Broadlex Services v RCR Resolve FM

[2015] NSWSC 1367

Supreme Court

New South Wales

Medium Neutral Citation:	Broadlex Services v RCR Resolve FM [2015] NSWSC 1367
Hearing dates:	7 September 2015, 8 September 2015, 9 September 2015, 10 September and 11 September 2015
Decision date:	11 September 2015
Jurisdiction:	Equity - Commercial List
Before:	McDougall J
Decision:	Refuse leave to withdraw admission and to amend
Catchwords:	INTERLOCUTORY ORDERS – application for leave to amend – where plaintiff admitted in its pleadings that a contract with the defendant had been formed from acceptance by conduct of a written offer – where it later sought to withdraw that admission and plead another mechanism of formation of the contract – application made after a four-day hearing – where defendant had no opportunity to muster evidence to meet the case sought to be put – where allowing the application so late in the day would not be just, quick or cheap – consequence of rejection of leave to withdraw the admission and to amend the pleadings
Legislation Cited:	Civil Procedure Act 2005 (NSW)
Cases Cited:	Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523
Category:	Procedural and other rulings
Parties:	Broadlex Services Pty Ltd (Plaintiff / Cross-Defendant) RCR Resolve FM Pty Ltd (Defendant / Cross-Claimant)
Representation:	Counsel: R C Gration (Plaintiff / Cross-Defendant) T J Breakspear (Defendant / Cross-Claimant)     Solicitors: Johnson Winter & Slattery (Plaintiff / Cross-Defendant) Kennedys (Defendant / Cross-Claimant)
File Number(s):	2014/69596

Judgment - (ex tempore – revised 11 september 2015)

Application by Plaintiff to withdraw an admission and amend pleadings; see transcript p 286

1. HIS HONOUR: The plaintiff (Broadlex) sues the defendant (Resolve) for about $241,000, owing under invoices rendered by Broadlex to Resolve for services supplied. Resolve admits that the services were supplied and that the invoices were duly rendered. The defence that Resolve propounds is, in fact, a defence by way of set off, which is amplified in a cross-claim.

2. Resolve contracted with Serco Australia Pty Ltd to provide facilities management services for Serco in relation to immigration detention centres and similar facilities throughout Australia. The contract between Broadlex and Resolve relates to one of those centres, the Villawood Immigration Detention Centre (VIDC). (The services relate also to an associated residential housing complex, but nothing turns on this.)

3. In its defence and its cross-claim, Resolve says that Broadlex failed to supply all the services that, contractually, it was bound to deliver under the contract between it and Resolve. It values those omitted services at about $674,000. In addition, Resolve says that Broadlex did not perform its services properly and that, as a result, Serco "abated" moneys otherwise owing to Resolve. Resolve says that it is entitled to recover the abated amount, about $266,000, in addition to the value of the omitted services.

4. The pleading of the contract between Broadlex and Resolve is somewhat confusing. As pleaded in the amended statement of claim filed by Broadlex, the contract is said to have been formed when on about 23 April 2010, Resolve, by issuing two purchase orders, accepted an offer made by Broadlex to supply services. The offer on which Broadlex relies was a written offer made in February 2010, clarified by an email dated 22 February 2010. Thus, the pleaded contract is a written contract on the terms of the offer (clarified in the manner I have indicated) and accepted by the written purchase orders.

5. In its defence, Resolve disputed the pleaded contract formation mechanism. It said that its purchase orders were not an acceptance of the offer on which Broadlex relied. It said, further, that its purchase orders "gave rise to a contract", and that the contract so arising incorporated the standard terms of Resolve (which undoubtedly were referred to in the purchase orders). It is not further pleaded, how the purchase orders gave rise to a contract.

6. The cross-claim took matters a little further. In para 4, Resolve pleaded that it "engaged Broadlex to perform cleaning services." The manner of that engagement is not further specified. I observe at this point that, as the case has been run, it may very well be that para 4 should have been pleaded as saying that Resolve offered to engage Broadlex by and on the terms of the purchase orders.

7. Paragraphs 5 to 13 of the cross-claim then plead, by reference to both the incorporated terms and conditions and other documents, the scope and content of the services that, Resolve says, were to be supplied, and other relevant terms.

8. Skipping over para 14, para 15 alleges that Broadlex commenced the supply of services on about 1 May 2010 and para 16 pleads that, by commencing supply, "Broadlex accepted the terms of [the purchase orders], including the terms and conditions."

9. Broadlex's amended defence to cross-claim takes issue with some of paras 4 to 12. Specifically, it takes issue with the pleaded scope of services. Again skipping over the answer to para 14, the amended defence, however, "Admits paras 15 and 16 of the cross claim."

10. It follows, in my view, that Broadlex has admitted that the contract between it and Resolve was formed when, on and from 1 May 2010, Broadlex accepted by conduct the offers contained in the relevant purchase orders.

11. Thus, the essential issue was whether, on the proper construction of those purchase orders, the scope and content of the services to be supplied was as Resolve says, or as Broadlex says, or perhaps some intermediate version.

