D F McCloy Pty Limited v Taylor Thomson Whitting Pty Limited

[2000] NSWSC 1142

CITATION:	D F McCloy Pty Limited v Taylor Thomson Whitting Pty Limited [2000] NSWSC 1142
FILE NUMBER(S):	SC 55001/99
HEARING DATE(S):	1/12/00
JUDGMENT DATE:	1 December 2000
PARTIES :	DF McCloy Pty Limited (Plaintiff) Taylor Thomson Whitting Pty Limited (Defendant)
JUDGMENT OF:	Einstein J

COUNSEL :	I Faulkner (Plaintiff) P Greenwood SC (Defendant)
SOLICITORS:	Paul Hines (Plaintiff) Minter Ellison (Defendant)
CATCHWORDS:	Adoption of referee's report - construction of referee's reasons - Contract - whether objectively possible to conclude that offeree accepted offer and all or some of attached terms as proffered by offeror
CASES CITED:	Empirnall Holdings Pty Limited v. Macton Paull Partners (1988) 14 NSWLR 523 Halton Pty Limited v. Stewart Bros Drilling Contractors Pty Limited (1992) ATPR 41-158. Henjo Investment v. Collins Marrickville (1988) 30 FCR 546 Maxitherm Boilers Pty Limited v. Pacific Dunlop Limited (1998) 4 VR 559 Laurel Race Course Inc v. Regal Construction Inc 333A 2d 319 (1975) L'Estrange v. F Graucob Limited (1934) 2 KB 394 at 403 Super Pty Limited v. S J P Formwork (Aust) Pty Limited (1992) 29 NSWLR 549 White Constructions NT Pty Limited v. Commonwealth of Australia (1997) BCL 193
DECISION:	Report to be adopted. Proceedings stood over to 8 December 2000.

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION - CONSTRUCTION LIST

EINSTEIN J

Friday 1 December 2000 ex tempore
Revised 7 December 2000

55001/99 - D F McCLOY PTY LIMITED -V- TAYLOR THOMSON WHITTING PTY LIMITED

JUDGMENT

1 HIS HONOUR: There is before the Court a notice of motion filed on 17 November 2000 in which the plaintiff claims an order that pursuant to Part 72 rule 13 of the Supreme Court Rules the report of the referee, Mr Callaghan SC, dated 30 October 2000 be adopted and seeks ancillary judgment and costs. 2 The referee's report has been marked as Exhibit A1 on the motion. 3 The report covers in detail the background circumstances in which the plaintiff, a builder, was engaged to design and construct a cinema complex. The plaintiff sub-contracted the structural engineering design component to the defendant engineers.

BACKGROUND:

4    The following matters essentially taken from the plaintiff's written submissions on 23 November 2000 are common ground.

"2. The footings were under-designed. The owner's independent engineering consultants first raised concerns in January 1998, and then for some months forcefully argued for design revision. These matters were passed on immediately by the plaintiff to the defendant. Building works continued apace. The defendant, despite the urgings of the owner's engineers, and despite attending meetings with those engineers who sought but did not receive from the defendant verified calculations of the designs, maintained that the design was adequate in all respects.

3. Continually reassured by the defendant of the correctness of the design in February, March, April and May 1998, the plaintiff continued to build and by the end of May 1998 was nearing practical completion. The finishing trades were engaged on site and, clearly, to have to expose and enhance both internal and external footings at such a late stage of the project was a builder's nightmare.

