Cleveland Nominees Pty Ltd v Ledger - [2000] WADC 135

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: CLEVELAND NOMINEES PTY LTD -v- LEDGER [2000] WADC 135

CORAM: YEATS DCJ

HEARD: 17-18 APRIL 2000

DELIVERED : 31 MAY 2000

FILE NO/S: CIV 2615 of 1998

BETWEEN: CLEVELAND NOMINEES PTY LTD
Plaintiff
AND
KIM FRANCIS LEDGER
Defendant

Catchwords:

Contract - Whether there existed a written agreement between the plaintiff and defendant for the purchase of a Porsche for the sum of $75,000 - Whether the plaintiff was bound by oral conditions - Application of parol evidence rule - Oral conditions inconsistent with written agreement - Plaintiff entitled to bring an action in debt

Legislation:

Sale of Goods Act 1895

Result:

Application allowed

Representation:

Counsel:

Plaintiff: Mr J Curthoys
Defendant: Mr I Marshall

Solicitors:

Plaintiff: Lynette P Quinlivan
Defendant: Ginbey & Co

Case(s) referred to in judgment(s):

Bank of Australasia v Palmer [1897] AC 540
Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133

Case(s) also cited:

BP Refinery (Western Port) Pty Ltd v Shire of Hastings (1977) 16 ALR 363
Codelfa Construction Pty v State Rail Authority of NSW (1982) 149 CLR 337
Heilbut Symons & Co v Buckleton [1913] AC 30
Hoyts Pty Ltd v Spencer (1919) 27 CLR 133
J J Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435
Masters v Cameron (1954) 91 CLR 353
Pukallus v Cameron (1982) 43 ALR 243

YEATS DCJ: The plaintiff claims $75,000 in money from the defendant in an action for debt based on an agreement in writing dated 6 February 1995 made between the plaintiff and the defendant. The plaintiff's case is that the plaintiff agreed to sell a Porsche 944 Turbo Racing Car to the defendant for the sum of $75,000 with payment to be made on or before 1 June 1997. The plaintiff claims the amount of $75,000 in an action in debt or, alternatively, specific performance of the agreement.
The defendant's case is that the agreement between the parties was partly written and partly oral and submits that the oral part of the agreement included a number of conditions. As those conditions have not been met the defendant submits that the written agreement has lapsed and is unenforceable in that he does not owe the $75,000 to the plaintiff.