12. Those disputes occupied some four days of hearing.

13. In the course of his final submissions, Mr Gration of counsel, for Broadlex, took the point that as Resolve had put its case both in opening and in closing submissions, the conduct relied on by it to constitute acceptance could not amount to an acceptance of the purchase orders. That followed, he submitted, from the very fact that it was Resolve's case that the conduct, on and from the commencement of performance of services, had not been in accordance with what Resolve says was the proper scope and content of the services to be supplied. On that analysis, Mr Gration said, the performance of services could not be taken to be an acceptance of the offer, because it did not correspond to the terms of the offer. He submitted instead that the way in which Broadlex performed services was, pursuing the classical analysis of offer and acceptance, a counter-offer, which Resolve accepted both expressly and by conduct in various ways.

14. It might be wondered how that dispute could arise given paras 15 and 16 of the cross-claim, and their admission.

15. Mr Gration provided detailed written closing submissions. He referred to the evidence of the dealings between the parties leading up to 1 May 2010, and indeed thereafter. Among those matters, he referred to a meeting which Broadlex said had occurred on 18 February 2010, at which representatives of Resolve were said to have told representatives of Broadlex what was required. He referred to subsequent events (including the quotation and the email clarifying it). He referred to other documents exchanged between the parties. He referred to evidence given by a Mr Tarabe of Broadlex as to a meeting with Messrs Carroll and Hull of Resolve in April 2010. Mr Carroll was the Facilities Manager for the VIDC. Mr Hull was Resolve’s Facilities Coordinator. According to Mr Tarabe, Mr Hull, when asked in effect what it was from the scope of works that Resolve wanted Broadlex to do, threw the specification into rubbish bin and said, "Just get me two cleaners and we'll do the rest. I will tell them what to do."

16. Mr Gration submitted that the conduct alleged to constitute acceptance of the offer must be construed against the background of all the dealings between the parties that led up to that conduct. Necessarily, as Mr Gration put his case, that included the meeting in February 2010, and what I might call the rubbish bin episode, as well as other matters.

17. Further, Mr Gration referred to what had happened when Broadlex did start work at VIDC. He referred to "unchallenged evidence" of witnesses to the effect that what Broadlex did was provide the cleaners, whose work was directed by Messrs Carroll and Hull. Mr Gration submitted that this was consistent with the proposition that the characterisation of the conduct could not be construed, or should not be concluded, to have been a strict response to the offer comprised in the purchase orders.

18. Again, it may be wondered how that submission could be put in circumstances where the formation of the contract had been admitted.

19. When these matters were explored, at the heel of the hunt in closing submissions, I pointed out that in my view the issue arising on the pleadings was the proper construction of the contract that had been formed in the manner admitted. That is because, in my view, where it is alleged that a contract is formed by acceptance by conduct of an offer (whether made orally or in writing), the test to be applied is whether, in all the circumstances, the objective bystander, knowing the relevant facts, would conclude that one party had accepted an offer made by another. I take that test from Empirnall Holdings v Machon Paull Partners (1988) 14 NSWLR 523 at 531 (Kirby P) and 535 (McHugh JA, with whom Samuels JA agreed). Reference may be made also to the analysis of Heydon JA in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at [71] and following, in particular (for present purposes) at [81], [82] and [85].

20. I accept, of course, that the characterisation of the conduct must take into account all relevant matters of conduct, including the genesis of the contract, and the dealings of the parties leading up to its formation. I do not think that this was in dispute.

21. The real difficulty arises from Mr Gration's reliance on antecedent dealings including the conversations in question. Mr Breakspear of counsel, who appeared for Resolve, had objected to the paragraphs in question in the various affidavits, on the basis of relevance. The paragraphs were admitted subject to relevance. The fact that they were so admitted does not absolve the party relying on them, Broadlex, from establishing their relevance. At one stage, it appeared that at least the February conversation might be relied upon as giving rise to an argument that the contract was in fact partly oral, partly written and partly to be inferred from conduct. In the event, that case was not pursued.

22. Given that the formation of the contract, by conduct amounting to acceptance of written offers, was admitted, the position on the pleadings is quite clear. The evidence of what was discussed in February 2010 could not be relevant to that issue because the question of characterisation of the conduct did not arise for decision on the basis of the admitted state of affairs. Equally, the rubbish bin episode could not be thought relevant, given the admitted state of affairs.

23. Finally, in this context, what Messrs Carroll and Hull are supposed to have said and done on and after 1 May 2010 could not be relevant, because once again, no question of characterisation of the conduct arose.

24. Mr Gration submitted, as one would expect having regard to the nature of his application and the time it was made, that the evidence was complete and that no further evidence could have been adduced on the point. He submitted that all that was necessary was to give a legal characterisation to the effect of the evidence that had been adduced.

