Cornerstone Hardware Brokers (Aust) Pty Ltd v Methven Australia Pty Ltd
[2014] VCC 945
•9 July 2014
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-12-03401
| CORNERSTONE HARDWARE BROKERS (AUST) PTY LTD | Plaintiff |
| v | |
| METHVEN AUSTRALIA PTY LTD | Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 10, 11, 12, 13, 17, 19, 24, 25 June 2014 | |
DATE OF JUDGMENT: | 9 July 2014 | |
CASE MAY BE CITED AS: | Cornerstone Hardware Brokers (Aust) Pty Ltd v Methven Australia Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2014] VCC 945 | |
REASONS FOR JUDGMENT
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Subject: CONTRACT LAW
Catchwords: Contract - Variation; whether variation agreed upon; three Masters v Cameron classes; fourth class; variation agreement in fourth class; whether subject to condition precedent to contract or performance or condition subsequent relative to execution of formal document; variation contract unconditional; repudiation; whether unjustified demand for further commission; giving of contract termination notice and enforcement proceeding where claimant continued performance and did not threaten to cease; no repudiation; damages to be assessed awarded to other party for repudiation; other party to put on proper evidence as to damages
Legislation Cited: s79 Evidence Act; s4 Australian Consumer Law; Part III Division 9 of the Evidence (Miscellaneous Provisions) Act 1958
Cases Cited:Tekmat Pty Ltd v Dosto Pty Ltd (1990) 102 FLR 240; Coghlan v
Pyoannee Pty Ltd [2003] QCA 146; Masters v Cameron (1954) 91 CLR 353; Baulkham Hills
Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 and (1986) 40
NSWLR 631; Tasman Capital Pty Ltd v Sinclair [2008] NSWCA 248; Factory 5 Pty Ltd (In
Liq) v State of Victoria (2010) 276 ALR 523; Geebung Investments Pty Ltd v Varga Group
Investments No 8 Pty Ltd (1995) 7 BPR 14, 551; FAI Traders Insurance Co Ltd v Savoy
Plaza Pty Ltd [1993] 2 VR 343; Brambles Holdings Ltd v Bathurst City Council (2001) 53
NSWLR 153; Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; Perri
v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; Lym International Pty Ltd v
Marcolongo [2011] NSWCA 303; Edgington v Fitzmaurice (1885) 29 Ch D 459; Bill
Acceptance Corporation Ltd v GWA Ltd [1983] FCA 280; Shevill v Builders Licensing Board
(1982) 149 CLR 620; St Andrews Property Holdings Pty Ltd v Harfouche, (unreported,
Murray C, Supreme Court of Western Australia, 30 June 1989), Nurkic v Jaycorp Pty Ltd
[2008] WADC 159; Compagnie Financiere de Pacifique v Peruvian Guano Co (1882) 11
QBD 55
Judgment: For the plaintiff for damages to be assessed for repudiation and
otherwise for the defendant.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr L. Magowan | Hicks Oakley Chessell Williams |
| For the Defendant | Mr P. Wallis | Herbert Smith Freehills |
Background
1 In 2000 Flexispray Pty Ltd (“Flexispray”), a company controlled by the Crichton family was in the business of supplying shower installations and other products to a number of hardware retailers. It entered into an agreement dated 21 September 2000 with Cornerstone Hardware Brokers (Aust) Pty Ltd (“Cornerstone”), the plaintiff in this proceeding, whereby it appointed Cornerstone as its sole and exclusive agent for the sale of its products. An accompanying letter of the same date from Ms Sandra Dobbin to Mr Matthew Crichton, Flexispray’s national sales manager, explained that Cornerstone’s role entailed calling on Flexispray’s retail customers and maintaining all necessary displays “in store”. The schedule to the agreement mentioned a large number of hardware retailers including major chains such BBC, Hardwarehouse, Bunnings and Mitre 10. The agreement provided for an initial one year term with the arrangement being “then ongoing until determined by either party giving to the other six months’ written notice in advance of its wish to terminate.” There was a general entitlement given to either party to terminate on six months’ written notice independently of the one year term provision already described.
2 On 21 May 2003, Methven Australia Pty Ltd, the defendant in this proceeding, was incorporated. It acquired the undertaking of Flexispray and the Crichton family, in particular Mr Matthew Crichton, became shareholders of the Methven group of companies. Methven Ltd is a listed public company incorporated and domiciled in New Zealand. The parties are agreed that the September 2000 agreement between Cornerstone and Flexispray was novated such that Methven Australia Pty Ltd became the principal, the supply of whose products to major retailers was being undertaken by Cornerstone. In the ensuing years, Cornerstone’s services to Methven Australia Pty Ltd were delivered solely in relation to the Bunnings retail chain which is the dominant player in the retail hardware market in Australia.
3 The September 2000 agreement provided for Cornerstone to be paid on sales up to an annual level of $2 million at the rate of 10 per cent; for monthly sales in excess of $2 million the commission was to be set “by negotiation.” In due course, the sales of products covered by the agreement exceeded the annual benchmark of $2 million but the standard commission of 10 per cent continued to be paid.
4 Flexispray’s business had been concentrated on the sale of shower installations. Methven, on the other hand, had concentrated on the sale of taps. In 2009, as a result of negotiations between Mr Matthew Crichton and Cornerstone, the across-the-board ten per cent commission level was modified, so that whilst commission on shower installations remained at ten per cent, it was set at five per cent for tap ware and at two per cent for valve products which Methven had introduced to the market.
5 By this time, Mr Matthew Crichton was the chief executive officer of Methven Australia. Cornerstone also dealt with Mr Bejatovic, who was at that stage national sales manager, and a Mr Troy Mortleman. Mr Matthew Crichton was also a member of the Board of Directors of the parent company, Methven Ltd.
6 On 8 July 2011, Mr Crichton sent an email to Ms Sandra Dobbin who was the director of Cornerstone and her husband, Mr Michael Dobbin, who is the general manager. The email said that, since Methven Australia was a subsidiary of a public company –
“we are required to tender all services every 2 years or so. The three of us have always had no need to do this, given our handshake arrangement sealed over ten years ago now, however, in our recent internal audit by NZ, we were picked up on this.”
