Complete Natural Stone Pty Ltd v Leopardi & Ors No. Scgrg-99-587 Judgment No. S502

[1999] SASC 502

COMPLETE NATURAL STONE PTY LTD V LEOPARDI & ORS

Full Court: Millhouse, Duggan and Lander JJ

MILLHOUSE J. I agree that the appeal and cross appeal should be dismissed, substantially for the reasons given by our brother Lander.
DUGGAN J. In my view the appeal and cross-appeal should be dismissed for the reasons given by Lander J.
LANDER J. The appellant, Complete Natural Stone Pty Ltd was one of two defendants, with Rito Calabrese, in proceedings brought by four plaintiffs, in the District Court. This is an appeal from the decision of the District Court Judge in which the learned Trial Judge found for the plaintiffs in an action in which they sought to exclude the two defendants from any right to occupy or come onto premises owned by the plaintiffs. One of the plaintiffs has cross appealed.
Complete Natural Stone Pty Ltd was the first defendant in these proceedings and is the appellant on this appeal. Calabrese has not appealed. The cross appellant is Leopardi. The Rollonds therefore are the respondents to Complete Natural Stone Pty Ltd’s appeal and Complete Natural Stone Pty Ltd and Calabrese are the cross respondents to Leopardi’s cross appeal. I shall continue to call each of the parties by their surnames. I shall call Complete Natural Stone Pty Ltd the appellant. Before I identify the orders from which the appeal and cross appeal have been brought it is necessary to say something about the action which the plaintiffs brought.
The plaintiffs are the registered proprietors of the land comprising Certificate Of Title Volume 5429 Folio 601 which comprises land of an area of 31.37 hectares. The plaintiffs purchased the land in October 1997.
The plaintiff, Leopardi, holds one undivided second part of the land and the other plaintiffs (the Rollonds) hold, as joint tenants, one undivided second part the second part.
There is a mining tenement, number P170, situate on the land and Leopardi is the holder and operator of the mining tenement and the Rollonds are described as joint holders.
The Rollonds were in partnership with each other and carried on a landscaping business. They use stone extracted from the quarry for that business.
Leopardi also extracted stone from the quarry which he sold as part of his own business.
Leopardi and the Rollonds shared the costs associated with the quarry including royalties and extraction costs but they did not share the separate incomes they received from the sale of stone extracted from the quarries.
The Trial Judge specifically found that Leopardi and the Rollonds were not in partnership. The appellant challenges that finding.
Rito Calabrese (who was the second defendant in these proceedings) had operated the quarry on this land in association with or through employment with the appellant prior to the purchase of the land by Leopardi and the Rollonds.
In March 1998, Leopardi approached Calabrese seeking information in relation to the running of the quarry and also inquiring of Calabrese whether it was possible to transfer to Leopardi the business name under which the quarry had been operated prior to the purchase by Leopardi and the Rollonds.
Other matters, which are not important, were discussed.
There is no evidence that the Rollonds were aware of Leopardi’s approach to Calabrese or the reasons for it.
On 26 March 1998, Leopardi and Calabrese met on the land at the quarry.
The matters which had been raised in the telephone conversation earlier in that month were discussed at some greater length. Leopardi advised Calabrese of the relationship and arrangements between Leopardi and the Rollonds.
One topic of discussion related to providing Calabrese with stones from the quarry. Calabrese inquired of Leopardi whether he could buy any stones from the quarry. He told Leopardi that he wanted large quantities of stone for his business. He said he would be interested in coming onto the land with his people to obtain stone.
Leopardi said that his reaction was that that had not been the intention of the parties in purchasing the quarry. The intention had been that he and the Rollonds would use the quarry for their own use but he told Calabrese that he would think about it.
About one week later Calabrese raised the subject again.
In the meantime, Leopardi had reported to Phillip Rollond his conversation with Calabrese.
On three occasions in each of the months of June, August and September of 1998 Leopardi sold stone which was paid for by Complete Natural Stone Pty Ltd, by way of cheque in the name of that company.
There was a dispute on the evidence as to whether Calabrese ever advised Leopardi that he was employed by the appellant but the Trial Judge did not find it necessary to decide that matter because he thought that whether or not that had been said Leopardi was well aware from an early stage of the relationship that Calabrese was associated with or worked for the appellant.
Between June and September 1998 Calabrese asked Leopardi whether the appellant could itself mine stone from the quarry. Leopardi told Calabrese that he would consider such a proposal as would Mr Rollond and he asked Calabres to put the proposal in writing.