25. I should note at this point that Broadlex pleaded and argued, in the alternative, that a conventional estoppel arose, so that (if Resolve's contentions as to the proper construction of the scope of works were correct), so that the parties should be taken to have dealt with other each on the conventional basis that the scope was more limited. In those circumstances, Broadlex pleaded and argued, it was now too late for Resolve to insist on the full scope of services, and to complain about the way in which in fact Broadlex approached the task.

26. That conventional estoppel is relevant because the matters relied upon to establish it included the way in which the parties dealt with each other on and from 1 May 2010. The answer that Mr Breakspear advanced to the conventional estoppel was that it was necessary for Broadlex to prove its corporate state of mind; that this required it to prove the state of mind of its relevant actors most closely connected with the transaction; that in this case the most relevant actor was the estimator, Mr Lupeski; and that Mr Lupeski's state of mind was crystal clear from the documents that he generated. Thus, on Mr Breakspear's approach, it was not necessary for him to canvass the dealings between the parties on and from 1 May 2010. He said, and I accept, that he (or Resolve) took a forensic decision to limit the answer to the conventional estoppel case in the way that I have indicated.

27. Mr Breakspear submitted that if the question of contract formation had been raised as an issue, he would have addressed the relevant facts in a different way. He would have done so, he submitted, because it would then have been necessary for him to investigate the pre-contractual dealings between the parties to see what, if any, material could be gleaned from them that might shed light on the characterisation of the conduct said to constitute acceptance. Equally, Mr Breakspear submitted, he would have investigated the post-contractual conduct (specifically, matters attributed to Messrs Hull and Carroll) that was said to be relevant to its characterisation.

28. Mr Gration submitted in reply that there was an inherent tension in the way in which Resolve put its case. That arose, he submitted, because the case for Broadlex was on the one hand that performance or tender of performance of the services amounted to acceptance of the offers, but, on the other hand, that the performance tendered had been defective (because it did not extend to all the services that Broadlex was required to perform, and because Broadlex required to be paid for those additional services).

29. The answer to this conundrum, I think, is that there was no such tension on the case as pleaded. There was no tension because the question of contract formation was not in issue. What was in issue was the question of the proper construction of the contract and the extent of the performance tendered by Broadlex, compared to that proper scope. Thus, although the tension would arise if Broadlex were permitted to withdraw its admission as to the formation of the contract, it does not arise as the case presently stands.

30. When the matter is analysed in the way that I just put, the answer to the application is clear. The case for Broadlex is in essence that all dealings and conduct, both leading up to the formation of the contract and for the month or so after it commenced to operate, are relevant to the question of characterisation of the conduct said to amount to acceptance. That was simply not a matter that Resolve needed to investigate, because the effect of the conduct, as accepting the offer constituted by his purchase orders, was admitted. If that admission were withdrawn, it is of course true that the question or the issue of acceptance be dealt with on the evidence as it stands. But it does not follow that that is the whole of the evidentiary universe that might have existed had the question of contract formation been put in issue.

31. Specifically, so it seems to me, making the application at the time it has been made has deprived Resolve of the opportunity of seeking evidence in respect of at least three matters. One of those matters is the meeting said to have taken place in February 2010, before Broadlex submitted its offer. The second is the rubbish bin episode. The third is the way in (on the evidence of the witnesses for Broadlex) Messrs Carroll and Hull behaved, and managed the contract and the performance of services by Broadlex, in the months of May and June 2010.

32. It cannot be said that the relevant actors, Messrs Biddiscombe, Carroll and Hull, must necessarily have agreed with what the relevant witnesses of Broadlex attributed to them. But even if they were to do so, the simple fact is that the late timing of the application for leave to amend means that, unless I were to adjourn the hearing, Resolve has been deprived of the opportunity to see what those people might say. It has also been deprived of the opportunity to examine its documentary records to see whether there is other material there that could throw light on the characterisation of the conduct said to amount to acceptance.

33. Of course, I could adjourn the hearing. I could ignore the fact that it has now occupied five days of court time, over a dispute worth (before interest) $240,000 one way and $960,000 the other. I could ignore the fact that the cross-claim is being run only because of its defensive value. I could grant the leave, vacate the hearing, make costs orders designed to compensate Resolve, remit the matter to the District Court so that it could be dealt with there in due course. I refer to the District Court because this matter was commenced there. It was transferred to this Court because of its suggested connection with a dispute between Resolve and Serco, which dispute has since been settled.

34. To my mind, to take those steps would be utterly inconsistent with s 56 of the Civil Procedure Act 2005 (NSW). It would not result in the cheap resolution of the real issues in dispute. It would not be just, because the costs (even if orders were made on the indemnity basis) would become out of all proportion to the amounts at stake. And it would not be quick, because, of necessity, resolution of this dispute (relating as it does to claims going back to 2010 to 2013) would be delayed yet again.

35. In those circumstances, I come to the view that the interests of justice, informed as they must be by the overriding objectives set out in s 56, dictate that the application for leave to withdraw the admission, and to amend, be rejected.

**********

Decision last updated: 16 September 2015