Ledger v Cleveland Nominees Pty Ltd
[2001] WASCA 196
•27 JUNE 2001
LEDGER -v- CLEVELAND NOMINEES PTY LTD [2001] WASCA 196
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASCA 196 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:106/2000 | 20 MARCH 2001 | |
| Coram: | MALCOLM CJ WALLWORK J STEYTLER J | 27/06/01 | |
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Application refused | ||
| PDF Version |
| Parties: | KIM FRANCIS LEDGER CLEVELAND NOMINEES PTY LTD |
Catchwords: | Appeal and new trial Admission of fresh evidence Appeal against judgment after trial Need for special grounds Relevant matter raised but not pursued in cross-examination of witness Evidence could have been obtained by the exercise of reasonable diligence |
Legislation: | Nil |
Case References: | Australian Democrats WA Division Inc v Australian Democrats Vic Division Inc, unreported; FCt SCt of WA; Library No 980589; 7 October 1998 Australian Electrical Electronics Foundry & Engineering Union Western Australia Branch v Hamersley Iron Pty Ltd (1997) 19 WAR 145 Bank of Australasia v Palmer [1897] AC 540 Greater Wollongong City Council v Cowan (1955) 93 CLR 435 Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133 Orr v Holmes (1948) 76 CLR 632 Roland v Duvall [1923] 2 KB 500 Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : LEDGER -v- CLEVELAND NOMINEES PTY LTD [2001] WASCA 196 CORAM : MALCOLM CJ
- WALLWORK J
STEYTLER J
- Appellant (Defendant)
AND
CLEVELAND NOMINEES PTY LTD
Respondent (Plaintiff)
Catchwords:
Appeal and new trial - Admission of fresh evidence - Appeal against judgment after trial - Need for special grounds - Relevant matter raised but not pursued in cross-examination of witness - Evidence could have been obtained by the exercise of reasonable diligence
Legislation:
Nil
(Page 2)
Result:
Application refused
Representation:
Counsel:
Appellant (Defendant) : Mr P I Jooste QC
Respondent (Plaintiff) : Mr J C Curthoys
Solicitors:
Appellant (Defendant) : Mony de Kerloy
Respondent (Plaintiff) : Lynette Quinlivan
Case(s) referred to in judgment(s):
Australian Democrats WA Division Inc v Australian Democrats Vic Division Inc, unreported; FCt SCt of WA; Library No 980589; 7 October 1998
Australian Electrical Electronics Foundry & Engineering Union Western Australia Branch v Hamersley Iron Pty Ltd (1997) 19 WAR 145
Bank of Australasia v Palmer [1897] AC 540
Greater Wollongong City Council v Cowan (1955) 93 CLR 435
Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133
Orr v Holmes (1948) 76 CLR 632
Roland v Duvall [1923] 2 KB 500
Case(s) also cited:
Nil
(Page 3)
1 MALCOLM CJ: This was an application by the appellant seeking leave to adduce fresh evidence pursuant to O 63 r 10(1) of the Rules of the Supreme Court 1971 ("the Rules") at the hearing of the substantive appeal. The appellant also sought leave to issue a writ of subpoena directed to Mr Timothy John Slako returnable before the Full Court at the hearing of the appeal. At the conclusion of the hearing on 20 March 2001, the Court was unanimously of the opinion that the application in relation to this appeal be dismissed. It was also ordered that the appellant pay the respondent's costs of the application to be taxed.
Background
2 The respondent (as seller) sued the appellant (as buyer) on a written agreement for the sale of a Porsche 944 Turbo Racing Car. The agreement was dated 6 February 1995, but alleged to have been entered into on 6 February 1997. The agreement required the appellant to pay a purchase price of $75,000 for the car on or before 1 June 1997. The agreement was evidenced by a letter dated 6 February 1995 from the respondent to the appellant in the following terms:
"Dear Kim,
Re: Porsche 944 Turbo Racing Car
Referring to our recent discussions regarding the 944 Turbo Racing Porsche I confirm our understanding as follows:-
You will purchase the entire car for the amount of $75,000. The purchase includes the parts set out on the attached list of inventory.
