Laurus Group Pty Ltd v Mitsui & Co (Australia) Ltd
[2022] VSC 360
•24 June 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2019 05931
BETWEEN:
| LAURUS GROUP PTY LTD AS TRUSTEE FOR THE LAURUS GROUP UNIT TRUST (ACN 131 050 363) | Plaintiff/First Defendant by Counterclaim |
| and | |
| MITSUI & CO (AUSTRALIA) LTD (ACN 004 349 795) | Defendant/Plaintiff by Counterclaim |
| and | |
| DAVID BRANDI | Second Defendant by Counterclaim |
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JUDGE: | M Osborne J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26, 27 and 28 April 2022, 3, 4, 5 and 11 May 2022 |
DATE OF JUDGMENT: | 24 June 2022 |
CASE MAY BE CITED AS: | Laurus Group Pty Ltd v Mitsui & Co (Australia) Ltd |
MEDIUM NEUTRAL CITATION: | [2022] VSC 360 |
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CONTRACT – Offer and acceptance – Exchange of emails – Whether parties made binding contract – When was the contract formed – Battle of the forms – Whether email constituted acceptance or counteroffer – Which terms and conditions applied to the contract – Authority to contract – Acceptance by conduct – Last shot doctrine – Higher status doctrine –– Damages – Quantification of loss and damage – Penalties – Liquidated damages term – Whether late payment fees unenforceable – Damages for loss of opportunity – Court must ask whether there was a commercial opportunity of some value - Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 – Masters Home Improvement Australia Pty Ltd v North East Solution Pty Ltd [2017] VSCA 88 – Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525 –NJ Capital Pty Ltd v AMKI Property Holdings Pty Ltd [2021] NSWSC 1462 – Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656 – Sellars v Adelaide Petroleum NL (1994) 179 CLR 332.
ESTOPPEL – Estoppel by convention – Whether distinct from promissory estoppel – Whether party suffered detrimental reliance – Whether party believed guarantee was not legally binding – MK & JA Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39 – Moratic Pty Ltd v Gordon [2007] NSWSC 5 – Painaway Australia Pty Ltd v JAKL Group Pty Ltd [2011] NSWSC 205 – Ryledar Pty Ltd t/as Volume Plus v Euphoric Pty Ltd (2007) 69 NSWLR 603.
EVIDENCE – Whether photograph of document is sufficient evidence – Whether photograph is unenforceable by reason of non-compliance with s 126 of the Instruments Act 1958 (Vic).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff and Defendants by Counterclaim | Mr D Williams QC and Mr P Miller | Keypoint Law Pty Limited |
| For the Defendant and Plaintiff by Counterclaim | Mr C Brown | Corrs Chambers Westgarth |
HIS HONOUR:
Introduction
The plaintiff, which carries on business under the name Australian Pipe and Tube (‘APT’), owns and operates a steel mill business. Up until July 2021, the second defendant by counterclaim, David Brandi (‘Mr Brandi’), was its sole director. The steel mill is located in Ravenhall, Victoria (‘the steel mill’) and is owned by a related entity, Australian Steel Assets Pty Ltd, the sole director of which is Mr Brandi’s wife. The defendant, Mitsui & Co (Australia) Ltd (‘Mitsui’), is an Australian subsidiary of the Mitsui Group, an international group of companies which own and operate various businesses ranging from product sales to logistics and financing. Mitsui has a steel division based in Melbourne which buys and sells steel, among other things. It acquires the steel from BlueScope Steel Ltd (‘BSL’), the largest manufacturer and supplier of steel in Australia.
It is not in dispute that Mitsui supplied steel in the form of ‘mother’ or ‘master’ coil to APT from 2 March 2019 to 26 June 2019. It is not in issue that the outstanding amount of the invoices rendered is $7,401,572.41. APT does not dispute the unpaid invoices but says that it has sustained loss and damage arising from various breaches of its supply contracts with Mitsui which it is entitled to set off in extinction or reduction of the debt. On APT’s case, it has suffered liquidated damages in the sum of $5,870,000[1] up to 29 April 2022 which continue to accrue, along with various other heads of damage. Alternatively to the claim for liquidated damages, APT claims damages at common law in respect of the alleged wrongful cancellation of two of the contracts in the amount of $6,923,000, or alternatively $3,283,590.[2] APT’s entitlement to liquidated damages or common law damages only falls for consideration if the contractual arrangements between APT and Mitsui were such that APT’s terms and conditions of trade (‘the APT Terms and Conditions’) governed the supply arrangements.
[1]The $5,870,000 in liquidated damages comprises $334,000 arising under the First Contract, Second Contract, Third Contract and Fourth Contract, $1,888,000 arising under the alleged Fifth Contract, and $3,648,000 under the alleged Sixth and Seventh Contracts. APT submits that the liquidated damages continue to accrue under each of the alleged Fifth Contracts and alleged Sixth and Seventh Contracts in the amount of $2,000 per day.
[2]These calculations are based on lost future sales calculated on the assumption that APT would sell 3,590 tonnes per month, alternatively 3,000 tonnes per month.
Mitsui denies that the APT Terms and Conditions applied to the supply arrangements and instead submits that its own terms and conditions of sale (‘the Mitsui Terms and Conditions’) applied to those supply arrangements. Accordingly, Mitsui denies that it is liable to APT and submits that APT is liable for the unpaid debt of $7,401,572.41 which it seeks to recover by counterclaim.
In its counterclaim, Mitsui also seeks to recover the same sum from Mr Brandi pursuant to two guarantees which it says it entered into with Mr Brandi. The first guarantee was entered into in April 2019 (‘the April Guarantee’) and the second was purportedly entered into on 26 September 2019 (‘the September Guarantee’).
Mr Brandi accepts that on 6 April 2019 he signed a signature page of a document provided to him by Mr Darren Hicks (‘Mr Hicks’) of Link Metals Pty Ltd (‘Link’) and emailed a photograph of the signature page to Mr Hicks. Mitsui appointed Link to act as its authorised agent in dealings with APT. Mr Brandi, says that the photograph of the signature page forwarded by him to Mr Hicks does not satisfy s 126 of the Instruments Act 1958 (Vic) (‘the Instruments Act’) and does not evidence the guarantee alleged by Mitsui, noting that the signature page does not record the terms of the April Guarantee in full and there is otherwise no evidence of the written record of the April Guarantee.
Mr Brandi otherwise argues that Mitsui is estopped from enforcing the April Guarantee by reason of Mr Brandi’s detrimental reliance on a mutual assumption that he had not provided an enforceable guarantee; as a consequence, Mr Brandi argues that it would be unconscionable to permit Mitsui to resile from that assumption.
Mr Brandi denies that he signed the September Guarantee and says that the copy of the September Guarantee relied upon by Mitsui was not signed by him, but that his purported signature was forged by Mr Hicks.
There are two primary matters which call for determination. The first matter is what terms applied to the contractual arrangements between APT and Mitsui. The second is whether either of the April Guarantee and September Guarantee is enforceable.
If the APT Terms and Conditions apply, then it is necessary to consider a number of consequential issues including whether the relevant contracts included a term requiring delivery to be effected by a specific date and various matters relating to the incidence of and calculation of APT’s damages claim. There is also a separate issue which has application even if the APT Terms and Conditions do not apply, which would reduce the debt claimed by Mitsui from APT by $256,383. That reduction depends upon a separate claim by APT that it is entitled to a 2% settlement discount referable to the amount paid by Mitsui to BSL in connection with mother coils supplied by BSL to Mitsui and then on-supplied by Mitsui to APT (‘the 2% settlement discount’).
Which terms and conditions apply to the supply arrangements?
It is convenient to turn first to the issue as to which terms and conditions applied to the supply arrangements.
The APT Terms and Conditions included the following:
(a) immediately upon Mitsui accepting an Offer,[3] then and unless APT agrees in writing, a Contract[4] shall arise as between Mitsui and APT on the terms set out in the Offer and incorporating the Terms and Mitsui shall be deemed to have accepted and agreed to the Terms [cl 2.4];
[3]Defined in cl 1(i) as ‘an offer made by APT to [Mitsui] to purchase Products from [Mitsui]. ‘Products’ is defined in cl 1(l) as ‘the goods and/or services supplied or to be supplied to APT under a Contract’.
[4]Defined in cl 1(d) as ‘an agreement between [Mitsui] and APT for the sale and purchase of Products upon acceptance by Mitsui of an Offer.
(b) a Contract once entered into may be cancelled by Mitsui only if APT consents in writing [cl 2.7] (‘Non-Cancellation Term’);
(c) title to all products shall pass to APT in accordance with the FIS[5] basis (namely when the products pass the ship’s rail at the port of shipment) [cl 3.5] (‘Transfer of Title Term’);
[5]FIS stands for ‘free-in store’.
(d) Mitsui does not have, and shall not be entitled to assert, any lien or other possessory right or security over the products after title in the products has passed to APT [cl 3.6] (‘No Assertion of Title Term’);
(e) the products the subject of the Contract are deemed to have been delivered to APT when the products are unloaded at the place agreed for delivery (which in default of agreement means APT’s premises) during APT’s business hours, or APT, its agent or contractor collects and loads the products at the place agreed for collection [cl 4.1] (‘Delivery Term’);
(f) Mitsui must do everything necessary to enable APT to take delivery of the products at the time and place agreed, failing which Mitsui shall pay liquidated damages to APT in the sum of $2000 per day (exclusive of any applicable GST) commencing on the day on which the products were required to be delivered under the Contract and ending on the day on which the products are actually delivered. APT shall not be responsible for any delay in delivery of the Products [cl 4.2] (‘Liquidated Damages Term’);
(g) APT may set off any amount owed by APT to Mitsui against any liability Mitsui has to APT. Mitsui waives any right to set off any amount that is, or may become, owing by Mitsui to APT against any amount owing to Mitsui by APT. This clause overrides any other document or agreement to the Contract [cl 5.2] (‘Set Off Term’);
(h) all amounts due and owing by Mitsui to APT under Contract (including but not limited to the APT Terms and Conditions) shall carry interest from the day on which the amount fell due for payment at the rate that is 2% higher than the rate prescribed pursuant to s 2 of the Penalty Interest Rates Act 1983 (Vic) [cl 5.3] (‘Interest Term’);
(i) without prejudice to any of APT’s rights, if at any time Mitsui is in breach of a Contract (including but not limited to the Terms), APT may suspend payment of any amounts payable by APT to Mitsui until such time as Mitsui remedies all applicable breaches [cl 6.1(a)] (‘Suspension Term’);
(j) APT shall be entitled to recover from Mitsui, and Mitsui indemnifies APT against, all costs, loss and damage suffered or incurred by APT (including recovery agent fees and legal costs on an indemnity basis) in connection with any breach of a Contract (including but limited to the Terms) [cl 3.8(b)(v) and 6.2] (‘Damages Term’).
Was an agreement reached on 20 December 2018 that the APT Terms and Conditions would apply to the supply arrangements ?
APT first argues that there was agreement on 20 December 2018 between APT and Mitsui that the APT Terms and Conditions would apply to all future contracts. It points to an email from APT’s then sales manager, David Luckeraft (‘Mr Luckeraft’) to Mr Hicks from Link on 20 December 2018 and Mr Hicks’ response.
Mr Hicks is a director of Link. He has had approximately 30 years’ experience in the Australian steel industry including working in management roles at BSL.
Mr Hicks emailed Mr Brandi on 6 December 2018 informing him that Mitsui wished to re-enter the steel trading business and enclosed a letter from Mitsui confirming an agency arrangement between Mitsui and Link by which Link was authorised to solicit and obtain orders on Mitsui’s behalf and which provided that Link would liaise directly with customers and suppliers to obtain the best prices whilst adhering to Mitsui’s policies.
Prior to that stage, most of APT’s mother coil was supplied directly by BSL. Each month, BSL provided APT with letters of offer which set out BSL’s pricing and specified estimated delivery dates. The BSL offers specified that its terms and conditions of sale as amended from time to time would apply to any supply made by BSL to APT. The BSL offer to APT was on payment terms which were short and strict, requiring payment within 30 days of delivery.
Because of BSL’s short payment terms, APT sometimes negotiated indirect supply through alternative suppliers such as Mitsui, who ordered mother coil from BSL and then on-supplied it to APT on longer payment terms (and with a margin allowed to Mitsui).
Mr Hicks met with Mr Brandi and Mr Luckeraft on Thursday 13 December 2018. On the following Sunday, 16 December 2018, Mr Hicks emailed Mr Brandi and Mr Luckeraft thanking them for their time the previous Thursday and advised that he was keen to ‘keep up the momentum’. His email advised that he would work with Mitsui on some ‘con stock’ (consignment stock) ideas that were discussed regarding mother and/or slit coils, and that he or David Buchanan (‘Mr Buchanan’) of Link would come back with any questions that Mitsui may propose. Otherwise in his email, Mr Hicks expressed an intention to have ‘something firm’ for APT to review in mid-January 2019.