Leopardi’s evidence was that he told Calabrese that he would have to speak to the Rollonds and that he would have to agree to any proposal which Calabrese submitted. The Rollonds told Leopardi that they would consider any proposal that Calabrese submitted.
Leopardi and Calabrese met at the quarry on 18 September 1998. A document was created at that meeting. Leopardi wrote the document but at the direction of Calabrese. Calabrese was not confident in his use of English.
During that meeting Leopardi told Calabrese that the Rollonds would have to be consulted about any proposal for the operation of the quarry. There was a dispute about whether Leopardi told Calabrese that Leopardi would have to submit the document to Rollonds who would have to agree to any proposal. The learned Trial Judge accepted the evidence of Leopardi in that regard and found that during the course of the conversation “Leopardi told Calabrese that the Rollonds would have to be consulted about any proposal for the operation of the quarry.” That finding, to which I shall return, is critical to a determination of the issues in this case.
The document was in the following form: [1/38]
“Agreement Between Michael John Leopardi, Phillip John Rollond and Rito Calabrese.
Giving Rito joint right to operate quarry for Five + Five years with above mentioned persons.
paying Royalty of $10/tonne of Saleable (sic) material by measurement of metreage m2 $20/pallet of stone.
For            50 layers Super Veneer
27     “                 Veneer
17    “                 thin pave
13     “                 Driveway Pavers
860 mm     Bookledg Small & large
2.5 tonne/pallet cutting Blocks.
Surrounding use of land is restricted to use by the owners only for purposes of grazing stock, farming ect (sic) unless agreed by all 3 parties.
This agreement also give (sic) Mr Calabrese first right of refusal in the event of the sale of the property.
payment agreement.
~~payment to the owners of~~ royalty calculated to be made at the end of every month. payment (sic) to be made within 30 day (sic) thereof.
Michael John Leopardi
PO Box 80 Crafers
8339 2575
041 882 5369
Rito Calabrese            M J Leopardi
18.9.98.”
It was agreed that Mr Calabrese would take the document away and instruct his solicitors to prepare a formal document which would be forwarded to Leopardi and the Rollonds for their consideration.
Calabrese instructed a solicitor, Mr Bungey of Wallman and Partners to act on his behalf. Mr Bungey arranged for a meeting at the quarry on 1 October 1998 at which he, Leopardi and Calabrese were present.
A number of matters were discussed at that meeting.
The learned Trial Judge found the following matters were amongst the matters discussed; the amount of blasting, who might carry out blasting work, where it would be done and the amount which would be permitted; the pallets which would be used for transporting stone; the type of stone which might be removed; the price of stone; the method of recording the stone taken away; the time for payment for the stone; access by others to the land; the appellant’s right of first refusal in the event that the land was sold and the terms of any agreement in regard to that; the weight of stone removed; compliance with the Mining Act; the royalties payable to the government; the erection of a shed for storage and whether a lease would be permitted.
Mr Bungey prepared a document which is entitled Heads of Agreement which he sent to the Rollonds by arrangement with Mr Leopardi on 8 October 1998. A second version of the Heads of Agreement was sent to them on 9 October 1998.
The differences between the two Heads of Agreement are minor and, I think, not relevant to the determination of this appeal.
With the first Heads of Agreement, Mr Bungey enclosed a letter which was in the following terms:
“I refer to the discussions with Michael Leopardi on 1 October 1998 and now enclose a copy of Heads of Agreement which I have prepared which are intended to set out the basic terms of the arrangement between Complete Natural Stone Pty Ltd and the owners of the land.
Please let me have any comments you may wish to make in relation to that document.”
The second document sent on 9 October 1998 was also accompanied by a letter but the terms of that letter are not important.
The Rollonds did not agree with the terms contained in either of the Heads of Agreement which had been sent to them. They decided, very shortly after receipt of the documents, that they would not enter into a contract of the kind referred to in either of the Heads of Agreement with the appellant. They told Leopardi that, probably on 10 October. They did not separately respond to the communications to them from Mr Bungey.
In fact Leopardi was also not happy with some aspects of the Heads of Agreement. Leopardi, however, did not communicate to Calabrese his disquiet with the Heads of Agreement, nor did he advise the appellant or Calabrese that the Rollonds would not agree to enter into a contract of the kind presented to them in those Heads of Agreement.
On 23 October 1998, Hans Guyer carried out some blasting work at the quarry. The preparation work for the blasting was carried out, in part, by Mr Calabrese. Mr Guyer had previously carried out blasting work for both Calabrese and Leopardi. He carried out two blasts, one on the instructions of Calabrese for the appellant, and the other in a separate area at the instruction of Leopardi for Leopardi. Mr Guyer submitted an account part of which was paid by the appellant and part of which was paid by Leopardi.