7 Mr Crichton said that he told Mr Bejatovic –
“to run the tender process … and we took submissions from Force One and Ausrep. We were shocked to find that they are offering some would say ridiculously low rates and impossible service levels.”
8 Ausrep, one of Cornerstone’s competitors, was said to be offering a “full service including relays and charge outs” for a commission of four per cent. Relays and charge outs arise where the retailer, in this case Bunnings, requires product displays to be re-established, moved or otherwise reconstructed. The arrangements between Methven Australia and Cornerstone had these services billed over and above the percentage commission which was charged upon sales of various classes of product. Mr Crichton said, “The numbers are too big to ignore as you would appreciate.”
9 Mr Crichton suggested a lunchtime meeting. He referred to a successful promotion and contract obtained in the recent past which had led him to promise the Dobbins a bottle of Grange. The Dobbins felt that, since what was being proposed was a business meeting, the consumption of alcohol would be inappropriate. As a result, a meeting at Cornerstone’s board room was arranged with the meeting attended by Mr and Mrs Dobbin representing Cornerstone and Mr Crichton and Mr Bejatovic representing Methven Australia.
10 The Dobbins told me that they run some four businesses. Cornerstone, which was originally owned by Mr Michael Dobbin, now belongs entirely to Mrs Sandra Dobbin. This arrangement occurred, according to Mr Dobbin, because he was involved in what he described as “a messy divorce” from his first wife. He sold the company to his now wife who had previously been his company’s employee. Mrs Dobbin concentrates her attention on a company known as Masters Distributors Pty Ltd which imports and markets a number of consumer items in Australia. She maintains ownership and an overall interest in Cornerstone, but Mr Dobbin is responsible for its day to day operations. He consults her as a matter of course on all major decisions.
11 Mr Crichton, who has since severed his connections with the Methven Group, after having risen eventually to the level of chief operating officer for the group and heir apparent to its chief executive officer, said that Methven Australia was in a strong position. He said that he gave the Dobbins to understand that unless they agreed to a substantial cut in the commission rates provided for in Cornerstone’s agreement with Methven Australia, it would give a six months’ notice and appoint Ausrep as its broker, instead. According to Mr Dobbin, this statement was made by Mr Bejatovic and not by Mr Crichton. Mrs Dobbin remembered it being said by Mr Crichton. All agreed that this position was adopted from whichever of the relevant executives on behalf of Methven Australia.
12 Mr Dobbin understandably protested that first class service could be provided only against payment of a fair commission. Lower commissions could be negotiated but competitors could not provide the same service level as Cornerstone had over the years.
13 The Methven team apparently pressed for a cut in commission with effect from 1 August. Mr Dobbin, however, said that that would be impossible, that a number of arrangements relative to Cornerstone’s sales representatives, who were located in all parts of Australia except the Northern Territory, to service the Bunnings outlets across the nation. He conceded that commission levels could be modified from 1 September. He suggested that the reduction in commission should be staged with the standard commission rate fixed at six per cent for the initial six month period, and thereafter at five per cent. This was offered to Methven Australia, according to Mr Dobbin, as a compromise, and Methven Australia was “going to come back”.
14 By way of compensation to Cornerstone, the Methven Australia team raised the issue of Cornerstone or a subsidiary company obtaining business from Methven’s New Zealand operation. This would entail Cornerstone performing the same services in New Zealand for Methven’s business there as Methven Australia obtained from Cornerstone in Australia. The services were to be provided relative to Methven’s supply of products in New Zealand to Bunnings and Mitre10, which is apparently the market leader in retail hardware in New Zealand.
15 The Methven Australia team did not purport to make any binding offers on behalf of its New Zealand operation. Rather, Cornerstone was being invited to make a presentation and enter into negotiation with Methven’s management in New Zealand.
16 It will be recalled that Mr Crichton, in his email which led to the calling of the meeting, also raised the issue of “refits and relays”, suggesting that cost of these steps should be met out of the gross commission charged by Cornerstone. Mr Dobbin said that, whilst Methven Australia raised this issue, he and Mrs Dobbin did not agree to this revision of arrangements between the two companies.
17 Mr Bejatovic followed the meeting with an email sent on 15 July 2011 to Mrs Dobbin and copies to Messrs Dobbin and Crichton. He said, “In summary, what we are proposing as a compromise position is made up of two parts”. The first entailed cutting commission to six per cent, effective 1 August 2011, and cutting to five per cent six months later with effect from 1 February 2012. Commission for turnover of sales in excess of $15 million were to be paid at a rate of four per cent.
18 He mentioned the following further matters:
(i) a new store visitation matrix whereby 1/3 of stores are visited weekly, 1/3 fortnightly, and the remainder monthly;
(ii) free relays, refits and new store layouts, as well as ongoing rectification works to existing displays and bay layouts (zero charge-outs);
(iii) a guaranteed one hour to Methven dedicated from each of your reps on every store visit;
(iv) agreement on terms within a KPI and Service level agreement framework (created together with Cornerstone) which covers goals and measures the achievement of set targets offering complete transparency across both leading and lagging indicators.
19 Mr Bejatovic said that the proposed new contract would be “for a two year period”.
20 Mr Dobbin sent an email to Mr Bejatovic, copied to Mr Crichton, covering “our standard contract”. The contract in question was in broadly the same terms as the 2000 agreement with Flexispray. The commission rates, as stated in the schedule, were left blank.
21 Mr Bejatovic responded in an email of 18 August 2011 to Mr Dobbin, copied to Mr Crichton, stating that he had given the form of contract “to the lawyers to look over”. He said it was Methven’s policy that there be a legal review on all contracts for amounts over $250,000.
22 Meanwhile, Mr and Mrs Dobbin had travelled to New Zealand to meet representatives of Methven Limited, including Group Chief Executive, Mr Rick Fala, and Chief Executive for New Zealand, Mr Gary Nel. Mr Dobbin sent a follow-up email 10 days after the meeting on 28 August 2011 addressed to Mr Nel with copies to Mr Fala and Mr Crichton. This led to a response from Mr Nel dated 1 September 2011. He sought clarification as to a number of matters, namely, turnover, service offer and rate tiers and timing. He added, “I look forward to receiving your standard contract for review”.
