Brambles Holdings Limited v WMC Engineering Services Pty Ltd

[1999] HCATrans 348

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P17 of 1999

B e t w e e n -

BRAMBLES HOLDINGS LIMITED

Applicant

and

WMC ENGINEERING SERVICES PTY LTD

Respondent

Application for special leave to appeal

GLEESON CJ
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON WEDNESDAY, 20 OCTOBER 1999, AT 3.16 PM

Copyright in the High Court of Australia

MR B.W. RAYMENT, QC:  May it please your Honours, I appear with my learned friend, MR A.N. SIOPIS, for the applicant.  (instructed by Freehill Hollingdale & Page)

MR G.R. HANCY:  If the Court pleases, I appear for the respondent.  (instructed by Phillips Fox)

GLEESON CJ:   Yes, Mr Rayment.

McHUGH J:   Why have you not got a wig on, Mr Rayment?

MR RAYMENT:   Because we are from Western Australia, if your Honour pleases, and I was informed that we should be following the rules of the Supreme Court with respect to robing.

GLEESON CJ:   You follow the rules of the court of your primary State of admission.

MR RAYMENT:   Then, if your Honours please, I will ‑ ‑ ‑

GLEESON CJ:   You go ahead anyway, Mr Rayment.

MR RAYMENT:   May I be seen, if your Honours please.  Your Honours, we submit that the judgment of the Full Court on the incorporation of terms issues is affected by errors of principle which are in themselves of sufficient importance to attract a grant of special leave.  We secondly submit that there is good reason to think that this Court on appeal may disagree with the Supreme Court of Western Australia on the incorporation of terms issues and, if so, that a further question of general public importance would arise as to whether the doctrine of sub-bailment on terms forms part of the law of Australia.

McHUGH J:   But how could it ever be other than a question of fact, Mr Rayment?  That is all it is, a question of fact, when all the terms are incorporated in a document.  How are you going to question a law out of it, let alone a question of public importance?

MR RAYMENT:   We would submit there were three errors of law made by the Full Court on that issue.  The first is whether a term will be incorporated in a contract where a party bound has merely constructive notice of it rather than actual notice of it.

McHUGH J:   That is a question of fact.

MR RAYMENT:   We would submit not, your Honour.  Could I just list them first and come back to them.  The second is – and it may be related – whether the failure to observe that even if there are no prior dealings between, here, the freight forwarder, GIF, and Brambles relating to long distance haulage, the circumstance that the parties dealt with each other according to the understandings of specialist members of the transport industry suffices to entitle the Court to import into the contract terms which, if nothing more be said, would usually in that trade form part of the contract.

The third is an insistence of the Full Court stemming from, perhaps, the earlier decision of the Full Court in the case of Rinaldi on a course of dealing being based on prior contractual documents rather than on any means by which notice was given by the other party, in this case Brambles.

GLEESON CJ:   Can I bring you back to the second of those three matters, Mr Rayment.  I may have misunderstood the evidence, and please correct me if I have, but I thought the evidence indicated that whilst it was known to be the practice of the industry that a contract of carriage such as this would contain, or may contain, something about the subject, what it would contain might depend upon the size of what was being carried and the distance for which it was being carried, and the amount that was being paid to the carriage.

MR RAYMENT:   Your Honour, the evidence was, in our respectful submission, adequately summarised as follows.  In the usual case, if nothing more be said, the standard terms applied by every member of this industry to contracts of road haulage which would be in well-known standard form typical of the Brambles contract would apply, and it would not matter how heavy the load was, how far it was going and the like.  There could be specially negotiated contracts such as, for example, tenders called for particular large transactions, or there could be long‑term contracts where special terms were negotiated for the individual case, but I will seek to show your Honours shortly some of the evidence about the matter.  But it comes to this, in our submission, that if nothing were said between parties negotiating a one-off contract of carriage, and that is all this was, in the industry that would be understood as carrying with it the standard terms.

Your Honours, could I take those three alleged errors of mine in turn.  The first is, we submit, contained in the reasoning of the Full Court at page 80, lines 20 ‑ ‑ ‑

GLEESON CJ:   Just before you go beyond the answer to the last question I asked you, at the bottom of page 59 and the top of page 60, it is said:

It cannot be said that exclusion clauses were “always” imposed in the road transport industry in general, or by the defendant in particular.

MR RAYMENT:   No.

GLEESON CJ:   Now, that is a proposition of fact.  Is it one with which you disagree?

MR RAYMENT:   No.  There are some cases in which these terms were not imposed, just as there always are, we would submit, when one is seeking to incorporate standard terms.  There is no reason to think that that would not be a very common state of affairs.  There are two reasons identified by the judge for it.  The first she refers to at the top of page 59 which might be summarised as describing it as cases where the mechanics of obtaining the signature fail, and those, we submit, are irrelevant to questions of general practice.  The second would be specially negotiated contracts.  She gives a “willingness to tender on occasions on terms which included”.  That would be complying with conditions of tender announced by the other contracting party.