The appellant began taking stone from the quarry an 24 October 1998. Leopardi did not object to the appellant’s presence. The Rollonds did not object to the appellant or Calabrese about the appellant’s or Calabrese’s presence. Calabrese and the appellant were, therefore, unaware that the Rollond’s had informed Leopardi that they did not intend to enter into any agreement with the appellant or Calabrese.
Leopardi said he did not speak to Calabrese or the appellant of the Rollonds attitude after 23 October 1998 because Leopardi was unsure how to handle the situation.
There was a dispute as to when Calabrese was first advised of the Rollonds attitude. Leopardi said that he told Calabrese that the Rollonds were not happy about the agreement on 21 October 1998. He said that there was a discussion about the contents of the Heads of Agreement, during the course of which he told Calabrese that the Rollonds were not happy with the proposal.
Calabrese denied that there was any conversation of that kind on that day. He said the discussion about the Heads of Agreement occurred much earlier and that Leopardi did not tell him of the Rollonds’ attitude until 6 November.
Leopardi said he went to the quarry and spoke to Calabrese and told him that the Rollonds were not interested in coming to any agreement with him. He told Calabrese that the Rollonds did not like his proposal and wanted him to leave the quarry. Calabrese, he said, told him that there was an oral agreement and that the deal had been done and that he had authority to be there.
Leopardi said that he said no more. He said he had previously seen Mr Calabrese become angry and aggressive so he backed off and left it at that. He thought, by saying what he had, he had satisfied the Rollonds request to him to have the appellant and Calabrese leave the land.
Leopardi said that he told Mr Phil Rollond, later that night, that he had spoken to Mr Calabrese and of Mr Calabrese’s reaction. He told Mr Rollond that he did not know what to do about it. He thought that Mr Rollond told him that they would get a lawyer.
Leopardi claimed that he spoke to Calabrese again, on 6 November and told Calabrese that the Rollonds were not interested in coming to any agreement with him. He said that Calabrese told him that they had a verbal agreement and “who were these people saying that to him”.
Calabrese admitted that there was a conversation on that date but denied that Leopardi had raised the matter to which he had referred in his evidence. He said that Leopardi said to him that he might have a bit of a problem with his partner Phil and that the problem was that the length of time of the proposed agreement.
Whether the conversations took place as deposed to by Leopardi or by Calabrese in any event it is clear that by 18 November an impasse had been raised.
Calabrese said that sometime before 18 November he was told by Leopardi that Leopardi had a problem. He said that his partner would not agree to Calabrese or the appellant coming onto the land and did not want to go ahead any more with this. Calabrese’s reaction was encompassed in this reply:
“Did you ask him how deep he wants to be buried?”
Calabrese said there was a further conversation another two days later which again was inconclusive.
On 18 November 1998, the Rollond’s solicitor wrote to Calabrese:
“We are acting on behalf of Barbara, Phillip and Julie Rollond, the owners with Mr Michael Leopardi of land at Kineke Road, Wistow on which there is a blue stone and slate quarry.
Our clients instruct us that you have entered upon the land for the purpose of quarrying, that you have done so without having any authority from our clients to do so.
Our clients are not willing for you to remain in possession of the land and accordingly have instructed us to request that you vacate the land immediately and remove all plant, equipment and chattels brought by you upon the land. You have licence from our clients to enter upon the land for this purpose and for no other purpose.
Should you fail to remove these items from the land within the next seven days, our clients will take such further action as they may be advised.”
The appellant’s solicitors replied to that letter on 25 November 1998:
“We act for Complete Natural Stone Pty Ltd in relation to this matter and refer to your letter of 18 November 1998.
We are instructed that Mr Calabrese has never dealt with your clients and that at all times in his discussions with Mr Michael Leopardi, Mr Leopardi has purported to act with the authority of your clients. In fact in the early stages of negotiations there were some issues which Mr Leopardi specifically indicated he would refer to your clients. They were subsequently resolved.
We enclose a copy of a hand written Agreement signed by Mr Calabrese and Mr Leopardi dated 18 September 1998 and a copy of draft Heads of Agreement prepared by us and sent to Mr P Rollond and Mr Leopardi on 9 October 1998.
After 9 October 1998 Mr Leopardi indicated to Mr Calabrese that the Heads of Agreement were acceptable and on that basis Mr Calabrese organised for drilling and a blast on the site to take place on 24 October 1998.
Before 24 October 1998 Mr Calabrese also did a large amount of work on the site in preparation for the blast and also work on the site to assist Mr Leopardi. At no time during the conduct of that work did Mr Leopardi indicate that there was any disagreement about the terms of the Heads of Agreement. In fact, he confirmed that the Heads of Agreement were acceptable.