Mr Hicks’ email concluded by asking Mr Luckeraft to send APT’s ‘modified feed grade through as well as a couple of thicknesses’ in relation to the steel coil and concluded ‘that would be great, the POSCO side may take a little longer so I would like to get it moving ASAP as well’. At this stage, the parties were also considering whether Link could import steel from a South Korean steel manufacturer called POSCO via Mitsui.
By way of response, Mr Luckeraft emailed Mr Hicks the following Thursday. The email was copied in to Mr Brandi. The email attached APT’s import coil requirements as well as the APT Terms and Conditions. The email then advised of the ‘typical size that we order on a monthly basis from BSL’. Mr Hicks replied thanking Mr Luckeraft and advising that he would ‘work on this with POSCO’.
By the terms of this email exchange, APT submits that APT and Mitsui agreed that the APT Terms and Conditions would apply to all future contracts between them.
I reject that submission. The exchange of those emails does not objectively evidence consensus between Mitsui and APT to the effect that the APT Terms and Conditions would apply to all future contracts. First, the purported acceptance conveyed by Mr Hicks’ brief email response signifies nothing more than that Mr Hicks would progress the matters the subject of Mr Luckeraft’s email of 20 December 2018 with POSCO and would otherwise come back with any queries from Mitsui. On no view of that brief response could it indicate that Mr Hicks was committing Mitsui to future supply on the basis of the APT Terms and Conditions. Not only were those conditions of trade overwhelmingly favourable to the prospective buyer, there had been nothing but the most preliminary of discussions in relation to a future trading relationship. There was no reference to any order at all to be placed by APT with Mitsui, and it was known by APT that Link was only an agent of Mitsui and that Link’s authority extended only to an authority to solicit and obtain orders on Mitsui’s behalf.[6]
[6]See [14] above.
Further, Mr Hicks’ email to which Mr Luckeraft’s email of 20 December 2018 responded made it clear that the information was sought in connection with various matters including a possible arrangement with another supplier, POSCO, and that Link would come back with any matters raised by Mitsui in mid-January and those matters could be reviewed by APT in the new year.
It is permissible to have regard to subsequent communications between the parties for the purposes of ascertaining whether the parties had entered into a binding agreement at an earlier stage.[7] In that respect, the exchange of emails between APT and Link from 6 January 2019 to 25 January 2019 is also significant. The subsequent communications are consistent with the tenor of Mr Hicks’ email of 16 December 2018 which contemplated that the arrangements between APT and Mitsui would be reviewed and hopefully settled on in mid-January 2019. They are inconsistent with the suggestion that the parties had entered into binding arrangements on 20 December 2018.
[7]Queensland Phosphate Pty Ltd v Korda [2017] VSCA 269, [37].
To that end, on 6 January 2019 Mr Brandi emailed Mr Hicks referring to Link’s agreement to take on APT’s initial 2500 tonne order which APT promised to have to Link as soon as possible in order that the order could be placed on BSL.[8] Mr Brandi’s email proposed various terms including terms of payment which involved payment on 90 days from the end of the month and which also set out APT’s intended orders to be placed on BSL throughout the calendar year 2019. The subsequent email exchange between Mr Brandi and Mr Hicks (into which Mr Luckeraft and Mr Hicks’ co-director, Mr Doubleday, were copied) referenced various matters including when payment was required to be made, when title would pass and the inclusion or otherwise of an ‘agreed penalty’ to be payable by Mitsui for poor ‘DIFOT’ (delivery in full on time) which Mr Brandi had suggested as $2 per tonne per week. Mr Hicks had replied to that suggestion by advising that he could not agree to this as ‘we are not the primary negotiating party’ and that ‘all terms of supply and price are directly negotiated between BSL and APT, then we are brought in as a third party … if BSL were to back this we would be accepting of the arrangement but without this I cannot agree to things that are out of our control’. Mr Brandi responded by agreeing with it, noting that it could be discussed further with BSL and that it was partly taken care of in a consignment stock arrangement in any event.
[8]In light of the earlier discussions it can be inferred that the order would be placed on BSL by Mitsui.
Putting aside the precise meaning from the exchange, two things are clear. First, the email exchange is inconsistent with a previous agreement having been reached on 20 December 2018 as APT now contends and, secondly, various matters discussed (such as when title would pass and the liquidated damages component) were completely at odds with the APT Terms and Conditions, which now APT contends had acquired contractual force back on 20 December 2018. Accordingly, I do not accept this submission.
The First Contract – APT P/O 15696
On 14 January 2019, Mr Brandi emailed Mr Hicks APT’s purchase order number (‘APT P/O’) 15696 accompanied by the APT Terms and Conditions.
The covering email advised that the price on the order was the current ‘gross BSL price inclusive of a BSL direct to APT rebate’.
Mr Brandi’s email asked that Mr Hicks ‘confirm acceptance of the order ASAP and place it on BSL for [February] delivery’. His email concluded by inviting Mr Hicks, in the event that he had any issues, to call him or Mr Luckeraft. The accompanying purchase order required delivery to be made to Surdex Steel’s (‘Surdex’)[9] premises in Dandenong and listed a quantity of tonnes (2,515) at designated unit prices resulting in a total price of $2,640,750 plus GST.
[9]Surdex is a third party slitter which APT used during this period to slit the mother coil supposed to APT into the required sizes.
In addition to the APT Terms and Conditions extracted above, clauses 2.3, 2.4 and 2.5 of those terms read:
2.3The Supplier must confirm acceptance of an Offer from APT within five Business Days of receipt. Any Offer not accepted within such five business day period shall be deemed to have been rejected by the Supplier.
2.4Immediately upon the Supplier accepting an Offer, then and unless APT agrees in writing, a Contract shall arise as between the Supplier and APT on the terms set out in the Offer and incorporating the terms of these Conditions and incorporating the Import Requirements and the Supplier shall be deemed to have accepted and agreed to these Conditions and the Import Requirements.
2.5In the event that the Supplier conditionally accepts an Offer on the basis of terms and conditions of supply proposed by the Supplier, then:
(a)APT may treat such conditional acceptance as a rejection of the Offer or;
(b)APT may treat such conditional acceptance as an acceptance of the Offer in which case the terms and conditions of supply proposed by the Supplier shall only operate and form part of the contract to the extent that such terms are not inconsistent with these Conditions. To avoid any doubt in such a case these Conditions shall prevail to the extent of any inconsistency.
(underline added)
‘Offer’ is defined as an offer made by APT to the supplier to purchase Products from the Supplier, whilst ‘Supplier’ is defined as the party to whom an Offer is made, which in this case was addressed to Mitsui.
The following day, Mr Luckeraft emailed an amended order also numbered 15696 which altered the quantities of product to be supplied in certain respects immaterial for present purposes. The purchase order otherwise remained dated 11 January 2019 (‘APT P/O 15696 (amended)’).
APT submits that this order was accepted by Mitsui on 11 February 2019 and 13 February 2019 at the latest, and points to an email from Mitsui to APT (into which Mr Hicks, among others, was copied) sent on 11 or 13 February 2019 which attached a Mitsui sales confirmation in respect of APT P/O 15696 (amended).
The email enclosed a revised sales confirmation with grade changes to three sizes. In each case the sales confirmation identified the arrival time as ‘Feb/March 2019’, and indicated the destination as being Surdex in Dandenong with payment terms being ‘120 days EOM’ (end of the month).
It is common ground that Mitsui effected delivery of the steel to the Surdex premises between 2 March 2019 and 15 April 2019 and forwarded invoices to APT between May and June 2019 totalling $3,226,340.81 (inclusive of GST).
In addition, on 18 March 2019 after part, but not all, of the delivery had occurred, Mitsui sent an email to Mr Brandi and to Mr Luckeraft attaching Mitsui’s sales contract CWB0008535 in connection with APT P/O 15696 (amended). CWB0008535 specified the contract date as February 1 2019 and confirmed the sale by Mitsui to APT of the quantities set out in the sales contract subject to ‘special terms and conditions’ and otherwise stated that it was ‘subject to the general terms and conditions set forth’ which were said to form an integral part of the contract. The general terms and conditions attached were the Mitsui Terms and Conditions. The contract had been signed on Mitsui’s behalf and contained provision for signature and return by the buyer. The sales contract specified payment terms of 120 days at invoice.
The Mitsui Terms and Conditions included that:
(a) property and ownership of the product would not pass until the product had been paid for in full by the buyer (clause 5(b));
(b) entitled the seller to charge the buyer interest at a rate of 3% per annum above the prime rate from the date of payment (clause 2(d));
(c) entitled the seller to stop product in transit and to repossess product already delivered (clause 10);
(d) contained a clause that required any claim by the buyer arising under the contract to be made within 30 days after arrival of the commodity failing which it would be deemed to have been waived (clause 11(a)); and
(e) limited the seller’s liability in the event of a breach of the contract by the seller to the actual damages directly sustained by the buyer from such a breach which in no event should exceed the price specified in the contract (clause 11(b)).
The Mitsui Terms and Conditions also included an entire agreement clause, which stated that the contract constitutes the entire agreement between the parties and supersedes all prior communications or agreements in relation to the subject matter (clause 18).
On 28 March 2019, Mr Luckeraft returned sales contract CWB0008535 to Mitsui by email having been signed by him in the space provided for signature and return by the buyer.
It is common ground that APT paid the invoices in full. In those circumstances, the only relevance of APT P/O 15696 (amended) is whether APT can claim liquidated damages in the amount of $334,000 because the product was not delivered in full by 31 March 2019. Delivery was not effected in full until 15 April 2019.
This depends on two matters; first that the contract (‘the First Contract’) incorporated the APT Terms and Conditions hence entitling APT to rely on the Liquidated Damages Term; and secondly, that there was a term that delivery was required to be effected by 31 March 2019.
I have rejected the first basis advanced by APT to the effect that APT and Mitsui agreed on 20 December 2018 that the APT Terms and Conditions applied to all orders pleaded by APT.
APT also argues, however, that Mitsui accepted purchase order APT P/O 15696 (amended) which was made on the basis of the APT Terms and Conditions which accompanied the purchase order on 14 January 2019, with Mitsui’s acceptance evidenced by the provision of the Mitsui sales confirmation on 11 February 2019 and 13 February 2019.
A difficulty with APT’s argument is that for Mitsui’s acceptance (whether on 11 February 2019 or 13 February 2019) to give rise to a binding contract, the APT offer of 14 January 2019 (which was made on the basis that it incorporated the APT Terms and Conditions) had to be an offer capable of acceptance. However, the offer made by the provision of APT P/O 15696 on 14 January 2019 (and then APT P/O 15696 (amended) on 15 January 2019), on the accompanying APT Terms and Conditions, was an offer to purchase made on the basis of the APT Terms and Conditions which specifically provided that if the offer was not accepted within five business days, it was deemed to have been rejected by the supplier. Clearly enough, the offer was one which remained capable of acceptance only within that five business day period, because its terms stipulated a deemed rejection if not accepted during that window.
It follows therefore that by the application of orthodox principles of contract formation, Mitsui’s sales confirmation forwarded on 11 February 2019 and 13 February 2019 could not constitute acceptance. Nevertheless, depending on the circumstances, a contract may be found to have been formed by conduct which manifests an intent to be bound, notwithstanding the absence of clear offer and acceptance.[10]
[10]Atco Controls Pty Ltd (in liq) v Newtronics Pty Ltd (Receivers and Managers Appointed) (in liq) (2009) 25 VR 411, [34]; Tecnicas Reunidas SA v Andrew [2018] NSWCA 192, [50].
In circumstances where delivery commenced on 2 March 2019, and where Mitsui’s sales confirmation referenced APT P/O 15696 (amended), did not refer to the Mitsui Terms and Conditions or otherwise signify any dissent to the APT Terms and Conditions, APT’s submission that the forwarding of the sales confirmation evinced an intent to be bound by the APT Terms and Conditions has merit.
That would be the end of the matter but for Mitsui’s provision of Mitsui sales contract CWB0008535 (which annexed the Mitsui Terms and Conditions) on 18 March 2019 for signing and return by APT and its subsequent return on 28 March 2019 signed by Mr Luckeraft. On Mitsui’s case, the First Contract was made on 28 March 2019 when APT returned the Mitsui sales contract duly signed by Mr Luckeraft. Mitsui submits that this analysis is consistent with what is described as the ‘last shot’ doctrine’[11] which dictates that in the case of a ‘battle of the forms’, the express terms of a contract are those of the last proffered form whose terms are not objected to by the other party (and usually evidenced by performance). Mitsui also submits that a conclusion that the contract was made on 28 March 2019 is supported by the application of the ‘the higher status’ doctrine[12] which in like battles, gives primacy to documents which ordinarily are considered to have a higher status than others.[13]
[11]See British Road Services Ltd v Arthur V Crutchfield & Co Ltd [1968] 1 All ER 811.