The date of the agreement

One of the fundamental matters in issue between the parties is the date of the written agreement. The written agreement is in these terms:
"6 February, 1995
Mr K F Ledger
c/- Chellingworth Porsche
252 Aberdeen Street
Northbridge WA 6005
Dear Kim,
Re: Porsche 944 Turbo Racing Car
Referring to our recent discussions regarding the 944 Turbo Racing Porsche I confirm our understanding as follows:-
You will purchase the entire car for the amount of $75,000. The purchase includes the parts set out on the attached list of inventory.
The purchase price is payable on or before the 1st June 1997.
Until the payment of the purchase price has been completed the vehicle will not be raced in any local or interstate event and you will ensure the vehicle with the insurance company noting my interest as unpaid vendor.
Title to the vehicle will at all times remain with me until full payment of the purchase price has been received by me.
You will transport the vehicle in the inventory from its current location at Wespeed to your Aberdeen Street premises and hold same in safe keeping for me pending the completion of the payment of the purchase price. You will at your expense prepare the vehicle to qualify as a Group A Porsche Cup racecar.
Yours faithfully,
Cleveland Nominees Pty Ltd
ACN 008 816 233
(signed) Clive Hartz
I confirm my agreement to purchase the vehicle on the above conditions.
(signed) K F Ledger"
Both parties agreed that the date 6 February 1995 is wrong. Mr Hartz, on behalf of the plaintiff, gave evidence that he prepared the letter using a template. He said he put in the correct day and month but it should have been 1997. The defendant, in his evidence, said that he has a diary note of the agreement being entered into on 30 April 1996. That diary note was not produced to the court.
The date of the document is of some considerable importance to its interpretation. That is because many of the matters relied upon by the defendant as conditions the subject of an oral agreement which were to be fulfilled before the written agreement could take effect occurred after 30 April 1996 but well prior to 6 February 1997.
The defendant gave evidence that he is involved in automotive engineering and has been involved in motor vehicle racing at several levels over 30 years. He has been driving cars at the Claremont Speedway and has also been the owner of a successful racing team and part owner of racing teams that raced on black top race tracks in Australia and overseas. He gave evidence that he has been very successful in that endeavour. The defendant's evidence was that his interest in purchasing the Porsche racing car of the plaintiff arose at a time when he was working at Chellingworth Motors as the after sales manager. He had been working to motivate the staff and believed that if Chellingworth purchased a vehicle such as that belonging to the plaintiff that the staff could use the vehicle as a project motor vehicle and work on it to build it into a vehicle which could participate and then be used as part of a racing team that would be owned and sponsored by Chellingworth. The defendant said that he had negotiated on the basis that Chellingworth Porsche would enter into a joint venture agreement with the defendant to purchase or sponsor the motor vehicle and that using it as a project car would have the advantage to Chellingworth of giving their technicians work to do during their down-time when there were no customer vehicles in the workshop needing servicing. The defendant said that his idea was initially met with some enthusiasm by Chellingworth's technicians and management. According to the defendant he held discussions with Mr Hartz on behalf of the plaintiff in about March of 1996 and that it was always discussed as a purchase by Chellingworth and that the project would only proceed if the Chellingworth Porsche dealership assisted him in the project. The defendant said he also made it clear to Mr Hartz that the vehicle would need to be classified as a Porsche Cup racecar and be approved by the Porsche Club (WA) and by PORA. The defendant said he always had advised Mr Hartz that he did not have the money to undertake the project on his own but might have done it as a joint venture with Chellingworth.
The defendant claimed that Mr Hartz put a considerable amount of pressure on him, continually telephoning him during March and April of 1996 and eventually suggested that they sign a memorandum prepared by Mr Hartz on 30 April 1996. The defendant claimed that the agreement was that memorandum of understanding. The defendant claimed that he was prepared to sign it as a "comfort letter" but would not sign any formal contract until all of the conditions that had been discussed had been met including Chellingworth Motors approving the project for the dealership, Chellingworth Motors entering a joint venture agreement and partly purchasing the motor vehicle as well as confirmation that the motor vehicle was suitable to be converted and would qualify as a Group A Porsche Cup racecar. The defendant said there was a further condition that he would inspect and agree an inventory of accessories with such agreement to be evidenced in writing and signed by both of them. According to the defendant he signed the document dated 6 February 1995 on 30 March 1996 but that it was subject to all of the conditions discussed orally.
There was evidence that the defendant had been involved in business as the managing director of Ledger Engineering Pty Ltd a large family owned engineering works situated in Kewdale but that in about September of 1992 the company had been placed in receivership. It was because of that that the defendant took his employment with Chellingworth Motors as the after sales manager. There was also evidence that the defendant's employment with Chellingworth ceased on 23 March 1997. On his behalf it is submitted that with his employment with Chellingworth ending at that time it was highly unlikely that he would have entered into an agreement to purchase the Porsche racing car the month prior, that is 6 February 1997. In support of that submission defence relies on the defendant's bankruptcy and shortage of funds to pay for the vehicle on his own. Those submissions of the defendant are not supported by the evidence. I note that his family company's receivership was as long ago as 1992. There was also evidence confirmed by the defendant under cross‑examination that he did have a sizeable sum of around $100,000 set aside in his wife's name to assist with a Supreme Court action he was involved in in relation to the family company.
There was evidence to support the defendant's contention that the idea of purchasing the Porsche racing car was initially as a project car for Chellingworth Motors. Gregory Arnold, the dealer principal of Chellingworth Motors, gave evidence that the defendant approached him in or about early 1996 to discuss the idea of a project vehicle to lift the moral of the technicians employed at Chellingworth Motors. However Mr Arnold gave evidence that when the matter was again raised with him in late 1996 he told the defendant that he did not see Chellingworth having a role in such a project and did not want Chellingworth Motors to have any role, either in purchasing the motor vehicle or becoming involved in any promotional work with any motor vehicle and that the matter should not be taken any further. To ensure there was no confusion Mr Arnold gave evidence that he telephoned Clive Hartz in late 1996 and told him that Chellingworth Motors would not support or be involved in the acquisition of the Porsche race car.
The plaintiff submits that those dates are consistent with the written agreement entered into on 6 February 1997 after the defendant was well aware that he was purchasing the vehicle on his own and well aware that Chellingworth Motors would not be involved. There is no mention of Chellingworth Motors in the written agreement other than the address of the defendant who was still in the employment of Chellingworth Motors in February 1997 and the reference in the final paragraph to transporting the vehicle and inventory from its current location at Wespeed to "your Aberdeen Street premises". Those Aberdeen Street premises are of course the premises of Chellingworth Porsche.
The plaintiff relies on the clear words of the document dated 6 February 1995 and says that it is an agreement entered into on 6 February 1997 at a time after both parties were aware that Chellingworth Motors would not be involved in the purchase of the Porsche.
After hearing all the evidence and assessing the credibility of the witnesses I am satisfied on the balance of probabilities that the written agreement was entered into on 6 February 1997 as the plaintiff contends. I accept the evidence of Mr Hartz about that. I believe that a date as early as April of 1996 as the defendant contends would have been surprisingly premature for a purchase price payable on or before 1 June 1997. I believe the date of 6 February 1997 is consistent with a payment due on 1 June 1997.
Another matter that seems to me to support the plaintiff's contention is the evidence that the inventory of accessories for the Porsche racing car, a document referred to in the agreement, was prepared by the defendant and Mr Andrew Stack, a senior technician at Chellingworth Motors, in about August of 1996. I believe that is consistent with the document being attached to the agreement and inconsistent with the agreement having been signed in April of 1996 some four months before that inventory was made. I accept Mr Hartz' evidence that the inventory was attached to the agreement when he received the signed copy from the defendant.