It was only after the blast on 24 October 1998 that Mr Leopardi indicated to our client that your clients had some concerns about the arrangements. In fact, Mr Leopardi only indicated at that time that your clients were concerned about the term of the agreement. In all other respects, according to Mr Leopardi, the agreement was acceptable.
In our view your clients have allowed Mr Leopardi to negotiate on their behalf and are bound by his acceptance of the arrangement. We do not agree that your clients are entitled to evict our client from the land.”
Leopardi said that he discussed Calabrese’s solicitor’s letter with Philip Rollonds on 27 November. However the Rollonds’ solicitors did not respond to that letter until 18 January and when they did it was in the following terms:
“We refer to your fax of 25 November 1998.
The only point we wish to make at this stage is to deny your assertion that Mr Leopardi had been authorised by our clients to contract with Mr Calabrese on their behalf. On the contrary, Mr Leopardi had been informed by our clients that they did not wish to enter into any arrangements with Mr Calabrese.
Mr Leopardi has told our clients consistently that his discussions with Mr Calabrese proceeded on the basis that any agreement under which Mr Calabrese might obtain access to the quarry would require our clients’ approval. In this regard, we note that the document dated 18 September 1998, which you claim to be a handwritten agreement between the parties, names Mr P J Rollond as a party to it, yet he has not signed it, nor has Mr Leopardi purported to sign on his behalf.”
In February 1999 the respondents commenced these proceedings.
The learned Trial Judge accepted the evidence of Leopardi in relation to the meeting of 18 September 1998 and concluded that no agreement had been entered into as at that date.
Notwithstanding that the document was signed by both Leopardi and Calabrese the Trial Judge was of the opinion that the document constituted no more than a proposal for consideration by the Rollonds. He was of the opinion therefore that there was no agreement in place as at 18 September 1998.
In relation to the meeting of 1 October 1998 the Trial Judge preferred the evidence of Mr Bungey, who was called by the appellant. Mr Bungey said that during that discussion on that day he said to Leopardi:
“How do the Rollonds feel about this arrangement?”
and that Leopardi replied:
“As long as they get their ten dollars per tonne they are fine.”
The Trial Judge found that the purpose of the meeting at the quarry on 1 October 1998 was to reduce the broad proposal which had been contained in the “agreement” of 18 September 1998 to fine detail. He said that nothing had changed as between the parties in regard to the Rollonds’ position, who, the parties understood, would still have to approve any proposal.
He found that the statement that Leopardi made to Bungey in relation to the Rollonds being fine as long as they get their ten dollars per tonne was no more than Leopardi’s expression of opinion of what he believed Rollonds’ attitude to any proposal might be.
He found that no agreement was entered into on 1 October 1998 and that any proposal was dependant upon the agreement of the Rollonds.
He found that there was no agreement between the appellant and Leopardi and the Rollonds to this point of time.
The Trial Judge found that the Rollonds received the two Heads of Agreement on 8 October and 9 October and discussed those agreements between themselves and agreed between themselves that they were not interested in agreeing to the proposals contained in those two Heads of Agreement. He further found that within a few days of 9 October the Rollonds communicated their disagreement to Leopardi. The Trial Judge found that Phillip Rollond told Leopardi that there would be no agreement unless something better was proposed by Calabrese.

No agreement, he found, was ever entered into between the plaintiffs and the appellant. The appellant and Calabrese had no right to come onto the plaintiffs’ lands.
The appellant pleaded, as an alternative, to a claim there was a contract that the plaintiffs had been guilty of misleading or deceptive conduct and thereby in contravention of the Fair Trading Act 1976.
The appellant claimed that:
“CNS was misled and deceived by the misleading conduct and believed that there was an Agreement between them on terms and conditions set out in the document “Heads of Agreement” and so relied on the misleading conduct and believed that there was an Agreement between them on terms and conditions set out in the document “Heads of Agreement” and so relied on the misleading conduct.”
The conduct which was claimed to be misleading was:
17.1. by the conduct described in paragraphs 4, 5, 6, 7, 11.1, 11.2, 12.1 and 14 (“the conduct”) the Plaintiffs expressly represented and/or promised that the Plaintiffs could grant quarrying rights to CNS and bound by the terms more particularly described in the document “Heads of Agreement” aforementioned; and further
17.2by their conduct as follows:-
17.2.1on or about 6th November Leopardi approached Calabrese and said words to the effect that “Phil has a bit of a problem signing the document with a 20 year term”; that when Calabrese demanded compliance with the Agreement, Leopardi said “I give you my word, we won’t throw you off after a year” and that he would talk to Philip Rollond and that he would take care of the problem;
17.2.2....... in several conversations between Leopardi and Calabrese on the land in the month of November 1998 whereby Leopardi affirmed his intention to be bound by the Agreement and undertook to CNS to procure the co-operation of the Rollonds and resolve their alleged disquiet about the term of the Agreement.”
