Inventure Partners Pty Ltd v Seeley International Pty Ltd - [2009] SADC 28

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
INVENTURE PARTNERS PTY LTD v SEELEY INTERNATIONAL PTY LTD
[2009] SADC 28
Judgment of Her Honour Judge McIntyre
24 March 2009
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - OFFER AND ACCEPTANCE - AGREEMENTS CONTEMPLATING EXECUTION OF FORMAL DOCUMENT - WHETHER CONCLUDED CONTRACT
The defendant sought assistance from the plaintiff to apply for a grant from the Structural Adjustment Fund for South Australia established by the Commonwealth and State Governments. The parties met on 10 October 2005 and again on 26 October 2005. The plaintiff forwarded written proposals to the defendant following these meetings. These proposals were not acceptable to the defendant. The plaintiff contends that there was a contract between the parties and that it is entitled to payment for work it performed on the grant application under the terms of that contract. In particular the plaintiff says that there was an oral contract entered into on 10 October 2005 but varied on 26 October 2005 or, alternatively, that there was a partly written, partly oral contract entered into on 26 October 2005. The plaintiff raises alternative causes of action in promissory estoppel and quantum meruit. The defendant denies that the plaintiff is entitled to any payment and resists all three causes of action.
Held: There was no contract entered into between the parties at any stage. The defendant did not make any representation to the plaintiff that the parties had entered into a binding contract and accordingly the plaintiff's claim in promissory estoppel fails. The plaintiff is entitled to reasonable remuneration for work done in the period 26 October 2005 to 7 November 2005.
Equuscorp Pty Ltd v Glengallan Investment Pty Ltd & Ors (2004) 218 CLR 471; Laidlaw v Hillier Hewitt Elsley Pty Ltd [2007] NSWSC 727; R v Bonython [1984] 38 SASR 45; Masters v Cameron (1954) 91 CLR 353; Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; Whittle v Parnell Mogas Pty Ltd (2006) 94 SASR 421; Lumbers v W Cook Builders Pty Ltd (In Liquidation) [2008] HCA 27; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221, considered.

INVENTURE PARTNERS PTY LTD v SEELEY INTERNATIONAL PTY LTD
[2009] SADC 28
Introduction

The plaintiff, Inventure Partners Pty Ltd (“Inventure”), provides consultancy services. Relevantly, Inventure raises corporate finance by providing assistance to companies applying for funding grants and financial assistance from the Government.
The defendant in this matter is Seeley International Pty Ltd (“Seeley”). Seeley is a designer and manufacturer of domestic and commercial climate control systems.
Inventure seeks payment for services it claims it provided to Seeley. Inventure’s claim raises three causes of action. The primary cause of action is in contract. Inventure’s alternative cause of action is promissory estoppel and, failing the estoppel claim, Inventure seeks a quantum meruit. Seeley denies that Inventure is entitled to any payment and resists all three causes of action.
Background
Following the closure of the Mitsubishi Motors Corporation plant at Lonsdale, and the reduction of the workforce at Mitsubishi’s Tonsley Park facility south of Adelaide, the Commonwealth and State Governments established the Structural Adjustment Fund for South Australia (“SAFSA”). The purpose of the SAFSA was to encourage investment to create new jobs in South Australia, particularly in the southern areas of Adelaide. Businesses were able to apply for grants from the SAFSA subject to meeting certain criteria. The applications were to be assessed by a federal government organisation called Invest Australia.
Seeley was interested in obtaining a SAFSA grant and wished to obtain assistance with the grant application from a suitably qualified consultant. Seeley had previously used Inventure to assist it in obtaining a Research and Development Start Grant from the Federal Government in or about December 2003.
The two principals of Inventure are Mr Michael Burfield and Mr David Zundel. Mr Burfield gave evidence that he met with Mr Nagel, who was then Seeley’s CEO, to discuss a possible SAFSA grant application in early 2005. He was unable to recall exactly when that meeting took place. Mr Nagel advised Mr Burfield that Seeley would be likely to require assistance from Inventure.[1]
[1] Burfield [T] 316-317
On 5 September 2005 an internal meeting was held at Seeley at which a possible SAFSA grant application was discussed.[2]
[2] Graham [T] 696; Exhibit P2 tab 2
On 7 September 2005 a number of Seeley employees, including Mr Frank Seeley and Mr Kym Graham, met with Mr Richard Niven and Ms Vanessa Kendrick from Invest Australia.[3]
[3] Exhibit P2 tab 3
On 27 September 2005 various Seeley employees, including Mr Graham and Mr Seeley met with Dr Hogarth, a consultant. Dr Hogarth advised, amongst other things, that he would be overseas from 6 October 2005 to 21 November 2005. Seeley understood from the discussions with Invest Australia that the grant application ought to be submitted by late October and was concerned about the level of assistance Dr Hogarth could provide given his proposed absence overseas.[4]
[4] Seeley [T] 495
Mr Seeley telephoned Mr Burfield in late September 2005 and asked if Inventure would be interested in assisting Seeley in relation to a SAFSA grant application.[5]
[5] Burfield [T] 317-318
A meeting took place on 10 October 2005 at Seeley’s premises. Mr Burfield and Mr Zundel attended for Inventure. Mr Seeley, Mr Graham and Mr Craig Zanker attended for Seeley. This meeting and its outcome are contentious. It is the plaintiff’s position that an oral contract was entered into at this meeting.[6] The defendant denies that this is the case.
[6] Zundel T90; Burfield [T] 325-326
On 13 October 2005 Mr Zundel sent an email to Mr Graham attaching a proposal dated 12 October 2005 (“first proposal”) and an invoice to Seeley for $8,000 plus GST.[7] In the email Mr Zundel also requested background material and in particular, a draft of Seeley’s application prepared by Mr Nagel, as “a good starting point”. He also suggested organising a meeting with various Seeley staff early the following week.
[7] Exhibit P1 tab 3
Mr Seeley was overseas and accordingly Kym Graham sent a brief précis of the first proposal to him by email on 13 October 2005.[8] Mr Seeley advised Mr Graham that the first proposal was not acceptable due to certain differences between what was discussed at the meeting on 10 October and the document. Mr Seeley also instructed Mr Graham to ask Mr Zundel a question about the method of payment of success fee on the SAFSA grant.[9]
[8] Exhibit P1 tab 4
[9] Graham [T] 709
On 18 October 2005 Mr Graham and Mr Zundel had a telephone discussion. Mr Graham advised that Mr Seeley was overseas but had considered the proposal. He said that Mr Seeley was not happy with the proposal, as it was different to what was discussed at the meeting. Mr Graham says that he asked Mr Zundel about the timing of the SAFSA grant and its effect upon the payment of success fee.[10] The contents of this discussion are contentious. It is however common ground that Mr Zundel agreed that the proposal did not reflect the agreement at the meeting on 10 October 2005 in relation to the timing and payment of the base fee. He arranged for an amended proposal (“the second proposal”) to be sent by Mr Burfield.[11] Mr Burfield attended to this by email on Wednesday 19 October 2005.[12]
[10] Graham [T] 710, Exhibit P1 tab 5
[11] [T] 95-96
[12] Exhibit P1 tab 6
Mr Graham telephoned Mr Seeley overseas and advised him about the second proposal and the conversation with Mr Zundel. Mr Seeley was not happy with the provisions relating to the success fee and indicated that he wanted a further face-to-face meeting with Inventure to discuss these issues.[13]
[13] Graham [T] 711 Seeley [T] 518
On 20 October 2005 Mr Graham sent an email to Mr Zundel attaching the draft SAFSA application prepared by Mr Nagel as requested.[14] Mr Graham gave evidence that he understood the purpose of Inventure seeking the draft was solely to provide background information. He did not think that they would start drafting an application on the basis of Mr Nagel’s draft because, as far as Seeley was concerned, Inventure had not yet been engaged by it.[15]
[14] Exhibit P2 tab 8
[15] Graham [T] 706-707
Mr Zundel on the other hand, whilst agreeing that the Nagel draft was for background material and that he did not view it as a first draft, maintains that at this stage Inventure considered that there was a contract in place or alternatively that there was no difficulty with the second proposal.[16] It is Inventure’s case that it was working on the application during this period.
