the purchase agreement I accept the evidence of the plaintiff’s witness Mr Cherry. I feel the extent of the particulars contained in the purchase agreement could only materialise as a result of a conversation between the two and certainly the two fax numbers could only be given by the defendant. What must be remembered is the uncontested evidence that the defendant wanted to sell his grain – his evidence is clear on this:
“I was trying to sell it. I was trying to work out what was the deal with this item, where you would sell it, how you would sell it.”[70]
[70] Page 48 transcript.
I concede that there were some inconsistencies regarding the initial and subsequent weight of the grain, who harvested the grain and when the grain was harvested. Further that there are uncertainties regarding the dates of conversations but it is the substance of the conversations and the resulting document[71] that I feel important. Ultimately I feel the identity of the person who harvested the grain is not important.
[71] Exhibit 1.
Law findings.
The case of Felthouse v Bindley[72] referred to by Mr Hogan in support of his argument, that the purchase agreement is merely an offer and that the plaintiff can not rely on silence as acceptance, dealt with the issue of the plaintiff offering to buy a horse from his nephew. The offer was not accepted prior to the horse being sold by the defendant auctioneer.
[72] (1862) 142 ER 1037
The basic position at law is this;
“Even if the offeree has decided to accept, the agreement is not yet complete. There must be an external manifestation of assent, some word spoken or act done by the offeree or by his or her authorised agent[73] which the law can regard as the communication of the acceptance to the offeror.”
[73] Powell v Lee (1908) 99 LT 284 and Batt v. Onslow (1892 13 LR (NSW) Eq 79.
However, what constitutes communication varies with the nature of the case and has provoked many difficult problems.[74]
[74]Para [135] Cheshire & Fifoot’s Law of Contract, 6th Ed. 1992.
In Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd[75] the NSW Court of Appeal acknowledged that the general rule is that a person cannot force contract on another by stipulating that silence will be acceptance but qualified the rule where the circumstances were such as to show that a contractual relationship had arisen by the conduct of the parties. McHugh JA went so far as to say that in the appropriate circumstances silence does amount to acceptance.[76]
[75] (1988) 14 NSWLR 523.
[76] (1988) 14 NSWLR at 534 also see Cheshire and Fifoot’s Law of Contracts, 6th Ed. Para [136].
The problem the defendant has – is his failure to communicate or register any protest to the plaintiff that he did not believe he was contracted to sell his grain to them. In the context of the discussions and considering the construction of the purchase agreement I believe the defendant had a duty to reply if he did not want his silence to constitute acceptance.
As Mr Hogan also states in his submission:
“One …… view of the evidence is that it was – the deal was done completely on the telephone, and this is a subsequent document which did not extend the agreement in any way.”[77]
[77] Page 92 transcript.
I agree – and that is the view I take upon a consideration of all of the evidence, particularly the initial communications.[78] I have accepted the evidence of Mr Cherry and when I consider the particulars contained in the Purchase Agreement[79] and the fact it was faxed to the two numbers at the request of the defendant, I find that the purchase agreement is not merely an offer. I find it is a contract and it was formed at the time the parties had the phone conversation on 10 November 2005.
[78] Per Moynihan - Woolworths (Q’land) Pty Ltd v Heritage Properties Commercial Pty Ltd SCQ 1833/99.
[79] Exhibit 1.
The issue of usage or custom is relevant to the evidence adduced on behalf of the plaintiff that it is usual practise for buyers and sellers of grain to agree or contract over the phone and later send the written agreement.[80]
[80] Exhibit 1.
A term may sometimes be implied into a contract by reason of a custom or usage in the market. The parties are regarded as having contracted on the basis of any custom or usage applicable and the term implied in accordance with the custom or usage.[81]
[81] Para 644 Contract Law In Australia, 3rd Edition. JW Carter DJ Harland 1996.
Before a term will be held to be implied in a contract, the usage or custom must be proved to be ‘notorious, certain, legal and reasonable’.[82]
[82] Majeau Carrying Co Pty Ltd v Coastal Rutile Ltd (1973) 129 CLR 48 AT 61.
The High Court of Australia in the matter of Con-Stan Industries v Norwich Insurance[83] set out a number of rules that must be satisfied before a term will be implied on the grounds of custom or trade usage;
[83] Con-Stan Industries of Aust Pty Ltd v Norwich Winterthur Insurance (1986) 160 CLR 226 at 236-8.
1. The existence of a custom or usage that will justify the implication of a term into a contract is a question of fact.
2. There must be evidence that custom or usage relied upon is so well-known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract; however, the custom need not be universally accepted.
3. A term will not be implied on the basis of custom or usage where it is contrary to the express terms of the agreement.
4. A person may be bound by a custom notwithstanding the fact that he (or she) had no knowledge of it.
I accept the evidence of the plaintiff that the practice of grain buyers completing purchase agreements over the phone with growers and seller is well established and reasonable in the industry and further that not with standing Mr Cusack was not aware of it – he is bound by the contact and the specific term;
“If not received within 7 days will be deemed acceptable.”
Given the very nature of this business, that is buying and on selling grain in sometimes volatile markets – I feel any subsequent departure from the terms of the initial agreement would cause financial uncertainty and instability in the market.
Section 52 argument – the case of Francis v Lyon[84] referred to by Mr Hogan differs from this matter before me in this respect, the seller, Mr Cusack has not definitively communicated to the plaintiff at the earliest possible time, that he did not intend to deliver the grain.
[84] Charles Decimus Francis v John Lyon (1907) HCA 12. (1907) 4 CLR 1023 at 1036.
In the absence of that communication and by the defendant’s lack of motivation to comply with his legal obligation and by his silence, the measure of damages contemplated in section 52 is – I find at that time when the plaintiff has made a decision to go back into the market and purchase grain to fulfil their contractual obligations relevant to the on selling of the defendant’s undelivered grain. That time I find was after the defendant failed to respond to the ultimatum contained in the two (2) faxes dated 9 January 2006 and 13 January 2006 respectively.[85]
[85] Exhibit 2.
Judgment.
I find that the plaintiff has proved it’s claim to the required standard, that being on the balance of probabilities and consequently I grant judgment for the plaintiff against the defendant in the amount of $6 317.20 for the claim, plus costs and interest pursuant to the Supreme Court Act 1995 (as amended).
I award costs against the defendant in favour of the plaintiff in the amount agreed between the parties, within 21 days of this decision being published. If the parties cannot agree as to the amount of costs I order the costs to be assessed by the Registrar.
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