Frontlink Pty Ltd (ACN 074 034 96) v Cynthia Feldman and Ramarim Pty Ltd (ACN 147 722 781)
[2017] VSCA 319
•10 November 2017
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2017 0012
| FRONTLINK PTY LTD (ACN 074 034 96) | Applicant |
| v | |
| CYNTHIA FELDMAN | First Respondent |
| and | |
| RAMARIM PTY LTD (ACN 147 722 781) | Second Respondent |
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| JUDGES: | OSBORN, WHELAN and KYROU JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 23 October 2017 |
| DATE OF JUDGMENT: | 10 November 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 319 |
| JUDGMENT APPEALED FROM: | [2016] VSC 691 (Daly AsJ) |
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CONTRACT – Appeal – Whether parties to a written agreement to raise cattle on, and have sole occupancy of, land for annual fee had entered into a new contract by implication from their course of conduct after expiration of initial contract term – Whether conduct of husband bound wife – Whether principles governing an “over holding” under a lease applied to render wife a tenant-at-will – Whether common law estoppel by convention prevented husband and wife from denying they remained bound by agreement – Leave granted; appeal dismissed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr J Korman | Belleli King & Associates |
| For the First Respondent | Mr D Williams QC with M M McInnis | Mason Black Lawyers |
| For the Second Respondent | Aitken Partners |
OSBORN JA:
WHELAN JA:
KYROU JA:
Frontlink owns 60 acres of urban fringe land located at 181 Grices Road, Berwick (‘the Grices Road property’).
Frontlink is a company associated with the family of Mr Sam Mondous. It has substantial commercial and rural property holdings largely located in the outer eastern fringe of Melbourne.
The first respondent (Mrs Cynthia Feldman) is the widow of Mr Derek Feldman, who died unexpectedly on 13 October 2010 leaving substantial parts of his business affairs and records in disarray. The liabilities of his estate far exceeded the assets.
Mr Feldman was a commercial real estate agent who owned the business named ‘Derek Feldman & Co Property Consultants’ and employed Mrs Feldman to help with the bookkeeping and administration of that business.
In his capacity as a commercial real estate agent, Mr Feldman had substantial business dealings with Mr Mondous dating back to the mid-1990s. At the trial of the proceeding, Mr Mondous gave evidence that Mr Feldman was ‘the best in the business’. Mrs Feldman also had dealings in an administrative capacity with Mr Mondous in the course of her assisting with the administration and bookkeeping of her husband’s business. She also managed a shopping centre for Mr Mondous.
On 20 October 2002, Frontlink, Mr Feldman and Mrs Feldman entered into a written agreement relating to the Grices Road property entitled ‘Joint Venture Farming Agreement’ (‘the Grices Road Agreement’). The agreement permitted Mr and Mrs Feldman (referred to as ‘the farming consultant’) to raise cattle on the Grices Road property. They were required to pay an annual fee of $22,000. The Grices Road agreement was expressed to continue until 21 October 2005 at which time it would expire unless extended in accordance with its terms.
It is common ground that the Grices Road agreement was not extended in accordance with its terms.
Mr Feldman operated a cattle raising business on the property. Over the years the number of stock was increased.
In the years after signing the Grices Road agreement, Mr Feldman and Frontlink also entered into two further agreements on similar terms in respect of two nearby properties, one on Soldiers Road and one on Pound Road.
Frontlink now claims fees from Mrs Feldman for the use of the Grices Road property during the period after the expiration of the Grices Road agreement in October 2005 and up to Mr Feldman’s death. It alleges that she is jointly liable for these fees.
Mrs Feldman denies liability with respect to this period on the basis that she was not party to any agreement relating to it. She also disputes the quantum of Frontlink’s claim on the basis that it does not give adequate credit for cattle seized by Mr Mondous from the Grices Road property after Mr Feldman’s death.
The proceeding has a somewhat tortuous history. Frontlink initially obtained summary judgment in the proceeding from an associate justice and that decision was subsequently upheld in the Trial Division. On 3 March 2014, however, the Court of Appeal set aside the summary judgment and remitted the matter for further hearing in the Trial Division. In the course of its reasons, the Court of Appeal determined that the Grices Road agreement was not a lease.
On 17 September 2015, Daly AsJ made orders for the trial of preliminary questions, namely:
(a) is Mrs Feldman liable to Frontlink by reason of the matters pleaded in paragraphs 1 to 5 of the statement of claim dated 23 December 2014?