4. During those months, the owner had given notice (pursuant to the terms of the building contract) to the plaintiff, to show cause why the contract should not be terminated. The primary obligation which (prior to September 1998) the plaintiff could not perform, of course, was correction of the alleged design faults. The owner owed substantial sums to the plaintiff, and the plaintiff was also seeking payment for variations. The plaintiff's ability to bargain with the owner was, in effect, paralysed from March to September 1998 because of the plaintiff's breach of its design obligations. The plaintiff at first asserted to the owner the soundness of the design, but had to retreat from that position by the end of May 1998 when the defendant finally admitted error. The owner had the upper hand, and in the ensuing months issued further 'show cause' notices to the plaintiff, citing the engineering design defect, inter alia. No doubt the issue of those notices was intended to, and achieved, stark reminders to the plaintiff of its inferior position as regards the owner. Due to the faulty design, the plaintiff's position as regards the owner under the contract remained precarious and continually under the threat of termination in respect of faults which the plaintiff could not rectify and which had been caused by the defendant's breaches.

5. Footings enhancement design was prepared by independent consulting engineers, Connell Wagner (Mr Robert Ferguson). The re-design was approved by Pittwater Council and the project was completed in November 1998. The footings enhancement occurred in September-November 1998. The plaintiff's presence on the site was prolonged by the faulty design issue.

6. In September 1998 the plaintiff and the owner settled all differences as to variation claims, delays and prolongation, in circumstances where the plaintiff had to compromise its claims as a set-off to the liquidated damages which the owner had imposed. The referee found that such losses were caused by the defendant's breaches.

7. The referee also found that the plaintiff had continued to build in the months to February to June 1998 in reliance upon the misleading assurances of correct design given by the defendant in February, March, April and May 1998.

8. On pages 27-28 of the referee's report is to be found the relevant text of the evidence of Mr Robert Ferguson of Connell Wagner. Mr Ferguson was highly critical of the defendant. For example, at report page 28.5, from the written report of Mr Ferguson tendered in evidence for the plaintiff:

'Their continued assertions as regards the adequacy of the footing pads would seem particularly ill-considered, as relatively simple calculations could have shown that many of the pads were under-designed, especially those at the perimeter of the building ... Whilst (putting the plaintiff on notice of these apparent problems of design) may have been an embarrassment at the time, it would have been prudent and responsible course of action in respect not only to public safety but also to minimise the extra costs to their client (the plaintiff).'

9. Mr Ferguson was not challenged as to this evidence. Indeed, he was not cross-examined.

10. The defendant admitted breach of contract and negligence, but denied Trade Practices Act breaches.

11. The defendant contested causation of some aspects of damage."

5    The defendant, represented by Mr Greenwood SC, opposes adoption of the report. 6    Both parties are agreed that the principles relevant to the adoption in whole or in part, or rejection of the report, are as set out by the New South Wales Court of Appeal in Super Pty Limited v. S J P Formwork (Aust) Pty Limited (1992) 29 NSWLR 549. The Court has an undoubted judicial discretion to accept, to reject, or to modify a referee's report and may reject the report if it reveals some error of principle, some absence or excess of jurisdiction, or some patent misapprehension of the evidence. 7 In Super Gleeson CJ at 553 referred, inter alia, as an example of a particular application of the Court's discretion, to the following passage from the judgment of Cole J in White Constructions NT Pty Limited v. Commonwealth of Australia (1997) BCL 193:

"... I am of the view that in this instance the Court should not embark upon a re-examination of the questions of fact upon which the referees have reported. There is obviously a large body of evidence upon which the referees can properly find as they did. The purpose of referees reporting to the Court on disputed questions of fact is rendered futile if the Court has to reconsider disputed questions of fact in circumstances where it is conceded that there is factual material sufficient to enable the referees to reach the findings they did. In circumstances where the Court, having closely scrutinised the referee's report, has a comfortable feeling of satisfaction that the factual issues have been properly explored and considered, in my view the Court should adopt the referee's report of findings of fact. In this instance I have that feeling and adopt the actual findings."