[16] Zundel [T] 200; 250 - 251
On 19 or 20 October 2005 the defendant says that Mr Graham telephoned Mr Zundel indicating that he had reported back to Mr Seeley and that Mr Seeley wanted to meet with Mr Zundel upon Mr Graham’s return to discuss “the whole thing”.[17] This is contentious. Mr Zundel still did not understand that there was any problem with the second proposal. He thought that the purpose of the meeting was to discuss the project and in particular a check list that he had prepared following receipt of the Nagel draft.[18] Mr Burfield saw the meeting in similar terms[19].
[17] Graham [T] 711-712
[18] Zundel [T] 97-98; 210-211
[19] Burfield [T] 332
Mr Seeley returned to Australia on 26 October 2005 and a further meeting took place on that date at Seeley’s premises. Mr Seeley, Mr Graham, Mr Paul Schwarz, Mr Zanker and Mr Bob James attended for Seeley. Mr Burfield and Mr Zundel attended for Inventure. The outcome of the meeting is controversial. The plaintiff says that this was the first occasion on which it learned there was an issue with the amount and timing of the success fee, but that by the conclusion of the meeting this issue had been resolved.[20] The defendant’s position is that Mr Seeley set out a number of propositions to which the plaintiff reluctantly agreed, but that any agreement was subject to Inventure providing an amended proposal that was acceptable to Seeley.[21]
[20] Zundel [T] 99-100; Burfield [T] 333-334
[21] Seeley [T] 526 - 528
Also discussed at the meeting was the grant application itself. Inventure provided a checklist setting out information required for the SAFSA application. This is the first written work that Inventure had provided to Seeley.[22] The plaintiff says that by the time of this meeting it had undertaken substantial work and that the checklist was discussed in some detail and the various tasks were divided amongst those present.[23] The defendant contends that, even if work had been done, it was not aware of the work nor had it sanctioned it.[24] Further Seeley denies that there was detailed discussion of the Inventure checklist at the meeting. [25]
[22] Exhibit P2 tab 10
[23] James [T] 839
[24] Seeley [T] 523-524
[25] Seeley [T] 526-527
On 27 October 2005 at 9.26am, Mr Zundel sent an email to Mr Graham attaching a modified consultancy proposal dated 27 October 2005 (“third proposal”) and an invoice for $6,000 plus GST.[26] The covering email stated, “I am attaching the modified proposal along the lines agreed yesterday. In putting the new condition into the proposal a few things arose that were not discussed yesterday”.
[26] Exhibit P1 tab 9
Mr Graham had difficulty contacting Mr Seeley to discuss the third proposal.[27] On 31 October 2005 Mr Graham contacted Mr Zundel by telephone and told him that Mr Seeley was interstate but that the third proposal did not accord with what was discussed at the meeting on 26 October 2005.[28] He said he would need to discuss the matter with Mr Seeley.
[27] [T] 718
[28] Graham [T]718
In the meantime, Mr Zundel and Mr Burfield undertook work in relation to the SAFSA grant application as discussed at the meeting on 26 October 2005. The defendant disputes the extent of this work but it appears uncontroversial that it included corresponding with various Seeley employees by email and the preparation of a draft application document.[29] A meeting occurred between Mr Zundel and Mr James, Mr Schwarz and Mr Zanker of Seeley on 3 November 2005 at which the draft application, in PowerPoint form, was discussed (“the PowerPoint meeting”). It is not clear whether Mr Burfield attended the PowerPoint meeting. It seems likely that he did not.[30] Mr Zundel says he spoke to the draft and provided advice concerning finalising it. The draft document was annotated as they went.[31] Mr James and Mr Zanker gave evidence. Neither specifically recalls Mr Zundel being present at the PowerPoint meeting but both are prepared to accept he may have been there.[32]
[29] Exhibit P2 tabs 11 to 39
[30] Zundel [T] 124; Burfield [T] 346-348
[31] Exhibit P2 tab 29; Zundel [T] 124-125; 269 - 273
[32] James [T] 824-5; Zanker [T] 866, 877
On the afternoon of 4 November 2005 Mr Graham spoke with Mr Seeley about the third proposal.[33] Following the instructions he obtained from Mr Seeley, Mr Graham sent an email to Mr Zundel, copied to Mr Burfield, on 4 November 2005 at 5.58pm. This email indicates that the third proposal was unacceptable and that Seeley was not prepared to proceed on that basis.[34]
[33] Graham [T] 719 and Seeley [T] 531
[34] Exhibit P1 tab 10, Seeley [T] 539, Graham [T] 719, Zundel [T] 228-229
On 5 November 2005 at 11.28am, Mr Zundel sent an email to Mr Graham stating that he would prepare a new proposal. On 7 November 2005 Mr Graham responded by email inviting Mr Zundel to send through a revised proposal.[35]
[35] Exhibit P1 tab 10
On 7 November 2005 Mr Zundel sent Mr Graham an email attaching a further proposal dated 27 October 2005 but modified 7 November 2005 (“fourth proposal”)[36].
[36] Exhibit P1 tab 10
Mr Graham told Mr Seeley about the fourth proposal indicating it reflected everything discussed at the meeting on 26 October 2005 apart from the 30 day payment terms. Mr Seeley instructed Mr Graham to inform Inventure that Seeley would no longer deal with them.[37]
[37] Graham [T] 720, Seeley [T] 535
Mr Graham telephoned Mr Zundel after his conversation with Mr Seeley informing him Seeley would no longer deal with Inventure on this matter. Mr Graham said that Mr Seeley was prepared to pay Inventure for work already undertaken. He sent an email to Mr Zundel confirming this.[38]
[38] Exhibit P1 tab 11
Mr Zundel responded to this email by stating that the 30-day payment terms were implied terms.[39] On 8 November 2005 Mr Seeley emailed Mr Zundel confirming the advice of cancellation of arrangements with Inventure.[40] Mr Seeley invited Mr Zundel to speak to Mr Graham in the next 2 or 3 hours if they “had a change of heart” concerning submitting an account for work performed to date. Inventure did not contact Mr Graham. No account was rendered. The present proceedings were issued.
[39] Exhibit P1 tab 11 Zundel [T] 103-104
[40] Exhibit P1 tab 13
In summary, the plaintiff’s primary contention is that there was a contract between the parties and that it is entitled to payment under the terms of that contract. It says that there was either an oral contract entered into on 10 October 2005 but varied on 26 October 2005 or, alternatively, that there was a partly written, partly oral contract entered into on 26 October 2005. If this primary contention is rejected the plaintiff claims entitlement to relief on the basis of either an estoppel or a quantum meruit.
Evidence
The plaintiff called two witnesses, Mr David Zundel and Mr Michael Burfield. In addition, Inventure tendered documents relating to the application for the grant and Inventure’s claim. These were as follows:
P1     Negotiation Documents
P2     Pre November 4^th grant Application Documents
P3     Post November 4^th grant Application Documents
P4     Other SAFSA Grant Application Consultancies
P5     Miscellaneous Documents
P6Consultancy Proposal to Seeley International dated 15 December 2003
P7     Marked copy of Application dated 15 February 2006
P8     Mr Burfield’s Notes of meeting on 10 October 2005
P9Marked Up copy of application dated 15/2/06 given to Mr Kowalick
P10Letter of Instruction from Johnson Winter to Mr Kowalick dated 7/12/07
P11Deed between the Treasurer of South Australia and Seeley International, dated 10/7/08
P12Payment Schedule
The defendant called a number of witnesses; Mr Frank Seeley, who is the chairman of directors of Seeley; Mr Ian Kowalick, who was engaged by the defendant to provide a report on the value of the services provided by Inventure to the defendant; Mr Kym Graham, who is the manager of the chairman’s office; Mr James, formerly an Innovation Manager at Seeley now retired but working part time as a consultant to Seeley; Mr Zanker, who is presently the Financial Controller at Seeley and was, at the time of these events a financial/management accountant with Seeley.