[12]See Transmotors Ltd v Robertson, Buckley & Co Ltd [1970] 1 Lloyd’s Rep 224.
[13]Thus, a confirmation note setting out relevant terms would have a higher status that an invoice which dealt only with accounting type matters.
Whilst both approaches have merit to later supply contracts, they are not of much assistance in relation to the First Contract. If the contract was in fact made on 11 February 2019 or 13 February 2019 and incorporated the APT Terms and Conditions, then Mitsui’s submission must confront clause 2.3 and 2.4 of the APT Terms and Conditions as well as the fact that a substantial component of the product had been delivered by the time Mr Luckeraft returned the sales contract on 28 March 2019.
In those circumstances, the better view is that the contract was made on 11 February 2019 or 13 February 2019 when Mitsui issued the sales confirmation. On that basis, the contract incorporated the APT Terms and Conditions, including the Liquidated Damage Term.
In addition, APT submits that Mr Luckeraft did not have authority to bind APT to terms and conditions other than the APT Terms & Conditions. Given my conclusion in relation to the First Contract, it is not necessary to consider the question of Mr Luckeraft’s authority in relation to the First Contract. It is more convenient to do so where it does have significance, which is in the case of the later contracts.
The conclusion that the APT Terms and Conditions applied to the First Contract only gets APT so far. It must also establish that there was a term of the First Contract, that the goods had to be delivered in full by 31 March 2019.
APT points to two documents, a letter from BSL to APT dated 1 February 2019 and the sales confirmation from Mitsui dated 13 February 2019 referred to above.
Turning first to the letter from BSL to APT, APT argues that the contract between APT and Mitsui incorporates the delivery dates in the letter from BSL to APT, which are stated as being between 4 March 2019 and 31 March 2019. It relies on the principle that a contract may be inferred from acts and conduct, which relevantly include that the price offered by APT to Mitsui was to be based on the prices in the offers from BSL to APT (plus a margin) and that Mitsui was to source its supply from BSL. APT also relies on the principles relevant to the implication of terms set out in BP Refinery (Western-Port) Pty Ltd v Shire of Hastings (‘BP Refinery’).[14]
[14](1977) 180 CLR 266.
I do not accept that submission. First, the letter relied upon by APT is a letter of offer from BSL to APT. Second, there is no mention in APT P/O 15696 (amended) of an effective delivery date of between 4 March 2019 to 31 March 2019; APT P/O 15696 (amended) refers to no delivery date at all, whilst the document allegedly evincing acceptance of that order, the sales confirmation of 13 February 2019, specifies arrival as ‘Feb/March 2019’. Plainly enough, there is no reference in either document to the offer from BSL to APT of 1 February 2019 which is hardly surprising given that the APT purchase order was sent some two weeks prior to that date and the letter from BSL to APT is contemplative of a potentially quite separate contractual arrangement between BSL and APT.
The offer from BSL to APT was a separate offer made by BSL to APT capable of acceptance by APT if it so chose. It is of no relevance to determining the contractual arrangements between APT and Mitsui. Whilst it is common ground and an objectively mutually known fact that Mitsui would be acquiring product from BSL which it would then on-supply to APT, and that the price charged by Mitsui to APT would be derived in part by reference to the price that BSL would have charged APT, those matters alone do not import into the contractual arrangements between Mitsui and APT an obligation to supply by 31 March 2019 based on a reference to that date in the unaccepted offer by BSL to APT.
In addition, the offer from BSL to APT was also expressly made on the basis that it was subject to BSL’s standard terms and conditions. Those standard terms and conditions exclude any liability arising from delayed delivery. The APT case therefore picks up parts of the letter from BSL to APT to incorporate into the contractual arrangements between APT and Mitsui, but puts other less helpful parts to one side. Had the offer made by BSL to APT been accepted by APT, then all parts of that offer would have found their way into the resultant contract between those two entities.
The letter from BSL to APT is irrelevant to the contractual arrangements between APT and Mitsui; it falls well short of the BP Refinery requirements; it is not ‘reasonable and equitable’ to include parts of that letter into the arrangements between APT and Mitsui including because it would make Mitsui liable notwithstanding that its supply was dependent on BSL being able to deliver, and where BSL was itself not accepting equivalent liability in any direct supply arrangement with APT. Further, it is not necessary to include the delivery term in that letter including because the First Contract contained an implied term that the product would be delivered within a reasonable time.
Nor is it so obvious that the delivery term in the letter from BSL would apply that it need not be stated. On the contrary, APT picks up part only of an offer from BSL to APT, neither that letter nor the specific term is referred to in any dealings between APT and Mitsui, and the inclusion of the term is unnecessary because of the implied term in the First Contract that the goods would be delivered in a reasonable time.
The Second Contract and the Third Contract – APT P/O 15721 and PO 15746/ Sales Contracts CWB0008539 and CWB0008540
On 25 February 2019, Mr Brandi emailed Mr Hicks APT P/O 15721 and P/O 15746 along with the APT Terms and Conditions. Neither purchase order specified a delivery date.
The email which accompanied APT P/O 15721 noted that the pricing shown was the agreed BSL gross price and requested that Mr Hicks place ‘these identically on BSL add [Mitsui’s] $35/tonne margin on this pricing to APT’.
APT says that this offer was accepted by Mitsui by 18 March 2019 at the latest, and refers to an email from Mitsui to Mr Brandi (and to Mr Luckeraft) on 18 March 2019.
This Mitsui email of 18 March 2019 attached Mitsui’s sales contracts numbered CWB0008539 in respect of APT P/O 15721 (the ‘Second Contract’) and CWB0008540 in respect of APT P/O 15746 (the ‘Third Contract’) (together, ‘the Second and Third Contracts’). The attached sales contracts were for a higher unit price than the figures incorporated in the purchase orders having been adjusted by the $35 per tonne figure referred to in the email from Mr Brandi of 25 February 2019.
More pertinently, the sales contracts attached the Mitsui Terms and Conditions and contained a space for the buyer’s signature. Although this was also the case with respect to the First Contract regarding APT P/O 15696 (amended), there had been no intervening sales confirmation issued by Mitsui and nor was the extent of delivery which had occurred prior to the return of Mitsui’s sales contracts CWB0008539 and CWB0008540 anything like the case with the First Contract.
On 28 March 2019, Mr Luckeraft returned the Second Contract and the Third Contract duly signed by him on APT’s behalf.
It is not in dispute that Mitsui delivered the steel the subject of the Second Contract between 26 March 2019 and 1 June 2019 to Surdex’s Dandenong premises. It is further not in dispute that Mitsui delivered the steel the subject of the Third Contract between 4 April 2019 and 28 June 2019.
Mitsui rendered invoices to APT totalling $7,854,635.36[15] of which APT paid $3,918,685.27 leaving a total outstanding of $3,935,950.09 in the case of the Second Contract, and rendered invoices to APT totalling $1,954,980 in respect of which APT has paid $339,221.97 leaving a total outstanding of $1,615,758.03 in the case of the Third Contract.
[15]Including GST.
APT submits that the APT Terms and Conditions applied to the Second and Third Contracts, that Mitsui was required to deliver all of the coil under those contracts by 28 April 2019, that it did not deliver in full and on time giving rise to a suspension of any payment obligation per the Suspension Term, and that APT is entitled to damages pursuant to the Liquidated Damages Term.
As was the case with the First Contract, APT’s claim is premised on the application of the APT Terms and Conditions to the Second and Third Contracts, and that those contracts included a term requiring delivery by a specified date, 28 April 2019.
I do not consider that the APT Terms and Conditions applied to either of the Second or Third Contracts. While the APT Terms and Conditions accompanied APT P/O 15721 and APT P/O 15746 sent on 25 February 2019, the offer conveyed by the provision of those purchase orders was not accepted within five business days. The offer had therefore lapsed by reason of the expiry of the five day period. There was nothing that remained capable of acceptance. Further and unlike the case with respect to the First Contract, there was no intervening provision of the sales confirmation document from which mutual assent could be inferred notwithstanding the absence of an extant offer capable of acceptance. Nor was there delivery absent any dissent from the APT Terms & Conditions. Delivery only began for a comparably small portion of the goods the subject of the Second Contract and after Mitsui had forwarded the Second Contract.
Further, the purported acceptance of APT P/O 15721 and APT P/O 15746 was the provision of Mitsui’s sales contracts CWB0008539 and CWB000854 expressly made on the basis of the Mitsui Terms and Conditions (which were markedly different to the APT Terms and Conditions) and which invited acceptance by APT with the specified mode of acceptance being its signing in the space headed ‘buyer’ and returned to Mitsui. On orthodox contractual analysis, regardless of whether the APT offer was still open for acceptance of not, this response by Mitsui was a counteroffer.
It is not in issue that Mitsui’s sales contracts CWB0008539 and CWB000854 were signed and returned by APT. Nor is it in issue that all the delivery in the case of the Third Contract occurred after Mr Luckeraft signed and returned the contracts as was the case with respect to a substantial part of the Second Contract.
However, APT argues that Mr Luckeraft’s signature was ineffective to give rise to contractual relations between APT and Mitsui because Mr Luckeraft had no authority to bind APT to terms and conditions other than those agreed to by Mr Brandi.
Accordingly, APT submits that Mr Luckeraft was not authorised to sign sales contracts CWB0008539 and CWB000854 on APT’s behalf and argues that the signing and return of those contracts in relation to the Second Contract and Third Contract by Mr Luckeraft on APT’s behalf on 28 March 2019 was of no legal consequence.
Mr Brandi gave evidence that he was responsible for negotiating terms of trade with suppliers which included Mitsui. He described Mr Luckeraft’s role as that of APT’s inventory manager up until mid-2019. According to Mr Brandi, Mr Luckeraft was responsible for managing the ordering of steel coils and managing the splitting of the steel that arrived. He said Mr Luckeraft would place orders on suppliers usually after approval by Mr Brandi of the draft order. He otherwise described Mr Luckeraft as being responsible for managing the orders but says that he never gave Mr Luckeraft instructions about signing sales contracts and that Mr Luckeraft was not authorised to do so.
Mr Luckeraft gave evidence to substantially similar effect. He additionally stated that it was standard practice for him to receive sales contracts from suppliers for APT for signing, and that upon receipt of such sales contracts, his practice was to check that the contract was consistent with what had been negotiated between APT and the supplier in relation to delivery terms, pricing, tonnage and the sizing of products. Otherwise, Mr Luckeraft said that he would not go through all the remaining terms and conditions. He said Mr Brandi did not give him any instructions about signing sales contracts and that Mr Brandi did not instruct him about whether he was authorised to sign contracts on behalf of APT or not. Mr Luckeraft said he took it upon himself to sign such sales contracts as were issued by suppliers. Further, in cross-examination, Mr Luckeraft accepted that up until about mid-2019 he was responsible for managing the ordering of steel for APT, that he was authorised to place purchase orders, and that Mr Brandi did not have any day-to-day involvement in supplies or supply contracts. Mr Luckeraft confirmed that in his role it was commonplace for him to sign sales contracts.
APT does not take issue with Mr Luckeraft’s authority to place purchase orders or to otherwise manage the ordering of steel. It disputes, however, that Mr Luckeraft had the authority to bind APT to the contractual arrangements which ensued following the placement of APT P/O 15721 and APT P/O 15746. I have considerable doubt about this alleged demarcation of authority conferred on Mr Luckeraft. Mr Luckeraft’s evidence went largely to the absence of any conferral of express authority by Mr Brandi. That is to say, Mr Brandi did not give him any instructions about signing sales contracts viz Mr Brandi did not instruct ‘whether [he] was authorised to sign contracts on behalf of APT’.
In other words, the contemporaneous conferral of admitted authority by APT’s then director, Mr Brandi, on Mr Luckeraft was the authority to place orders for steel. That cannot be disputed. Nor is it disputed that as a matter of practice Mr Brandi signed a number of sales contracts. There is no evidence of any express restriction on authority communicated by Mr Brandi to Mr Luckeraft or objection by Mr Brandi to the fact that Mr Luckeraft was signing sales contracts.
In that context, I have considerable scepticism about accepting Mr Brandi’s evidence of an actual restriction on Mr Luckeraft’s authority, including in circumstances where that restriction was apparently not directly communicated to Mr Luckeraft and where Mr Luckeraft’s conduct in routinely signing sales contracts was at odds with such a restriction.
Further, the submission that Mr Luckeraft’s authority was such that he was not authorised to negotiate contractual terms on APT’s behalf sits uneasily with the conduct that APT relies upon in this case. As an alternative to its case that the parties had agreed that the APT Terms and Conditions applied to all dealings between APT and Mitsui occasioned by the exchange of emails on 20 December 2018 (which I have rejected), APT relies upon the placing of the amended offer by Mr Luckeraft on APT’s behalf on 15 January 2019 in the case of the First Contract.