The Trial Judge preferred the evidence of Calabrese as to when Leopardi first told him of the Rollonds’ attitude. That is in contra distinction to his finding in relation to the meeting of 18 September 1998 when he preferred the evidence of Leopardi. In relation to this topic he said that he reached the conclusion that the evidence of Calabrese should be preferred after taking into account the impression that both Leopardi and Calabrese made on him in the witness box.
It followed that he rejected Leopardi’s account of the meeting of 21 October 1998.
The Trial Judge found that between 20 October 1998 and 2 November 1998 there were a number of conversations between the Rollonds and Leopardi. In those conversations Leopardi was told that the Rollonds did not want Calabrese or the appellant on the property. Leopardi was told that the Rollonds did not want Calabrese on the property on 26 October 1998, 27 October 1998 and 30 October 1998. On 31 October 1998 there was a meeting between all plaintiffs where Leopardi was again told that the Rollonds did not want Calabrese on the land. Leopardi said he felt threatened at that meeting. On 2 November 1998, Leopardi was told again by Phillip Rollond that the Rollonds were not prepared to reach an agreement with Calabrese.
During the same period Leopardi met Calabrese on occasions at which the Rollonds were not present. On 23 October 1998 he met with Calabrese but did not tell him of the attitude of the Rollonds. On 4 November 1998 he again met with Calabrese at the quarry but again said nothing about the Rollonds attitude.
It was not until the meeting on 6 November 1998 when Leopardi told Calabrese that the Rollonds were not interested in reaching any agreement with him and that they wanted him to leave the quarry. This was the first time the Trial Judge found that Calabrese was put on any notice that there was any difficulty with the Rollonds.
On this occasion Calabrese said that he was told by Leopardi there was a difficulty with the Rollonds but he was not told that they wanted him to leave the quarry.
Notwithstanding the conversation Calabrese and the appellant refused to vacate the land.
Leopardi and the Rollonds brought an action against the appellant and Calabrese seeking orders that the defendants remove all of their plant and equipment located on the land and an injunction restraining the appellant and Calabrese from entering into or otherwise dealing with the land on which the quarry is situated. They also sought a declaration that the appellant and Calabrese were trespassers and damages for trespass.
The appellant and Calabrese resisted the respondent’s claims and the appellant counterclaimed seeking an order for declaration that there was an agreement, right or licence in favour of the appellant to enter onto the land and quarry and remove stone from the land in accordance with the terms of the document entitled “Heads of Agreement”. The appellant also sought an order for specific performance of the agreement and in the alternative damages to be assessed, compensating the appellant for the plaintiff’s misleading and deceptive conduct. In that counterclaim the appellants sought damages for misleading and deceptive conduct against all of the respondents.
The Trial Judge found for the plaintiffs upon the basis that there was no agreement ever entered into between the respondents and the appellant or Calabrese giving the appellant or Calabrese any right to enter onto the land or any right or licence to mine the quarry.
After delivery of his reasons he made an order that the appellant and Calabrese remove or cause to be removed all of their plant and equipment from the land and from the quarry. He later made further orders ordering an inquiry and account into the quantity and value of the stone taken by the appellant and Calabrese from the quarry after 21 October 1998 and referring the matter to a Master for that purpose. He made consequential orders for costs to which I will return.
The Trial Judge allowed the appellants’ counterclaim but only in relation to the relief sought against Leopardi. In respect of the claim against Leopardi he ordered that Leopardi pay damages to the appellant to be assessed or agreed.
The end result of the claim and the counterclaim was that Leopardi was found to have been guilty of misleading and deceptive conduct in relation to his conduct toward the appellant between 9 October 1998 and 18 November 1998.
On the other hand it was determined that the appellant and Calabrese were not entitled to any right or licence to come onto the premises for purposes of mining on the quarry or for the purpose of taking away any stone.
The appellant has appealed against the orders made in favour of the respondents. Leopardi has cross appealed in relation to the order made in favour of the appellant.
I shall deal with the appeal first and then the cross appeal.
In their Statement of Claim, Leopardi and the Rollonds alleged that Leopardi held the land as joint tenants with the Rollonds. The appellant and Calabrese admitted that allegation.