In addition, the defendant also tendered documents relating to Seeley and its dealings with Inventure. Those exhibits were as follows:
D1    Bundle of Inventure Partner Invoices
D2    Inventure Partners Website Documents
D3    Marked copy of Application dated November 2005
D4    Inventure Objective Work Document
D5    Email from Mr Burfield to Paul Schwarz dated 31 October 2005
D7    Bundle of Documents Relating to John Hogarth
D8    Email from Mr Gordon to Mr Hogarth dated 10 October 2005
D9Bundle of Documents relating to Mr Seeley’s travel arrangements
D10Bundle of Documents commencing with an email from Mr Graham dated 13 October 2005
D13Computer Screen printout – Document History of Minutes of Meeting of 10/10/05
D14Computer Screen printout – Document History of Minutes of Meeting of 26/10/05
D15Computer screen printout, further documented history of minutes dated 10/10/05
D16 Email from Paul Steel dated 29/7/08
D17 Draft minutes prepared by Mr Graham on 11/10/05
D18Request for particulars and letter from Johnson Winter and Slattery dated 2/8/07
D19 Bundle of plaintiff discovery documents
I received three documents, that the defendant sought to tender, de bene esse. These were:
·MFID6 Report of Mr Kowalick dated 21 December 2007;
·MFID11 Letter from Johnson Winter Slattery Lawyers to Mr Kowalick dated 21 July 2008; and
·MFID12 Supplementary Report of Mr Kowalick dated July 2008.
The documents were tendered on the basis that Mr Kowalick is an expert. The topic of the reports was stated to be “The fair commercial value of the services actually provided by Inventure to Seeley in relation to the Structural Adjustment Fund for South Australia”. The plaintiff objected to the tender of these documents on four grounds. First, that some of the evidence did not qualify as expert evidence rather it was material about which Mr Kowalick was in no better position that the court to determine.[41] Second, that the factual basis of some of the opinions expressed was unclear. Third, that some of the statements of fact contained in the reports were assumptions and finally, that the supplementary report contained new material and was too late. Whilst the plaintiff did not contend that the whole of the two reports were affected by these objections it was said that it was impossible to extract the material that was not objectionable from that which was. Having considered that matter further I consider that the plaintiff’s objections are well founded. I will not admit these documents into evidence and I do not take them into consideration.
[41] R v Bonython [1984] 38 SASR 45

It is my view that all witnesses in this matter attempted to give honest evidence to the best of their ability. The evidence of both Mr Burfield and Mr Zundel was, it appeared to me, in many cases reconstructed to some extent from documents and by reference to their usual practice. Both were hampered by their lack of contemporaneous notes, minutes or other documentation. Mr Burfield in particular gave evidence of a catastrophic computer crash that had caused him to lose a number of documents that may have assisted his recall. The reconstruction was also in my view coloured by their perception of the events in question.
Mr Seeley and Mr Graham, who were the key witnesses for the defendant, on the other hand had notes and minutes of various meetings including those with Inventure. Whether for this reason or not, they appeared to me to have better recall of the events in question and to have given generally more cogent evidence. Generally, I prefer their evidence where there is conflict. Ultimately however there was little difference between the parties concerning many events, rather it was their interpretation of those events that varied according to their particular position.
Issues
The issues in this matter are:
1.Was there a contract entered into on 10 October 2005, varied on 26 October 2005? If so, what were its terms?
2.Was there a contract entered into on 26 October 2005? If so, what were its terms?
3.If there was no contract, is the plaintiff entitled to relief on the basis of
3.1Estoppel
3.2 Quantum meruit? If so, how is that to be calculated?
10 October 2005 Meeting
The plaintiff’s primary claim is that the parties entered into an oral contract at the meeting on 10 October 2005.
The meeting at Seeley on 10 October 2005 lasted about 1½ hours. Mr Graham took handwritten notes of the meeting. He then typed minutes from these notes the following day.[42]
[42] Exhibit P1 tab 1, Exhibit D13, XXN Graham [T] 699
Mr Seeley led the discussion on all topics for Seeley.[43] Mr Seeley was the key decision-maker and was the person at the meeting with the ability to bind Seeley. It is clear that Inventure understood this to be the case.[44] Mr Burfield and Mr Zundel both spoke for Inventure although it appears that Mr Zundel took the lead role in discussions about Inventure’s terms.[45]
[43] Zundel [T] 81, Graham [T] 702
[44] Zundel [T] 181-182
[45] Zundel [T] 79
A number of Seeley projects were discussed as potentially being the subject of the grant application. These projects were Mobile Max, Chill Cel, Indirect Cooler and Sloped Tank.[46] Inventure said that the Chill Cel production and Indirect cooling projects would be appropriate subjects of the SAFSA grant application as they dovetailed into the previous Research and Development Start Grant.[47]
[46] Graham [T] 702
[47] Seeley [T] 560, Zundel [T] 171, 297
There was general discussion about the SAFSA grant scheme. Mr Zundel and Mr Burfield were at pains to establish their credentials and knowledge of the SAFSA scheme. In effect they were making a pitch for Seeley’s work. There was some controversy on the evidence about the state of Seeley’s knowledge concerning SAFSA at the time of the first meeting with Inventure. Mr Burfield and Mr Zundel gave evidence that suggested that Seeley did not fully understand the scheme. In particular they said that Inventure informed Seeley of the amount of funding that remained available in the scheme, the concept that the amount of the grant needed to be linked to the number of sustainable jobs created and that the focus of the grant was on production and commercialisation rather than research and development.[48] Mr Zundel described the discussion with Seeley on these topics in some detail and described Seeley as
“…quite naïve or not really understanding the part that jobs played in the structural adjustment fund. In fact I gained the impression from that meeting that they were really talking in Commercial Ready terms, the other grant process, rather than SAFSA terms”[49]
[48] Zundel [T] 83- 85 & 174; Burfield [T] 322-3 and 374.
[49] [T] 163
Mr Burfield said that Inventure recast the strategic direction of the project to comply with the SAFSA scheme requirements at this meeting.[50]
[50] Burfield [T] 372
Mr Seeley on the other hand gave evidence that he did understand the requirements of the SAFSA scheme and in particular the matters set out above because of meetings he and various Seeley employees had with Invest Australia and subsequently with Dr Hogarth.[51] This is confirmed in Mr Seeley’s hand written notes of the meetings with Invest Australia and Dr Hogarth and in minutes taken by Mr Graham.[52]
[51] Seeley [T] 490 – 493; Exhibit P2 tab 1 and 3
[52] Exhibit P2 tab 1 & tab 3
I consider that Mr Burfield and Mr Zundel underestimated the state of Seeley’s knowledge of the process. I find that, Seeley did know the amount of funding that remained available in the scheme, that the amount of the grant needed to be linked to the number of jobs created and that the focus of the grant was on production and commercialisation rather than research and development. It is however equally clear that Inventure impressed Seeley with their track record and that Seeley wished to engage their services.
Mr Zundel led the discussion concerning fees on behalf of Inventure. He said words to the effect that Inventure would not do the job at the same rates they had previously done the R & D start grant application. He further said that they would not do the job unless they were paid a success fee.[53] He proposed a base fee of $20,000 and a success fee of 5%.[54]
[53] Seeley [T] 504, Zundel [T] 176
[54] Seeley [T] 505, Graham [T] 703
The base fee was uncontentious. Mr Seeley said that $20,000 was acceptable. It was discussed that the base fee would be paid $6,000 upon engagement, $8,000 upon a first draft being prepared and $6,000 upon lodgement of application with Invest Australia.[55]
[55] Exhibit P1 tab1
The parties then discussed the success fee. Mr Zundel sought 5% of the grant funds. Mr Seeley rejected this. Ultimately Mr Seeley proposed that Seeley pay 5% on the first $1 million of grant funds and 2% thereafter.[56] Mr Burfield entered the discussion to say, “done”.[57]
[56] Zundel [T] 86, Burfield [T] 378, Seeley [T] 504, Graham [T] 703
[57] Burfield [T] 378, Zundel [T] 86, Seeley [T] 504-506, Graham [T] 703
Mr Zundel said that he would send Seeley a written proposal covering what had been discussed. His evidence was that the written proposal was to confirm the agreement reached at the meeting.[58] Mr Burfield had no recollection of the discussion concerning this but said that it was normal practice for Inventure to send a written proposal.[59] Mr Seeley and Mr Graham also agree that this was discussed. The difference between the parties is as to the purpose of the proposal.