23 Mr Dobbin responded the same day in a short email, stating, “I am about to jump on a plane and fly to Europe, for a trade show. I will answer your questions on the servicing next week. …” Mr Dobbin believed that he did follow up with a response to the queries from Methven in New Zealand, though the Dobbins are unable to identify any letter or email along these lines. The proposal for Cornerstone to provide services to Methven in New Zealand seems to have gone no further.
24 The same day, being 1 September 2011, Mr Bejatovic sent a form of contract for the relationship of Methven and Cornerstone. He described it as, “the revised contract our lawyers have prepared”. The draft was described as, “Sales Agency Agreement” and was prepared by Freehills on behalf of Methven Australia.
25 The 2000 agreement and the new form provided by Mr Dobbin was quite brief and was marked by the general absence of provisions imposing express obligations on Cornerstone. The document prepared by Freehills and submitted by Mr Bejatovic on 1 September 2011, provided at Clause 7 that Cornerstone must, “use all reasonable endeavours to ensure that the Customer KPIs are satisfied at all times during the term of this agreement”.
26 The customer KPIs referred to, were identified in Schedule 1 of the agreement. They referred to key performance indicators stipulated by Bunnings relative to its supply relationship with Methven. The schedule referred to the following:
· Continued improvement throughout the term of this agreement of the Principal’s [that is, Methven Australia’s] performance in the key performance indicator imposed by the Customer [that is, Bunnings] on its suppliers and known as “Gross Margin Return On Investment (GMROI)”, initially as compared to the Principal’s performance as set out in the July 2011 KPI report issued by the Customer to the Principal and a copy of which has been provided to Cornerstone.
· Satisfaction of the “Vendor In Store” key performance indicator targets imposed by the Customer and any other key performance indicator targets or other requirements imposed by the Customer on the Principal from time to time…”.
27 Clause 8 sets out what were described as additional Cornerstone obligations requiring Cornerstone to perform in certain ways as set out in paragraphs (a) to (s). Clause 12 entitled either party to terminate the agreement on six months’ written notice. Clause 12(c) provided for immediate termination by Methven Australia if Cornerstone had breached the agreement and, in Methven Australia’s view, the breach could not be remedied, or was not remedied within 14 days after notice was given to Cornerstone requiring remedy. There were certain automatic default events entitling Methven Australia to effect an immediate termination if Cornerstone were unable to pays its debts, there was a change of more than 50 per cent in the ownership or share capital, certain keys persons ceased to be employed or “the Customer KPIs are not satisfied in any consecutive three month period during the term of this agreement”.
28 The draft provided for an initial term of one year with an automatic extension for a further period of one year on the expiry of the initial term and any further term “until terminated by either party in accordance with Clause 12”. The contract also included a number of standard boilerplate provisions. It stipulated a rate of commission of six per cent “until 31 March 2012” and, thereafter commission at the rate of five per cent. Amongst the services which Cornerstone was required to perform was the conduct of relays and refits without any further or separate remuneration. The key persons referred to whose departure might entitle Methven Australia to give an immediate termination of the contract were Mr and Mrs Dobbin and Rhonda Grosso.
29 In accordance with the established practice, Cornerstone received a recipient created tax invoice from Methven Australia disclosing the sales turnover and calculating commission payable at the rate of six per cent, which led to total commission inclusive of a 10 per cent goods and services tax charge of $57,232.65. Cornerstone issued a complementary invoice to Methven Australia for that level of commission. It also rendered an invoice at the end of September for some $606.10, representing charges for relays or refits in some three Bunnings outlets located in Victoria, Queensland and New South Wales, described in the invoice as “charge outs”. This amount was apparently not paid by Methven Australia.
30 The same procedure was followed at the end of October 2011, namely, that Methven Australia rendered a recipient created tax invoice calculating commission at the rate of six per cent. Cornerstone rendered its own invoice for commission in accordance with the Methven Australia calculations.
31 Cornerstone had submitted the draft agreement for comment to one of its legal advisers, Mr Bruce Pippett. He responded to Ms Sarah Guiney, whose signature clause describes her as “International Business Development Master Distributors Pty Ltd”. Mr Pippett had noted that the Methven Australia draft agreement followed the same pattern as the Cornerstone one “but the clauses are longer and include matters not in your agreement”. He drew attention to the provisions relative to customer KPIs and observed:
“Clause 8 imposes further obligations on you requiring you to do certain things. You may want to consider whether any of the requirements interfere with your business. I would particularly be concerned about paragraph (s). This is far too wide”.
32 He continued:
“Many of the obligations imposed on you by the proposed agreement are commercial in nature and not of legal concern. There is nothing illegal in the agreement but it is more a case of whether you wish to enter into an agreement that imposes obligations on you that to date have not been included in any agreement of yours I have ever seen. That is a commercial matter.”
33 He also observed that the draft empowered Methven Australia to appoint other agents “as well as you”. It was not until 26 November 2011 that Mr Dobbin sent an email to Mr Bejatovic copying Mr Pippett’s commentary. He said:
“I am in China all next week. Let’s get together for Breakfast on 8 December and go through and finalise this once and for all. Let’s meet at our usual haunt in Kew, if that suits you. If it doesn’t then give me a time that does. The 6th won’t work for me, the rest of the week is good.”
34 The “usual haunt in Kew” referred to, is a restaurant known as “QPO”, operating in the building which was for many years the post office in Kew.
35 The lunchtime meeting did take place and Mr Dobbin sought revision of the draft by deleting the entire first dot point in the schedule under the heading “KPIs”, including its reference to “GMROI”.
36 He said the second dot point was also problematic. Amongst the requirements laid down by Bunnings was a 100 per cent attendance record for sales representatives in a large number of outlets across the nation. Mr Dobbin said it was practically impossible to ensure that occurred. What if a representative, for instance, in far north Queensland, was taken ill? If his or her visit were delayed for a day or two, the 100 per cent benchmark would not be met.