Whilst APT argues that this singular act was authorised in contrast to the signing of the sales contracts the subject of the Second Contract and the Third Contract (and for that matter also on 18 March 2019 in relation to the sales contact referable to APT P/O 15696 (amended)) , I have considerable scepticism about accepting such evidence. Just as Mr Luckeraft was authorised to place purchase orders on Mitsui, the contemporaneous evidence is suggestive of an actual conferral of authority on him consistent with his role in managing the ordering of steel, to enter into the relevant contractual arrangements that facilitated its provision. A conferral of authority in those terms is consistent with what occurred in practice.
Further, I note that the email from Mitsui to Mr Luckeraft on 18 March 2019 enclosing Mitsui’s sales contracts CWB0008539 and CWB000854 was sent not just to Mr Luckeraft but also to Mr Brandi. Accordingly, there is little doubt that Mr Brandi was aware of the attachments which included the Mitsui Terms and Conditions. So much is clear from his email in response to Mr Hicks in which Mr Brandi sought confirmation that the sales contracts that had been provided were not invoices and that the time for payment of the invoices was 120 days from delivery. Thus, on 18 March 2019 Mr Brandi received copies of Mitsui’s sales contracts which called for signing by the buyer and return. The obligation to sign them was confirmed by Mr Hicks in his email to Mr Brandi on 20 March 2019 in which he described the contracts as the ‘formal SAP contracts’ that needed to be signed before confirming the 120 days payment requirement.
Eight days later, Mr Luckeraft returned signed contracts CWB0008539 and CWB000854.[16]
[16]As well as the First Contract.
To suggest now as APT does that Mr Luckeraft’s signing and return was effectively some sort of unauthorised frolic strains credulity. Accordingly, I reject Mr Brandi’s evidence that Mr Luckeraft had no actual authority. Mr Luckeraft had actual authority evidenced by his practice of signing and returning such contracts with the knowledge of and without objection from Mr Brandi.
Further and in any event, independently of the conferral of actual authority on Mr Luckeraft to sign the sales contracts, in my view Mr Luckeraft had implied authority to do all such things as are reasonably incidental to the discharge of the matters that were the subject of his admitted authority, which involved placing and managing the orders for steel. Agreeing on the supply contracts was a necessary incident of this task, and hence Mr Luckeraft had implied authority to enter into the relevant contractual arrangements to facilitate the acquisition of steel.
Alternatively, APT’s conduct in relation to its dealings with Mitsui (which included, for this purpose, its dealings with Mitsui’s agent Link) was sufficient to amount to a holding out by APT that Mr Luckeraft had such authority to act.
First, APT P/O 15696 was sent by email from Mr Brandi and was attached along with the APT Terms and Conditions. The covering email sent to Mr Hicks described the order as ‘the first of many APT orders’ and after requesting that Mr Hicks confirm acceptance of the order and place it on BSL for February delivery urgently, the email concluded with Mr Brandi requesting that in the event that any issues arose, Mr Hicks should call himself or Mr Luckeraft.
Thus, APT by its director (described in the email as the chairman, Mr Brandi) directed that Mr Hicks should call Mr Luckeraft as an alternative to Mr Brandi if any issues arose in relation to APT P/O 15696. Whilst in terms the direction to call Mr Brandi or Mr Luckeraft in the event that any issues arose was confined to any issues with this purchase order, the email was sent in the stated context of being the first of many APT orders. Thus, Mr Brandi held out Mr Luckeraft as an alternative contact in relation to dealing with purchase orders placed by APT. Consistent with this, the purchase orders in relation to the Second and Third Contracts were sent by APT by email from Mr Brandi (again accompanied by the APT Terms and Conditions) but Mr Luckeraft was also copied in on those purchase orders and it was Mr Luckeraft who emailed through a revision to APT P/O 15721 on 26 February 2019 to which Mr Hicks responded.
Further, and as noted above, Mitsui’s email to APT enclosing Mitsui’s sales contracts CWB0008539 and CWB000854 was emailed to both Mr Brandi and Mr Luckeraft and addressed ‘good afternoon David.[17]’ Notwithstanding Mr Brandi’s receipt of those sales contracts, and after Mr Brandi had subsequently on 20 March 2019 sought clarification that they did not constitute invoices, APT did nothing to communicate to Mr Hicks or Mitsui any restriction on Mr Luckeraft’s authority or otherwise any reluctance on APT’s behalf to accept the goods on the terms the subject of the Mitsui sales contracts in the period from receipt of those sales contracts on 18 March 2019 until Mr Luckeraft returned them by email on 28 March 2019.
[17]The first name of both Mr Brandi and Mr Luckeraft was ‘David’; to add to the occasional clarification, Mr (Darren) Hicks’ fellow director of Link was also named David (Buchanan).
In my view, a combination of APT’s admitted conferral of authority to Mr Luckeraft to place orders, the admitted conferral of authority on Mr Luckeraft to manage the ordering of steel, its nomination of him as a contact to deal with any queries in relation to purchase orders, and APT’s silence once it received the sales contracts from Mitsui (sent by email to Mr Brandi and Mr Luckeraft) with the request that they be signed and returned in the period prior to Mr Luckeraft’s execution, the return of those contracts constitutes a holding out such as to confer ostensible authority on Mr Luckeraft to bind APT to the terms and conditions set out in those sales contracts, which were the Mitsui Terms and Conditions.
In my view, it follows therefore that the Mitsui Terms and Conditions governed the Second and Third Contracts. In any event it is clear that the APT Terms and Conditions did not apply to the Second and Third Contracts; first, because the offer conveyed by Mr Brandi’s email to Mr Hicks on 25 February 2019 in the form of the provision of APT P/O 5721 and APT P/O 15746 along with the accompanying APT Terms and Conditions was, by their terms, an offer which was capable of acceptance only within five business days, and APT does not allege that there was any relevant acceptance by Mitsui within that five business day period. Secondly, the act relied upon as founding acceptance by Mitsui, being the email from Mitsui’s Ms Nicole Woolrich (‘Ms Woolrich’) on 18 March 2019, did not only occur at a time after which the APT offer had expired, but it was inconsistent with the terms of the APT offer containing, as it did, the sales contracts and attached the Mitsui Terms and Conditions. This was quite unlike the position with respect to APT P/O 15696 (amended) which was the subject of an intervening sales confirmation which referenced no contrary terms to the APT Terms and Conditions.
Further and in any event, if Mr Luckeraft did not have actual, implied or ostensible authority to sign and return the Second and Third Contracts, then APT’s acceptance of the goods the subject of those contracts, after Mitsui had offered to supply those goods to APT on the Mitsui Terms and Conditions sent on 18 March 2019, constituted an acceptance of that offer by APT by its conduct.
It is consistent with the ‘last shot’ doctrine[18] to find that a contract arose in circumstances where APT accepted the goods in discharge of Mitsui’s delivery obligations, which occurred after the provision of the Mitsui Terms and Conditions.
[18]See [46] above.
APT’s case rests upon an antecedent agreement between APT and Mitsui to the effect that the APT Terms and Conditions applied to all dealings between APT and Mitsui. For the reasons set out above, I have rejected the submission that an agreement to that effect was entered into on 20 December 2018. Whilst I accept that the APT Terms and Conditions applied to the First Contract, (being the steel the subject of APT P/O 15696 (amended)) notwithstanding that APT later returned Mitsui sales contract CWB0008535 which purported to incorporate the Mitsui Terms and Conditions, I have rejected the submission that the APT Terms and Conditions applied to the Second and Third Contracts.
That being so, APT is not entitled to rely upon clause 2.5 of the APT Terms and Conditions. In effect, that clause provides that the conditional acceptance by a supplier of an offer made by APT on the basis of terms and conditions of supply proposed by the supplier may be treated by APT as an acceptance of APT’s offer in which case the supplier’s terms and conditions apply only to the extent that they are not inconsistent with the APT Terms and Conditions.
It follows therefore that the terms and conditions which applied to the goods the subject of the Second and Third Contracts were the Mitsui Terms and Conditions and not the APT Terms and Conditions. The Mitsui Terms and Conditions did not include any term requiring delivery by a specified time, and the incorporation of such a term is inconsistent with the entire agreement clause contained in clause 18 of the Mitsui Terms and Conditions.
Even if the Mitsui Terms and Conditions did not apply and the Second and Third Contracts were governed by the APT Terms and Conditions, I do not accept that there was a term of the contracts requiring delivery by 28 April 2019. Once again this submission rests on the argument that the date specified in the offer from BSL to APT (which was not accepted by APT and in any event excluded liability for BSL in the event that it did not deliver the product within the specified time) nevertheless found its way into the sales contract between APT and Mitsui (but without the limitation term between BSL and APT that would have arisen had BSL and APT entered into a direct agreement). It did not, for the same reasons set out in relation to the First Contract.
The Fourth Contract – APT P/O 16779/ sales contract CWB00008594
On 15 March 2019, Mr Luckeraft sent APT P/O 16779 to Mr Hicks. Mr Brandi was copied into the email. The purchase order was in substantially the same form as the earlier three purchase orders, but it included a new column headed ‘Due Date’ which referred to various dates for the delivery of particular items ranging from 6 May 2019 to 20 May 2019. Unlike the earlier three purchase orders, it was not accompanied by the APT Terms and Conditions. Mr Luckeraft sent an amended purchase order to Mr Hicks on 9 April 2019 (‘APT P/O 16779 (amended)’). Again, the amended purchase order included the same specific due dates as in the earlier order, but was not accompanied by the APT Terms and Conditions.
Notwithstanding the identification of specified due dates in APT P/O 16779 (amended), APT alleges that the steel the subject of the order had to be delivered by 2 June 2019 (a different date to the due dates identified in the purchase order), and points to a letter from BSL to APT containing BSL’s offer for May 2019 which specified a delivery window between 29 April 2019 to 2 June 2019. As was the case with the earlier letters from BSL, the BSL letter stated that BSL’s standard terms and conditions of sale as amended from time to time would apply to any supply. For the reasons stated above, I do not accept that the delivery date referred to in the letter from BSL to APT was incorporated in and formed part of the contractual arrangements between APT and Mitsui.
In any event, APT submits that APT P/O 16779 (amended) was accepted by Mitsui by 10 April 2019 at the latest, and identifies as the relevant act of acceptance Mitsui’s email to Mr Luckeraft which attached sales contract CWB00008594, which was expressly referable to APT P/O 16779 (amended). That sales contract annexed the Mitsui Terms and Conditions.
Notwithstanding that the email from Mitsui of 10 April 2019 enclosed a sales contract which provided that the sale was on the Mitsui Terms and Conditions, APT relies upon this communication as acceptance of APT P/O 16779 (amended) which it argues incorporates the APT Terms and Conditions, notwithstanding that they did not accompany either the purchase order or the amended purchase order.
For clause 2.5 of the APT Terms and Conditions to apply to the Fourth Contract, APT must point to a pre-existing agreement between APT and Mitsui which would provide for the application of the APT Terms and Conditions to all subsequent contracts. It cannot do so.
Even if Mr Luckeraft’s email to Mr Hicks of APT P/O 16779 on 15 March 2019 or APT P/O 16779 (amended) sent on 9 April 2019 can be treated as an offer made on terms which incorporated the APT Terms and Conditions notwithstanding that they were not annexed to that purchase order (which I do not accept) then the alleged acceptance by Mitsui on 10 April 2019 was not an acceptance of those terms but rather the making of an offer to supply on different terms, namely an offer to supply on the basis of the Mitsui Terms and Conditions. The making of an offer on different terms constitutes a rejection of the earlier offer and is treated as a counteroffer for the purposes of orthodox contractual analysis. That was the case here.
After the making of this counteroffer by Mitsui on 10 April 2019, on 30 April 2019 Mitsui forwarded an amended sales contract CWB00008594 to Mr Luckeraft on 30 April 2019. This amended contract was referable to APT P/O 16779 (amended) and once again attached the Mitsui Terms and Conditions. This constituted a revised counteroffer.
Mitsui contends that this revised counteroffer was accepted by way of an email from APT’s Ms Marina Pirotta (‘Ms Pirotta’) to Mitsui on 11 June 2019 which read ‘as per discussion with David Brandi he has accepted the price in the contract’. Ms Pirotta worked for APT as a stock controller/ production planner since mid-2019, when she took over the role from Mr Luckeraft.
Thus, and unlike the case of the Second and Third Contracts, Mitsui contends that the acceptance occurred not by way of the signing and return of the sales contract but by the email set out above. It is uncontroversial that Mitsui delivered steel the subject of that contract between 21 May 2019 and 26 June 2019 and issued invoices to APT between May 2019 and August 2019 totalling $1,861,469.29.