(b) if so, what is the amount of the liability?
At trial, evidence was called on behalf of Frontlink from Mr Sam Mondous, his son Mr Kameel Mondous, Ms Rachel Ivic, and Mr Glen Wilmot. In turn, evidence was called on behalf of Mrs Feldman from Mrs Feldman herself, Mr Mark Feldman (her son), Ms Sharon Bunting, Mr Shaun Bilson, Ms Belinda Bilson and Mr David Mond. The evidence is summarised in substantial detail at [39]–[161] of the reasons for judgment.[1] The evidence went both to the course of dealings between the parties and the dispute as to the disposal of cattle.
[1]Frontlink Pty Ltd v Feldman [2016] VSC 691 (‘Reasons’).
On 30 November 2016, her Honour determined the preliminary question of liability adversely to Frontlink.
Frontlink now seeks leave to appeal that decision.
The pleaded claim
In its fourth amended statement of claim dated 1 August 2016, Frontlink first pleaded that the Grices Road agreement was extended by agreement between the parties.
3.The plaintiff, as Owner, assigned the right to receive profits from the property at 181 Grices Road, Clyde North (the Grices Road property) to the first defendant (Cynthia) and Derek Joseph Feldman (deceased) (together, the Assignee) by a written Agreement dated 20 October 2002 (the Grices Road Agreement).
Particulars
A copy of the Grices Road Agreement may be inspected at the offices of the plaintiff’s Solicitors by prior appointment.
4. The Grices Road Agreement provided, amongst other things, that:
a)The Assignee shall reimburse the Owner for Council rates and for water and building insurance, power and other services (the reimbursement payments).
b)In consideration of the right to receive the profits and maintain the property in accordance with good husbandry practices the Assignee shall pay a fee to the Owner (the profits fee) as follows:
a.for the first year of the term of the Agreement the sum of $22,000 per annum (plus GST if applicable);
b.in each subsequent year of the agreement or further term the amount of the share of the profit payable to the owner shall increase in line with the CPI (Melbourne) All Groups.
4A.By its terms the Grices Road Agreement was stated to be for three years, with the Assignee having the option to extend the agreement for a further three years.
4B.The period of the Grices Road Agreement was extended from time to time by agreement between the parties for the following periods on the same terms and conditions as had before applied.
(a)20/10/05 – 20/10/06
(b)20/10/06 – 20/10/07
(c)20/10/07 – 20/10/08
(d)20/10/08 – 20/10/09
(e)20/10/09 – 20/10/10
(f)20/10/10 – 20/10/11
Particulars
The agreement by the parties to the extension of the Grices Road Agreement period was to be implied, arising from the Assignee continuing in occupation of the Grices Road Property after the completion of its initial three year term for the periods referred to, and conducting thereon farming activities as contemplated by the Grices Road Agreement, and from the plaintiff rendering accounts in respect of the occupation and from the Assignee paying monies in respect of that occupation and usage.
Particulars
Payments were made to the plaintiff by the Assignee as follows:
o14 November 2002 - $3,366;
o30 March 2007 - $88,000.
Further particulars may be provided after discovery.[2]
[2]No further particulars were provided.
The trial judge found that there was no positive statement or conduct on Mrs Feldman’s part which signified any intention on her part to establish or maintain an ongoing legal relationship with Frontlink in relation to the Grices Road property after the expiration of the Grices Road agreement.
In the alternative, the claim was put on the basis of an account stated:
4BA.Further and in the alternative to 4B, after the initial term of the Grices Road Agreement had expired on 20 October 2005:
(a)the Assignee continued in possession of the Grices Road property until on or about 1 February 2011, alternatively on or about 13 October 2010 (the continued possession period).
(b)the use of the Grices Road Agreement by the Assignee continued as it had since the Grices Road Agreement commenced.
(c)There was no discussion or agreement between the Owner and the Assignee as to the fact that the initial term had expired, or as to any change in who was liable for payment for use of the land, or any changed terms as to amounts due for use of the land.
(d)Amounts that would have been due had the Grices Road Agreement been formally extended or renewed by agreement (which it was not) were agreed by the Assignee as owing.
Particulars
Acknowledgments of monies owing in relation to the Grices Road [Agreement] including for part of the continued possession period were made by the Assignee to Frontlink on or about 30 March 2007 and 17 October 2009.