Leopardi and the Rollonds tendered a search of the Certificate Of Title which showed that Leopardi was entitled to one undivided second part and the Rollonds were entitled, as joint tenants, to one undivided second part of the land.
It was asserted during the appeal by counsel for the appellant that the case had been conducted on the basis that in fact Leopardi and the Rollonds were tenants in common rather than joint tenants as it had been pleaded and admitted. That assertion was disputed by counsel for Leopardi and the Rollonds. Counsel for the appellant then sought to amend its defence by withdrawing the admission to the plea that the parties were joint tenants. That application was refused.
It was further asserted by counsel for the appellant that in a number of respects the pleadings had been ignored and the case had proceeded upon assertions different to those raised in the proceedings.
Again that matter was disputed by counsel for Leopardi and the Rollonds.
It seems to me that the parties were entitled to expect that this case would be conducted on the pleadings.
There is no suggestion in the learned Trial Judge’s reasons that he proceeded upon any basis different from that asserted in the pleadings. There is no suggestion that he reached his conclusion by reference to r46.04(4)(a)(i) of the District Court Rules.
It is not clear to me, from a reading of the transcript, that the parties did abandon the pleadings or agree, either expressly or implicitly, to proceed upon assertions other than those raised in the pleadings.
Pleadings play an important and indeed an essential part in the litigation process from the interlocutory stage through to and including the trial.
Because they define the issues between the parties they provide the framework upon which the interlocutory processes can be decided. Discovery applications are decided by reference to the pleadings because it is the pleadings which identify the relevant issues between the parties.
The pleadings also provide the record for the purpose of determining issues of issue estoppel and res judicata in any subsequent proceedings between the same parties or even different parties.
As importantly, however, it is the pleadings which perform the fundamental purpose of providing each of the parties with procedural fairness. The pleadings indicate to the opposing party the case which that party has to meet to defeat the case brought against the second party. The pleadings should give fair notice of the case which the other party has to meet. The pleadings, therefore, are the very structure upon which the pre-trial and the trial processes are determined.
That is not to say that a party cannot raise additional or different issues to those raised on the pleadings. If the justice of the case requires a consideration of issues not raised on the pleadings in either an interlocutory application or the trial itself then that may be allowed.
“Rules and forms of procedure are not ends in themselves, but means to an end, which is the attainment of justice.”:
Harrison Jones and Devlin Ltd v Union Bank of Australia (1910) 11 CLR 492 per Griffiths CJ at 504.
Because, however, one of the important functions which pleadings provide is to satisfy the requirements of procedural fairness it will only be in circumstances where it is in the interests of justice to allow a party to raise additional or different issues from those pleaded that a court will permit those issues to be raised.
It would not ordinarily be appropriate to allow a party to introduce additional or different issues if the result of that was to deny the opposing party procedural fairness.
The Rules of Court provide for the court to grant all such relief on any cause of action to which the parties might be entitled on the evidence whether or not the relief granted is expressly requested in the pleadings: (r46.04(4)(a)(i)). Of course, that would not permit the court to deny a party procedural fairness and to give relief in circumstances where the other party did not have fair notice of the claim: Dare v Pulham (1982) 148 CLR 658 at 665.
Therefore if there is to be any departure from the pleadings in the way in which the case is being conducted some notice must be given to the opposing party that such a departure is contemplated: Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286.
The rules of procedure, of course, must not be used as an instrument of oppression. However, if a party is denied procedural fairness by a relaxation of the rules then the rules have not provided one of their basic functions which is to provide procedural fairness to all of the parties to litigation.
In this case I am not satisfied that the parties deliberately departed from the matters raised on the pleadings or if the appellant did that Leopardi and the Rollonds were given notice that the case was to be conducted on a basis other than that contained on the pleadings.
The point is important not only for the purpose of explaining the decision made by this Court in refusing the application to amend to plead a tenancy in common but also in relation to other allegations which were said to have been made out on this appeal but were not matters raised on the pleadings between the parties.
I believe that this matter was conducted upon the pleadings and that Leopardi and the Rollonds proceeded on that basis.
It follows that this appeal should also be decided by reference to the pleadings as they were at trial.
It was the appellant’s case, in its pleadings, that an agreement was entered into between the appellant and Leopardi and the Rollonds which was partly oral and partly in writing in which Leopardi and the Rollonds agreed to grant the appellant the right to quarry bluestone and slate on the land on terms and conditions more particularly described in a document entitled “Heads Of Agreement”.
The appellant pleaded that the agreement was made in a conversation between Calabrese as agent for the appellant and Leopardi on behalf of himself and as agent for the Rollonds at a meeting on 18 September 1998 and was confirmed at a meeting between Leopardi, Calabrese and Mr Bungey on 1 October 1998.