In my view, the fact that Ms Pirotta did not sign and return the sales contract does not mean that no agreement came into existence. The sending of the email by Ms Pirotta on 11 June 2019 after she had received the amended sales contract CWB00008594 and shown it to Mr Brandi, coupled with APT’s subsequent receipt of the product, constitutes sufficient indicia of assent to amount to an acceptance of the offer on the terms set out in the sales contract notwithstanding that it was not signed. Analysis in that way is consistent with the ‘last shot approach’ and for that matter, the ‘higher status approach’.
In any event, what is important is that the sale was not made on the basis of the APT Terms and Conditions, and nor did it incorporate a term that the product had to be delivered by 2 June 2019. As such, the failure of Mitsui to deliver all of the coil the subject of the Fourth Contract by 2 June 2019, instead delivering some of the steel by 14 June 2019 is of no consequence. There was no obligation to supply by that date for the reasons set out above and, in any event, APT is not able to rely upon the Liquidated Damages Term contained in the APT Terms and Conditions because the APT Terms and Conditions did not form part of the Fourth Contract.
The alleged Fifth Contract – APT P/O 16961
On 12 July 2019, APT’s Ms Pirotta sent APT P/O 16961 to Mr Hicks. APT P/O 16961 also included the ‘due date’ column which was specified as being 2 September 2019 but did not list any proposed prices with the covering email noting that the pricing would be worked out the following week with ‘Dave’. Mr Brandi was copied into the email. APT P/O 16961 also included a further notation prioritising various items from 1 to 4. The covering email informed Mr Hicks that priorities had been placed against each size and requested that Mr Hicks forward it on to Mitsui so that Mitsui could pass it on to BSL. Ms Pirotta advised Mr Hicks that this would help APT prioritise items into their rolling schedule. The APT Terms and Conditions did not accompany APT P/O 16961.
APT submits that APT P/O 16961 was accepted on that day by Mitsui by way of an email from Mr Hicks that day, stating ‘received with (sic) and have a great weekend’.
APT otherwise relies upon an email from Ms Pirotta to Mr Hicks on 5 August 2019 requesting amendments to the purchase order stating ‘please amend the PO and place on [BSL] the following HRC – 922 x 152 140T would you like a revised PO? to which Mr Hicks responded ‘Thanks Marina, we will send the SC for you to sign, this will be good enough for us’. The reference to ‘SC’ was plainly a reference to sales contract.
Mitsui denies that it entered into any contract in relation to APT P/O 16961 (‘the alleged Fifth Contract’) with APT. It otherwise denies that any agreement was on the APT Terms and Conditions or that the alleged Fifth Contract incorporated a term that the steel the subject of the order had to be delivered by 29 September 2019.
In relation to the alleged term requiring delivery by 29 September 2019, APT once again relies upon communications between BSL and APT containing BSL’s September deliveries offer for APT. The letter of offer was sent to Mr Brandi by BSL by email and states that it was for products ‘placed by APT on BSL directly’. It also referred to and incorporated BSL’s standard terms and conditions of sale. For the same reasons as set out above, I do not accept that the date specified in letters by BSL to APT constituted a term of the agreement between APT and Mitsui.
Even putting that conclusion to one side, it is still necessary to determine whether the alleged Fifth Contract was entered into on the APT Terms and Conditions, because APT brings a claim in damages for conversion against Mitsui arising from the sale by Mitsui of 1551 tonnes of steel delivered by Mitsui to Surdex with the proceeds of such sale retained by Mitsui.
Mitsui says that it never accepted APT P/O 16961. Mitsui does not dispute that it ordered steel from BSL and that it placed the order on BSL so that Mitsui would be in a position to fulfil APT P/O 16961. It argues however that the steel was ordered in anticipation of an acceptance by it of APT P/O 16961, which acceptance never occurred.
Notwithstanding Mr Hicks’ email to Ms Pirotta of 5 August 2019, no sales contract was sent by Mitsui to APT in connection with APT P/O 16961. Instead, on 8 August 2019 Mitsui’s Ms Wainwright emailed APT enclosing a spreadsheet of outstanding invoices due to be paid on 28 August 2019 and noting that there was one invoice from March 2019 which was due to be paid on 29 July 2019 and which remained outstanding for $64,472.87. This outstanding invoice related to the First Contract. The spreadsheet attached to Ms Wainwright’s email recorded a total amount due to be paid on 28 August 2019 of $5,609,899.91 and related to the First Contract, the Second Contract and the Third Contract. It did not include the goods the subject of the Fourth Contract which had not yet fallen due, nor those the subject of the alleged Fifth Contract (which it says was never in fact entered into).
Further, and by way of follow-up to Ms Wainwright’s email of 8 August 2019, Ms Wainwright met with Mr Brandi, APT’s chief financial officer Mr Folino, and Mr Buchanan from Link on 15 August 2019. Following the meeting, Ms Wainwright circulated an email of notes taken at that meeting to Mitsui representatives as well as to Mr Buchanan and Mr Hicks. The notes recorded the purpose of the meeting as being to discuss the outstanding accounts receivable, general business and a future order to be placed the following week. Among the matters recorded in Ms Wainwright’s email is the statement made by Mr Buchanan that Mitsui could not accept any new orders until the outstanding invoices had been paid. Consistently with that, the email records it being stated that APT should place orders directly on BSL until such time as APT reduced its accounts receivable with Mitsui to ‘manageable levels’. The notes record Mr Brandi as agreeing with this. Whilst the notes were internal and not sent to Mr Brandi, I have no reason to doubt that they contained an accurate account of the matters discussed.
On 20 August 2019, Mr Folino emailed Mr Buchanan, copying in Ms Wainwright and Mr Brandi, and confirmed APT’s agreement with the matters set out in Ms Wainwright’s spreadsheet subject to a 2% discount which APT maintained was applicable. The 2% settlement discount issue is addressed below. Relevantly, Mr Folino’s email records the total amount due (and to fall due) from APT to Mitsui as $12,475,945.19 less 2% which equalled $12,226,426.28. Mr Folino set out a proposed repayment schedule:
As per Mitsui Revised Payment Plan Payment Date Total amount due 28 August 2019 $5,674,372.78 $2,174,372.78 5 September 2019 Total amount due 30 September 2019 $5,203,545.56 $3,000,000.00 30 September 2019 Total amount due 28 Oct 2019 $1,567,809.48 $2,500,000.00 31 October 2019 Total amount due 28 Nov 2019 $30,217.37 $2,500,000.00 29 November 2019 Total amount due 28 December 2019 - $2,052,053.50 28 December 2019 Total $12,475,945.19 $12,226,426.28
To similar effect, on 22 August 2019 Mr Brandi emailed Mr Buchanan and Mr Hicks with the subject line ‘Payment Due 11 July’ which stated that APT was trading well but was hampered by funding arrangements with its existing bank. Mr Brandi’s email also advised that APT was proposing to enter into new financing arrangements which would enable it to make payments to Mitsui albeit that it would miss the payment due at the end of August 2019. Mr Brandi otherwise raised again the question of the 2% settlement discount.
Against the background of the events recorded in that correspondence, on 23 August 2019 Mitsui emailed BSL requesting that BSL suspend production of the goods the subject of APT P/O 16961 until further notice.
On 27 August 2019, various Mitsui representatives, along with Mr Buchanan from Link, met with APT’s Mr Folino and Sandra Ah-Yu (‘Ms Ah-Yu’) who was Mr Brandi’s personal assistant. Following the meeting, Mr Buchanan circulated notes via email to the Mitsui representatives. The notes record discussions between APT and Mitsui relating to the payment of outstanding invoices. They further record that APT confirmed that the first payment of the outstanding sum would be $2.1 million on 5 September 2019 and that it was aiming to pay an additional $4 million by 30 September 2019 which would result in clearing the full amount of the August 2019 invoice. The notes also record Mr Folino explaining that the sales in the last two months[19] had improved and APT expected to achieve sales of 3,000 to 3,500 tonnes per month. The email again records that APT confirmed they were having issues with their bank and requesting an extension of funding which had not yet been actioned. Mr Buchanan’s notes record Mitsui as saying that it would only consider a restart of supply once all outstanding sums had been paid, and that Mitsui rejected the claim for the 2% settlement discount. As was the case with the internally circulated notes of the 15 August 2019 meeting, I have no reason to doubt that they are an accurate record of the matters discussed.
[19]Presumably a reference to July and August 2019.
On 28 August 2019, BSL emailed Mitsui in response to Mitsui’s email of 23 August 2019 and said that BSL was only able to cancel approximately 940 tonnes of the order that Mitsui had placed on BSL and would need to deliver the remaining 1550 tonnes.
On 2 September 2019, Mr Hicks emailed Mr Brandi advising him that Mr Hicks was instructing Surdex to cease taking direction from APT in relation to the coils that had been delivered to Surdex due to a lack of communication from APT’s senior management. In response, Mr Brandi emailed Mr Hicks confirming that APT required that Mitsui reinstate APT P/O 16961 stating that this should not have been cancelled.
On 6 September 2019, Mr Brandi attended a further meeting with Mitsui representatives, which was also attended by Mr Buchanan.
Against the background of the above matters, APT alleges that it entered into the alleged Fifth Contract in relation to APT P/O 16961, that Mitsui’s cancellation of the supply the subject of that purchase order constituted a breach of that contract, and that Mitsui’s subsequent sale to Surdex of 1551 tonnes for the sale price of $1,279,740 (including GST) constituted conversion of APT’s property by Mitsui. For APT’s claim to succeed, it must establish that there was a contract in place for the goods the subject of APT P/O 16961 and that the sale was on the basis of the APT Terms and Conditions.
Acceptance of the latter is necessary for APT’s claim for conversion damages to succeed which rests on the assertion that title passed to APT for the steel the subject of APT P/O 16961 notwithstanding that it is common ground that APT did not make payment for those goods. APT relies on the Non-Cancellation Term, The Transfer of Title Term, and the No Assertion of Title Term.
The critical question is whether a binding contract came into place either by reason of Mr Hicks’ ‘received with (sic) and have a great weekend’ email of 12 July 2019, or Mr Hicks’ later email of 5 August 2019 sent in response to Ms Pirotta’s email of 5 August 2019.
In my view, neither email constituted a relevant acceptance such as to give raise to the parties entering into a binding contract either by reason of the application of orthodox principles or as manifestation of mutual assent. Turning first to Mr Hicks’ email of 12 July 2019; on its terms it did no more than acknowledge receipt of the order and convey best wishes for the weekend. Even without reference to any other matters, this does not evince an acceptance sufficient to give rise to binding legal relations, but all the more so in the context of the parties earlier dealings where APT relies on the sending of the sales confirmation as acceptance of APT P/O 15696 (amended) giving rise to the First Contract and the later sending of emails attaching sales contracts as conveying acceptance of the later purchase orders. Accordingly, APT ‘s case rests on a different mode of acceptance to that advocated by it in relation to the earlier supply contracts. Further, Ms Pirotta’s email which was said to be an offer capable of acceptance did not list prices which were to be ‘worked out the following week with Dave (Brandi)’.
Nor did Mr Hicks’ email to APT on 5 August 2019 amount to an acceptance. Mr Hicks’ response to Ms Pirotta was also sent to various representatives at Mitsui as well as to representatives of BSL and was copied to Mr Brandi. The response read:
Thanks Marina, we will send the SC for you to sign, this will be good enough for us.
Nic, please amend PO to BSL.
Kathy/Eliza please note.
…
On the same day, Ms Woolrich from Mitsui emailed BSL attaching an amended purchase order from Mitsui which corresponded to APT P/O 16961 (amended) placed by APT on Mitsui. Ms Woolrich’s email was also copied to Mr Brandi among others.
Mr Hicks’ emailed response on 5 August 2019 therefore did three things; first, it answered Ms Pirotta’s query by saying that Mitsui did not require a revised purchase order; secondly, it advised APT that Mitsui would forward a sales contract to APT for APT to sign (and return), which would be ‘good enough’ (and necessarily that an amended purchase order was not required); and thirdly, it gave instructions to Ms Woolrich to amend the Mitsui purchase order to BSL.
Mr Hicks thus informed APT in substance that Mitsui would send APT a sales contract for signing and return as it had done for the First Contract, the Second Contract, the Third Contract and the Fourth Contract.
Whilst Mr Hicks’ email contemplated that a contract would be entered into consequent upon the return of the signed sales contract, in my view it makes clear that further steps were required before a binding agreement would come into place; namely the provision by Mitsui of a sales contract and its signing and return by APT. Neither of these events occurred.
Nor does the fact that Mitsui subsequently placed its own purchase order on BSL and copied Mr Brandi into the covering email affect the analysis in any way. The placing by Mitsui of its purchase order on BSL was so that Mitsui would be able to supply the goods to APT pursuant to the contract that it expected to enter into with APT in a timely manner assuming the signing and return by APT of the sales contract which Mr Hicks anticipated would be provided by Mitsui.
The fact that all relevant actors, APT, Link, Mitsui and BSL contemplated that a contract would be entered into between APT and Mitsui is not the same thing as communicating acceptance to APT at that time of the purchase order placed by APT.