4BB.In the premises:
(a)the terms of the Grices Road Agreement continued to apply during the continued possession period (save for the terms as to the length of term of the agreement and of any option to renew);
(b)the Assignee continued to be liable to the Owner for the profits fee and reimbursement payments for the continued possession period.
Particulars
The Grices Road Agreement was either a lease or analogous in material respects to a lease. The continued possession period was either a holding over after the lease expired such that the Assignee became a tenant at will, or analogous to a holding over such that the Assignee continued to be subject to the same rights and obligations as it had under the Grices Road Agreement (save for the terms as to length of term of the agreement and any option to renew) in the same way as a tenant at will continues to be subject to the same rights and obligations as it had under a lease which has expires (sic) whilst the tenant continues in occupation of the leased premises after expiry of the term.
The trial judge found that Mrs Feldman did not acknowledge that monies were owed by her in respect of the Grices Road property.
In the further alternative, the claim was put on the basis of estoppel.
4C.Alternatively, for the period set forth in Paragraph 4B after the initial three year term of the Grices Road Agreement, the Assignee represented to the plaintiff that the period of the Grices Road Agreement was to be extended on the same terms and conditions as before had applied (the representation).
Particulars
With the concurrence of the plaintiff, the Assignee remained in occupation of the Grices Road property after the initial period of the Grices Road Agreement carrying on farming activities as contemplated by the Grices Road Agreement and from time to time paid moneys in respect of that occupation and usage.
4D.On the basis of the representation the plaintiff assumed that the Grices Road Agreement was continuing and that the Assignee agreed to a continuation of its terms and acted or abstained from acting in reliance on that assumption or expectation.
PARTICULARS
The plaintiff continued charging in respect thereof and refrained from obtaining possession of the Grices Road property from the defendant and Derek Joseph Feldman and leasing the Grices Road property for profit to others.
4E.At all material times the Assignee knew or intended that the plaintiff would act or abstain from acting in reliance on the assumption or expectation.
4F.In the circumstances the plaintiff’s actions or inaction will occasion detriment to it if the assumption or expectation referred to is not fulfilled.
The trial judge found there was no conduct on the part of Mrs Feldman which would amount to a representation on her part that she continued to be bound by the terms of the Grices Road agreement after its expiry, nor was there any evidence that Frontlink assumed that she was so bound and acted on that assumption. Nor was it pleaded that Mr Feldman made any representations to Frontlink as an agent for Mrs Feldman such that she, as principal, should be bound by the representations of her agent.
The proposed grounds of appeal
The proposed grounds of appeal are:
1.The Associate Judge erred in failing to consider whether the parties to the written agreement had entered into a new contract to be implied from their course of conduct after expiry of the written agreement. Her Honour ought to have found that a new contract had been formed on the same terms and between the same parties as the written agreement, to be implied from the parties’ unchanged course of conduct after expiry of the written agreement.
2.The Associate Judge erred in holding that the first respondent’s husband could not by his conduct bind the first respondent, in circumstances where the first respondent and her husband had constituted a single joint party to the written agreement.
3.The Associate Judge erred in holding that the principles governing an ‘overholding’ under a lease do not assist the applicant in the current case.
4.Further or in the alternative, the Associate Judge erred in holding that a common law estoppel by convention did not exist. Her Honour ought to have found that such estoppel prevented the first respondent, her husband, and the applicant from denying that they remained bound by the terms of their expired agreement.
Proposed ground 1 – A new contract?
Proposed ground 1 of appeal is problematic in its formulation. It is plain that the trial judge did consider whether the parties entered into a new contract to be implied from their course of conduct after expiry of the initial agreement. Further, if, as the proposed ground asserts, her Honour should have found that a new contract had been formed on the same terms as the initial Grices Road agreement, then that contract would have expired prior to Mr Feldman’s death. The statement of claim does not allege a new agreement on the same terms as the Grices Road agreement but alleges the sequential annual extension of the Grices Road agreement.
Moreover and in any event, the trial judge’s findings of fact disposed of the bases on which it was alleged that an agreement to extend the Grices Road agreement was to be implied.
Turning first to the question of whether there was an implied, year to year extension of the Grices Road Agreement, the evidence simply does not go that far. It is common ground that the agreement was not extended in accordance with its express terms. Even if there was conduct on the part of Derek Feldman which supports a conclusion that he agreed to the extension of the Grices Road Agreement, which there was, it is trite law that a party to an agreement cannot bind a third party, in the absence of an agency relationship between the promisor and the third party. It was not pleaded that Derek Feldman acted as the agent of Mrs Feldman. It was Derek Feldman who kept his cattle on the Grices Road property, made the payment in March 2007 from the proceeds of the sale of his cattle, borrowed money from Mr Mondous and/or Frontlink to pay the outstanding rates owing on the three properties, and made promises to pay the outstanding arrears on the three properties.