In so far as it was claimed that the agreement was in writing it was said that the written agreement comprised the documents signed by Leopardi and Calabrese on 18 September 1998 and the document entitled Heads Of Agreement between the appellant, Leopardi and the Rollonds, prepared by Mr Bungey and forwarded to the Rollonds on or about 9 October 1998.
The appellant claimed that Calabrese was an employee of the appellant and authorised by the appellant to negotiate arrangements regarding the procurement of mining and quarry rights.
There was no argument about that point.
On the other hand it was also asserted that Leopardi was invested with actual or ostensible authority to deal with the land to the extent that it related to the quarry. Those matters were very much in dispute.
It was asserted that in performance of the agreement and after 9 October the appellant arranged for a drilling contractor to attend and undertake drilling work and engage contractors and marketed the stone quarried from the land. It was asserted that the appellant entered into contracts with third parties for the supply of stone.
The appellant claimed, in its pleading, that it removed 906.5 tonnes of stone between October 1998 and January 1999.
The appellant further asserted that Leopardi and the Rollonds were therefore estopped by their conduct by denying that there was an agreement between Leopardi, the Rollonds and the appellant.
In the further alternative, as I have already mentioned, the appellant claimed that Leopardi and the Rollonds were guilty of misleading or deceptive conduct and in contravention of s56 of the Fair Trading Act.
It seems to me that the issues raised on the pleadings were:
1.Whether there was a contract entered into on 18 September 1998 binding upon Leopardi and the Rollonds.

2.Whether there was a contract entered into on 1 October 1998 binding upon Leopardi and the Rollonds.

3.Whether there was a contract entered into on 9 October 1998 binding upon Leopardi and the Rollonds.

4.Whether Leopardi was the agent of the Rollonds on each of those dates and, if so, whether he had actual or ostensible authority.

5.Whether, if there was no contract, that Leopardi and the Rollonds were estopped from denying there was a contract.

6.Whether Leopardi and the Rollonds, or any of them, had been guilty of misleading or deceptive conduct.

The appellant filed extensive grounds of appeal which I need not set out in extenso. The principal complaint made by the appellant was that the Trial Judge should have found that an agreement was entered into between the appellant and Leopardi and the Rollonds on 18 September 1998 or, in the alternative, an agreement was entered into between the same parties on 1 October 1998.
If the Trial Judge had made such a finding then the appellant submitted that it would have followed that the appellant was entitled, either by way of right or licence, to come onto the property owned by Leopardi and the Rollonds and to take stone in accordance with either the terms of the contract of 18 September 1998 or 1 October 1998.
Counsel for Leopardi and the Rollonds accepted that the real questions to be decided on this appeal were whether an agreement had been entered into on either of the dates mentioned. It was conceded that if there had been such an agreement then the appellant would be entitled to come onto the property for the purpose of taking stone.
The appellant, however, attempted to introduce other matters on appeal. It was put, in relation to the appeal, that even if Leopardi was without authority the Rollonds had, by their silence, ratified the contract or in the further alternative that the Rollonds had, by their conduct, accepted the offer.
Those matters were not raised on the pleadings nor, as I understand it, were they agitated before the learned Trial Judge.
As I have already said, Leopardi and the Rollonds were entitled to assume that the case would be conducted on the pleadings unless they had fair notice that the trial would proceed otherwise: Dave v Pulham (supra): In my opinion they were not given the notice and it is not appropriate for this Court on this appeal to consider matters outside of the pleadings: Coulton v Holcombe (1986) 162 CLR 1 at 7-8.
That is because the two particular matters upon which the appellant seeks to rely are matters of fact which were not addressed by Leopardi and the Rollonds at the trial.
In my opinion, therefore, the matters on appeal should be addressed as I have indicated and without reference to the claims that the Rollonds had by their silence ratified the contract or that the Rollonds had by their conduct accepted the offer.
The issues which were decided at trial and are to be reviewed on this appeal are those which I have itemised.
A good deal of argument was directed to whether or not Leopardi was the agent of the Rollonds. There seems to be no doubt that Leopardi was the agent of the Rollonds. Indeed, he had actual authority from the Rollonds to act as their agent. In my opinion, that is not so much to the point. The real question, in this case, is the extent of the agency possessed by Leopardi.
The learned Trial Judge has decided that matter on the facts. He found that Leopardi’s authority was limited to negotiating to a point of time where the negotiations had to be submitted to the Rollonds for their approval. It seems to me that that finding is determinative of that issue.
In my opinion that finding was open to the learned Trial Judge. There was evidence to support it. His Honour had the advantage of hearing the witnesses.