In any event, APT’s claim rests upon not simply a contract coming into existence but rather it being one incorporating the APT Terms and Conditions. Those terms and conditions were not in fact appended to any of the purchase orders the subject of the alleged Fifth Contract. Accordingly, in my view, the APT Terms and Conditions did not form part of any contract between Mitsui and APT even if, contrary to my view, Mr Hicks’ email constituted an effective acceptance of APT P/O 16961 on Mitsui’s behalf.
Further, the conduct of the parties after the date of the alleged acceptance is at odds with the suggestion of a binding agreement having earlier come into place. Three days later, Mitsui had not forwarded the contemplated sales contract; rather it was chasing up a payment of $64,472.87 which had been due on 29 July 2019 and reiterating that $5,609,899.91 was due on 28 August 2019. Further when Mitsui met with Mr Brandi and Mr Folino on 15 August 2019, it informed them that it would not accept any further order until APT reduced its accounts receivable with Mitsui.
APT P/O 17012 and P/O 17013 – was there a Sixth and Seventh Contract?
On 8 August 2019, APT’s Ms Pirotta emailed Mr Hicks APT P/O 17012 and APT P/O 17013. Ms Pirotta’s email again set out a due date for delivery ‘commencing 30 September 2019’, and in the case of APT P/O 17013 specified a priority rating from 1 to 3 depending on the various components. Her covering email to Mr Hicks requests that the orders be placed with BSL as soon as possible to avoid delay on coils and stated ‘as per the last order where I lost a week and this will have an impact on our rolling’s (sic) and customer orders’.
In APT’s amended statement of claim and in its further and better particulars, it asserts that these purchase orders were accepted orally by Mr Hicks in a telephone call with Mr Brandi on 8 August 2019 or 9 August 2019 and gave rise to binding contracts (‘the alleged Sixth and Seventh Contracts’). No evidence was given by Mr Brandi as to this alleged conversation. There is evidence of an email response from Mr Hicks to Ms Pirotta on 8 August 2019 which was copied to Mr Brandi and Ms Wainwright from Mitsui. Mr Hicks’ email noted that the prices listed in the purchase orders did not match ‘what we are told is “your” negotiated base prices that we get given to us as the purchase price’ and requested that Mr Pirotta review and reissue ‘[APT’s] confirmed price’ for the purchase.
Further, on 14 August 2019 Ms Pirotta emailed Mr Hicks some six days after the alleged conversation in which Ms Pirotta informed Mr Hicks that she had just had a meeting with BSL who had advised her that APT P/O 17013 had not been placed, and requested that Mr Hicks follow that up. Her email concluded ‘as for the $2/tonne please just add it to the order. David Brandi and yourself can work that out later’.
There is no evidence of any acceptance by Mitsui of APT P/O 17012 and APT P/O 17013. Such documentary evidence as exists is inconsistent with the alleged conversation in respect of which Mr Hicks failed to give evidence in any event. In my view, there was no alleged Sixth and Seventh Contracts.
Summary of the contractual position in relation to the APT purchase orders and the alleged First to Seventh Contracts
For reasons set out above:
(a) I do not accept that APT and Mitsui entered into an agreement on 20 December 2018 to the effect that the APT Terms and Conditions would apply to all purchase orders placed by APT on Mitsui.
(b) I accept that APT and Mitsui entered into the First Contract and accept that it was on the APT Terms and Conditions.
(c) I do not accept that there was a term of the First Contract that required Mitsui to effect delivery by 31 March 2019.
(d) I accept that APT and Mitsui entered into the Second Contract, but I do not accept that the contract was on terms which incorporated the APT Terms and Conditions. I accept that the Mitsui Terms and Conditions applied to that contract.
(e) I accept that APT and Mitsui entered into the Third Contract, but I do not accept that the contract was on terms which incorporated the APT Terms and Conditions. I accept that the Mitsui Terms and Conditions applied to that contract.
(f) I do not accept that there was a term of the Second or Third Contracts that required Mitsui to effect delivery of the goods by 18 March 2019 at the latest.
(g) I accept that APT and Mitsu entered into the Fourth Contract. I do not accept that the contract was on terms which incorporated the APT Terms and Conditions. I accept that the Mitsui Terms and Conditions applied to that contract.
(h) I do not accept that there was a term of the Fourth Contract that required Mitsui to effect delivery by 10 April 2019 at the latest.
(i) I do not accept that APT and Mitsui entered into the alleged Fifth Contract. If they did enter into any contract, I do not accept that it was on the basis of the APT Terms and Conditions.
(j) I do not accept that APT and Mitsui entered into the alleged Sixth and Seventh Contracts. If they did enter into any contract, I do not accept that it was on the basis of the APT Terms and Conditions;
The APT claim requires acceptance of the APT Terms and Conditions applying to the First to Fourth Contracts and additionally contracts being entered into in respect of the Fifth to Seventh Contracts incorporating the APT Terms and Conditions.
Because of my conclusion that the APT Terms and Conditions did not apply to the Second Contract, Third Contract and Fourth Contract, that it was not a term of the First Contract that the goods be delivered in full by 31 March 2019, and that no contract was entered into in relation to the alleged Fifth Contract and the alleged Sixth and Seventh Contracts, the APT claim fails, and it is not necessary to consider whether APT is entitled to loss and damage as a result of breach by Mitsui. It is however necessary to consider the claim concerning the 2% settlement discount, which raises separate issues and is not dependent on the application of the APT Terms and Conditions.
The BSL settlement discount agreement
APT alleges that it entered into an agreement with Mitsui on 4 April 2019 on the following terms (‘the BSL settlement discount agreement’):
(a) APT would continue to place orders with Mitsui for steel coil;
(b) Mitsui would then place its own orders with BSL for such steel coil;
(c) APT would pay Mitsui the full amount invoiced by Mitsui to APT for the steel coil the subject of each contract;
(d) Mitsui would pay BSL by the due date for payment (and so as to ensure that the BSL settlement discount applied) the full amount invoiced by BSL to Mitsui for the coil supplied by BSL to Mitsui for on-sale to APT;
(e) APT would request BSL that the BSL settlement discount be credited to APT and be applied with respect to the orders placed by Mitsui with BSL; and
(f) Mitsui would:
(i) direct BSL to pay the BSL settlement discount applicable to each supply of coil by BSL to Mitsui directly to APT; or
(a)the Photograph I provided Mr Hicks on 6 April 2019 was insufficient to create an enforceable guarantee from me to Mitsui;
(b)I had not provided an enforceable guarantee to Mitsui;
(c)I was not under any enforceable obligation to guarantee the payment of the debts of APT to Mitsui pursuant to the proposed guarantee.
29My assumption was reinforced during September 2019 when Mitsui requested that I provide a personal guarantee to Mitsui.
(underlining added)
Mr Brandi’s evidence set out in his witness statement did not condescend to the basis upon which he formed that opinion.
In cross-examination, Mr Brandi gave a different account saying that when he signed the April Guarantee and sent a photograph of it back to Mitsui, he did not think about its binding nature. He otherwise accepted that he signed the April Guarantee and returned a photograph of it because Mr Hicks had asked him to do so, including for the purposes of obtaining trade credit insurance by Mitsui with respect to the provision of goods on credit to APT.
Failing to turn one’s mind to enforceability is not the same as forming a positive state of mind as to unenforceability.
Next, Mr Brandi gave this evidence in cross-examination:
MR BROWN: But that’s not correct, is it? You didn’t turn your mind to whether you were bound by it or not, as you just said a minute ago, you signed it, you provided it, you did what you were asked and you did what you knew was necessary for trade credit insurance?---I remember a conversation with Darren in the weeks following this and he mentioned to me that Mitsui would need a new one in due course, that it was unenforceable.
When was this?---Very, very close to this.
And it was a conversation that you say you had?---With Darren, yes.
But you haven’t given any evidence on that before now?---No. I had a conversation with my counsel and because I didn’t have enough particulars on the exact date and time they um – we didn’t – we didn’t put it in.
Because it never happened, did it?---It happened, 100% happened.
But he’s not a lawyer, is he, even if it did happen?---No. He had that feedback from Mitsui but they weren’t comfortable to rely on that and they wanted a new one in due course.
But that doesn’t mean it’s not enforceable and you didn’t turn your mind to that, did you?---Well, my assumption was that that meant it was unenforceable in their view.
When do you say that conversation happened? What date?---Oh, it was I the weeks following this, so I don’t have the exact date.
In April?---Yeah. It had more than likely been in April.
By telephone or face to face?---Oh, Darren and I were pretty close. We went out a few times. Um, we were going to buy a business together you know, so um, he told me and I can’t remember if it was by phone or in person but we definitely had the conversation.
So you don’t recall whether it was by phone or in person?---It was with Darren but I can’t remember if it was from a phone or in person.
(underline added)
Thus in cross examination Mr Brandi advanced a new argument that his assumption arose not as from 6 April 2019 on some unidentified basis, but from some later date, based on what Mr Hicks had later told him.
Mr Brandi also submits that Mr Hicks accepted in cross-examination that this conversation may have occurred. The evidence given by Mr Hicks in cross-examination was as follows:
So as a starter meaning not as the whole of what we want, but to start?---Based on receiving the email at 5:20 on a Saturday afternoon and he was based at his home and following his email to me I thought in my judgment at the time at least it shows that he has signed the document …
But you didn’t follow up with him to get an original?---He had already sent an email making a statement that he would get his assistant to send it in.
And did you not subsequently have a conversation with him within a few days or weeks after that, where you said to him that wasn’t good enough for Mitsui. They actually wanted a signed document?---I may have. I can’t recall.
So if he said that he recalled such a conversation you wouldn’t disagree with him?---It may have happened.
(underline added)
Mr Brandi further relies upon the fact that in September 2019 Mitsui requested that Mr Brandi provide a personal guarantee arguing that this is consistent with the mutually held assumption that the April Guarantee was not enforceable. On 10 September 2019, Mitsui wrote to Mr Brandi (and to Mr Folino) requesting that Mr Brandi provide the ‘signed personal security’ which Mitsui’s representative, Mr Funasaka, offered to pick up from APT’s office but asked that a PDF be sent in advance. There was no evidence of any response from Mr Brandi or APT.
On 20 September 2019, Mitsui’s Mr Funasaka emailed Mr Brandi requesting that he ‘prepare signed documents’ (which included the guarantee letter) ‘and give [them to] us during today’s meeting’.
It is also common ground that at the meeting in Mitsui’s offices on 26 September 2019, Mr Brandi was shown a copy of the September Guarantee for him to sign and later that day received a copy of an email attaching a proposed guarantee. The disputed evidence as to what occurred at this meeting and its aftermath is dealt with below, but for present purposes it is sufficient to note that on 26 September 2019, Mr Brandi was provided with a guarantee to sign having not provided the original of the April Guarantee.
I have no difficulty in rejecting Mr Brandi’s evidence that Mr Hicks told him in the weeks following the provision of the photograph of the April Guarantee on 6 April 2019 that Mitsui considered that what had been provided was unenforceable. I accept that there may well have been a conversation between Mr Hicks and Mr Brandi to the effect that Mitsui wanted an original of the signed document and even that the photograph was not enough for its purposes, but I do not accept that the conversation went as far as Mr Brandi contends.
Had Mr Hicks made a statement to the effect proffered by Mr Brandi in cross-examination, it is inconceivable that it would not have been addressed by Mr Brandi in his witness statement which constituted his evidence-in-chief and which specifically dealt with the April Guarantee, or in his defence to the Mitsui counterclaim which advanced the estoppel plea.
If the alleged conversation had occurred, it would surely have been referred to in this part of Mr Brandi’s witness statement. I have no hesitation in rejecting Mr Brandi’s evidence that he was told by his lawyers not to include this because the exact date was not known. I am satisfied that no such conversation occurred and that Mr Brandi made it up in the witness box.
Further, the fact that Mitsui requested Mr Brandi forward the original of the April Guarantee, or that Mr Hicks conveyed Mitsui’s desire that the original be provided and that the scanned copy was not sufficient, or that Mr Hicks subsequently proffered a fresh document for execution and return by Mr Brandi at the meeting on 26 September 2019, does not establish that Mitsui assumed, in the period from 6 April 2019 to 26 September 2019, that the April Guarantee the subject of the photograph emailed by Mr Brandi to Mr Hicks was unenforceable, much less that Mitsui know that Mr Brandi had that state of mind and was acting in reliance on that state of mind.
Further, I do not accept, as Mr Brandi submits, that he acted to his detriment on the basis of that mutual assumption and that it would be unconscionable for Mitsui to now resile from that mutual assumption. I do not accept that Mr Brandi’s acquiescence or authorisation of the provision of purchase orders by APT to Mitsui occurred on the faith of an assumption on Mr Brandi’s behalf that he had not bound himself to guarantee those debts. There is nothing in the communications which preceded the email of 6 April 2019 which is supportive of such a proposition. On the contrary, Mr Brandi had shown a willingness to provide such a guarantee evinced through the communications with Mr Hicks prior to the signing of the April Guarantee. It follows therefore that I reject Mr Brandi’s estoppel defence and accordingly, in my view, Mr Brandi is bound by the April Guarantee.