[58] [T] 89
[59] [T] 325 and 379
Mr Zundel and Mr Burfield believed that they had concluded an agreement at the meeting, that Inventure had been engaged to undertake the project and that they were to commence work as soon as possible to fit the tight timeframe of the SAFSA grant program. Mr Zundel considered that the purpose of the proposal was to document the agreement.[60]
[60] Zundel [T] 87-91, Burfield [T] 324-326
Mr Seeley did not believe a “verbal legally binding contract” had been entered into at that meeting. He did not consider that Inventure would commence work until their written proposal was signed off.[61] Mr Graham gave similar evidence.[62] Both were anticipating that Inventure would send a written proposal and both believed that Inventure would not commence working on the application until the written proposal had been signed off by Seeley.
[61] [T] 506-508
[62] [T] 704-705
This difference is at the heart of the dispute between the parties. Was there an oral contract at the conclusion of this meeting?
Inventure’s case is that the evidence supports a finding that the parties reached agreement on the following matters:
·A base fee of $20,000.
·The timing of the payment of the base fee. Specifically that it was payable in three instalments as follows: $6,000 upon engagement, $8,000 upon completion of a draft and $6,000 upon lodgement of the application.
·A success fee of 5% in respect of the first $5 million and 2% thereafter.
It is said that agreement on these matters is plain on the minutes of the meeting[63] and supported by the oral evidence.[64]
[63] Exhibit P1 tab 1
[64] Zundel at [T] 86-89, Burfield at [T] 324-325 and Seeley at [T] 505
The defendant on the other hand says that the parties did not use contractual words to characterise what they had done. The parties negotiated some fundamental issues before moving to negotiate the balance of the arrangements or specifically a document to be proposed by Inventure. There was nothing specified during the meeting as to important issues such as the definition of success, whether the success fee was payable on the grant moneys received or the amount approved, when the success fee was payable, which projects would be the subject of the work by Inventure, what was the temporal scope of the engagement and what work would be done by Seeley and what work would be done by Inventure. The parties should not be taken to have intended an oral contract with so much left uncertain.
The minutes do not greatly assist a resolution of this issue. They record some items under the heading “Next Step” which includes “sign off on engagement”. There was a suggestion that the items under this heading were discussed by the Seeley personnel following the departure of Mr Burfield and Mr Zundel. I do not consider that this contention, even if correct, is of great significance. Mr Zundel gave evidence that he may have used the words “sign off” albeit he considered it more likely that he would have said “confirm”. He also conceded that he had said that Inventure would require further information to get started although he did not use the phrase “list of requirements” that appears in the minutes.[65] Mr Burfield did not recall the discussion but agreed that it was “probably accurate” that Mr Zundel said he would prepare a written proposal, send it to Seeley and they would sign off and pay the fee upon engagement.[66]
[65] [T] 182-184
[66] [T] 379
This is consistent with the email correspondence following the meeting on 10 July 2005. Mr Zundel emailed Mr Graham at 6.05 am on 13 October 2005 requesting him to excuse the delay in providing the proposal as he and Mr Burfield had been in “wall to wall meetings”.[67] Later the same morning Mr Zundel sent an email to Mr Graham attaching a proposal dated 12 October 2005 (“first proposal”) and an invoice to Seeley for $8,000 plus GST. The covering email stated that:
If ok with you, please sign a copy and effect payment of the initial fee invoice attached, to get started.[68]
[67] Exhibit P1 tab 3
[68] Exhibit P1 tab 3
The parties have referred me to Masters v Cameron[69] where the High Court identified three categories of agreement upon contractual terms where those terms are to be documented as follows:
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 classes. 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 that 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 in 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 the formal contract.
[69] (1954) 91 CLR 353 at 360
The plaintiff says that there is a fourth category by way of a variation of the first category where the parties intend to be bound immediately by the terms which they have agreed upon, while expecting to make a further contract in substitution for the first contract containing, by consent, additional terms.[70] It is said that both category one and category four cases involve a situation where there is an intention to be immediately bound despite the contemplation of a written agreement at some point in the future. Inventure contends that the agreement reached on 10 October 2005 was probably a category four case whereas the agreement reached on 26 October 2005 was clearly a category one case given that everything had been agreed and there was no room to negotiate any new or additional items.
[70] McLelland, J in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622
The difficulty with the application of Masters v Cameron to the present case, as pointed out by the defendant, is that in Masters v Cameron and for that matter Baulkham Hills Private Hospital Pty Ltd the parties had recorded terms using words indicative of a contract but stating that the agreement would be further documented. In this case the agreement pressed is wholly oral. There is no memorandum or any writing whatsoever. Indeed neither Mr Burfield nor Mr Zundel made notes of the agreement they say was discussed at either meeting. In particular they did not make notes of the meeting on 26 October 2005 in circumstances where there had already been dispute about the prior meeting discussions. In the absence of any writing I must look at the surrounding circumstances to determine whether a contract exists.
A contract is not to be construed from the subjective thoughts and intentions of the parties. It may only be construed in an objective way.[71] Subsequent behaviour can be used to determine whether there has been an agreement although it may not be used to construe the terms of the agreement.[72]
[71] Equuscorp Pty Ltd v Glengallan Investment Pty Ltd & Ors (2004) 218 CLR 471 at 34
[72] Laidlaw v Hillier Hewitt Elsley Pty Ltd [2007] NSWSC 727 (6 July 2007)
The meeting on 10 October 2005 was cordial. Those representing Seeley were impressed by Inventure’s presentation and track record. Those representing Inventure were excited by the prospect of again working with Seeley. There was clearly a degree of optimism about Seeley’s prospects of obtaining a SAFSA grant. Viewed objectively however it is my view that there was no meeting of minds on the terms of engagement at the meeting and therefore no oral contract.
Mr Zundel and Mr Burfield were convinced that Seeley had engaged Inventure and that they had a firm agreement. This is not enough to establish an oral contract. Mr Seeley considered that whilst they had reached what he termed “a commercial deal” the Inventure proposal was required to “consummate” that deal.[73] I do not consider it unreasonable for Mr Seeley to have formed that view in the circumstances. Based on what Inventure told Seeley in the meeting and what was in the subsequent documents it appears that, whilst there was agreement on some key points, there was no contract. Rather, the parties had commenced negotiations and were to continue to negotiate based upon the document to be provided by Inventure. There is a complete lack of contractual words that indicate an intention by the parties to be bound. Indeed the words used suggest quite the opposite when viewed objectively.
[73] Seeley [T] 566-568
Inventure indicated they would supply a “proposal”. The word “proposal” denotes a document which may or may not be accepted. I also find that Mr Zundel used words to the effect that Seeley would have to “sign off” on the proposal. He agreed that he might have used these words in the meeting, as did Mr Burfield. It is consistent with the contents of his email. The act of signing off implies acceptance of an offer with a concomitant ability to reject it. Mr Zundel’s covering email also does not suggest a concluded deal whatever his subjective intentions. Rather Seeley is invited to sign the proposal “if ok”. This suggests an ability to negotiate further if it was not “ok”. The email further suggests that signature of the proposal and payment of the initial fee are precursors to commencement of work. Likewise the consultancy proposal and the invoice indicate that the initial fee is payable “upon engagement”. The proposal contains a flow chart under the heading “Inventure Partners Methodology” which indicates that the proposal precedes engagement.
Further, it is likely that the parties would have been subject to significant future disputation about the terms of the agreement if this were an oral contract as the plaintiff contends. This can be seen from the present dispute. This is particularly the case given that neither Mr Burfield nor Mr Zundel took any notes of the meeting.
It is my view that there was no agreement or indeed discussion between the parties concerning fundamental issues. The first issue was whether the success fee was to be paid on the amount approved as opposed to the amount received. Inventure’s usual practice is to calculate this fee on the amount approved and this was put to Mr Seeley as its case.[74] Mr Seeley, and for that matter Mr Graham, denied that this was discussed in the meeting on 10 October 2005.[75] Mr Zundel agreed that it was not.[76] Mr Burfield said that it was their usual practice but ultimately agreed that he had no recollection of discussing this topic.[77] I find that this issue was not discussed at the meeting and hence there was no agreement on this issue.