37 Mr Dobbin, who, it is accepted, has extensive personal contacts with senior Bunnings executives, said that despite Bunnings’ apparent stipulation for 100 per cent performance on this KPI, he knew for a fact that “Bunnings really are only looking for 98 per cent or 97 per cent as a trigger”. (T71, L21–22)
38 Mr Dobbin also sought an amendment to delete the requirement of new store relays to be performed without separate and additional charge. Mr Dobbin said he left the restaurant “thinking we had an agreement”. (T72, L13)
39 Mr Bejatovic had, at that stage, become the Acting Chief Executive of Methven Australia. Mr Dobbin believed that, whilst Mr Bejatovic had not committed to accept the points which he had raised, having referred the matter to his superiors in New Zealand, he believed that Mr Bejatovic would concede.
40 A further meeting between Mr Bejatovic and Mr Dobbin was organised on 6 February 2012. By this time, Mr Crichton had resigned from Methven as a result of a conflict with the Board and the then Chief Executive, Mr Fala, which apparently centred on the Board’s calling off an acquisition in the United States of America which Mr Crichton had negotiated.
41 Mr Bejatovic then emailed a second draft of the proposed contract to Mr Dobbin on 22 February 2012. He said that Clause 8(s), which had attracted adverse criticism from Mr Pippett, had been reworded. A new clause had been added which entitled Methven Australia to terminate the contract immediately with Cornerstone and any related body corporate or associate employed, engaged or otherwise became involved with Mr Crichton. In fact, Mr Crichton did undertake employment and consultancy with Master Distributors Pty Ltd, which, it will be recalled, is another company owned by Mrs Dobbin. The draft excluded the Northern Territory from the areas which it covered, and as to key persons, it corrected the rendition of Mrs Dobbin’s name and excluded Ms Rhonda Grasso.
42 In the schedule, the first KPI dot point was deleted but the second remained. Mr Dobbin absolutely objected to the clause relative to Mr Crichton. Matters seemed to have reached an impasse.
43 Mr Dobbin sent an email to Mr Bejatovic dated 28 March 2012. That email stated, amongst other things:
“As you are aware there is still an existing contract ‘on foot’ between Cornerstone and Hardware Brokers (Australia) and Methven and has been since 2000. At your company’s insistence we were forced to renegotiate with you last year, both on the commission arrangements, and store servicing charges, (under pressure of competitive quotes from other providers in the market).
As a gesture of goodwill, based on Methven confirming that we were continuing as their rep force [sic], and that only minor details had to be finalised, and ultimately conditional on Methven signing the new contract, I agreed to go to the new commission arrangements from 1 September, 2011.
After protracted discussion, we reached a final agreement on a proposed contract in late November 2011. In February 2012 we met again as the contract was still not signed. You then introduced several new clauses to the contract which have no relevance to our company, and were not points that our company, Cornerstone Hardware Brokers (Australia), would ever agree to.”
44 The letter continued:
“It is now late March, and unless you sign the agreed November contract before the end of the month, I will have to assume (given our numerous conversations and attempts to resolve the new negotiations), that the existing contract is the one we are using and I will be sending Methven an invoice for $170,974.53 plus GST for the makeup commission between what was the rate, and what we are currently being paid conditional on Methven signing the contract. Plus, we will also need to invoice any relay and refit charges that have taken place since September.”
45 To Mr Dobbin’s knowledge, Methven Limited and its subsidiaries operated on a financial year ending 31 March. The threat of a substantial additional charge for commission within a couple of days of the end of the relevant fiscal year would potentially require Methven to revisit the profit figures which it would report to the market and to statutory authorities.
46 Counsel for Methven, Mr Wallis, cross-examining Mr Dobbin, put to him that he wrote, as he did on 28 March 2011, with the deliberate intention of pressuring Methven, based on these considerations. Mr Dobbin denied having any such thing in mind.
47 Mr Dobbin and Mr Bejatovic had a further meeting on the afternoon of 29 March. Once again, the meeting was to be at QPO. At 4.15pm, Mr Bejatovic emailed a third draft of the contract to Mr Dobbin stating, “As per our discussion this afternoon, all of the changes you have requested have been made”. The “Crichton clause” was gone. The Customer KPIs in the schedule included a single dot point as follows:
·Satisfaction of ‘Vendor In Store’ key performance indicator targets and measures imposed by the Customer, specified as equal to or greater than: an attendance rated 100%, Vendor order placement of 80%, Vendor order value of 80%. Range and in-stock possession of 100 per cent.
48 The termination clause for default at Clause 12(c) was shortened so as to entitle Methven to effect an immediate cancellation by written notice to Cornerstone:
“The Customer’s KPI’s are not satisfied in any consecutive three month period during the term of this agreement.”
49 Mr Dobbin remained unsatisfied. In particular, linking the “Vendor in Store” performance to a right of automatic cancellation seemed, to him, unfair. He said achievement of a 100 per cent result under that KPI was dependent upon Methven Australia always having stock available to deliver to the relevant Bunnings outlet. A survey of Methven Australia’s previous performance in this respect showed significant shortfalls simply because items were not in stock. It would be unjust, Mr Dobbin felt, to leave Cornerstone liable to cancellation in those circumstances. Cornerstone would, if it committed to this provision, in his view, be set up to fail. He continued to object to a requirement for a 100 per cent attendance rate by representatives. This, he said, was physically impossible.
50 At the meeting on 29 March, Mr Bejatovic described Mr Dobbin’s tone as “very clinical and prescriptive”. (T513, L10) It will be seen that the third draft agreement, whilst it responded to a number of Mr Dobbin’s criticisms by, for instance, deleting the Crichton clause, did not respond to all of them. In particular, for instance, it still appeared to make Cornerstone liable to termination if stocking levels in Bunnings of Methven products could not be maintained because of a lack of supply from Methven, as distinct from merely a lack of service by Cornerstone. I asked Mr Bejatovic why it was that this apparently reasonable grievance of Cornerstone did not seem to have been catered for in the third draft. He said:
“Your Honour, my discussions with Mike [Dobbin] were always about when Methven can’t fulfil the order that’s been generated. We accept that completely.” (T517, L12–15)
I said:
“So, am I right in saying in effect you were inviting Mr Dobbin to trust Methven would administer the contract in good faith with respect to that and other matters?”