8    Likewise at p 555 Gleeson CJ, in referring to the approach of Giles J, said:

"Giles J rejected the submissions that he had been obliged to reconsider, and determine for himself, every issue of fact or law in respect of which the builder was dissatisfied with the decision of the referee. He considered that such an approach would render virtually futile the whole procedure of sending matters out to the referee and was not required by the rules. On the contrary, his Honour approached the matter on the basis that he had a discretionary decision to make as to whether he adopted the referee's report in whole, or in part, and that, in making that decision, he, being satisfied that the referee had applied his mind to the task of fact-finding required of him, carefully and in a manner consistent with legal principles, would not do more than ensure that the referee had addressed the appropriate questions, and that there was evidence capable of being accepted which, if accepted, supported the findings of fact made. This, it should be emphasised, was his Honour's approach to challenges to findings of fact for which there was an evidentiary basis. That was the context in which the issue arose for his consideration."

9    As I understand the position, those statements of principle are binding upon this Court. 10    The defendant's written submissions assert that the report was based on an error of principle and are in the following terms:

" The Referee’s Finding
5. The referee found that relevantly, the defendant's retainer was concluded on 20 November 1996. That occurred when the plaintiff's representative telephoned the defendant to accept the offer set out in the defendant's letter dated 16 October 1996. (Paragraph 18(a)
6. The defendant's letter of 16 October 1996 provided, inter alia, 'Subject to your agreement, our services would be carried out in accordance with the Association of Consulting Engineers Australia February 1991, Guideline Terms of Agreement.' The letter then went to set out the fees for each aspect of the defendant's work. (Paragraph 5 bottom of page 4)
7. The ACEA Guideline Terms of Agreement clauses 4.2 and 4.3 are extracted at page 14 of the referee's report. The effect of those clauses is to provide a limitation of liability of $300,000 and a duration of one year within which the plaintiff must bring a claim against the defendant arising out of the work undertaken by the defendant. At the expiration of that period the defendant is discharged from liability.
8. The referee found that the limitation provisions were not part of the retainer. (Paragraph 28 on page 25)
THE REFEREE'S REASONS:
9. The referee described his task as making an objective assessment on the basis of the documentary material and Mr McLeod's evidence and undertaking an objective determination whether the plaintiff assented to the limitation provisions (my emphasis). (Paragraph 25 on page 22) The referee then went on to describe what was 'dominant' in his consideration.
THE ERROR OF PRINCIPLE:
10. It is respectfully submitted that there are three errors in the approach described in paragraph 9 above.

11. The first is that the referee addressed the wrong question. The issue was whether the ACEA terms were incorporated into the agreement, not whether the plaintiff assented to the limitation provisions of those terms.

12. The referee found that part of the ACEA terms became part of the retainer but other terms did not. (Paragraph 27 at the bottom of page 24)

13. It is submitted that either the whole of the ACEA terms were incorporated into the retainer or none of them were. Having found that some provisions were incorporated it follows that the whole of the terms must have been similarly incorporated.

14. Second, the matters listed by the referee as being 'dominant' in his consideration were not pertinent to the task of determining the terms of the retainer in October/November 1996, or were of no significance in the determination of the essential question.

15. Third, the referee applied an incorrect test and onus on the defendant by considering whether the defendant did all that was reasonable to bring the limitation provisions to the notice of the plaintiff. (Paragraph 26 at the top of page 25) His conclusion that he did not think the plaintiff should reasonably have anticipated that it was intended to incorporate the limitation provisions, is with respect irrelevant.

16. The referee placed reliance upon a statement by Buchanan JA in Maxitherm Boilers Pty Limited v. Pacific Dunlop Limited (1998) 4 VR 559 at 568. That statement however has to be taken in context. At the top of page 568 his Honour said:

'Once the conclusion has been reached that an express offer containing a party's standard terms has been accepted, there is no occasion to then consider whether sufficient steps have been taken to bring the standard terms to the attention of the other party. The ultimate question is whether the party relying on the standard terms can properly assume that the other party has consented to those terms.'