The purchase price is payable on or before the 1st June 1997.
Until the payment of the purchase price has been completed the vehicle will not be raced in any local or interstate event and you will ensure [sic] the vehicle with the insurance company noting my interest as unpaid vendor.
Title to the vehicle will at all times remain with me until full payment of the purchase price has been received by me.
You will transport the vehicle in [sic] the inventory from its current location at Wespeed to your Aberdeen Street premises and hold same in safe keeping for me pending the completion of
(Page 4)
- the payment of the purchase price. You will at your expense prepare the vehicle to qualify as a Group A Porsche Cup racecar.
Yours Faithfully,
Cleveland Nominees Pty Ltd
ACN 008 816 233
(signed) Clive Hartz
I confirm my agreement to purchase the vehicle on the above conditions.
(signed) K F Ledger"
3 The respondent's case as pleaded was that the letter constituted a contract entered into on or about 6 February 1997 by which the respondent agreed to sell the vehicle for the sum of $75,000 as "the purchase price". The purchase price was payable on or before 1 June 1997 which sum was presently due and owing. It was also pleaded that the respondent was ready, willing and able to perform the contract. The respondent claimed the sum of $75,000 or alternatively an order that the appellant specifically perform the contract by paying the respondent the sum of $75,000.
4 By his defence the appellant denied the existence of the alleged agreement and said that:
"(a) That the writing was an understanding only between one Clive Hartz and the [appellant];
(b) The letter understanding related to an entire vehicle meaning a Porsche 944 Turbo Racing Car ('the Porsche Race Car') together with an agreed inventory of the accessories ('the motor vehicle');
(c) The [appellant] agreed not to race the Porsche Race Car in any local or interstate event if and only if an agreement to purchase the motor vehicle was made;
(d) The [appellant] was to insure the motor vehicle if and only if an agreement to purchase the motor vehicle was made;
(Page 5)
- (e) Title to the motor vehicle would at all times remain with Mr Hartz until full payment of the purchase price was made and would only be made if an agreement to purchase the motor vehicle was made and conditions incorporated therein were satisfied;
(f) The [appellant] was to transport the motor vehicle from its then current location at WestSpeed, Osborne Park to Aberdeen Street premises and hold the same in safekeeping if and only if an agreement to purchase the motor vehicle was made;
(g) Chellingworth Porsche was to carry out all necessary modifications at their cost to ensure the Porsche Race Car qualified as a Group A Porsche Cup Racecar;
(h) At all relevant times the [appellant] and Mr Hartz were to inspect and agree an inventory of accessories ('the Inventory') and such agreement was to be evidenced in writing and signed by the [appellant] and Mr Hartz; and
(i) Chellingworth Porsche was required to enter into a joint venture agreement with the [appellant] to purchase/sponsor the motor vehicle."
5 The appellant has pleaded a number of other points not presently relevant, except that in par 4 it was pleaded, among other things, that the appellant was not required to take possession of the motor vehicle; did not enter into any joint venture agreement with Chellingworth Porsche regarding the motor vehicle; the motor vehicle did not qualify as a Group A Porsche Cup Race Car and could never so qualify; and no agreement was made between the appellant and Mr Hartz regarding the inventory. Further, it was pleaded that the agreement was subject to a number of conditions which had not been met. Alternatively, it was pleaded that if any agreement had been made it was abandoned when Mr Hartz offered the motor vehicle to Chellingworth Motors as a trade in on a new Jeep motor vehicle in or about September 1996. Consequently, the obligation of the appellant to pay the purchase price did not arise.