[74] [T] 575-576
[75] Seeley [T] 575-576 & 589, Graham [T] 703
[76] [T] 195
[77] [T] 383
Likewise I find that there was no discussion about the timing of payment of the success fee. Mr Zundel and Mr Burfield gave evidence that they told Seeley at the meeting that it was Inventure’s usual practice to require payment of the success fee at the time of the first and second draw down of grant funds.[78] Mr Seeley and Mr Graham deny that this occurred.[79] I prefer the evidence of Mr Seeley and Mr Graham. In addition to my views about the reliability of their evidence over that of Mr Zundel and Mr Burfield I note that the timing of the payment of the base fee was recorded in the minutes. There is no similar record of the timing of the payment of the success fee. This is an extraordinary omission if it was discussed. Further, this topic was the subject of considerable debate subsequently. It was in fact one of the key areas of dispute between the parties. I cannot accept that Seeley would have let it pass unremarked at the meeting given the position Seeley took in subsequent discussions on that topic.
[78] Zundel [T] 178-179, Burfield [T] 384
[79] Seeley [T] 575; Graham [T] 742-743
In all of the circumstances I find that there was no oral contract entered into at the meeting on 10 October 2005.
Events between 10 October and 26 October 2005
Mr Graham sent an email to Mr Seeley, who was by this stage overseas, setting out a précis of the first proposal and attaching page 8 which had details of the fee arrangement.
On 18 October Mr Seeley and Mr Graham had a telephone conversation concerning the first proposal. Mr Seeley advised Mr Graham that the first proposal was not acceptable. The base fee was payable in different amounts to what was discussed on 10 October. Further, it included terms that Mr Seeley said, and I have found, had not been discussed at the meeting. First, success was defined as approval rather than draw down. Second, the success fee was required to be paid 75% on first draw down and 25% on the second draw down. Mr Seeley instructed Mr Graham to ask Mr Zundel how the success fee would be linked to payments of the SAFSA grant.

Mr Graham says that he telephoned Mr Zundel the same day advising that Mr Seeley was overseas and that he was unhappy with the first proposal. He says that he outlined the issues he discussed with Mr Seeley. Mr Zundel agreed that the timing of the base fee was different to what had been discussed at the meeting and that the proposal should be amended.
There is some dispute as to whether the success fee was discussed. Mr Graham said that he told Mr Zundel that Mr Seeley had instructed him to ask about the timing of payment of the SAFSA grant in order to understand how it related to the 75%/25% payment terms and so that he could make a decision as to the next steps. In response Mr Zundel said that the grant was paid in accordance with the achievement of milestones. Mr Graham understood this to mean that the grant would not be paid in the same 75%/25% proportion as the success fee. He says that he told Mr Zundel that he would need to get back to Mr Seeley and that when Mr Seeley had worked out what to do he would get back to Inventure.[80]
[80] Graham [T] 709-710
Mr Zundel gave evidence initially that Mr Graham made no mention of the success fee and that his enquiry about the timing of payment from Invest Australia was completely independent of the success fee.[81] Mr Zundel subsequently said that he had no recollection of the detail of the discussion and was reconstructing from his email to Mr Burfield.[82] His reconstruction does not however accord with that email. Rather the email is consistent with Mr Graham’s evidence. The email states, inter alia, that the enquiry from Mr Graham was how payments by Invest Australia “would impact on our success payment terms”.[83]
[81] Zundel [T] 95-96, 207 - 209
[82] Zundel [T] 208
[83] Exhibit P1 tab 5
I accept Mr Graham’s evidence on this point in preference to Mr Zundel. I find that the issue of the timing of the payment from Invest Australia was discussed in the context of the success fee and that Seeley had indicated that it was not prepared to accept the first proposal. Rather Mr Graham advised that he had to confer with Mr Seeley on the topic of the success fee and then would contact Inventure.
Following the discussion between Mr Zundel and Mr Graham on 18 October Mr Burfield redrafted the proposal based upon the email he received from Mr Zundel. He sent an email to Mr Graham attaching a second version of the proposal dated 12 October 2005 (“second proposal”). The covering email stated that “if ok with you please sign a copy”, again suggesting ongoing negotiations rather than that there was a concluded contract.
There was little difference between the first and second proposal. The only change was that the $20,000 base fee was payable $6,000 upon engagement, $8,000 upon lodgement of initial draft and $6,000 on lodgement of the final application. The definition and timing of the success fee remained the same. Accordingly a key area of difference remained unresolved between the parties.
Mr Graham spoke to Mr Seeley concerning the second proposal. He says, and I accept, that he also advised him of Mr Zundel’s response concerning the timing of payment of grant funds and the success fee. Mr Seeley was not prepared to accept the 75%/25% payment terms and wanted to meet “face to face” with Inventure to resolve this issue.
On 19^th or 20^th October 2005 Mr Graham telephoned Mr Zundel and advised him that Mr Seeley wished to meet upon his return to Australia. There is limited evidence on what was discussed in that call. Mr Graham did not consider at that stage that there was a legally binding agreement to engage Inventure. It is implicit in his evidence that the purpose of the meeting was to discuss Inventure’s proposal. It is not, however, clear precisely what he said to Mr Zundel on that topic.[84]
[84] Graham [T] 711-712
Mr Zundel and Mr Burfield say that they continued to believe that Seeley had engaged Inventure notwithstanding that Seeley had not signed the second proposal, paid the invoice paid or attended to Mr Zundel’s email request dated 13 October 2005 that a meeting take place between Mr Graham, “Paul and Craig early next week to understand all the things we jointly need to do”.[85]Mr Burfield thought that the purpose of the meeting on 26 October 2005 was to request data and to clarify some strategic issues.[86] Mr Zundel thought that the purpose of the meeting on 26 October 2005 was to discuss a checklist that he had prepared. He was not aware of any other purpose for the meeting. It is however plain that he understood Mr Seeley was to be present at the meeting on 26 October 2005 whatever its purpose. [87]
[85] Exhibit P1 tab 3
[86] [T] 332
[87] [T] 97-98 and 211-212
26 October 2005 Meeting
Mr Seeley returned to Australia on 26 October 2005. The meeting with Inventure took place at the Seeley offices on that day. Present for Seeley were Mr Seeley, Mr Graham, Mr Schwartz, Mr Zanker and Mr James. Mr Burfield and Mr Zundel attended for Inventure. The meeting went for approximately 45 minutes.[88]
[88] Zundel [T] 97 and Graham [T] 715
Again, Mr Graham took handwritten notes of the meeting and some months later, on 5 January 2006 when the parties were in dispute, prepared typed minutes from those notes.[89] The delay and timing of preparation of those typed minutes (after this dispute was well and truly on foot) is somewhat controversial. Again, neither Mr Burfield nor Mr Zundel took notes. The minutes appear, in the main, to represent what the parties say was discussed. The key area of controversy relates to the last dot point under the heading “proposal” and that under the heading “next steps” which suggest that it was incumbent on Inventure to provide an amended proposal for “review and acceptance”.
[89] Exhibit P1 tab 7, D14 and Graham [T] 712
Mr Seeley chaired the meeting and led discussions for Seeley on the fee issue. He said that the second proposal was not in accordance with the terms discussed at the previous meeting. He said the success fee calculated on the amount approved was not acceptable nor was a fee payable 75% on the first draw down and 25% on second draw down. Seeley’s position was that the success fee should be calculated upon the amount drawn down and should be paid by reference to the amounts drawn down. He required 30-day payment terms, meaning 30 days after the end of the month in which an invoice was issued. There appears to be no dispute that this was what he said and that the minutes accurately record his position.[90]
[90] Zundel p 213-215
Mr Zundel said that it was important to Inventure that the success fee be calculated on the amount approved because they had no involvement after the grant was approved nor did they have any control over the amount drawn down. There was some negotiation on this point. Mr Seeley would not move from his original position. Mr Zundel maintained Inventure’s position until eventually Mr Burfield said, “you win”.[91] Mr Zundel denied that he was unhappy with this but conceded it was not his “preferred option”. He said he went out of the meeting thinking that they had negotiated and agreed.[92]
[91] Zundel [T] 98-99, 213, 219, Burfield [T] 332, Seeley [T] 525, Graham [T] 713
[92] [T] 215
Following the fees discussion, there was some discussion about the grant itself including discussion of a checklist prepared by Mr Zundel.[93] The checklist set out a number of matters to be attended to by Seeley staff. There is some dispute as to the length of this discussion but, for present purposes, it is not important to resolve this issue.