The only conduct on the part of Mrs Feldman after October 2005 which was relied upon by Frontlink was her presence at two meetings at which the outstanding accounts were discussed, her initialling the account statements for the three properties to acknowledge their receipt, her organising the Bilsons to move into the Grices Road property, and her failure to tell Frontlink that she was no longer bound by the Grices Road Agreement. In my view, the evidence is equally consistent with Derek Feldman alone being, in effect, a party to an agreement or being a tenant at will at the Grices Road property. Mrs Feldman assisted Mr Feldman with his business, and attended some business meetings with him, which explains why she was in attendance at some meetings, and handled commercial documents concerning Derek Feldman. Kameel Mondous’ evidence as to why he wanted Mrs Feldman to acknowledge receipt of account statements for each of the three properties is consistent with the evidence concerning Derek Feldman’s management of his affairs: it is possible that Kameel Mondous wanted to ensure the account statements were in the hands of someone who might be more responsible and attentive than Derek Feldman.
As for Mrs Feldman’s ‘silence’ concerning the Grices Road Agreement, even ignoring her own evidence that she had not read the Grices Road Agreement, what Frontlink (an experienced commercial operator) is effectively contending is that a person in the position of Mrs Feldman, in order to avoid liability, is obliged to tell Frontlink that she is no longer bound to the terms of an agreement which was prepared by it and, in accordance with its express terms, had lapsed. While the courts are generally amenable to facilitate commercial activity by not being unduly pedantic concerning informal arrangements between commercial people,[3] one can go too far in seeking to protect parties from the consequences of failing to properly document their commercial relationships.
Accordingly, the evidence does not support a conclusion that Frontlink on the one hand, and Derek Feldman and Mrs Feldman on the other hand, entered into a further agreement to extend the term of the Grices Road agreement, on an annual basis, or otherwise. At or after the end of the term of the Grices Road Agreement, Frontlink may have assumed the agreement was still on foot, but the situation lacked the necessary element of mutuality. There was certainly no positive statement or conduct on Mrs Feldman’s part which signified any intention on her part to establish or maintain a legal relationship with Frontlink in relation to the Grices Road property. The reference in the pleadings to the parties agreeing as to a year by year extension is mere speculation: there is no evidence of such a term apart from the references in the Grices Road Agreement to an annual profit share fee, and the references in the statements of account prepared by Frontlink in 2009 and 2010 to rent being calculated on an annual basis.[4]
[3]See, for example, those authorities where it has been determined that a binding contract exists, notwithstanding that the conduct of the parties does not fall within the usual ‘offer/acceptance’ paradigm: Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Australia) Ltd (1988) 5 BPR 97, 326; Vroon BV v Fosters Brewing Group Ltd [1994] 2 VR 32; and Husain v O&S Holdings (Vic) Pty Ltd [2005] VSCA 269.
[4]Reasons [193]–[196] (citation in original).
On the hearing of the appeal, counsel for Frontlink submitted in the first instance that Frontlink accepted her Honour’s findings of fact and that the real question for the Court was what should be implied as a matter of law from the facts as found. In reply, however counsel sought to resile somewhat from this position. In her Reasons, her Honour carefully summarised the evidence from each of the witnesses and no attack was made upon the accuracy of that extensive summary. Moreover, the proposed grounds of appeal do not assert specific error of fact. Nor was such an alleged error satisfactorily articulated with any precision during the course of the submissions in reply.
We would not grant leave to appeal on the basis of a belated attack on her Honour’s findings of fact, the terms of which were not properly raised by the application for leave to appeal or the case that the respondent was called upon to answer. Nevertheless, we are prepared to read proposed ground 1 of appeal as intended to embrace the proposition that the trial judge erred in holding that the evidence does not support a conclusion that Frontlink entered into a further agreement with both Mr and Mrs Feldman to extend the term of the Grices Road agreement. It is this contention which we take to be the central thrust of the applicant’s case on appeal.