6 The learned trial Judge in the District Court concluded that the agreement was entered into on 6 February 1997 as the respondent had contended. Her Honour expressed her reasons for that conclusion in pars [12] - [13] of her reasons as follows:
(Page 6)
- "After hearing all the evidence and assessing the credibility of the witnesses I am satisfied on the balance of probabilities that the written agreement was entered into on 6 February 1997 as the plaintiff contends. I accept the evidence of Mr Hartz about that. I believe that a date as early as April of 1996 as the defendant contends would have been surprisingly premature for a purchase price payable on or before 1 June 1997. I believe the date of 6 February 1997 is consistent with a payment due on 1 June 1997.
Another matter that seems to me to support the plaintiff's contention is the evidence that the inventory of accessories for the Porsche racing car, a document referred to in the agreement, was prepared by the defendant and Mr Andrew Stack, a senior technician at Chellingworth Motors, in about August of 1996. I believe that is consistent with the document being attached to the agreement and inconsistent with the agreement having been signed in April of 1996 some four months before that inventory was made. I accept Mr Hartz' evidence that the inventory was attached to the agreement when he received the signed copy from the defendant."
7 These conclusions were reached against a background in which both parties agreed that the date 6 February 1995 was wrong. Mr Hartz, who represented the respondent throughout, said that he put in the correct day and month, but the year should have been 1997. The appellant says that he had a diary note of the agreement being entered into on 30 April 1996, but the diary note was not produced to the Court. As the learned Judge accepted:
"The date of the document is of some considerable importance to its interpretation. That is because many of the matters relied upon by the defendant as conditions the subject of an oral agreement which were to be fulfilled before the written agreement could take effect occurred after 30 April 1996 but well prior to 6 February 1997."
8 In 1996 the appellant was employed by Chellingworth Motors ("Chellingworth") as the After Sales Manager. He had been involved in motor vehicle racing at different levels for over 30 years. Chellingworth was a dealer in Porsche motor cars. He envisaged that a joint venture agreement could be negotiated with the respondent. There were discussions to the effect that the purchase be made by Chellingworth
(Page 7)
- because the appellant did not have the money to purchase the car and undertake the project on his own.
9 According to the appellant the respondent put a lot of pressure on him to sign the memorandum which he did on 30 April 1996. The appellant described the letter as a "letter of understanding". He said that he was prepared to sign the letter as a "comfort letter" but would not sign any formal contract until all the conditions that had been discussed were met, including:
(a) Chellingworth Motors approving the project for the dealership;
(b) Chellingworth Motors entering into a joint venture agreement and partly purchasing the motor vehicle;
(c) confirmation that the motor vehicle was suitable to be converted to and would qualify as a Group A Porsche Cup racecar;
(d) the appellant would inspect and agree in writing with the respondent an inventory of accessories.
10 There was evidence at the trial that the appellant had been the Managing Director of Ledger Engineering Pty Ltd, which operated a large family-owned engineering works in Kewdale. In about September 1992 the company had been placed in receivership. Subsequently, the appellant was appointed Chellingworth Motors' After Sales Manager. That employment ceased on 23 March 1997. It was contended at the trial that in these circumstances it was unlikely that the appellant would have finally committed himself to the alleged agreement because of his bankruptcy and shortage of funds.
11 As to these matters, the learned Judge expressed her conclusions as follows:
"Those submissions of the defendant are not supported by the evidence. I note that his family company's receivership was as long ago as 1992. There was also evidence confirmed by the defendant under cross-examination that he did have a sizeable sum of around $100,000 set aside in his wife's name to assist with a Supreme Court action he was involved in in relation to the family company.