[93] Exhibit P2 tab 10
Inventure contends that, if there was no oral contract following the meeting on 10 October 2005, there was one at the conclusion of the meeting on 26 October 2005. Everything had been agreed by that time and there was no more room for further negotiation or terms. Inventure refers specifically to the evidence of Mr Seeley and Mr Graham on that point.[94] In effect the parties had agreed that the terms would be in line with the second proposal amended as discussed at the meeting. The parties intended to be immediately bound by the terms agreed.
[94]Seeley [T] 574; Graham [T] 765
Seeley contends that there was no intent to have the uncertainty of an oral contract and says that the express reference to a proposal supports that proposition. Further Seeley points to the fact that, when the written proposal was provided, it was different to what was agreed at the meeting which militates against the plaintiff’s contention that there was a concluded agreement.
Mr Seeley said that the proposal should be sent to Mr Graham and that, if it was acceptable he, Mr Seeley, would sign it.[95] The minutes also record words to similar effect. The plaintiff takes issue with the minutes indicating that they were not prepared until over two months after the meeting had occurred and at a time when proceedings were on foot. Mr Graham had also destroyed his handwritten minutes. In view of this I will disregard the contents of the minutes. It is clear however from the evidence of Mr Zundel and to a lesser extent Mr Burfield that there was discussion of the provision of a written proposal. Mr Zundel’s evidence on this topic is particularly important.[96]
[95] Burfield [T] 215, Zundel [T] 218
[96] [T] 218 - 220
QI suggest that you left the meeting expecting that, as far as the engagement was concerned, the next step was for you to resubmit the proposal back to Seeley.
AYes. I was going to revise the proposal in the terms that Frank required and resubmit it.
QIn that regard, you were to be a faithful scribe. You were simply to document what Frank had asked for as opposed to putting back to Frank a counter offer.
AI left the meeting agreeing to certain terms and conditions and I was to reflect those in the application.
QSo at the minute that you walked out of the meeting, your intention was that you would redefine ‘success’ as payment, no longer approval.
AYes.
QAnd that the percentage, 5% or 2%, would be a percentage of the amount paid, not the amount approved.
AYes.
QAnd the payment terms would be proportionate to the draw-down.
AYes.
QAnd, in particular, you wouldn’t get paid until – in accordance with Seeley’s normal 30 day trading terms.
AThat’s right.
QThen that night you thought further about it; correct.
AYes.
QAnd you thought that really wasn’t fair to Inventure.
AI actually thought it was – I understood the intent and I was in agreement with the intent – or sorry, I should rephrase that. I agreed with the intent but I didn’t think it was workable when I started thinking about how that would occur, and it seemed to me that what Frank was saying to us we could accommodate, but accommodate by putting a time period cap on it so that it didn’t go on infinitum. Now, clearly in saying that, that advantages Inventure in that it would bring the payments to a conclusion in a defined period of time rather than the extent of when Seeley had to comply with the grant.
QI’m suggesting to you that you weren’t seeking to clarify what had been agreed; rather, you were having second thoughts about what had been agreed.
ANo, I was in agreement with the intent of it, as I said, and I was looking for a workable outcome.
QIndeed, I suggest that you yourself had never agreed to what Frank said; rather, it was Mike Burfield who jumped in and agreed it.
AAs we have indicated earlier, Mike had been the lead in agreeing to it and I was in agreement with that.
The difficulty with Inventure’s position that there was a concluded agreement at the conclusion of the meeting on 26 October 2005 is that its subsequent actions were not consistent with a concluded agreement. Rather they are suggestive of continuing negotiations.
On the morning of 27 October 2005, Mr Zundel sent an email to Mr Burfield requesting a word version of the proposal. He also stated that he wished to make certain points in the covering email to Seeley including that the basis of the grant would be the amount approved and not the actual draw down amount and that payments would be proportionate to draw down but would not exceed a period of 12 months.[97]
[97] Exhibit P1 tab 8, Zundel [T] 101, 219-221
Later that day Mr Zundel sent an email to Mr Graham attaching a modified consultancy proposal dated 27 October 2005 (“third proposal”) and an invoice for $6,000 dated 12 October 2005.[98] The covering email stated:
I am attaching a modified proposal along the lines agreed yesterday. In putting the new condition into the proposal a few things arose that were not discussed yesterday – I have included them in the proposal but highlight them here.
The reason for their inclusion is that our work is in getting the grant – we have no input after that – hence all fees are on what is raised and not what is spent. The same applies to timing – we accept that our payments are linked to timing of the program funds but feel this needs to be capped – and we have said 12 months. I would hope that frank will be ok with these additions.
[98] Exhibit P1 tab 9
The third proposal included the following terms:
·Success was defined as approval of the project application.
·The amount of success fee was calculated on the amount approved.
·Payment of the success fee would be proportionate to draw downs by Seeley from the programme but would not exceed a period of 12 months. In the event that full draw down was not made within 12 months of the execution of the deed Seeley would finalise all payments with Inventure.
·75% of the success fee would be payable upon the first draw down of grant funds and 25% payable upon the second.
The inclusion of a 12-month cap was not discussed at the meeting. The rationale advanced by Mr Zundel was the same rationale advanced by him the previous day, and rejected by Mr Seeley, concerning the amount and timing of payment of the success fee. Notwithstanding Mr Zundel’s evidence outlined above that he understood the intent of the agreement and was simply attempting to make it workable, this was a significant alteration. It does not accord with Mr Seeley’s position, expressed at the meeting the previous day that the amount of the success fee had to be on amounts as Seeley received them. I do not consider that Mr Zundel’s explanation outlined above is tenable. The agreement reached was workable – it just did not suit Inventure. In effect Mr Zundel was reverting to the position he had maintained at the meeting before Mr Burfield’s intervention. He was continuing to negotiate.
Mr Zundel and Mr Burfield were aware that the third proposal contained terms that were not agreed to at the meeting.[99] Submitting this proposal is not consistent with Inventure’s contention that everything had been agreed and there was no more room for further negotiation or terms.
[99] Zundel [T] 224-5; [T] Burfield 410-414
The continued use of the terminology “proposal” suggests an offer capable of acceptance or rejection. The third proposal contains the same indications that agreement to the proposal precedes engagement and that payment of the invoice is required on engagement. The third proposal did not include a 30-day payment term as discussed at the meeting – this was subsequently an issue of contention. The invoice accompanying the proposal, for the first payment on engagement, indicates that it is “payable in 7 days”. Given it is dated 12 October 2005 the question is within 7 days of what? Consistent with the balance of the proposal it appears that it should be paid within 7 days of engagement.
Following receipt of the third proposal Mr Graham had difficulty contacting Mr Seeley to discuss the proposal. On 31 October 2005 Mr Seeley travelled to Melbourne. He returned to Adelaide on 2 November 2005 but drove directly to the Barossa Valley without attending the office, returning only on 4 November 2005 when he spoke to Mr Graham. He instructed Mr Graham to tell Inventure that the third proposal was unacceptable and that he would not proceed on that basis.
Mr Graham then sent an email to Mr Zundel copied to Mr Burfield stating that Mr Seeley was “extremely upset” by the third proposal, that it was unanimously agreed at the meeting on 26 October that Inventure would only receive success fee payments progressively at the percentage rates agreed, calculated on moneys as they were received by Seeley and that all payments would be on 30 day terms. Mr Graham stated that the proposal was unacceptable and that Seeley was not prepared to proceed on that basis.[100]
[100] Exhibit P1 tab 10
On 5 November 2005 Mr Zundel sent an email to Mr Graham apologising for upsetting Mr Seeley and stating that he would prepare a new proposal with the amount of success fee linked to draw down and the timing of payment linked to draw down.
Mr Graham received this email on Monday 7 November 2005. He responded by inviting Mr Zundel to send through a revised proposal for reviewing.[101]
[101] Exhibit P1 tab 10
On 7 November 2005 Mr Zundel sent Mr Graham an email attaching a further proposal dated 27 October 2005 (modified 7 November 2005) “fourth proposal”.[102] In relation to the success fee it was stated that:
payments will be proportionate to the draw downs by Seeley from the programme ie for the first $1 million dollars Inventure will receive 5% of each payment thereafter Inventure will receive 2% of each payment.