The task of this Court on an appeal by way of review was summarised by the High Court in Robinson Helicopter Company Inc v McDermott:[5]
A court of appeal conducting an appeal by way of rehearing is bound to conduct a ‘real review’[6] of the evidence given at first instance and of the judge’s reasons for judgment to determine whether the judge has erred in fact or law. If the court of appeal concludes that the judge has erred in fact, it is required to make its own findings of fact and to formulate its own reasoning based on those findings.[7] But a court of appeal should not interfere with a judge’s findings of fact unless they are demonstrated to be wrong by ‘incontrovertible facts or uncontested testimony’,[8] or they are ‘glaringly improbable’ or ‘contrary to compelling inferences’.[9]
[5]Robinson Helicopter Company Inc v McDermott (2016) 90 ALJR 679, 686–7 [43] (citations in original).
[6]Fox v Percy (2003) 214 CLR 118, 126–7 [25] (Gleeson CJ, Gummow and Kirby JJ).
[7]Devries v Australian National Railways Commission (1993) 177 CLR 472, 479–81 (Deane and Dawson JJ); Fox v Percy (2003) 214 CLR 118, 128 [29] (Gleeson CJ, Gummow and Kirby JJ); Miller & Associates Insurance Broking Pty Ltdv BMW Australia Finance Ltd (2010) 241 CLR 357, 380–1 [76] (Heydon, Crennan and Bell JJ).
[8]Fox v Percy (2003) 214 CLR 118, 128 [28] (Gleeson CJ, Gummow and Kirby JJ).
[9]Fox v Percy (2003) 214 CLR 118, 128 [29]. See also Miller & Associates Insurance Broking Pty Ltdv BMW Australia Finance Ltd (2010) 241 CLR 357, 380–1 [76].
In the present case, her Honour’s findings accorded squarely with the weight of the evidence and in turn she was correct to conclude that as a matter of law no implication arose that Mrs Feldman agreed to be bound by an ongoing arrangement after the expiry of the initial agreement.
It may be accepted that, as Frontlink submits, parties may continue to act in conformity with contractual terms contained in a document which purports to relate to an expired period of time and thereby demonstrate an objective mutual intention to further be bound by those terms.
There is no dispute that the trial judge correctly stated the underlying principles of contract law:[10]
Prior to turning to the specific issues in this trial, it is helpful to identify the relevant legal principles against which the conduct of the parties must be evaluated. While Frontlink in its pleadings has alleged that there has been an implied extension of the Grices Road Agreement, it is really contending that there has been a variation of the Grices Road Agreement to extend the term of the agreement, and the fact of the variation and its terms can be implied from the conduct of Derek Feldman and Mrs Feldman in failing to vacate the property, in continuing to pay the rent and outgoings for the Grices Road property, and in acknowledging the debts owing in respect of the Grices Road property.
The principles governing whether parties to an existing agreement can be found to have varied the terms of their agreement are conveniently summarised in the following extract of Cheshire and Fifoot’s Law of Contract:[11]
A contract cannot be varied unilaterally, but only by a further contract. Ex hypothesi, variation by contract involves two contracts, the existing one (which may or may not continue to exist: see 22.5) and the new one (the contract of variation). The existence of a contract of variation must be clearly demonstrated by reference to the usual rules of formation. A definite agreement, going beyond discussion or negotiation, must be established, but as with any contract such an agreement may be inferred from conduct. Consideration must also be established. Where a variation is made in favour of one party ostensibly without advantage to the other (for example, a reduction in price), the element of consideration may be missing. However, the modern doctrine of consideration recognises a ‘practical’ as well as a legal benefit in such situations.
[10]Reasons [181]–[182] (citation in original).
[11]NC Seddon and MP Ellinghaus, Cheshire and Fifoot’s Law of Contract (Lexis Nexis, 9th ed, 2008) [223] (citations omitted).
The difficulty confronting Frontlink in the present case is, however, that the evidence did not establish that Mrs Feldman acted in a way which objectively indicated any intention that she agreed to be bound by the terms of the initial Grices Road agreement during the extended period in issue.
Contrary to Frontlink’s pleaded case, it was not demonstrated that Mrs Feldman was in occupation of the Grices Road property during the relevant period, or that she farmed it, or that she acknowledged personal liability for her husband’s use of the property, or that her husband acted as an agent for her in doing any of those things.
The fact that Mrs Feldman was a party to the initial Grices Road agreement was but one circumstance bearing on the question whether she was a party to the ongoing arrangement after the initial agreement expired.