The Trial Judge found that Calabrese was put on notice on 18 September 1998 that any proposal would have to be approved by the Rollonds.
The Trial Judge has found that that position did not change. All negotiations were subject to the approval by the Rollonds. As he has further found the Rollonds did not ever approve of the negotiations.
It follows therefore that Leopardi had the Rollonds’ authority to enter into negotiations and to arrive at concluded negotiations subject to the approval of the Rollonds.
It follows from the Trial Judge’s finding that Calabrese had been put on notice that any negotiations had to be approved by the Rollonds that the appellant and Calabrese were aware of the limits of Leopardi’s authority.
It is true that, in making that finding, the Trial Judge preferred the evidence of Leopardi whilst in most other respects he preferred the evidence of Calabrese and Bungey. That, in my opinion, does not indicate any inconsistency in the reasoning process on the part of the Trial Judge. Where there is a dispute between two witnesses as to a conversation and the events surrounding a conversation it is rarely the case that one of the witnesses has a complete and perfect recollection of the conversation and the other witness an incomplete and imperfect understanding of the same conversation.

In this case, in my opinion, the Trial Judge was entitled to analyse the conversation to the degree which he did and to determine for himself the evidence that might be accepted in respect of it.
I agree with the Trial Judge that Leopardi did not have actual authority to bind the Rollonds and nor did he have ostensible authority in view of the finding made in relation to the conversation of 18 September.
For those reasons, in my opinion, the learned Trial Judge was entitled to reach his conclusion in relation to the appellant’s claim against the respondents.
It was put, as an alternative, that the Rollonds became liable because their conduct amounted to a representation that Leopardi had authority to act on their behalf and or in the alternative their conduct was of a kind such as to be likely to mislead or deceive within the meaning of s56 of the Fair Trading Act.
Both of those claims had to be dismissed for the same reason that the agency claim was dismissed upon the finding made that Calabrese knew on 18 September 1998 that all negotiations were subject to the approval of the Rollonds.
Because it cannot be said that the Rollonds’ conduct after 8 or 9 October 1998 indicated authority, in my opinion, those claims fail for the same reasons.
For those reasons, in my opinion, the appeal must be dismissed.
The cross appeal must also be dismissed. In my opinion, the Trial Judge correctly discriminated between the conduct of the Rollonds and the conduct of Leopardi.
The Rollonds never gave Leopardi authority to deal with the appellant or Calabresi except upon the limited terms to which I have referred.
When it first came to their knowledge that Calabrese or the appellant or both of them had come onto the land for the purpose of quarrying they took that matter up with Leopardi for the purpose of having him advise the appellant and Calabrese that they were not satisfied with the terms offered by the appellant and Calabrese.
They reminded Leopardi, on more than one occasion, that Leopardi should bring those matters to the attention of the appellant and Calabrese.
It was not unreasonable, in my opinion, for them to assume, at least up until 18 November, that Leopardi had brought those matters to the attention of the appellant and Calabrese.
On 18 November 1998, their solicitors wrote to the appellant and Calabrese in the terms to which I have referred.
I agree, therefore, with the conclusion arrived at by the learned Trial Judge that they were not guilty of any misleading or deceptive conduct and the counterclaim against them was rightly dismissed.
Leopardi complains about the finding that he was guilty of misleading and deceptive conduct as a result of which the appellant and Calabrese suffered damage.
Leopardi was well aware, from 10 October 1998, that the Rollonds would not agree to the terms proposed by the appellant and Calabrese. The finding of the Trial Judge was that he not only did not pass that information on to the appellant and Calabrese, he represented to Calabrese in the conversations to which I have referred that the appellant would be entitled to operate the quarry.
The Trial Judge also found that he continued to allow the appellant and Calabrese to misunderstand their position until 18 November.
The learned Trial Judge found that Leopardi’s failure to acquaint the appellant and Calabrese with the true position led Calabrese to embark on the quarrying activities on and after 21 October 1998.
I do not think there is any doubt that those findings are correct. Those findings are not only supported by the evidence of Calabrese but also by the evidence of Leopardi himself. It is clear that Leopardi found himself in a difficult position and he was unsure of how to extricate himself from it. His failure, however, to take any steps to extricate himself from the embarrassment of which he was then suffering led him to engage in conduct which was misleading and deceptive.
In my opinion the Trial Judge was right to conclude that Leopardi was responsible to the appellant for that misleading and deceptive conduct.
I would also dismiss the cross appeal.
In my opinion, both the appeal and the cross appeal should be dismissed.

[1999] SASC 502

2 December 1999