Mr Bejatovic replied:
“Yes.” (T517, L29–T518, L1)
51 Mr Bejatovic said that since early 2011, he had been becoming increasingly disenchanted with the level of service provided by Cornerstone to Methven. In early 2011, Mr Brett Hall, a former employee of Danks, had been appointed to manage Methven’s relationship with Bunnings. He and Mr Troy Mortleman of Methven had raised a series of problems with Cornerstone’s service to Methven. These things, according to Mr Bejatovic, became issues for Methven because Bunnings made complaints directly to Methven. Mr Bejatovic directed Mr Mortleman to prepare a discussion paper, including options to remedy the problems. That paper was emailed to him on 21 March 2012. It recommended inter alia:
·Disengagement of Cornerstone as MAU Bunnings VIS provider from 1 April 2012 with a new VIS provider appointed; and
·Progression of Strikeforce and Ausrep to the second round of discussions, with Strikeforce the preferred option. (Court Book (“CB”) 688 at 700) Strikeforce and Ausrep were competitors of Cornerstone.
52 In his report to the Board of Methven Limited for March 2012, sent 10 April 2012 to Mr Fala and other senior executives, Mr Bejatovic said:
“Cornerstone have become increasingly less effective as our presence at Bunnings expands and involves more complex FMCG style engagement across all aspects of their dominant retail footprint. As such we have requested tender submissions from the top 5 FMCG agencies best suited to MAU needs. It is anticipated that MAU will reduce the current 5% commission on sales to 4% or less and also improve its service levels. The contractual notice period for Cornerstone is six months and it is expected that notification will be given in April. Plans to transition are being made at present.” (CB 660)
53 Mr Dobbin heard rumours of Methven’s approaches to the market, described in Mortleman’s discussion paper. He asked Mr Bejatovic if the rumours were true and Mr Bejatovic denied these matters. He accepted that this was at odds with good, ethical business practices, but was of the view that relations were so bad that his action was justified. (T565–6)
54 According to Mr Bejatovic’s recollection, following the meeting on 29 March and the submission of the third draft agreement later that day, there was no further contact between him and Mr Dobbin until 11 April. On that day, Mr Bejatovic emailed Mr Dobbin stating:
“Mike, have left a couple of messages for you … please call me.”
Mr Dobbin replied:
“Mark I am in Asia and will be till the end of this week. Have been unable to retrieve my emails. Can you email what you wanted to talk about. Appreciate it. Mike.”
Mr Bejatovic responded:
“Hi.
I need the altered and signed contract this week.
Can you please confirm that this will be done?” (CB 461–2)
55 The following evening, Mr Dobbin sent a lengthy email which I reproduce in full:
“Dear Mark,
I have reflected over the past 10 days, on the many discussions we have had in trying to resolve the proposed New Contract between our two companies, and whilst I appreciate some of the concessions you made at our last meeting to finalise this contract, there is wording in the contract and expectations still in Schedule ‘1’ that quite truthfully are outside of the Cornerstone ability to Control, yet could be deemed dismissible offences within 14 days if not rectified, over three months. One in particular, that we think is impossible to control is to achieve a range, and in stock position of 100%. This is totally dependent on Methven having stock, and delivering in full and on time, which as history shows has not always been one of the companies [sic, sc company’s] great strengths. Once the product is out of stock, this will throw up the Vendor order value, as the stores try to order the out of stock lines themselves in between Cornerstones calls. Mark I cannot accept those measurement tools to be judged by.
We obviously are not going to be able to get agreement on this contract, and to that end I am reverting to the original contract, of the year 2000, and giving Methven 6 months’ notice under the terms of this contract, finishing our relationship at the 30th September 2012. I am also enclosing an invoice for the difference in Commission between what you have currently paid to date, and what the commission rate is in the contract that has been still on foot for the last 7 months. This account is due and payable immediately. As you are very much aware, the drop in Commission last September was on the condition we could agree on a new ‘Bunning’s’, New Zealand. You and your previous management made a big selling point at our many discussions last year that New Zealand was to be part of the whole deal in accepting any kind of commission cut in the new agreement. I noted that in our discussions at our last meeting that you were trying to distance yourself from any commitment about New Zealand and that was another factor in my decision here. On top of this attached invoice I will also be sending Methven a charge for all of the relay and refit work we have done over this period where a charge has not been applied to date as per the terms of the original contract.
Mark it has been a great thrill being involved with Methven for all of these years, and it is disappointing that it has to end this way, but as we have been 7 months trying to get agreement on the proposed contract revision, (to the financial disadvantage of Cornerstone), your company has things in the proposed new contract which are just untenable. You and your team keep entertaining Quotes from other merchandising companies instead of showing loyalty to our team and as of late [sic] as last week we got more industry information that you are still reviewing for other Merchandising companies to replace us? Cornerstones fine work in Bunnings is what got Methven to where it is today, and it is very disappointing to us that we just cannot trust what we are being told now by you in pushing to revise our current contract. That is why we believe it best to end the relationship.
You can be assured Cornerstone will do it best for Methven, as it always has, till we finish at the end of September.
Mike” (CB 463–464)
56 Mr Bejatovic said, on receiving that email, he “was alarmed”. (T518, L26‑27) He said the first step that he took was to report to Group Chief Executive, Mr Rick Fala. (T519, L1–3) His email to Mr Fala, in the form reproduced, is shown as transmitted at 9.51pm. Mr Bejatovic said that this was New Zealand time, two hours ahead of Australian Eastern Time, and that his report to Mr Fala was made within about an hour of receiving the email quoted above from Mr Dobbin. He provided a chronology of the events and reported to Mr Fala:
“Freehills engaged tonight to make recommendations on the enforceability of the existing contract and our current position.” (CB 709–10)
57 Cornerstone rendered an invoice for “Bunnings Commission Unpaid” $192,731.78, with the addition of goods and services tax $19,273.18. The total invoice amount was $212,004.96. This represented a “catch up” of commission bringing the amount charged up to the old levels as they were before the events of July 2011, covering the period from 1 September onwards. There was a further invoice rendered as at 30 April 2012 for $15,266.50, together with goods and services tax $1,526.65, total $16,793.15 relating to “charge outs” in Victoria, New South Wales, Queensland, South Australia and Western Australia. These amounts represented charges rendered by Cornerstone for refits and relays in the relevant period which initially were not separately billed following the meeting in July 2011.