Parol Evidence Rule

The date on which the agreement was signed is of crucial importance. That is because the plaintiff contends that the discussions to do with Chellingworth Motors joint venture, the question of finance, the question of whether the vehicle could be modified so as to qualify as a Group A Porsche Cup racecar were all matters that were discussed in the course of negotiations by February 1997 when I am satisfied the agreement was signed. The defendant was well aware that Chellingworths was not involved when he confirmed his agreement to purchase the vehicle on the above conditions in his own right.
The law is clear that:
"… parol testimony cannot be received to contradict, vary, add to or subtract from the terms of a written contract, or the terms in which the parties have deliberately agreed to record any part of their contract." (Bank of Australasia v Palmer [1897] AC 540 per Lord Morris at 545.)
In this case the "conditions" that the defendant seeks to imply as part of this contract would in my view be inconsistent with the written contract. That is because the contract in its terms is strictly a contract between Mr Hartz and the defendant. Chellingworth Motors is not mentioned as a party to the contract or as a joint venturer with Mr Ledger. Conditions of the nature suggested by the defendant contradict the written contract and oral evidence of them cannot be received.
It is also clear from the words immediately above the defendant's signature that he confirmed his agreement to purchase the vehicle on the conditions referred to in the written agreement. Those conditions cover all the matters one would expect persons negotiating for the sale and purchase of a motor vehicle to have agreed. The further conditions suggested by the defendant directly contradict the conditions contained in writing in the contract. For these reasons parol evidence of the conditions cannot be received.

Collateral contract

The defence put its case on a number of bases. One was that there was a collateral contract. These issues were considered in Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133 at 139:
"(a) When parties negotiate an agreement by parol and subsequently reduce it to writing, the writing constitutes the contract …, or at any rate is conclusive evidence of its terms … (b) A distinct collateral agreement, whether oral or in writing, and whether prior to or contemporaneous with the main agreement, is valid and enforceable even though the main agreement be in writing, provided the two may consistently stand together so that the provisions of the main agreement remain in full force and effect notwithstanding the collateral agreement."
In this case the collateral agreement contended for by the defendant will not consistently stand with the provisions of the written agreement. The written agreement is an agreement by the defendant to personally purchase the vehicle on the above conditions and those conditions do not refer to any prior conditions such as contended for by the defendant. It would be inconsistent with the terms of the written agreement to find any condition related to Chellingworth's involvement. I also note that the terms of the agreement are clear in the last sentence "You will at your expense prepare the vehicle to qualify as a Group A Porsche Cup racecar". Those words are inconsistent with any condition as asserted by the defendant that the race car must be brought into compliance as a Group A Porsche racecar before the contract takes effect.