There were other circumstances which pointed strongly against the implication for which Frontlink contends. First, the context underlying the dealings of the parties changed fundamentally from that which existed at the date of the initial agreement. Secondly, the only contemporaneous documentation relating to the period in question makes clear that the ongoing arrangement was one between Frontlink and Mr Feldman.
The evidence showed that at the time of the initial Grices Road agreement Frontlink wished to ensure that it would not be liable for land tax with respect to the Grices Road property by putting in place arrangements for primary production to continue upon it. That purpose was fulfilled both before and after the expiry of the initial Grices Road agreement by the cattle raising undertaken by Mr Feldman. By the date of the expiry of the Grices Road agreement, this activity was of the same kind as that undertaken by Mr Feldman at two other properties owned by Frontlink. There was no evidence that Mrs Feldman had any interest in the cattle farming undertaken by her husband at any of the three properties.
On the Feldmans’ part, Mr Feldman wished to raise cattle on the land at the time of the initial Grices Road agreement but it was contemplated also that he and Mrs Feldman might reside at the property. Mrs Feldman had also contemplated that she might be able to agist horses upon the property. After the expiry of the initial Grices Road agreement, Mr Feldman continued to use the property for cattle raising and the house upon it was occupied free of rent by a couple who assisted in running the property. But Mrs Feldman did not reside at the property or agist horses upon it. Nor was there any evidence that she contemplated doing so or communicated any intention to do so during the period in question.
In this context, Frontlink delivered statements of account to Mr Feldman. The accounts are both expressly and impliedly directed to Mr Feldman alone and not Mrs Feldman:
·The first page of each of the statements of 20 July 2009, 17 October 2009, 7 January 2010, and 26 October 2010 is headed: ‘History of Rent with Derek Feldman’.
·The foot of all but one of the pages of the accounts reads: ‘Frontlink Pty Ltd — Derek Feldman record for Grices, Pound & Soldiers Rd’.[12]
·The accounts for the Grices Road property are stated in the same document as the accounts for the Soldiers Road and Pound Road properties, without differentiation of their status, in circumstances where there is no dispute that Mrs Feldman was never party to any agreement relating to either the Soldiers Road or Pound Road properties.
·The accounts dated 17 October 2009, 26 October 2010 and 26 November 2010 all give a total ‘outstanding for three properties’.
·The account of 26 November 2010 is headed:
Frontlink Pty Ltd
Rates for properties leased to Derek Feldman
[12]The other page stated at its foot ‘Frontlink Derek Feldman’.
Taken together, the documents constitute a series of plain statements by Frontlink that its arrangement was with Mr Feldman. Not a single account was expressed to be directed to Mrs Feldman or to include Mrs Feldman. No other books of account were produced by Frontlink despite the fact that it is apparent that during the years in question it conducted a substantial business. In our view, Frontlink must now be fixed with its characterisation of the arrangement contained in the statements of account. Such statements constitute the best objective and only contemporaneous evidence of the ongoing relationship of the parties. They constitute admissions by Frontlink that its continuing arrangement was with Mr Feldman alone.
Frontlink’s written submissions with respect to the first proposed ground of appeal commenced with the proposition:
No evidence was produced by any party suggesting there was any relevant change to any party’s conduct or position on expiry of the Agreement.[13]
[13]Applicant’s written case [18].
This submission must be rejected. Frontlink’s own statements of account constituted evidence that the arrangement after the expiry of the initial Grices Road agreement was an arrangement with Mr Feldman alone.
In oral argument, it was submitted on behalf of Frontlink that little weight could be given to the terms of the statements of account because the statement of history of payments made with respect to the Grices Road property commenced with reference to the payments due under the initial Grices Road agreement which was made with both Mr and Mrs Feldman. As at the dates of the accounts, however, no monies were due with respect to these periods. The relevant accounts were directed to Mr Feldman, he being the person liable in respect of the subsequent arrangement under which monies were then due and payable.
Frontlink also submits that Mrs Feldman’s conduct after the expiry of the initial Grices Road agreement was consistent only with a mutual understanding that the terms of the original contract continued to bind the parties. This submission should also be rejected. The conduct of the parties was entirely consistent with an ongoing arrangement between Frontlink and Mr Feldman as reflected in the accounts delivered by Frontlink to Mr Feldman. There is no dispute that Frontlink was party to the same sort of ongoing arrangement with Mr Feldman alone in relation to the Soldiers Road and Pound Road properties.
The fact that Mrs Feldman acted as Mr Feldman’s bookkeeper during the period in issue and initialled statements of account directed to him in order to acknowledge their receipt is entirely consistent with an ongoing arrangement with Mr Feldman alone.