17. There was no evidence before the referee nor is there anything in the report to suggest that the defendant was aware of anything that would suggested that the plaintiff had not consented to the ACEA terms. The acceptance was unqualified by the plaintiff. The referee found that some of those terms were incorporated into the retainer.

18. The subject terms are a standard form published by the defendant's professional association for use by all consulting engineers in the country. There is no finding by the referee (nor with respect could there be) that the ACEA terms were of a type that no one would anticipate in a contract for the provision of engineering services.

19. The plaintiff had the opportunity to read and reject the terms proposed by the defendant. It chose not to reject them and expressly accepted them. The plaintiff ought to be bound by the decision that it took. The defendant was entitled to presume that the plaintiff had accepted the terms of its offer. In Maxitherm Callaway JA said at page 562:

'It is not uncommon to enter into a transaction on another party's standard terms and conditions without inquiring what they are. It is often not worth doing and a sensible commercial risk to run. The law reflects commercial reality by holding the party who does not inquire to such of the other party's standard terms and conditions as may fairly be regarded as within the risk the first party took. Some terms are outside the risk and the first party is not bound by them. A term may be contrary to industry practice or, however appropriate to other contracts into which the other party regularly enters, unsuited to the particular contract. It is rarely, if ever, sufficient to show a term is onerous, but its onerous quality or some other feature may show that it was not reasonably to be expected.'

20. The examples of the type of provision that would not be expected are far removed from the present case. Indeed, rather than being contrary to industry practice, the ACEA terms are the standard for the industry.

21. It is in that commercial context that the referee was obliged to apply the objective bystander test so out in Empirnall Holdings Pty Limited v. Macton Paull Partners (1988) 14 NSWLR 523.

22. The evidence does not establish whether the plaintiff read the terms proposed by the defendant. Mr Goff, the person conducting the negotiation for the plaintiff, was never called to give evidence. The evidence is open on the question of whether the terms were read or not. One may assume they were read: L'Estrange v. F Graucob Limited (1934) 2 KB 394 at 403

THE EFFECT OF THE PROVISIONS ON THE TRADE PRACTICES CLAIM:

23. The referee's report disclosed an error of principle by relying on the judgment of Lockhart in Henjo Investment v. Collins Marrickville (1988) 30 FCR 546 as authority for rejecting the defendant's submission that the liability under the TPA could be modified by agreement.

24. The present case is not an inducement case. The position in Henjo was entirely different. In that case, but for the misleading and deceptive conduct the parties would not have entered into the contract that contained the relevant clauses. (Special Conditions 6 and 7).

25. Accordingly, where his Honour referred to such clauses as not affecting the operation of the Act, his Honour was referring to clauses such as the ones in that case. The clause in the present case are not of that kind: Halton Pty Limited v. Stewart Bros Drilling Contractors Pty Limited (1992) ATPR 41-158."

11    As I understand the defendant's central proposition, it is that the referee did not appreciate or apply what is said to have been the correct test but in fact erred in principle by applying what is said to have been an incorrect test. 12    The defendant, as will have been observed, submits that the referee was obliged to apply the suggested objective bystander test which is said to have been in the following terms:

"The ultimate issue is whether a reasonable bystander would regard the conduct of the offeree, including his silence, as signalling to the offeror that his offer has been accepted." Empirnall Holdings v. Macton Paull (1988) 14 NSWLR 523 at 535 per McHugh JA (as his Honour then was).