Specific performance

The defendant contends that this is in reality an action for specific performance and relies on the non‑delivery of the vehicle or parts. The defendant further claims that the plaintiff's action for specific performance cannot succeed because the plaintiff is not ready, willing and able to meet its obligations under the contract. The defendant relies on evidence of what are referred to as "Missing Parts" in document exhibit 4. I note that exhibit 4 purports on its face to list 16 missing parts but there was not sufficient evidence to support that contention. Exhibit 4 "Missing Parts" was apparently a list of items from the inventory attached to the agreement which do not appear in a report prepared by Mr Geoff Nicol when he conducted a non‑dismantling and visual inspection of the parts on 7 July 1999. Mr Nicol, however, said in evidence that he only looked at the parts that Mr Slako told him were relevant. There was no direct evidence of all the parts being looked at and Mr Slako was not called by the defence to give evidence of what he showed Mr Nicol. The only reliable evidence about exhibit 4 titled "Missing Parts" is Mr Hartz evidence that items 7 and 8 were missing due to a fire.
In any event on the view I take of the case this is not an action for specific performance. The plaintiff relies on s48(2) of the Sale of Goods Act 1895 which is in these terms:
"Where, under a contract of sale, the price is payable on a day certain, irrespective of delivery, and the buyer wrongfully neglects or refuses to pay such price, the seller may maintain an action for the price, although the property in the goods has not passed, and the goods have not been appropriated to the contract."
In this case the price of $75,000 was payable on a day certain, that is on or before 1 June 1997 irrespective of delivery. In these circumstances I believe the plaintiff is entitled to bring an action in debt and sue for the sum owing.
If at this stage some of the parts or accessories of the racing car have been lost in a fire then a remedy may lie for breach of warranty and I refer to s52(1) of the Sale of Goods Act 1895.

Credibility

Mr Hartz gave evidence that after the defendant entered into the written agreement he telephoned the defendant on numerous occasions to obtain payment. Mr Hartz gave evidence he telephoned the defendant on 11 June 1997. According to Mr Hartz the defendant admitted he was due to pay on 1 June and enquired whether Mr Hartz was asking for a cheque. According to Mr Hartz the defendant explained the reason he hadn't paid was because he had been called by Ted and Shane Jordan and they were after a Porsche Cup car and he was happy to pass them to Mr Hartz. Mr Hartz gave evidence he told the defendant "No, I've done a deal with you. If you want to on-sell it that's all right".
Mr Hartz also gave evidence of a telephone call on 17 June 1997 during which the Jordans were again mentioned by the defendant. According to Mr Hartz he again told the defendant that he was looking to the defendant to pay him and asked the defendant when the money would be forthcoming. At that time, according to Mr Hartz, the defendant said he could expect the money at the end of July if not earlier.
There was also evidence of a telephone call on 12 September 1997 where the defendant allegedly told Mr Hartz he had escrow shares and would be in a position to pay for the vehicle in about three or four weeks. According to Mr Hartz he agreed to extend the period another three or four weeks.
Mr Hartz also gave evidence of a phone call to the defendant on 29 October 1997 again requesting the money. According to Mr Hartz the defendant told him the company prospectus would issue on 5 November 1997 and business was a bit tight.
Finally, there was evidence of a phone call on 27 February 1998 which was allegedly overheard by Mr Alistair Walker, the plaintiff's accountant. According to Mr Hartz and Mr Walker, in that conversation the defendant said that he was in better shape than before, that he had shares in escrow which would be tradeable in three months and agreed there was a valid signed contract for the sale of the car. According to both Mr Hartz and the accountant Mr Walker, the defendant said they would have to be patient for the money and if he had the money he would pay them. On this occasion both Mr Hartz and Mr Walker gave evidence that the defendant said he would have the funds in about three months' time.

The defendant denied in his evidence that he had every made any admissions that the $75,000 was due and owing or any admissions relating to the validity of the written contract. On the defendant's behalf it was submitted that it was unlikely a non‑legally trained person in the position of the defendant would use the words "valid signed contract" in the course of his alleged telephone conversation with Mr Hartz overheard by Mr Walker. There is some merit in the defendant's submission. The words a "valid signed contract" are out of keeping with the manner of the defendant's speaking as I observed during his evidence at trial. That could cause me to doubt Mr Walker's evidence. But Mr Ledger's evidence at trial did demonstrate that he is an astute businessman. He signed the contract. Its terms were explicit and clear. I do not accept Mr Ledger's evidence that he believed the contract was merely a comfort letter.
I have considered this issue carefully but considering all of the evidence and the positive impression I formed of Mr Hartz I accept his evidence supported as it is by Mr Walker. That evidence supports the plaintiff's case that following the agreement in writing on 6 February 1997 the defendant on numerous occasions in telephone conversations with Mr Hartz admitted that the $75,000 was due and owing and asked for extensions in time to pay.
For these reasons I find that the defendant owed the plaintiff the sum of $75,000 and interest on that sum from 1 June 1997.