[102] Exhibit P1 tab 10
There was no express term that payments would be due 30 days from the end of the month from the date of the invoice. This proved to be a sticking point and Mr Seeley instructed Mr Graham to inform Inventure that Seeley would no longer deal with them.[103]
[103] Seeley [T] 535-536, Graham [T] 720
Mr Graham telephoned Mr Zundel to inform him of his instructions from Mr Seeley but told him that Seeley was prepared to pay Inventure for work already undertaken. He confirmed this in an email to Mr Zundel.[104]
[104] Exhibit P1 tab 11
Mr Zundel sent an email in response stating that the implied terms were 30 days from receipt of funds by Seeley.[105] On 8 November 2005 Mr Seeley emailed Mr Zundel confirming advice of the cancellation of any arrangements with Inventure.[106]
[105] Exhibit P1 tab 11
[106] Exhibit P1 tab13
The plaintiff says that Seeley at all times indicated that there were firm arrangements with Inventure. In Mr Seeley’s email of 11 October 2005 reporting on the 10 October meeting he used language such as “having hammered out the deal” and “settled” on a deal. It is said that while he made reference at the end of his email to the “official proposal” document coming, there is no suggestion that a deal or the commencement of work had to await this document. Likewise following the meeting on 26 October 2005 Mr Seeley indicated that there were “very clear and mutually agreed arrangements” and referred to having “cancelled the arrangements with David Zundel and Mike Burfield due to their repudiation of any agreement” and matters being “firmly agreed”.[107]
[107] Exhibit P1 tab 11
I do not however consider that these emails, without more, indicate that there was a legally binding contract between the parties. Mr Seeley’s evidence was that he considered they had a commercial deal that would not be binding until formally documented.[108] The emails were internal emails to Seeley staff. He was not using words such as agreement, deal and repudiation in their legal sense. Seeley’s other conduct is entirely consistent with there being no contract.
[108] [T] 562-563
Further, I note that the converse is true of the emails from Inventure to Seeley. At no stage do any of the emails from Inventure suggest that there is a contract between the parties. Mr Zundel’s email to Mr Graham dated 5 November 2005, inter alia, states as follows:
A key reason for preparing a formal written proposal is to ensure that the understanding between Inventure and the client is clear – and in this instance it is obvious it was not.

At no stage was there a clear understanding between Inventure and Seeley. They commenced negotiations at the meeting on 10 October 2005 and it is my view that negotiations continued throughout. The proposals, emails, telephone discussions and meetings were a series of offers and counter offers. The evidence does not demonstrate a time at which they had reached agreement to be bound by the same terms and conditions. Further the evidence does not show that the parties agreed to an oral contract. The parties wanted a clear understanding of their agreement and chose to do this by way of a written proposal from Inventure to be signed by Seeley.
Accordingly, I find there was no contract between Inventure and Seeley at any stage and the plaintiff’s claim on this basis fails.
Estoppel
The plaintiff’’s claim in estoppel is pleaded in paragraph 19 of its amended statement of claim as follows:
Particulars
19.1   Inventure repeats paragraphs 4.1 to 11 and paragraphs 15 to 18 above and says     that:
19.1.1        at all material times from 10 October 2005 until 7 November 2005   Inventure acted on the assumption that Inventure and Seeley had                   reached an agreement that Seeley would pay the base fee for work   performed by Inventure and the success fee if the SAFSA grant   application was successful.
19.1.2        Seeley induced Inventure to adopt the assumption referred to in   paragraph 19.1.1 above as:
19.1.2.1     Seeley instructed Inventure to commence work on the   SAFSA grant application on 26 October 2005;
19.1.2.2     Seeley’s management team worked in conjunction with   Inventure in preparing the SAFSA grant application; and
19.1.2.3     at no time prior to 7 November 2005 did any   representative of Seeley advise Inventure that Seeley did   not consider that an agreement had been reached in   respect of payment of the base fee or the amount of the      success fee;
19.1.3        in reliance upon the assumption referred to in paragraph 19.1.1 above.   Inventure carried out considerable work on the SAFSA grant   application to the benefit of Seeley;
19.1.4        Seeley knew that Inventure was acting on the basis of the assumption                  referred to in paragraph 19.1.1 above in carrying out the work;
19.1.5        Inventure has suffered detriment through the provision of consulting                    services to Seeley without payment for those services.
The elements required to make out promissory estoppel are:
·The defendant makes a promise to the plaintiff.
·The defendant induced the plaintiff to rely upon the promise in taking action it would not otherwise have done.
·The defendant’s conduct would cause the plaintiff to suffer detriment by reason of that action if the promise is not fulfilled.
·The defendant knew or intended that the plaintiff would be so induced by the promise to take such action to its detriment.
·The defendant failed to act to avoid the detriment.[109]
[109] Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 and Whittle v Parnell Mogas Pty Ltd (2006) 94 SASR 221
Mr Zundel and Mr Burfield assumed that a contract existed between Inventure and Seeley following the meeting on 10 October 2005. They further assumed that they should start work as soon as possible. The key question is whether these assumptions were caused by any promise or representation made by Seeley.
The plaintiff has pleaded three matters as outlined above.
The first is that Seeley instructed Inventure to commence work on the SAFSA grant application on 26 October 2005. I note the evidence of Mr Seeley and Mr Graham that they made no request to Inventure to start work at any stage and did not believe they would start work until sign-off of the proposal. No request to commence work was made, and the plaintiff does not contend that it was, at the meeting on 10 October 2005. Rather the plaintiff contends that there was an instruction to commence work at the meeting on 26 October 2005. I do not consider that there was an explicit instruction to Inventure to commence work on that occasion. There may however have been an implied instruction given the presence of Seeley operational staff at the meeting and the discussion of the Inventure checklist.
The second matter raised by the plaintiff’s pleadings on this point is that Seeley’s management team worked in conjunction with Inventure to prepare the grant application. This certainly occurred on and from 26 October 2005 until Seeley terminated negotiations with Inventure.
The third matter that the plaintiff relies on is Seeley’s failure to advise Inventure that Seeley did not consider an agreement had been reached in respect of the payment of the base fee or the amount of the success fee. I do not accept this contention. I find that Mr Graham informed Mr Zundel on 18 October and again on 19 or 20 October that Mr Seeley was not happy with the proposal. Inventure knew that Mr Seeley had to approve the arrangements. Further, Inventure did not receive a signed proposal or indeed any other indication that Seeley was happy with the first or second proposal. Seeley did not pay the invoice for the fee payable upon engagement. I further find that Seeley did not know or intend that Inventure believed that it had agreed to the proposal. It did not know, nor did it intend that Inventure commence work, prior to the meeting on 26 October 2005.
I find that Seeley made no representation to Inventure at the meeting on 10 October 2005 that the parties had entered into a legally binding contract. Rather I consider that Mr Zundel and Mr Burfield somewhat optimistically made that assumption following what was, by all accounts, a positive meeting. The belief in the existence of a contract was a self induced belief. Seeley did nothing to promote this. I also note that, at this stage, there was also considerable uncertainty as to the terms of any agreement with, as I have found, important aspects relating to the success fee not having been discussed. This lack of clarity also hampers the plaintiff’s claim for a promissory estoppel.[110]
[110] Whittle v Parnell Mogas Pty Ltd (2006) 94 SASR 421
Further I do not consider that Seeley made any representation to Inventure at the meeting on 26 October 2005 that the parties had entered into a legally binding contract. On the contrary Inventure represented to Seeley that it would provide a proposal the next day. Inventure did provide the third proposal however it was different to what was agreed at the meeting on 26 October 2005. Seeley at no time represented that it had agreed to the wording of the third proposal. It did not return a signed version of the proposal nor did it pay the fee due on engagement. On 31 October 2005 Mr Graham told Mr Zundel that Mr Seeley had not seen the revised proposal but, given it was not what had been agreed to at the meeting, Mr Seeley was likely to be unhappy with it. Accordingly there was nothing said by Seeley which induced Inventure to believe that Seeley had agreed to the third proposal. In the circumstances therefore I find that the plaintiff’s claim in estoppel fails.