In any event, Mitsui contends that Mr Brandi also executed the September Guarantee on 26 September 2019.
The September Guarantee
It is common ground that a meeting occurred on the morning of 26 September 2019, attended by Mr Brandi and Mr Folino on behalf of APT, Mr Hicks and Mr Buchanan on behalf of Link, and various representatives of Mitsui including Ms Wainwright.
The meeting occurred against the background of Mitsui’s unwillingness to deliver the coil the subject of the alleged Fifth Contract, and Mitsui’s attempts to obtain payment from APT of various outstanding amounts as well as an original signed guarantee from Mr Brandi.
It is also common ground that at this meeting the Mitsui representatives asked Mr Brandi to sign and return Mitsui’s sales contract CWB0008594 which related to the steel ordered and supplied pursuant to the Fourth Contract, that the Mitsui representatives requested that Mr Brandi sign and return a personal guarantee in favour of Mitsu in respect of APT’s trade with Mitsui, and that Mr Brandi sign an accounts receivable document which acknowledged that the sum of $12,475,945.19 was due as of 2 September 2019.
It is not in dispute that Mr Brandi signed the accounts receivable document confirming the debt of $12,475,945.19 (as of 2 September 2019). Beneath Mr Brandi’s signature he wrote that his acknowledgement was subject to a direct discussion with BSL regarding a 2% settlement discount and confirmation that Mitsui had not received any 2% discount regardless of whether Mitsui had made payment to BSL on time or not. It is also uncontroversial that Mr Brandi responded to the request that he sign Mitsui’s sales contract CWB0008594 by saying in substance that he would need to check it before he signed it, but that he would do so once Ms Pirotta checked that everything was okay.
On Mr Brandi’s account, when he was asked to sign the September Guarantee he said he would not sign it and that he wanted to have his lawyer review it. In general terms, both Mr Hicks and Ms Wainwright agreed that Mr Brandi responded by saying he wanted his lawyer to review it before he would sign it. What is disputed is that according to Mr Brandi, he said he read the September Guarantee and observed that two clauses, 6 and 7, had no application and as a consequence crossed them out before handing the guarantee back to the Mitsui representatives. Mr Brandi could not recall whether he initialled the crossing out.
Mr Folino gave evidence to substantially the same effect as Mr Brandi.
In contrast, both Mr Hicks and Ms Wainwright were adamant that Mr Brandi did not cross out clauses 6 and 7 at this meeting and did not hand the document back to the Mitsui representatives. On their evidence, Mr Brandi crossed out those clauses, initialled his changes, and signed the document at a lunch later that same day (‘the disputed signature’).
It is also common ground that during the course of the meeting, one of the Mitsui representatives sent a copy of the September Guarantee by email to Mr Brandi, among others.[48]
[48]The emails sent by Mitsui’s Mr Funasaka enclosing a copy of the guarantee were apparently sent at 11:06am and 11:25am. There is an email from Mr Buchanan in response at 12:15pm recording that he just received the email.
It is also common ground that after the meeting had concluded, Mr Hicks, Mr Buchanan and Mr Brandi went to the Melbourne Cricket Ground (‘MCG’) for the purposes of a corporate lunch. 26 September 2019 was the Thursday before the AFL Grand Final.
It is undisputed that following the meeting at Mitsui’s offices, Ms Wainwright sent an email to Mr Brandi and Mr Folino (copying in Mr Buchanan and Mr Hicks), with minutes of the meeting and asked Mr Brandi to let her know if there were any misunderstanding or disagreements.
Mr Brandi responded in short order 20 minutes later with minor amendments to the minutes:
Amended slightly, otherwise agreed and thanks for your time today everyone. I am confident we will get there shortly. It’s my priority.
(underline added)
For convenience, Mr Brandi’s changes are shown by the underlining and cross outs below with the underlining showing the words added by Mr Brandi and the cross outs showing his redactions.
(1) Sales contract – agreed to have Marina check outstanding sales contract and when she is satisfied, sign and return - requested today.
Action – DF to follow up.
(2) Personal guarantee – agreed to have lawyer check it and once lawyer & David satisfies, will sign - requested within today and pass to Darren. Darren let Mitsui know the receipt of the signed one.
Action – DH to follow up.
(3) A/R – signed but with comment about 2%. Discussion on 2% discount to be continued with APT/BSL. Mitsui
should notneeds to be involved in this discussion, but disc held separately due to ACCCregulations. It is APT/BSL issue. Thisshould not preventmay hinder APT paying full invoice amountsagreedcurrently provided.a. Outstanding Aug invoices – agreed to pay as much as they can, each day. Total amount to be paid by Friday day 4/Oct 2019 – circa A$3.5mln requested if not before.
b. Once a total of A$5mln is received Mitsui will release some cargo held at Surdex for PO16961 or released earlier with a clear plan. Detailed quantity to be released will be agreed weekly. APT to submit the information of the coils, which has been already pre-sold to end users (i.e. required delivery date of coils weekly, quantity etc)
Mr Brandi had also added at the bottom of the email the words ‘future monthly orders to be resumed ASAP after further discussion and Mitsui approvals’ and ‘Mitsui will hold off reporting to any credit insurers – work with [Link] etc’.
What occurred at the 26 September 2019 lunch was the subject of conflicting evidence. Mr Brandi’s evidence was that he arrived at the lunch at around 1pm and that he left reasonably early because the person who was driving him home had to leave early to pick up their children from school. Mr Brandi said that as he was leaving the event, Mr Hicks left the table and said ‘hang on a second’ before pulling the folded September Guarantee out of his jacket pocket containing the clauses that Mr Brandi had crossed out that morning in the Mitsui office, and asked Mr Brandi to sign the guarantee.
Mr Hicks is said to have prefaced this request by telling Mr Brandi that his (that is, Mr Hicks’) relationship with Mitsui was on the line and they were going to ‘kill him’ if he didn’t get the guarantee signed. According to Mr Brandi, Mr Hicks said that he was ‘stressed’ and ‘not coping’ and that this was going to jeopardise his career. On Mr Brandi’s account, Mr Brandi said he was sorry but he couldn’t sign the guarantee until he received legal advice and then left quickly to catch up with the person who was driving him home. Mr Brandi said the conversation occurred about 2-3 metres from the table at which they were sitting, whose attendees included Mr Buchanan. According to Mr Brandi, Mr Hicks ‘didn’t eat much and was drinking a lot’ at the lunch.
Mr Hicks gave a very different version of events. According to Mr Hicks, after Mr Brandi arrived at the lunch, Mr Brandi pulled the guarantee out of his pocket when he arrived at the lunch, placing it on the table saying ‘I’ve still got a couple of things to go over with my solicitor’. Later, according to Mr Hicks, Mr Brandi took a telephone call and exited the room before returning and saying ‘that was my solicitor, here’s the document. I’ve got a couple of changes to make and then I’ll sign it’.
Following Mr Brandi’s statement that he had spoken to his solicitor, Mr Hicks gave evidence that he and Mr Brandi stepped away from the table into an adjacent area where Mr Hicks witnessed Mr Brandi cross out two paragraphs, initial them and then sign the document. Mr Hicks then signed and dated the document as a witness, using a different pen to that used by Mr Brandi.
According to Mr Hicks, when Mr Brandi received another telephone call and left the table, Mr Hicks took a photograph of the signed document and sent a photo back to Ms Wainwright and to Mitsui by email sent at 3:23pm. Mr Hicks thus had the original of the document and had sent through an email to Ms Wainwright and others with a photograph of what he said Mr Brandi had signed.
The following Tuesday, 1 October 2019, Mr Brandi’s assistant Ms Ah-Yu emailed Mr Hicks stating that Mr Brandi ‘would like a copy of the document he handed to you at the football function last Thursday’, and asked that the document be emailed to her.
On 2 October 2019, Ms Ah-Yu forwarded a follow-up email which was responded to within a short time by Mr Hicks who sent through a copy of the document which he says Mr Brandi signed on 26 September 2019. The document so sent (a photograph of the same document sent by Mr Hicks to Ms Wainwright on 26 September 2019) is in largely similar terms to the April Guarantee.
It contained eight clauses but clauses 6 and 7 had been crossed out by Mr Brandi (either on his account at the meeting at Mitsui’s offices or, on Mr Hicks’ account, at the luncheon at the MCG). What purport to be Mr Brandi’s initials appear next to those two clauses. It is also clear that the cross outs, the date ‘26th September’, and the signing by Mr Brandi are in a different ink than Mr Hicks’ name and signature as the witness.
Both parties called expert handwriting evidence. Both handwriting experts compared the disputed signature with copies of signatures affected by Mr Brandi on other documents, the authenticity of which was not disputed (‘the signature standards’). According to Mr Neil Holland (‘Mr Holland’) , a handwriting expert called by Mitsui, the disputed signature was written by the same person who effected the signature on the signature standards. Mr Holland also expressed the opinion that it was highly probable that the questioned ‘DB’ initials and the date ‘26th September’ were of sufficient similarity to the DB initials and the date’s letter and numeral formations on the signature standards documents such that he could conclude that it was highly probable that they were written by the writer of the signature standards.
Mr Holland also opined that the same writing ink was used to write the disputed signature, the initials, the cross out lines written in clauses 6 and 7 and the date ‘26th September’.
In contrast, the handwriting expert called by APT and Mr Brandi, Mr Trevor Joyce (‘Mr Joyce’), concluded that significant areas of concern existed when the questioned signature was compared to the signature standards, which supported the conclusion that the disputed signature was as a result of simulation behaviour (that is, the signature had been made by a person other than Mr Brandi). Mr Joyce was not asked to express any opinion on the DB initials, nor the date.
Mr Brandi’s case theory is that Mr Hicks had been drinking at the MCG luncheon, appeared ‘stressed’ and ‘nervous’, and was under a great deal of pressure to obtain Mr Brandi’s signature that day. The gist of the submission is that Mr Hicks’ judgment was apparently sufficiently impaired by the combination of alcohol, stress and nerves that he determined to forge Mr Brandi’s signature, perhaps comforted by the expectation that in all likelihood Mr Brandi would in any event sign and return the guarantee soon such that no harm would in any event likely arise as a result of Mr Hicks’ forgery.
Mr Hicks’ account was less colourful. Mr Brandi wanted to get legal advice before he signed the September Guarantee. He received that advice, crossed out two clauses and as a consequence signed it in Mr Hicks’ presence and handed the document to him.
Acceptance of Mr Brandi’s evidence over that of Mr Hicks compels a finding that Mr Hicks has engaged in conduct of a criminal nature by forging Mr Brandi’s signature. This of course is a serious allegation and the relevant matter must be proved to a sufficient standard which reflects the gravity which attaches to such a finding.[49]
[49]Briginshaw v Briginshaw (1938) 60 CLR 336, 362.
I am not prepared to accept Mr Brandi’s evidence over Mr Hicks. Indeed, I consider Mr Hicks’ account of events infinitely more probable. Mr Brandi’s account requires acceptance of a number of propositions which vary between unlikely and preposterous. First, it compels a finding that Mr Hicks, apparently an otherwise respectable businessman, effected a forgery of Mr Brandi’s signature in circumstances where Mr Brandi had previously signed the April Guarantee and was anxious to assuage Mitsui’s concerns so that he could obtain the release of the stock that was being held at Surdex’s premises so that APT could comply with its customer orders.
Thus, Mr Brandi had given no indication that he was not willing to provide the guarantee, only that he wanted to have his lawyer check a relatively simple document. Quite why Mr Hicks would have undertaken the extraordinary step of forging Mr Brandi’s signature in such circumstances is difficult to conceive.
Secondly, and notwithstanding the suggestion that Mr Hicks had undertaken this extraordinary step, possibly influenced by a combination of alcohol and stress, he was nevertheless composed enough, on Mr Brandi’s account, to have the perspicacity to have effected a forgery of Mr Brandi’s signature which, to the untrained eye, bears a close resemblance to the signature on the April Guarantee. The alleged forgery was sufficient to enable Mr Holland to conclude that the disputed signature was indeed Mr Brandi’s. Additionally, notwithstanding the circumstances which apparently motivated Mr Hicks to undertake this course, Mr Hicks chose a pen to use for the purposes of affecting Mr Brandi’s signature which, at least to the naked eye, was of a not dissimilar nature to that used to sign the April Guarantee.
Thirdly, Mr Hicks’ alleged forgery had the further good fortune of being consistent with Mr Brandi’s apparent practice in signing documents in relation to the distance above the various signature lines as seen in both the April and September Guarantees, and in the signature standards. Further, both experts agreed that Mr Brandi’s signature was a complex and difficult signature to simulate. This notwithstanding, Mr Joyce acknowledged that the disputed signature was a good forgery, such that he initially thought it to be written by the author of the signature standards (that is, Mr Brandi) before closer inspection.