13    The defendant in its written submissions submits that the referee saw it as appropriate to decide and decided only whether the defendant did all that was reasonable to bring the limitation provisions to the notice of the plaintiff, and in that regard whether the plaintiff had assented to the limitation provisions of the ACEA terms. 14    This was supplemented in oral submissions by the assertion that the referee ought not to have approached the task which he set himself from the point of view of the defendant having an onus to satisfy the referee that the defendant had done all that was reasonable to bring the limitation provisions to the notice of the plaintiff. 15    The defendant's written submissions asserted that it was inappropriate for the referee to have relied upon the following passage from the judgment of Buchanan J in Maxitherm Boilers Pty Limited v. Pacific Dunlop Limited (1998) 4 VR 559 at 568:

"I do not intend to convey that express acceptance of an offer which incorporates other terms by reference necessarily connotes acceptance of all those terms. In a case where the person expressing consent has not read the terms his consent may be taken to be a consent to those terms which are appropriate to a contract of the type in question. If the terms include provisions which no one would anticipate in a contract of the type in question, it would not be appropriate to assume consent to those provisions. The basic inquiry remains whether it is reasonable to assume that a contracting party has assented to the terms put forward by the other party."

16    The gravamen of the defendant's oral submission was that the referee found that certain terms had been incorporated into the agreement whereas other terms had not been so incorporated. The gravamen of the defendant's oral submission was that although this was accepted as a question of fact for the referee, the Court should be comfortably satisfied that there was no or no acceptable or admissible evidence upon which the referee could have or did rely in support of his decision on this question of fact. 17    Mr Greenwood SC took the Court closely through each of the considerations which the referee identified as dominant in his consideration and which appeared in the several sub-paragraphs to paragraph 25 of the report. It is convenient to set out paragraph 25 from the referee's report:

"I think that my task comes down to making an objective assessment on the basis of the documentary material and Mr McLeod's evidence and undertaking an objective determination whether the plaintiff assented to the limitation provisions. In this regard, dominant in my consideration are the following:
(a) The reference to the Guidelines is in the fees section of the letter of 16 October 1996 and the fees section is one of ten sections in a long letter. That reference to the Guidelines is in contrast to the reference to the Guidelines in the memo of 17 February 1977 (constituting the turn bay arrangement), which reference is prominently positioned beside the words Terms of Engagement, and is pointed in its terms, such that the turn bay arrangement may well have been subject to all the provisions of the Guidelines. On the other hand the reference in the letter of 16 October 1996 to the Guidelines is suggestive only of an intended application on the matter of fees only.
(b) The word 'Subject to your agreement' prefaced the reference to the Guidelines in the letter of 16 October 1996 and the Guidelines explicitly recognise the negotiability of terms of engagement. (See paragraphs 11(a) and (b) above and note the potential for variation of the $300,000 figure in clause 4.2 - See 11(e) above.) Whilst the defendant relies on these words, as in effect requiring the plaintiff to proffer a positive rejection of the suggested applicability of the Guidelines, I incline to the view that they are required, if they were to incorporate the limitation provisions, the extraction by the defendant from the plaintiff of a positive acceptance of the suggested applicability of the Guidelines, certainly in respect of the limitation provisions.
(c) The stipulations in section 10 of the letter as to the defendant's professional indemnity cover are to my mind somewhat inconsistent with there being a limitation of the defendant's liability on this job to $300,000. I am not attracted to the defendant's submission that section 10 should be read as referring not to this job but, in effect, to all the defendant's jobs. Section 10 does not say that and apart from other considerations, I would ask what interest would the plaintiff have as to the defendant's potential liabilities on the defendant's other jobs and why should the $5,000,000 not be read as a cover for each claim?
(d) There was no actual mention in Mr McLeod's discussion with Mr Goff or in the documentary material of the limitation provisions.
e) The limited reference to the Guidelines by the defendant and the failure of the defendant to mention the limitation provisions may be contrasted to what Connell Wagner did when they were retained in August 1998. Connell Wagner's retainer proposal comprised a page and a half letter which stated as one of three conditions of the retainer:

'(c) Our commission is based on the current condition of the ACEA Guideline Terms of Agreement with the additional special conditions as attached to this letter.'