Quantum Meruit
The plaintiff seeks reasonable remuneration, based on quantum meruit for the consultancy services provided. It contends that the amount payable should be calculated by reference to the fee structure agreed by the parties. Specifically, the plaintiff seeks assessment of its damages on the basis of a base fee and a success fee.
To succeed on a quantum meruit the plaintiff must prove that there was a request by the defendant to do work and an acceptance of that work by the defendant in circumstances where it would be unconscionable for the defendant not to pay reasonable remuneration. It does not matter whether the request was made expressly or whether its making was to be implied from the actions of the parties in the circumstances of the case. [111]
[111] Lumbers v W Cook Builders Pty Ltd (In Liquidation) [2008] HCA 27
Seeley sought out Inventure to assist it with the SAFSA grant application. In consequence the meeting of 10 October 2005 was arranged. There was a tight time frame for submission of the grant application. This was a matter well known to the parties. I accept the evidence of Mr Seeley and Mr Graham that they made no request to Inventure to start work at the meeting on 10 October 2005 and did not believe they would start work until sign off of the proposal.
Further, there appears on the evidence to have been no contact between Inventure and Seeley of a type that would indicate Inventure was working prior to 26 October 2005. Inventure did not tell Seeley that it was doing substantive work, nor did Seeley consider that such work was being undertaken. Inventure did not request information from Seeley other than the Nagel draft. Nor did Inventure pursue the initial meeting, suggested by Mr Zundel in his email dated 13 October 2005. Inventure provided no written work to Seeley prior to 26 October 2005.
Whilst I accept Mr Seeley and Mr Graham’s evidence that there was no request that Inventure start work at the meeting on 26 October 2005, I consider that there was an implied request by Seeley. There was discussion at the meeting of a check list prepared by Inventure and a request for information to be provided by Seeley to Inventure. Seeley operational staff present at the meeting, including Mr James and Mr Zanker, clearly understood that they were to commence work and provide the requested information to Inventure as soon as possible. I therefore find that Seeley knew or should have known that Inventure commenced work on and from 26 October 2005. Further, Seeley did nothing to suggest that Inventure should not continue that work until 7 November 2005. Accordingly Seeley must be taken to have approved of, or agreed to, the work being undertaken. This is particularly the case in view of the various emails passing between Seeley staff and Inventure and the PowerPoint meeting on 3 November 2005. I consider therefore that the defendant should pay the plaintiff reasonable remuneration for the work done in the period from the meeting on 26 October 2005 until 7 November 2005.
The defendant suggested in the presentation of its case that the plaintiff did not undertake any useful or productive work, that much of the work was pro-forma and available in the public domain from the SAFSA website and that the final SAFSA application was, in effect, principally Seeley’s work. I do not accept this submission. Clearly the termination of the arrangements between the parties meant that Seeley completed the application with no further input from Inventure. Inventure however did work including the preparation of the checklist and the draft discussed at the PowerPoint meeting on 3 November 2005. I am not in a position to fully assess the merits or otherwise of this work however it is plain that there was some utility to it. The checklist and the draft application formed the basis of at least two discussions between Inventure and Seeley. In any event, whatever its quality, the work performed was of a nature and type contemplated by Seeley in its discussions with Inventure.
The difficulty with calculating the amount payable to the plaintiffs is that Mr Zundel and Mr Burfield did not keep detailed records. They generally worked on a fixed fee arrangement of the type they sought to negotiate here. Accordingly it was not necessary for them to maintain time sheets or other records in order to render an account. Their practice was to work electronically with a ‘live’ document. Accordingly there is a limited documentary trail. Mr Zundel did keep some time sheet records for personal time management.[112] These are however incomplete.[113]
[112] Exhibit P2 tab7
[113] [T] 104-106
Mr Kowalick gave evidence of the value of Inventure’s work. I consider this evidence is of limited assistance even if admissible.[114] I say this without being in any way critical of Mr Kowalick. He did not know what work had actually been performed by Inventure and this is the key issue for determination of the quantum meruit.
[114] See above
Mr Zundel’s time sheet suggests that he worked approximately 14.5 hours on the Seeley project from and including the meeting on 26 October 2005 to 7 November 2005. I accept however that the time sheet is incomplete and that it is likely he undertook more work than is outlined. Mr Zundel gave evidence that the SAFSA grant applications typically involved working in a total range of 120 - 250 hours. This included preparation of the application and negotiation post-lodgement of the first draft.[115] He did not give an estimate of the time he spent from 26 October 2005 until Inventure ceased work.
[115] [T] 112
Mr Burfield gave similar evidence. He also gave evidence that he spent 30 – 40 hours working on the grant application from 26 October 2005 to 7 November 2005.[116] He was cross examined about this topic[117] but maintained that he had undertaken significant work during that period. There is limited documentation to substantiate Mr Burfield’s evidence. Indeed the documentation is limited to a number of emails.[118] I also find that he did not attend the PowerPoint meeting with Seeley.[119] I consider it likely that he is overstating the hours that he worked. Mr Zundel on the other hand had the lead role for Inventure on the project. He not only engaged in email correspondence but also attended the meeting and drafted the application that was worked on in that meeting. His time sheet shows considerably less time recorded than Mr Burfield’s estimate. I consider that his time sheet underestimates Mr Zundel’s work on the project.
[116] [T] 348
[117] [T] 465-7
[118] Exhibit P2
[119] See note 30 above
In view of the lack of documentation it is necessary to take a broadaxe approach to this matter. Allowing for my findings that Mr Zundel has likely understated the time spent on his time sheet and that Mr Burfield has likely overstated the amount of time I consider it appropriate to allow 50 hours in total for Inventure’s work during this period.
Inventure urges that I assess the quantum meruit on the basis of the agreement that the parties were attempting to negotiate namely a base rate and a success or result basis. Whilst base fee and success fee arrangements are common, according to the evidence of Mr Zundel, Mr Burfield and Mr Kowalick, the limited work that I have found Seeley liable to recompense Inventure in the context of the whole application makes this inequitable. Further, I consider that Inventure’s input to the achievement of the SAFSA grant was, in the circumstances, limited. I therefore consider that payment of a success fee to Inventure is inappropriate.
I consider it preferable to calculate the reasonable remuneration by reference to prevailing hourly rates in the consulting industry.[120] Mr Zundel and Mr Burfield were leaders in the market given the breadth of their experience in grant work applications.[121] There was evidence that the principals in some of the larger accounting firms charge up to $900 per hour for grant work on an hourly basis. Others working in those firms would charge at lower rates starting at $250 per hour. It was not generally the case that a principal would perform all the work on an application.[122] The blended hourly rate for a big four accounting firm would therefore be less than $900 and would vary depending on who did the bulk of the work.
[120] Pavey & Matthew Pty Ltd v Paul (1987) 162 CLR 221
[121] Zundel [T] 50-1, Burfield [T] 306 and Kowalik [T] 621 and 661
[122] Kowalik [T] 652-653
Mr Zundel and Mr Burfield gave evidence that they had charged historically on an hourly rate basis at rates between $200 and $250 per hour. Generally however their practice was to charge a base fee and success fee. There was considerable evidence on the quantum of these fees on other projects. Suffice to say that the fees varied according to the nature of the client and the amount of work required of Inventure. The plaintiff submitted that the calculation of an equivalent hourly fee across the applications for grants charged on the basis of a base fee of $20,000 and a success fee of 5% was in the range of $633 to $950 per hour. This is however highly speculative and requires the making of a number of assumptions.
Finally I note that Dr Hogarth was prepared to do the same work at $140 per hour.
Taking a broadaxe approach to the calculation of the figure, noting the wide range of hourly rates from $140 to $950, I consider a rate of $300 per hour is appropriate. This is more than the rate historically charged by the directors of Inventure on hourly rated work and one-third of the big four accounting firms charge rate for principals. This equates to $15,000 being two-thirds of the base fee that would have been applicable if Seeley had accepted the plaintiff’s proposal. In the circumstances I consider that this represents an appropriate commercial price for the work undertaken by the plaintiff.
I therefore assess the plaintiff’s damages in the sum of $15,000. I will hear the parties on the issue of costs and interest prior to entering judgement.