We had in mind to take your Honours to the evidence of Mr King very shortly about this matter.  Mr King was the one referred to at the foot of page 57 by the judge as the primary person whose evidence related to this matter.  Your Honours, at the back of that volume, a little more of Mr King’s evidence than is printed in the application book appears, and if your Honours would please go to the foot of page 106 ‑ ‑ ‑

McHUGH J:   Has your opponent seen this material?

MR RAYMENT:   Yes.

McHUGH J:   Do they consent to us seeing it?  The parties have to understand that cases are to be decided on what is in the application book, as approved by the Registrar of the Court.  It is all right if the material is handed up by consent, but ‑ ‑ ‑

MR RAYMENT:   We gave notice of this.  I do not know that I can confirm consent, but we gave notice of this and have had no notice of any objection to it, your Honour.  But, your Honours, at page 106 of the transcript which is at former appeal book 139, having given some answers about the similarity of long distance freight and local freight, general carriage, as it is called, he was asked:

You would use standard terms and conditions whether you were carrying out heavy haulage or general freight, wouldn’t you?---Unless there had been other arrangements made you would operate under those standard terms and conditions, yes.

We would submit that what that suggests is that unless separate negotiations occurred between parties, they will take place on the standard terms.

GLEESON CJ:   Just remind us, what was the explanation of why in this case they did not proffer their standard terms?

MR RAYMENT:   What happened was there was merely a telephone conversation between Smirk of Brambles with Van Dalsen of GIF, who was formerly a Brambles man who had been in the industry for many years.  There was simply a request for a price to carry the goods from Fremantle to Leinster, answered by giving a price, confirmed by fax, the only relevant term of which expressed was that insurance would be a matter for GIF.

GLEESON CJ:   Yes.

MR RAYMENT:   We would submit that in the industry ‑ ‑ ‑

GLEESON CJ:   So, what was the explanation of why they did not send along their contract?

MR RAYMENT:   Your Honour, they always did it this way.  This was the way business was usually done and the trial judge found that.  What happened then was that the cart note would turn up, as it had on some 500 previous occasions, and it would contain the standard terms and conditions which had never been disputed between GIF and Brambles.

GLEESON CJ:   You mean after the contract had been performed, the standard terms and conditions would be presented?

MR RAYMENT:   No, as it was being performed, actually.  If there had been someone there to sign for the goods in Fremantle, it would be as they were being performed.  But the parties had previously had, in the previous four years, 500 transactions just like this where invoices had been sent attaching cart notes with the standard terms attached to them ‑ ‑ ‑

McHUGH J:   But that does not mean that they were binding if you send them along afterwards.  I used to have a security provider that once there was a wage increase, they would send you along a retrospective addition for their charges and I used to just refuse to pay it.  Now, do not tell me I was bound because they kept sending these after the event.  They did not persist in it.

MR RAYMENT:   We submit the real question is only one.  Was what was reasonable to give notice of the terms done in this case?  Now, if on 500 previous occasions there had been a shorthand contract for the carriage of goods, followed by sending of standard terms and conditions and never a dispute, known to both parties, it would have to follow, in our submission, that when Van Dalsen and Smirk have a similar conversation in this case, the same terms and conditions apply.  That was the case that was made.

GLEESON CJ:   Mr Rayment, it does come as a surprise to be told that in 1999 there is any significant doubt about the principles of law to be applied to the question of whether standard terms and conditions are incorporated in the contract.

MR RAYMENT:   That is what I seek to elaborate, if your Honours please, in this matter.

GLEESON CJ:   Yes.

MR RAYMENT:   Could I start with the first of those three errors that I sought to identify.  The process of reasoning of the Full Court at page 80, lines 25 to 30, is to ask:  did Brambles prove that GIF had actual knowledge of the conditions?  Do your Honours have page 58?  There is reference there to Lord Devlin’s speech ‑ ‑ ‑

GLEESON CJ:   You were on page 80, I thought?

MR RAYMENT:   I am sorry, page 80.  It is Lord Devlin’s speech in McCutcheon.  Now, Lord Devlin indeed said in McCutcheon that it was not enough to prove that somebody had constructive notice of a term, actual knowledge of it was required, and that remark your Honours will see – if I can refer to the bundle of cases just handed up at Tab 1 – that remark your Honours will see at page 134.  Halfway down the main paragraph at the top of that page, Lord Devlin says:

Previous dealings are relevant only if they prove knowledge of the terms, actual and not constructive, and assent to them.