The Special Conditions comprised one of two attachment pages and were headed 'Limit on Liability' with paragraph 1 reading as follows:

'Notwithstanding any other provision of this contract, Connell Wagner's liability to D F McCloy Pty Limited and any other party to whom D F McCloy releases the report with Connell Wagner's express written consent whether severally, jointly or otherwise arising out of the performance or non-performance of the services and the release of the report, whether under the law of contract, tort or otherwise shall be limited to $300,000 for any single claim and in the aggregate for all claims by all or any of them.’”

18    As to sub-paragraph (a), the defendant submitted that the reference to the memorandum of 17 February 1997 was entirely irrelevant and amounted to an attempt to use a document which post-dated the contract for assistance in determining its terms. To my mind there is substance in the defendant's submission in this regard. 19    As to sub-paragraph (b), the defendant submitted that the referee was incorrect in effectively treating the matter as if the onus lay upon the defendant to have extracted from the plaintiff a positive acceptance in so far as the limitation provisions were concerned, of the applicability to the special guidelines. 20    As to sub-paragraph (c), the defendant's submission was that there was no relevant representation made which was incorrect or misleading or deceptive. The submission was that the reference in s 10 to the defendant's provisional indemnity cover ought not to have played any part in the referee's decision as to how to construe the defendant's 16 October 1996 offer made in paragraph (9) 21    As to sub-paragraph (e), the defendant's submission was that the referee was incorrect in taking into account a document of a third party. 22    It seems to me that there are really two separate questions for consideration. The first is whether there are in truth two competing tests in relation to the subject situation. The second question is what exactly did the referee do in his reasons. 23    I do not understand that Empirnall is authority for the proposition that express acceptance of an offer which incorporates other terms by reference necessarily connotes acceptance of all those terms. It is important to note that at p 535 McHugh JA cited Laurel Race Course Inc v. Regal Construction Inc 333A 2d 319 (1975) where Judge Levine said at p 529:

"Where the offeree with reasonable opportunity to reject offered services takes the benefit of them under circumstances which would indicate to a reasonable person that they were offered with the expectation of compensation, he assents to the terms proposed and thus accepts the offer.”

24    McHugh JA pointed out that the question of acceptance should not be looked at in terms of a rule of law but as one of fact and continued

“A more accurate statement is that where an offeree with a reasonable opportunity to reject the offer of goods or services takes the benefit of that under circumstances which indicate that they were to be paid for in accordance with the offer , it is open to the tribunal of fact to hold that the offer was accepted according to its terms."
[emphasis added]

25    To my mind the decision of the Court of Appeal is by no means inconsistent with the passage from the judgment of Buchanan JA in Maxitherm set out in paragraph 15 above. 26    To my mind there is no substantive difference between the tests as formulated by McHugh JA in Empirnall and as formulated by Buchanan JA in Maxitherm. Both McHugh JA and Buchanan JA regarded as the "ultimate issue" or "basic inquiry" whether a "reasonable bystander would regard the offer as accepted" or whether it is "reasonable to assume that the contracting party has assented to the terms." Very simply, there can be no difference between the two tests because, ex hypothesi, McHugh JA’s "reasonable bystander" could not and cannot be taken to assume something which is not reasonable. The basal test is whether, considered in the whole of the matrix of circumstances, it is objectively possible to conclude that the offeree has accepted the offer and the term attached as proffered by the offeror. 27    Ultimately, and during argument, as I understood him Mr Greenwood SC appeared to accept this analysis. 28    Furthermore, it is my reading of the referee's report that the referee in fact approached the matter objectively and held that in the circumstances it was not reasonable assume that seen objectively, the plaintiff had assented to the relevant terms put forward by the defendant. 29    As will have been noted, paragraph 25 of the referee's report commenced with the words:

"I think that my task comes down to making an objective assessment on the basis of the documentary material and Mr McLeod's evidence, and undertaking an objective determination whether the plaintiff assented to the limitation provisions."