Next, at least according to Mr Holland’s evidence which in this respect was not the subject of contrary expert evidence, Mr Hicks’ alleged forgery of the ‘DB’ initials next to the crossed out clauses 6 and 7 was also sufficiently skilled such as to warrant the conclusion from Mr Holland that they too were written by Mr Brandi. Additionally, Mr Hicks had the good fortune or skill, when writing the ‘th’ on the 26th, to write the ‘th’ in a style which, to the naked eye, was similar to that used by Mr Brandi on the signature standards and in any event at a sufficient level of compatibility to enable Mr Holland to conclude that it was highly probable that it was Mr Brandi’s writing.
If Mr Brandi’s account is to be accepted, Mr Hicks’ signature simulation was effected with a sagacity and dexterity not commonly shown by those effected by the combination of stress and alcohol which Mr Brandi says he observed in Mr Hicks. Otherwise, Mr Hicks’ achievement in simulating the signature could only have been the product of the most unlikely good fortune.
Then, on Mr Brandi’s version of events, Mr Hicks had for some reason felt the need to send a photograph of the forgery he had effected to Ms Wainwright, notwithstanding that on Mr Brandi’s version of events, part of Mr Hicks’ lack of judgment was that he believed that it was likely that Mr Brandi would sign the document and return it in a few days in any event such that the forgery would not need to be exposed.
Ultimately, the objective fact which points to the sheer improbability if not absurdity of Mr Brandi’s account is the request made on the following Monday by Mr Brandi’s assistant, Ms Ah-Yu, for a copy of the document that Mr Brandi handed Mr Hicks at the lunch on the previous Thursday. Prior to that day, Mr Brandi had received copies of the guarantee that Mitsui required he execute on 26 September 2019 by email from the Mitsui representatives. There was no need for him to request a copy of the document he handed Mr Hicks so that he could obtain legal advice about it prior to him executing the same. That being so, the most obvious explanation is that Mr Brandi asked for a copy of the document that he had signed and handed to Mr Hicks on the Thursday at the lunch.
Even more damningly for Mr Brandi’s case is that Mr Hicks provided Ms Ah-Yu with a copy of the document in response. Thus, Mr Hicks had now provided Mr Brandi’s assistant a copy of the document thereby exposing his alleged forgery. And yet, there is no response at all from Mr Brandi or anyone on his behalf. Had Mr Hicks engaged in this bizarre conduct and had he for some reason, perhaps remorse, handed over the product of his criminal activity to Ms Ah-Yu, it is extraordinary to say the least that Mr Brandi did not respond by pointing out that he had not signed the document and that what purported to be a document signed by Mr Brandi was in fact a forgery.
In contrast, Mr Hicks’ account accords overwhelmingly with the probabilities in light of the reliable contemporaneous and objectively ascertainable facts. Mr Brandi was anxious to ensure that Mitsui authorised the release of the stock the subject of the alleged Fifth Contract which was held at Surdex’s premises so that APT could fulfil its customer orders. Mr Brandi had emailed the Mitsui representative between the meeting in the morning and before the lunch saying that he was confident that they would ‘get there shortly’ and stating that it was a priority for him.
In any event, I formed a very dim view of Mr Brandi as a witness. His evidence with respect to the discussion concerning the lack of enforceability of the April Guarantee given in cross-examination and outlined above was most unpersuasive. Secondly, he repeatedly stated that the main topic at various meetings between Mitsui and APT was Mitsui’s failure to comply with its delivery obligations and yet there is minimal if any reference to any contemporaneous complaints to that effect in any of the communications which passed between APT and Mitsui.
Thirdly, Mr Brandi gave evidence that APT’s customers were agitated over APT’s apparent inability to supply due to Mitsui’s late supply and that APT’s reputation was suffering as a consequence. This notwithstanding, APT produced no illustration of any contemporaneous complaint.
Fourthly, Mr Brandi’s vivid account of the events of 26 September 2019 stands in marked contrast to his pointed vagueness in relation to various other meetings with Mitsui and with Mr Hicks. Whilst it is perhaps understandable that Mr Brandi may have had a more detailed recollection of the meeting at the MCG on 26 September 2019 owing to the unusual and possibly memorable occasion (being a lunch during the grand final week) which coincided with the discussions which occurred in the execution of the September Guarantee, there is otherwise no real basis for him to have had a particularly strong memory of what occurred at the meeting earlier that day.
Finally, I reject Mr Brandi’s evidence to the effect that he crossed out clauses 6 and 7 at the meeting at Mitsui’s offices in the morning. Whilst it does not matter to any great extent when those clauses were crossed out, in my view it is unlikely that Mr Brandi would have crossed out clauses in circumstances where it is common ground that he was going to get legal advice as to the subject matter of the September Guarantee before executing it. It makes little sense for him to have crossed out clauses before receiving such legal advice. Nor do I ascribe any weight to the supporting evidence given by Mr Folino. I was unimpressed by Mr Folino’s evidence as well. It had a rehearsed quality; he understandably was vague about his recollection of meetings over this period save that he professed to have a generally precise recollection of the meeting at Mitsui’s s offices on the morning of 26 September 2019. Nor do I consider that Mr Buchanan’s failure to give evidence about the events of 26 September 2019 is of any great moment. Whilst I infer that his evidence would not have been of assistance to Mitsui, the fact that such evidence would not assist does not mean that I should prefer Mr Brandi’s most improbable account over that of Mr Hicks.
Rather, the more probable sequence of events is that the call that Mr Brandi acknowledges that he received occurred during the course of the lunch at the MCG was in fact from Mr Brandi’s solicitor as Mr Hicks says, and that in response to that call Mr Brandi crossed out the relevant clauses before signing and returning the September Guarantee to Mr Hicks. In contrast, I found Mr Hicks’ account far more credible. Whilst I do accept that he was mistaken when he stated in evidence that he had spoken with the Mitsui representatives about what would happen if Mr Brandi crossed out clauses 6 and 7, overall I formed a positive view of Mr Hicks’ credibility. I found his account by far the more consistent with the probabilities in light of objectively reliable contemporaneous circumstances.
I accept that Mr Hicks sent a photo of what had been signed by Mr Brandi to Ms Wainwright, no doubt because of the previous difficulties that occurred over the preceding month in obtaining Mr Brandi’s assent to the various requests for return of an executed guarantee, and because this was contemplated in the event that Mr Brandi signed the guarantee.[50] Moreover, I find that Ms Ah-Yu asked for a copy of the document because Mr Brandi knew he had signed the guarantee and he wanted a copy for his records. I also find that the reason why there was no objection from Mr Brandi or anyone else at APT to Mr Hicks’ provision of the signed September Guarantee by email of 2 October 2019 was because it was a document which contained Mr Brandi’s signature, not one forged by Mr Hicks.
[50]See item (2) at [228].
Necessarily, this conclusion also involves a rejection of Mr Joyce’s expert evidence to contrary effect. Generally, I found the evidence of both handwriting experts of some but not enormous utility. Both agreed that it was a complex signature. Both agreed that it was a difficult signature to simulate. Both agreed that there were differences between each of the signatures comprising the signature standards because no two signatures are the same, even if written by the same person. The critical difference between the evidence of Mr Holland and Mr Joyce is that whilst, for the most part, Mr Holland acknowledged the differences between the disputed signature and the signature standards identified by Mr Joyce, Mr Holland explained those differences on the basis that no two signatures are alike and referred to various other signatures in the signature standards which, according to Mr Holland, bore similarities to the disputed signature.
Mr Joyce in contrast maintained that whilst each of the signature standards did differ from one to the other because that was to be expected, the differences in the disputed signature were more significant than could be explained by the usual differences that might occur in the case of two signatures written by the same person. I prefer Mr Holland’s evidence. Mr Joyce was reluctant to make what appeared to be fairly obvious concessions to a number of matters put to him by counsel for Mitsui. Mr Joyce was not prepared to concede, absent microscopic examination, the presence of a disfluency in the signature standards which, at least to the naked eye, appeared obvious. Relatedly, Mr Joyce was reluctant to accept the similarity between Mr Brandi’s admitted deployment of the ‘th’ in certain admitted documents and that written for the date (26th) on the September Guarantee.
Whilst I could perhaps understand why Mr Joyce may have qualified his answers because of the absence of examination of a sufficient number of comparable examples, it did appear to me that Mr Joyce was reluctant to concede what was obvious on visual inspection.
Nevertheless, the critical matters which have informed my rejection of Mr Brandi’s evidence are the objective circumstances as noted above and the attendant likely probabilities in light of these matters together with the dim view that I formed of Mr Brandi’s credibility generally.
Accordingly, in my view Mr Brandi signed the September Guarantee.
That does not dispose of the issues that arise in relation to the September Guarantee. Mr Brandi also submits that the September Guarantee is unenforceable due to a lack of consideration. Mr Brandi submits that as at 26 September 2019, Mitsui had already delivered the steel under the First to Fourth Contracts and had already cancelled the alleged Fifth Contract and not delivered under the purchase orders the subject of the alleged Sixth and Seventh Contracts.
Accordingly, Mr Brandi argues that entry into the September Guarantee was not supported by any executory promise by Mitsui to do any further act. He submits correctly that past consideration is not good consideration.[51]
[51]Hill Equipment & Refrigeration Co Pty Ltd v Nuco Pty Ltd (1992) 110 FLR 25, 28.
Mitsui meets this submission in part by submitting that the September Guarantee is a deed relying upon the fact that immediately before Mr Brandi’s signature, the words appear ‘executed as a deed poll in favour of Mitsui & Co’.
For a document to constitute a deed, in addition to legislative requirements, the common law requires that the executing party must have intended to create a deed.[52] The question of intention to create a deed is to be considered by reference to the form, substance and object of the instrument under consideration as well as admissible extrinsic evidence.
[52]400 George Street (Qld) v BG International Ltd [2012] 2 Qd R 302, [20].
In 400 George Street (Qld) v BG International Ltd (‘400 George Street’),[53] the Court of Appeal in Queensland held that the question of whether a party intended to make a deed is to be decided objectively principally by reference to the contents of the instrument under consideration.[54] The Court of Appeal concluded that the reference in the execution page to ‘executed as a deed’ was a strong indicator that the legal nature of the instrument was intended to be a deed.
[53]Ibid.
[54]Ibid, [30]–[33].
In Norton on Deeds,[55] the author describes the following as a correct definition of deed:
A deed is a writing:
(i) on paper, vellum or parchment;
(ii) sealed;
(iii) delivered;
whereby an interest, right or property passes or an obligation binding on some person is created or which is in affirmance of some act whereby an interest, right or property has passed.
[55]R Norton, R Morrison and H Gooden, A Treatise on Deeds (Sweet & Maxwell, 2nd ed, 1928), 3.
In my view, there is insufficient indicia to suggest that the document executed by Mr Brandi in September 2019 was intended to create a deed. Whilst there is a reference to ‘executed as a deed poll’ as was the case in 400 George Street, the document itself contains no other reference to it being a deed. Importantly and unlike 400 George Street, there is no reference to the document having been signed, sealed and delivered by Mr Brandi. Otherwise the substance of the document is consistent with the language of agreement, not deed. In particular, the document refers to it having been provided ‘in consideration of Mitsui at Mr Brandi’s request agreeing to supply APT with goods and/or services from time to time’. Therefore, I do not accept that the document constitutes a deed and accordingly, in order to be enforceable, consideration must have been provided by Mitsui.
However, I do consider that consideration has been provided; so much appears on the face of the September Guarantee. The document states that ‘in consideration of Mitsui’s promise to supply APT, Mr Brandi guaranteed the due and punctual payment by APT of all moneys’, which is then defined to include the trader’s present and future indebtedness.
Further, the communications which passed prior to the execution of the document by Mr Brandi on 26 September 2019 are entirely consistent with a promise by Mitsui to supply in the future; clause 3(b) of Mr Brandi’s amended minutes of the 26 September 2019 meeting contemplate the future supply by reason of the release of some of the cargo held at Surdex and Mr Brandi’s minute records future monthly orders to be resumed as soon as possible after further discussion and Mitsui’s approval. Plainly, the provision of further goods by Mitsui to APT was within the contemplation of the parties at the time of the execution of the document by Mr Brandi but was dependent upon a number of matters including Mr Brandi’s execution of the signed guarantee (as well as making payment with respect to outstanding invoices).
It follows therefore that in my view Mr Brandi is bound by the September Guarantee as well as the April Guarantee.
Conclusion
In the result, the APT claim will be dismissed.
There will be judgment for Mitsui on the counterclaim against the first and second defendants by counterclaim for $7,401,572.41 plus interest.
I will hear the parties as to the updated interest calculation with respect to the amounts payable under the counterclaim and as to costs.
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