That is the principle on which the Full Court below acted, and your Honours see it, page 80, opposite line 30, and then that is why they feed it into the test beginning at line 36:

In the case in question –

they say –

Brambles sought to satisfy the court that GIF had actual knowledge of the conditions printed on its cart notes by inference –

et cetera.  Over the page, that is the test they apply when they come to ask themselves whether the test had been satisfied.  But, your Honours, the test of Lord Devlin has been exploded as a test in England for many years.  Lord Justice Diplock, in the next case in the volume handed up, expressly disapproved it in Hardwick Game Farm v Suffolk.  If your Honours would open tab 2 and go, if you would, to page 344 of the report there, Lord Justice Diplock said, at the foot of 344:

The learned judge, however, felt himself to be constrained by certain observations of Lord Devlin in a recent case of McCutcheon v David MacBrayne, Ltd to hold that the fact that Mr. Golden had never in fact read the conditions on the back of the sold notes issued in respect of the previous transactions was, in itself, sufficient to prevent any of those conditions from being a term of the oral contract sued on.  I think that the learned –

primary –

judge correctly interpreted Lord Devlin’s speech in that case but in my view the proposition which it lays down did not form the ratio decidendi of any other member of their Lordships’ House, and, with great respect, I think that it is wrong.

Then his Honour goes on to say what, by contrast with it, should have been laid down as the rule, and his Lordship says that:

It is accomplished not by determining what each party actually thought –

it had to be actual knowledge –

those rights and liabilities should be, but by what each party by his words and conduct reasonably led the other party to believe were the acts which he was undertaking a legal obligation to perform.

GLEESON CJ:   Now, look at the finding of fact made on page 81, in the middle of the page, on that point, beginning at line 20.

MR RAYMENT:   Yes, but what their Honours conclude about it, having regard to the test that they have enunciated, is really at line 30 that what was required was evidence of its dealings with GIF regarding long distance work.  So they say it will not be enough to know anything from which it might be inferred or the like.  It has to be actual knowledge with respect to long distance work- - -

GLEESON CJ:   But they are asking what you say is the right question.  They are not trying to psychoanalyse these people.  They are saying, by their conduct, have GIF evinced an acceptance of and a readiness to be bound by the exclusion clause, in line with what Lord Diplock says.  They say, on the facts, the trial judge was correct to answer that question in the negative.

MR RAYMENT:   They have expressed a test rather differently, with respect.  They have expressed the test at line 30 in terms of actual knowledge, and they have then referred to Lord Devlin, which must be an indication to those bound by the decision that they are applying the test which Lord Devlin specified.

GLEESON CJ:   They used the expression “From an objective point of view” in line 35.

MR RAYMENT:   They do say that, but what follows it, with respect, your Honours, is equally relevant to what must have been the actual knowledge of the other party.  You see, this is a case where Van Dalsen was not called.  We sought to prove that he was the sort of man who would have well known what this conversation amounted to because of his record, and actual knowledge in the present case had to be inferential.  But the test that they have stated, with respect, your Honour, is the test which - the House of Lords, I should say, from Lord Justice Diplock, agreed with Lord Justice Diplock in saying it was incorrect.

Now, your Honours, may I add to it that Mr Justice Cooper in Pondcil v Tropical Reef Shipyard in Queensland – that is the third case behind that tab – took the opposite line to that which was espoused by the Full Court in McCutcheon, and your Honours will see it is pages 53652 to 53653 in Mr Justice Cooper’s judgment.

Now, your Honours, the second error which we seek to go to is this:  the failure to notice that GIF and Brambles were both from the trade and we submit that is a matter of real importance.  But their Honours in the Full Court seem to treat Van Dalsen as if he had to know particular matters about long distance haulage, but it was sufficient, in our submission, to know that he was from the trade because the evidence was that the trade well understood this matter.

If your Honours would go to the application book, page 8, paragraph 11, there is a man called Roper who was not cross‑examined whose evidence was received.  Paragraphs 11, 12 and 18 of that statement

support the view that this trade well understood that long distance or short distance haulage, both of them, would be covered by standard terms and conditions of which Brambles’ terms were typical which would exclude negligence.

Lord Denning said, if your Honours have the list of authorities which was previously filed, Lord Denning said – if we go behind tab 1 – in a case where the evidence did not permit a finding of prior dealings - could I just turn to page 310 behind tab 1, in the judgment of Lord Justice Denning as he then was in British Crane Hire, his Lordship said, in effect:

There were thus only two transactions many months before and they were not known to the defendants’ manager who ordered this crane.  In the circumstances I doubt whether those two would be sufficient to show a course of dealing.

Then at letter D he said:

But here the parties were both in the trade and were of equal bargaining power.  Each was a firm of plant hirers who hired out plant.  The defendants themselves knew that firms in the plant-hiring trade always imposed conditions in regard to the hiring of plant –

and that is true here, even though there might have been special circumstances on ‑ ‑ ‑

GLEESON CJ:   Thank you, Mr Rayment.  We do not need to hear you, Mr Hancy.

The unanimous decision of the Full Court of the Supreme Court of Western Australia upholding the decision of the trial judge turned substantially upon findings of fact that were made by the trial judge and supported by the appellate court.  In that respect, particular reference is made to the findings of fact referred to on page 8 of the judgment of Justice Anderson in the Full Court.  The case does not raise a question of principle appropriate to the grant of special leave and the application is refused.

Do you resist an order for costs?

MR RAYMENT:  No, your Honour.

GLEESON CJ:   The applicant must pay the respondent’s costs of the application.

AT 3.38 PM THE MATTER WAS CONCLUDED