58 The invoices remained unpaid. By letter dated 4 May 2012, Freehills announced that they acted for Methven Australia. They referred to the email of 12 April attaching “a purported invoice claiming payment of $212,004.96”. Freehills said they were obtaining instructions and would write to Cornerstone further. The letter closed stating:
“In the meantime, all of Methven’s rights are expressly reserved.”
59 Freehills then sent a letter dated 1 June 2012 to Mr Hicks of Hicks Oakley Chessell Williams, who were then acting, and continue to act, in this matter for Cornerstone. Freehills asserted that there had been an agreement reached in 2011 to the following effect:
·for the period 1 September 2011 to 1 April 2012, a flat rate of six per cent on the sales of all products [would be charged by Cornerstone to Methven Australia in lieu of the previous arrangements]; and
·for the period 1 April 2012 onwards, a flat fee of five per cent on the sale of all products [would be charged].
60 They said it was also agreed that all relay and refit work would not be separately charged. They said that this arrangement was made in the face of Methven adopting the position that, if these matters had not been agreed to, it would have exercised its contractual right to terminate the 2009 agreement. They said that this 2011 agreement was carried into effect by the parties. The agreement, they said, was unconditional and therefore Cornerstone could not go back on it and claim additional commission. The letter continued:
“Cornerstone’s conduct in:
·asserting that the 2011 agreement was not on foot;
·serving purported invoices seeking ‘back payment’ of commission calculated at rates other than those agreed, and seeking payment for relay and refit work;
·asserting (by means of your letters dated 22 and 23 May 2012) that the amounts in the purported invoices are due and owing; and
·threatening (by means of your letter dated 23 May 2012) to commence Court proceedings against Methven in respect of the purported invoices;
constituted a clear repudiation of the 2011 Agreement.”
61 They said that Methven accepted the repudiation and reserved its rights. Methven apparently contacted Bunnings, the effect being that Cornerstone was locked out from further involvement in Methven Australia’s supply of products to Bunnings. The acceptance of repudiation was enunciated in a letter from Freehills dated 27 June 2012. By letter of 31 July 2012, Hicks Oakley Chessell Williams denied that Cornerstone had repudiated its obligation. It said that Cornerstone “is and has at all material times remained ready, willing and able to carry out its obligations under the Agency Agreement”. The action taken by Methven Australia, said the letter, itself constituted a repudiation which Cornerstone accepted.
62 On 11 May 2012, statutory notices had been served on behalf of Cornerstone. These were notices under the Corporations Act demanding payment of the amounts rendered by way of “catch up” commission and other payments, and asserting that non-payment would be relied on as evidence of Methven Australia’s insolvency as a basis for approaching the Supreme or Federal Courts for a winding up order relative to that company. Those statutory demands were at the insistence of Freehills on behalf of Methven Australia, withdrawn on 23 May 2012.
63 Cornerstone’s solicitors then commenced the present proceeding. They sought initially $388,223.71 against Methven Australia as a debt or liquidated sum, subsequently amended to $440,759.71, together with contractual damages and damages for misleading and deceptive conduct under the Australian Consumer Law, interest and costs. The proceeding also joined Mr Bejatovic as the second defendant, seeking damages against him under the Australian Consumer Law, though the claim against him personally has not been pursued and has been removed in amendments to the statement of claim.
Pleadings
64 The pleadings underwent radical revision in the course of the proceeding. On the plaintiff’s side, this reached a fourth Further Amended Statement of Claim. I will refer to this as simply “the Statement of Claim”.
65 The Statement of Claim alleged the initial contract between Cornerstone and Flexispray. The Statement of Claim at paragraph three alleged that Methven, “became the assignee of the rights and obligations of Flexi Spray…”. Whilst the benefit of a contract may be assigned either at equity or a statutory legal assignment – s134 Property Law Act 1958, it would seem to be legally impossible to assign obligations – Government Insurance Office (NSW) v KA Reed Services Pty Ltd [1988] VR 829.
66 Methven, however, admitted that there was, “An implied novation of the Agency Agreement by which [Methven Australia] was substituted for Flexispray as a party to the Agency Agreement”.
67 Paragraph six of the Statement of Claim alleged the revision of commission rates under the agency agreement to 10 per cent for sales of shower head products, five per cent for sales of tap products, and two per cent for sales of valve products. This allegation is admitted by Methven Australia.
68 Crucially, the Statement of Claim alleged that “in or about July or August 2011”, there was a further variation, modifying commission rates to a flat rate of six per cent on the sales of all products from 1 September 2011 to 1 April 2012, and five per cent thereafter on sales of all products. These variations were admitted by Methven Australia.
69 The previous version of the Statement of Claim and its predecessors had alleged, subject to certain conditions, Cornerstone had agreed that it would no longer, from 1 September 2011, make separate charges upon Methven Australia for relay or refits. This contention, however, was deleted in the most recent version of the Statement of Claim.
70 Next, as part of the same paragraph – paragraph seven, the Statement of Claim alleged that it was agreed that the parties would “Commence negotiating towards the enter [sic, sc. entry] by them of a new agency agreement in writing”. This was admitted by Methven Australia in its Defence.
71 The reduction in commission charges was, according to the Statement of Claim, conditional upon the parties “executing a new written agency agreement”. Further, according to the Statement of Claim, if that requirement were not met, “within a reasonable time, the commission rates payable by [Methven Australia] to [Cornerstone] would revert, from 1 September 2011, to the rate set out under the agency agreement as varied (in 2009)”.
72 According to the Statement of Claim, negotiations toward the formation of a new written agency agreement broke down “on or about 12 April 2012”. Therefore, said the Statement of Claim, the condition for the reduction of the commission rates from 1 September 2011 was not met and charges under the former regime were properly made by Cornerstone.