30    This then explains the manner in which the referee went on to deal with the matter in paragraph 26 of his report. 31    In paragraph 26 of his report the referee said:

"I am mindful that this case should be viewed not so much as a 'ticket case' involving a consumer but as a commercial contract. Nevertheless, it seems to me that the basic test would still be along the lines whether the defendant 'did all that was reasonable (or reasonably necessary) in the circumstances of the case to bring the terms to the notice of the' plaintiff (see par 20 above). Whilst I would, on balance, accept the reference to the Guidelines in the letter of 16 October 1996 was sufficient to incorporate any relevant Guideline provisions in respect of fees, I do not think that the plaintiff should reasonably have anticipated that it was intended to incorporate the limitation provisions. The defendant did not do all that was reasonable to bring the limitation provisions to the notice of the plaintiff. As Buchanan JA said in Maxitherm Boilers Pty Limited v. Pacific Dunlop Limited (1988) 4 VR 559 at 568:
'I do not intend to convey that express acceptance of an offer which incorporates other terms by reference necessarily connotes acceptance of all those terms. In a case where the person expressing consent has not read the terms, his consent must be taken to be a consent to those terms which are appropriate to a contract of the type in question. If the terms include provisions which no one would anticipate in a contract of the type in question, it would not be appropriate to assume consent to those provisions. The basic inquiry remains whether it is reasonable to assume that a contracting party has assented to the terms put forward by the other party.'"