Likewise, the fact that Mrs Feldman arranged in 2009 for a couple named the Bilsons to move into the house on the property on terms requiring them to undertake the management of Mr Feldman’s cattle does not indicate anything other than the centrality of the arrangement between Frontlink and Mr Feldman relating to use of the land for primary production. Moreover, as counsel for Mrs Feldman submitted, the arrangement was directly contrary to the terms of the initial Grices Road agreement, which granted the sole right of residence to Mr and Mrs Feldman. It was not confirmatory of the continuing operation of that agreement.
Proposed ground 2 – Did Mr Feldman bind Mrs Feldman by his conduct?
The second proposed ground of appeal is again formulated in terms which do not reflect the trial judge’s reasons. Her Honour did not hold that Mr Feldman ‘could not by his conduct bind the first respondent’; she held that there was no claim of agency. In this she was correct. Moreover, there was nothing in Mr Feldman’s conduct after the expiry of the initial agreement which indicated that he was purporting to act for anyone but himself in conducting cattle raising operations on each of the three Frontlink properties. The fact of a prior joint agreement did not of itself establish that Mr Feldman somehow bound Mrs Feldman as a party to the further arrangement relating to the Grices Road property.
Proposed ground 3 – Overholding
Proposed ground 3 of the appeal is directed to the following passage in the trial judge’s Reasons:
Senior counsel for Mrs Feldman did not take issue with the proposition that there could be a tenancy at will, or the principles governing the obligations of the parties to such an arrangement. However, he submitted that the concept of ‘overholding’ has no application to a commercial agreement for the management of a farm. He relied upon the statement of the Court of Appeal to the effect that the Grices Road Agreement was not a lease, noting that it was Frontlink that prepared the Grices Road Agreement. Senior counsel noted that there were many aspects of the Grices Road Agreement which distinguished the agreement from the usual landlord-tenant relationship, in particular, the obligation imposed upon the farm consultant to actively farm the land, and to keep accounts, unlike a tenancy arrangement, which merely confers a right of occupancy upon the tenant.
In the current case, I agree that the principles governing an ‘overholding’ under a lease do not assist Frontlink in the current case. Senior counsel for Frontlink could not direct me to any authority that establishes that the principles of overholding could extend beyond the orthodox relationship of landlord and tenant. Given the Grices Road Agreement had come to an end, and I have found that there was no conduct on the part of Mrs Feldman which could support a finding that she had consented to an extension of the Grices Road Agreement, similarly, there was no conduct on her part which could be pointed to as establishing she had assumed the obligations of a tenant at will. If there was a tenant at will at the Grices Road property, it was Derek Feldman.[14]
[14]Reasons [203]–[204].
The applicant submits that the authorities with respect to overholding by a tenant should be applied by analogy in the present case. In our view, the analogy postulated does not assist in answering the fundamental question determined by her Honour, namely whether in all the circumstances of the case there was an implied year to year extension of the initial Grices Road agreement to which Mrs Feldman was a party as the applicant alleges.
Proposed ground 4 – Estoppel by convention
Lastly, Frontlink submits that the trial judge erred in holding that Mrs Feldman was not estopped from denying that she remained bound by the terms of the initial agreement. Her Honour dealt with the case put to her as follows:
Further, turning to the question of whether Mrs Feldman is estopped from denying she was bound by the Grices Road Agreement after October 2005, in my view largely for the reasons set out above, there has been no conduct on the part of Mrs Feldman which would amount to a representation on her part that she continued to be bound by the terms of the Grices Road Agreement after its expiry in October 2005. There are a limited number of circumstances where mere silence can amount to a representation.[15] None of these apply in the current case. Some of the conduct said to amount to Mrs Feldman’s alleged ongoing ‘involvement’ with the Grices Road property, such as her keeping Jezebel there, and her arranging for the Bilsons to take care of the property and the cattle, was not known to Frontlink until, at the very earliest, on the occasion of the 5 November meeting, but more likely, not until Sharon Bunting and the Bilsons gave their evidence at trial. As such, that conduct could not amount to a representation Mrs Feldman made to Frontlink which was or could be relied upon by Frontlink.