73 An alternative case put was that if, in the circumstances, there was no completed agreement to vary the agency agreement in July/August 2011, Cornerstone remained entitled to charge commissions in accordance with the rates agreed in 2009. Accordingly, the Statement of Claim sought payment of the face value of the catch-up invoices rendered with respect to the period from 1 September 2011 to 31 March 2012 totalling $245,194.16 inclusive of GST, together with interest for April 2012. The Statement of Claim acknowledged receipt of $49,101.99 commission inclusive of GST against a total amount owed of $88,014.85, making a claim therefore for the difference of $42,804.15 inclusive of GST, together with interest. There were further charges for June and July 2012 to the same effect, with the total of $440,759.71 inclusive of interest.
74 There was also a claim for damages for breach of the agency agreement and specifically damages for repudiation by Methven Australia which was said to have been accepted by a letter from Cornerstone’s solicitors dated 31 July 2012. The repudiation damages were said to consist of a loss of profit for the balance of the period of notice of termination given by Cornerstone calculated at $122,278 and additional costs of $7,537.
75 The Statement of Claim also included a claim for misleading and deceptive conduct. In paragraph 15 of the Statement of Claim, it was alleged that Methven Australia represented to Cornerstone that if Cornerstone did not execute a new agency agreement within a reasonable time, the commission rates charged by Cornerstone would revert from 1 September 2011 to the rates which were in existence immediately prior to 1 September 2011, and that Methven Australia would pay Cornerstone for relay or refit charges. This representation was said to have been made verbally or by implication in the course of conversations between Mr and Mrs Dobbin on behalf of Cornerstone, and Messrs Bejatovic and Crichton on behalf of the Methven Australia “in or about July and August 2011”.
76 The conversations were said to have taken place at Cornerstone’s office in Dunlop Road, Mulgrave on 13 July 2011 and 1 August 2011. It was said that relying upon these representations, Cornerstone continued to accept goods for and on behalf of Methven Australia and to provide hardware broking services to it, rendering commission at a flat rate of six per cent and not charging separately for refits and relay.
77 Next, it was alleged that Methven Australia now denies the making of the representation, referring in particular to statements by Freehills and letters to Cornerstone’s solicitors of 18 May 2012, 22 May 2012 and 27 July 2012. The representation, it was said, was misleading and deceptive and, insofar as it pertained to future matters, was not based on any reasonable grounds. It was said that there was further misleading and deceptive conduct on the part of Methven Australia by failing to correct the initial representation and in the fact that Methven Australia tendered to other suppliers and adopted a plan to disengage from Cornerstone by 1 April 2012. It was said that Cornerstone has suffered loss and damage as a result.
78 An alternative representation alleged by Cornerstone to have been made to it by Methven Australia, was that a new written agency agreement on similar terms to the existing agreement would be executed, save that it would reduce commission to flat rates of six per cent from 1 September 2011 to 1 April 2012 and thereafter to a flat rate of five per cent. This representation was said to have been made at the meeting on 13 July 2011 between Mr and Mrs Dobbin on behalf of Cornerstone and Mr Bejatovic and Mr Crichton on behalf of Methven Australia.
79 It is said that Cornerstone relied on that alternative representation and reduced its commission accordingly and did not give notice of termination of its agency agreement. In fact, it was said that Methven Australia did not execute a new written agency agreement as represented but, rather, refused to execute a draft agreement prepared by Cornerstone and submitted, instead, an alternative form of additional clauses not previously discussed. It also entered into tender arrangements with other service providers to disengage from Cornerstone. It is said that Cornerstone has suffered loss and damage and reliance upon that misleading and deceptive conduct because, had it not received that alternative representation, it would have continued to charge for refit and relay separately and would not have reduced its commission.
80 In its defence, Methven Australia agreed that negotiations took place between the parties in July 2011 and that they were represented by Mr and Mrs Dobbin on behalf of Cornerstone and Messrs Bejatovic and Crichton on behalf of Methven Australia. The negotiations, according to the Defence, occurred at the meeting on 13 July 2011 and in telephone discussions between Messrs Bejatovic and Dobbin in July 2011, telephone discussions between Messrs Crichton and Dobbin in July 2011 and in email correspondence between Mr Bejatovic and Mrs Dobbin on 15 July 2011.
81 Whilst the Defence admitted that the parties agreed to document the variations agreed on within a form of contract “that would also impose service obligations on [Cornerstone]”, it denied that the execution of that document constituted a condition upon the reduction in commission or the removal of a right to charge separately for refits and relay.
82 The Defence recited the history of negotiations for the execution of a new agency agreement and the stand taken by Cornerstone alleging that Cornerstone thereby “evinced an intention no longer to be bound by the Agency Agreement as varied [in July/August 2011] and wrongly repudiated the Agency Agreement as varied…”.
83 The Defence further alleged that, if the cuts in commission were conditional, as alleged by Cornerstone, Cornerstone would be “estopped from asserting that legal position as against [Methven Australia]” or, alternatively, it alleged that Cornerstone had “waived its right to assert that legal position against [Methven Australia] [or] alternatively has elected to affirm” the relevant variation because it failed “to specify any time period by which it would terminate the Agency Agreement during the discussions referred to…between August 2011 and 27 March 2012”, and by its conduct, “represented that it would not assert that legal position after 1 September 2011”. This representation was relied upon by Methven Australia, the Defence alleged. Methven Australia could have acted promptly to have a new written contract entered into, avoiding any obligation to make additional payments for refits and relays or to pay further commission.
84 Under cover of the denial that the commission variation was in any way conditional, it said that, if it were conditional, then there was an implied term that Cornerstone would do everything that was reasonably necessary to enable the condition to be met. Cornerstone, by its conduct, did not do everything that was necessary to meet the condition and caused it not to be fulfilled.
85 The Defence narrated the events which I have referred to above.
86 Methven Australia denied that there was no agreement in July 2011 to vary the agency agreement and said that Cornerstone was estopped from asserting that by reason of giving Methven Australia to understand that the commission reduction had been agreed to and submitted Cornerstone’s standard contract. According to the Defence, Methven Australia relied on its representation to its detriment in not giving notice of termination to Cornerstone.
87 As to the allegations of misleading and deceptive conduct, Methven Australia denied representing that, if a new agency agreement were not executed within a reasonable time, the rates would revert to their 2009 level.