32    The referee certainly stated that it seemed to him that the basic test was along the lines of whether the defendant “did all that was reasonable (or reasonably necessary) in the circumstances of the case to bring the terms to the notice of the (plaintiff)". 33    Where the referee then goes on to hold that he would, on balance, accept the reference to the Guidelines in the letter as sufficient to incorporate any relevant Guideline provisions in respect of fees, but holds that he did not think that the plaintiff should reasonably have anticipated that it was intended to incorporate limitation provisions, the referee to my mind was applying an objective test. 34    Whilst the referee in fact holds that the defendant did not do all that was reasonable to bring the limitation provisions to the notice of the plaintiff, this is not to say that all the referee did was to consider that question. In fact, as I read the referee's report and in particular paragraph 26 in conjunction with the citation from the judgment of Buchanan J in Maxitherm, the referee has answered the inquiry in the last sentence of that citation. He has in fact, as I read his reasons, asked himself whether it is reasonable in the circumstances to assume that the plaintiff seen objectively had assented to the terms put forward by the defendant. The answer to that question has been in the negative. 35    As is apparent from the decision of the Court of Appeal in Super the Court must be satisfied that the referee has applied his mind to the task of fact-finding required of him, carefully and in a manner consistent with the legal principle. I reject any assertion that I am obliged to re-consider and determine for myself every issue of fact or law in respect of which the defendant is dissatisfied with the decision of the referee - noting that I do not suggest for a moment that Mr Greenwood SC put forward any such submission. 36    In exercising the discretionary decision which is necessary to be exercised, it seems to me that there are several clear indications in the referee's report that the referee, far from exclusively relying upon what may be accepted as inappropriate considerations referred to in certain of the sub-paragraphs of paragraph 25 of his report, in fact took into account entirely appropriate considerations referred to in other sections of those sub-paragraphs and generally appearing from the circumstances proven before the referee. 37    As to sub-paragraph (a) of paragraph 25, the first sentence was unexceptional as was so much of the final sentence as excludes the comparison introduced by the words "on the other hand." 38    As to sub-paragraph (b) of paragraph 25, the first sentence was clearly an appropriate consideration to take into account. The submission that the referee erred in misplacing the appropriate onus is not of substance. The referee was entitled to take into account all the evidence before him including the evidence, or lack thereof, as to what steps the defendant (and the plaintiff) are shown to have taken in reaching the agreement sued upon 39    As to sub-paragraph (c) of paragraph 25, the first sentence was clearly an appropriate consideration to take into account. 40    Generally, and more importantly, the referee in the very first sentence of paragraph 25, and in his previous elicitation of the detailed submissions by both parties and of the facts, seems to me to have been clearly entitled to have formed the view that he did from the terms of the vital documents before him - those documents comprising the 16 October 1996 offer, the ACEA terms of agreement, and the 1 November 1996 facsimile, provided the referee with all that was necessary for him to answer the question, which to my mind he did answer and did answer correctly. At the end of the day but now using my own terminology I see that question as having been, whether, considered in the whole of the matrix of circumstances, it was objectively possible to conclude that the plaintiff had accepted the offer and the relevant term attached as proffered by the offeror. The answer was in the negative. 41    To my mind the defendant has failed in this regard to establish an error of principle in the referee's decision. The defendant's proposition that either the whole of the ACEA terms were incorporated into the retainer, or none of them were, and having found that some provisions were incorporated, it must follow that the whole of the terms were similarly incorporated is, in my view, simply incorrect. 42    I have understood at least part of the defendant’s address from the bar table today, the Court is faced with an attempt to oppose the adoption of the referee's report based upon the proposition that the referee’s findings are vitiated by his taking into account a number of considerations which are said to have been irrelevant or impermissible for the exercise. 43    To the extent that the defendant's submissions constitute an assertion that the referee should be held to have erred on an error principle, it does not seem to me, for the reasons given above, that the defendant has substantiated that proposition. 44    Some limited reference was made in the defendant's written submissions and by Mr Greenwood at the bar table to the fact that the evidence did not establish whether the plaintiff by, as I understand it, Mr Goff, who had conducted the negotiations for the plaintiff, had read the terms proposed by the defendant. During argument, as I understood it, the defendant accepted that the referee was entitled to approach the matter on the basis that there were written documents before him and, in the case of the telephone acceptance of the defendant's letter of 16 October 1996, an oral communication. In so far as the defendant's attack on the report focuses upon a question of fact, I am, having carefully read the report, comfortably satisfied that the referee had sufficient before him in terms of the factual material which he was entitled to rely upon as to sustain the proposition that no error of fact has been shown. There was, it seems to me, clearly an evidentiary basis upon which the referee was entitled to come to the decision to which he did come on the question of fact. To my mind there is no substance in the suggestion that the referee's report should not be adopted by reference to the absence of evidence establishing whether the plaintiff had read the terms proposed by the defendant. 45    The plaintiff had signified in its submissions in reply, an attempt to seek to raise a further ground to support the adoption of the report which had not previously been telegraphed to the defendant. This was that upon the true construction of the retainer document of 16 October, and 1 November 1996, it was an implied term of the retainer that the defendant place no limit on its liability to the plaintiff for breach of its duties - the presence of such implied term is said to preclude the defendant's reliance upon exemption clauses. 46    I make plain that the notice of motion was argued without the plaintiff pursuing that submission, it being unnecessary in the view to which the Court has come, to consider whether the plaintiff should be entitled to put any such argument. Certainly the Court did not invite Mr Greenwood SC to respond to that argument and it should not be treated as having been a live consideration for the Court's decision. 47    Both parties have accepted that the above reasons mean that it is unnecessary for the Court to refer to or deal with the suggested error of principle by the referee relating to the reliance on the judgment of Lockhart J in Henjo Investments v Collins Marrickville (1988) 30 FCR 546 for rejecting the defendant's submission that the liability under the Trade Practices Act could be modified by agreement. In those circumstances I do not see it as necessary for the Court to deal with that issue. 48 I stand the proceedings over before me next Friday at 9.30 a.m. on the assumption that if the parties do settle their differences they can produce some short minutes of order in signed form, or I will receive them by facsimile and make orders by consent.

I certify that paragraphs 1 -48
are a true copy of the reasons
for judgment herein of the
Hon. Justice Einstein
given on 1 December 2000 and
revised on 7 December 2000

___________________
Susan Piggott
Associate

7 December 2000

Last Modified: 12/20/2000