There was evidence to support the defendant's contention that the idea of purchasing the Porsche racing car was initially as a project car for Chellingworth Motors. Gregory Arnold, the dealer principal of Chellingworth Motors, gave evidence that
(Page 8)
- the defendant approached him in or about early 1996 to discuss the idea of a project vehicle to lift the moral [sic] of the technicians employed at Chellingworth Motors. However Mr Arnold gave evidence that when the matter was again raised with him in late 1996 he told the defendant that he did not see Chellingworth having a role in such a project and did not want Chellingworth Motors to have any role, either in purchasing the motor vehicle or becoming involved in any promotional work with any motor vehicle and that the matter should not be taken any further. To ensure there was no confusion Mr Arnold gave evidence that he telephoned Clive Hartz in late 1996 and told him that Chellingworth Motors would not support or be involved in the acquisition of the Porsche race car.
The plaintiff submits that those dates are consistent with the written agreement entered into on 6 February 1997 after the defendant was well aware that he was purchasing the vehicle on his own and well aware that Chellingworth Motors would not be involved. There is no mention of Chellingworth Motors in the written agreement other than the address of the defendant who was still in the employment of Chellingworth Motors in February 1997 and the reference in the final paragraph to transporting the vehicle and inventory from its current location at Wespeed to 'your Aberdeen Street premises'. Those Aberdeen Street premises are of course the premises of Chellingworth Porsche.
The plaintiff relies on the clear words of the document dated 6 February 1995 and says that it is an agreement entered into on 6 February 1997 at a time after both parties were aware that Chellingworth Motors would not be involved in the purchase of the Porsche.
After hearing all the evidence and assessing the credibility of the witnesses I am satisfied on the balance of probabilities that the written agreement was entered into on 6 February 1997 as the plaintiff contends. I accept the evidence of Mr Hartz about that. I believe that a date as early as April of 1996 as the defendant contends would have been surprisingly premature for a purchase price payable on or before 1 June 1997. I believe the date of 6 February 1997 is consistent with a payment due on 1 June 1997.
(Page 9)
- Another matter that seems to me to support the plaintiff's contention is the evidence that the inventory of accessories for the Porsche racing car, a document referred to in the agreement, was prepared by the defendant and Mr Andrew Stack, a senior technician at Chellingworth Motors, in about August of 1996. I believe that is consistent with the document being attached to the agreement and inconsistent with the agreement having been signed in April of 1996 some four months before that inventory was made. I accept Mr Hartz' evidence that the inventory was attached to the agreement when he received the signed copy from the defendant."
12 The learned Judge went on to conclude that the oral evidence regarding the joint venture with Chellingworth Motors, finance and the suitability of the vehicle was inadmissible to contradict, vary, add to or subtract from the terms of the written contract: Bank of Australasia v Palmer [1897] AC 540.
13 The appellant's case at the trial was put on an alternative basis, namely, that there was a collateral contract or agreement between the parties in terms of the relevant condition. This alternative case was rejected on the ground that the principal agreement and the collateral agreement contended for were inconsistent with each other contrary to the requirement in Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133 at 139 that the two must "consistently stand together so that the provisions of the main agreement remain in full force and effect notwithstanding the collateral agreement".
14 There was a third defence raised by the appellant at the trial, namely, that the action was "in reality" an action for specific performance. That defence failed on the merits on the basis that the action was not an action for specific performance, but an action for payment of the price under s 48(2) of the Sale of Goods Act 1895 (WA). In any event, her Honour held that the only reliable evidence was that by the time proceedings had been commenced, only two parts were missing which had been lost in a fire. Finally, according to the terms of the contract, the purchase price was payable on a day certain, namely, on or before 1 June 1997, irrespective of delivery in accordance with s 48(2) so that the respondent was entitled to sue for the price as a present debt "irrespective of delivery".
(Page 10)
15 This gave rise to a remedy for breach of warranty in respect of the missing parts under s 52(1) of the Act, but that was not a matter raised at the trial of the action.
16 Finally, under the heading "Credibility" the learned Judge accepted evidence given by the respondent of five telephone conversations with the appellant between 11 June 1997 and 27 February 1998 when the appellant admitted liability and indicated arrangements he had made or was making to pay the purchase price of $75,000. The last of the conversations was overheard by a Mr Walker, the respondent's accountant. Both of them gave evidence that the appellant acknowledged that there was a valid signed contract for the car. The appellant said they would have to be patient for the money. If he had the money he would pay. He said he would have the funds in about three months' time.