88 Methven Australia also denied making what is described in the Statement of Claim as the “alternative representation”. It generally denied the other allegations made by the plaintiff.
Conclusions
2011 Agreement ?
89 My survey of the pleadings indicates that Cornerstone’s primary case and the one contractual claim, which it had when the trial commenced, was that its contract to supply hardware broking services to Methven Australia was the subject of a conditional variation in July/August 2011. Nevertheless, early in the trial, by leave, Mr Magowan amended the Statement of Claim so as to include the contractual claim based on the premise that the negotiations in July/August 2011 were abortive and no concluded agreement was reached. According to this contention, the 2009 commission entitlements of Cornerstone therefore persisted and the disputed invoices were properly rendered in accordance with that 2009 commission regime. Mr Magowan supported this contention which, as a matter of abstract principle, would seem to be unanswerable, by reference to paragraph [22.3] of Cheshire & Fifoot Law of Contract 10th Australian Edition, 1108-9. At 1109, the learned editors state:
“An intention to create a legally binding [variation] agreement, as well as sufficient certainty of the varied terms, must also be established; unless this is achieved the original contract continues in undiminished operation.”
The authorities relied on in support of that proposition are Tekmat Pty Ltd v Dosto Pty Ltd (1990) 102 FLR 240 and Coghlan v Pyoannee Pty Ltd [2003] QCA 146. I accept Mr Magowan’s submission on this point.
90 Even although the plaintiff’s case, based on there having been no effective variation of commission entitlements in 2011, was adopted as a “fall-back” position, as a matter of logic, it is the issue which must first be considered. It is only if I find that there was an effective variation contract entered into in 2011 that the further question, whether it was conditional and, if so, in what manner, can arise.
91 However one interprets the events of July to August 2011, it is clear that both parties contemplated that a formal commission agreement would be entered into and such formal agreement was never executed. Does that consideration, in itself, exclude the possibility of there having been an effective variation in 2011? Both parties referred to the celebrated exposition of the law on this subject in the joint judgment of the High Court of Australia, Dixon CJ, McTiernan and Kitto JJ, in Masters v Cameron (1954) 91 CLR 353. There, their Honours said:
“Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three cases. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. Of these two cases the first is the more common. Throughout the decisions on this branch of the law the proposition is insisted upon which Lord Blackburn expressed in Rossiter v. Miller (1878) 3 App Cas 1124 when he said that the mere fact that the parties have expressly stipulated that there shall afterwards be a formal agreement prepared, embodying the terms, which shall be signed by the parties does not, by itself, show that they continue merely in negotiation. His Lordship proceeded: ‘ . . . as soon as the fact is established of the final mutual assent of the parties so that those who draw up the formal agreement have not the power to vary the terms already settled, I think the contract is completed’ (1878) 3 App Cas, at p 1151 : see also Sinclair, Scott & Co. Ltd. v. Naughton [1929] HCA 34; (1929) 43 CLR 310, at p 317 . A case of the second class came before this Court in Niesmann v. Collingridge [1921] HCA 19; (1921) 29 CLR 177; where all the essential terms of a contract had been agreed upon, and the only reference to the execution of a further document was in the term as to price, which stipulated that payment should be made ‘on the signing of the contract’. Rich and Starke JJ. observed (1921) 29 CLR, at pp 184, 185 that this did not make the signing of a contract a condition of agreement, but made it a condition of the obligation to pay, and carried a necessary implication that each party would sign a contract in accordance with the terms of agreement. Their Honours, agreeing with Knox C.J., held that there was no difficulty in decreeing specific performance of the agreement, ‘and so compelling the performance of a stipulation of the agreement necessary to its carrying out and due completion’ (1921) 29 CLR, at p 185: see also O'Brien v. Dawson [1942] HCA 8; (1942) 66 CLR 18, at p 31 (at p361)
Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own: Governor & c. of the Poor of Kingston-upon-Hull v. Petch [1854] EngR 995; (1854) 10 Exch 610 (156 ER 583). The parties may have so provided either because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document, as in Summergreene v. Parker [1950] HCA 13; (1950) 80 CLR 304 or simply because they wish to reserve to themselves a right to withdraw at any time until the formal document is signed.” ((1954) 91 CLR 353, 360–1)
92 Since Masters v Cameron, a fourth class of case has been recognised, beginning, it would seem, by the judgment of McLelland J in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 and affirmed by the New South Wales Court of Appeal (1986) 40 NSWLR 631; the fourth class being cases in which the parties were content to be bound immediately and exclusively by the terms agreed upon whilst expecting to make a further contract in substitution for the initial arrangement containing additional terms to be agreed upon. In this fourth class, as with the first and second classes identified by their Honours in Masters v Cameron, an immediate legal obligation is created which will persist, even if no further agreement, as contemplated, is ever entered into. Mr Magowan commented that this so-called fourth class in the Masters v Cameron analysis could be regarded as a “subset” of the first. This “fourth class” should be regarded as now well established. Mr Wallis referred to a number of subsequent cases in which this analysis had been applied, including Tasman Capital Pty Ltd v Sinclair [2008] NSWCA 248 [27]–[28] and Factory 5 Pty Ltd (In Liq) v State of Victoria (2010) 276 ALR 523, 525, 527–8 per Bromberg J in the Federal Court of Australia. Mr Wallis said that the consideration which would guide a court in determining whether parties intended to be bound immediately, whether or not the contemplated further agreement was ever entered into, were identified by Kirby P (as he then was) in Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd (1995) 7 BPR 14,551. Mr Wallis summarised the effect of his Honour’s analysis as follows:
(a)the question depends on the language the parties have employed and no special form of words is essential to be used in order that there will not be a binding contract before execution of a formal agreement;
(b)the use of the words “subject to contract” creates a rebuttable presumption that no contract was intended to be formed;
(c)the Court will construe the language of the parties and characterise their conduct, where appropriate, by reference to the surrounding circumstances, which are properly to be regarded as throwing light on their intention;
(d)the Court will take account of whether the usual method of engaging in transactions of the type in question involve executing a written agreement;
Disposition
147 I direct that the parties bring in short minutes to give effect to these reasons within 14 days.
Costs
148 I have heard no submissions on the question of costs and so I will reserve them.
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