In any event, even if the conduct of Mrs Feldman amounted to an actionable representation on her part, there are, on Frontlink’s own evidence, real question marks around the issues of reliance and detriment. The evidence of Mr Mondous was to the effect that he relied upon Derek Feldman’s assurances that Frontlink would be paid the amounts outstanding with respect to the three properties, either from the proceeds of sale of cattle, and/or by foregoing commissions, and that he expected he would ultimately be paid. Indeed, in his evidence, Mr Mondous said words to the effect that Frontlink would not be in this position (that is, in litigation with Mrs Feldman) if Derek Feldman was still alive. While there is some evidence from Kameel Mondous to the effect that he and his father told Derek Feldman that he would have to leave the three properties if he failed to get up to date with the rent, no such evidence was given by Mr Mondous, and Kameel Mondous gave evidence that he had no discussions with his father about ejecting Derek Feldman from the Grices Road property or any of the other properties. As late as 2010, Mr Mondous was prepared to lend Derek Feldman money to pay outstanding rates on the three properties, when he knew hundreds of thousands of dollars was owing in respect of the three properties.
Indeed, I can infer from the evidence that there was some benefit to Frontlink from its arrangements with Derek Feldman in respect of the three properties, notwithstanding the arrears. Mr Mondous’ evidence is that Frontlink no longer wanted to farm the properties itself. He conceded that there had to be farming businesses operating from the properties for land tax exemption purposes. I can infer from Mr Mondous’ evidence that Derek Feldman was ‘the best in the business’, in the context of giving evidence as to why Frontlink allowed the arrangement to continue despite the arrears, that it was in Frontlink’s broader commercial interest to maintain a good relationship with Derek Feldman. Accordingly, I am far from satisfied, even if it could be established that the absence of any change amounted to a representation on the part of Mrs Feldman, and leaving aside the question of whether it was unconscionable for Mrs Feldman to resile from any representation, that the remaining necessary elements of a promissory estoppel have been established.
Similarly, the evidence does not support a finding that a common law conventional estoppel operates to bind Mrs Feldman to the terms of the Grices Road Agreement after its expiry in October 2005. Frontlink may well have assumed that Mrs Feldman continued to be so bound (although I suspect that Mr Mondous and/or Kameel Mondous did not even turn their minds to the question of whether Mrs Feldman herself was liable under the Grices Road Agreement until after Derek Feldman’s death), but the evidence does not support a finding that Mrs Feldman assumed she was so bound, or knew that Frontlink assumed that she was so bound. I also refer to my comments regarding my reservations as to whether Frontlink suffered any real detriment as a result of any departure by Mrs Feldman from any assumed state of affairs.[16]
[15]See the discussion at Cheshire & Fifoot [11.17] and [6.18], where the learned authors refer to ‘at least’ three sets of circumstances where silence may give rise to relief: where silence distorts a positive representation, where the contract requires the parties act in the utmost good faith, and where a fiduciary relationship exists between the parties.
[16]Reasons [197]–[200] (citation in original).
No error has been demonstrated in this reasoning.
Frontlink submits that the evidence was consistent only with the proposition that Frontlink assumed that the initial Grices Road agreement continued after its expiry and that Mr and Mrs Feldman adopted the same assumption.
On the contrary, the circumstances under which Mr Feldman continued to raise cattle after the expiry of the initial agreement were entirely consistent with ongoing arrangements with him alone.
Moreover, elsewhere in submission, Frontlink accepted that Mrs Feldman had probably forgotten that she was a party to the initial agreement by the time of its expiry.
Further, the statements of account delivered by Frontlink to Mr Feldman were directly inconsistent with the arrangement which it is now said all parties assumed to exist.
The factual basis of the pleaded promissory estoppel was not made out.[17]
[17]Ibid [197].
Moreover, as the trial judge held, there was no evidence of conduct by Mrs Feldman which could have founded the assumption that she accepted some ongoing liability with respect to the Grices Road property.[18]
[18]Ibid [200].
In oral submission, Frontlink placed emphasis upon the fact that Mrs Feldman gave oral evidence that she had kept a pet cow, Jezebel, at the property during the period in question. It is plain that such conduct was entirely incidental to the substantial use of the property by her husband for the purpose of raising cattle. Moreover, as the trial judge observed, there was no evidence that Frontlink was aware of or relied upon the presence of the pet cow on the Grices Road property during the period in issue.
In our view, the claim in estoppel fails on the facts substantially for the same reasons as the claim by reference to an alleged implied agreement to continue the arrangement on the same terms as the initial Grices Road agreement.
Conclusion
We would grant leave to appeal on the proposed grounds, but for the above reasons, the appeal should be dismissed.
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