17 At trial the appellant contended that it was an action for specific performance and in particular relied on the non-delivery of the vehicle or parts. The appellant further claimed that the respondent's action for specific performance could not succeed because the respondent was not ready, willing and able to fulfil its obligations under the contract. Her Honour determined that this was not an action for specific performance. Her Honour held that the respondent was able to sue for the purchase price after 1 June 1997 under s48(2) of the Sales of Goods Act 1895 (WA).
Further Evidence Sought to be Adduced on Appeal
18 The appellant seeks leave to adduce further evidence that the relevant fire occurred on 12 May 1997 and at the premises of West Racing Motor Development at 6 O'Malley Street, Osborne Park.
19 Mr Hartz, the principal witness for the respondent, admitted under cross-examination at the trial that two items were missing because they had been destroyed in a fire. They were a "924 GTR front fiberglass section" and a "spare glass door".
20 The appellant contends that if it can be established that these particular items were destroyed by fire on 12 May 1997, he can rely on s 7 of the Sale of Goods Act. Section 7 of the Act provides that:
"Where there is an agreement to sell specific goods, and subsequently the goods, without any fault on the part of the
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- seller or buyer, perish before the risk passes to the buyer, the agreement is thereby avoided."
21 The appellant contends that the trial Judge failed to consider s 7 of the Sale of Goods Act. Section 7 of the Sale of Goods Act deals with the situation where the goods the subject of the contract perish after the formation of the contract. When the requirements of s 7 are met, the buyer is entitled to refuse to pay the purchase price so that the respondent cannot rely on s 48(2) of the Act. It was contended on behalf of the appellant that the learned Judge was in error in applying s 48(2) of the Act without regard to s 7.
The Grounds of Appeal
22 The appellant's grounds which are relevant are grounds 1, 2 and 7, which may be summarised as follows:
1. The purchase price was not due and payable because:
(a) the respondent's claim was a claim for specific performance; and
(b) because of the missing parts, the respondent was not ready, willing and able to perform the contract and had neither title to nor possession of the missing parts which formed part of the subject matter of the contract.
2. The finding that the appellant owed the respondent the sum of $88,500 was in error because the respondent had affirmed the contract and it was only open to the respondent to seek specific performance of the contract, or treat the contract as at an end and sue for damages for breach for loss of the bargain.
7. The learned trial Judge erred in relying on s 48(2) of the Act in circumstances where the respondent could not deliver the goods the subject of the contract and
(a) the contract price was not payable on a day certain;
(b) the appellant never wrongfully refused to pay the purchase price because the respondent could not deliver them and pass title to them to the appellant.
(Page 12)
- specifically perform the contract by reason of the missing parts, the contract was not enforceable at all. It is true that the transfer of property constitutes the essence of a contract of sale. Thus, if the seller is unable to transfer title in the goods sold there will generally be a total failure of consideration. In Roland v Duvall [1923] 2 KB 500 the defendant sold and delivered a motor vehicle to the plaintiff. The plaintiff used the vehicle for four months. It turned out that the vehicle was owned by a third party. The plaintiff surrendered the vehicle to the true owner and sued the seller to recover the price. It was agreed that his only remedy was damages. It was held that he was entitled to recover the full price because there was a total failure of consideration. In the present case it was submitted in this Court on behalf of the respondent that the appellant's remedy in respect of the two missing spare parts was an action for damages for breach of warranty under s 52(1) of the Sale of Goods Act. The availability of this remedy was adverted to by the learned trial Judge. In my opinion, there was no total failure of consideration by reason of the missing parts. The inability of the respondent to deliver them would only entitle the appellant to an agreed reduction in the purchase price equivalent to the current cost of replacement, or in default of agreement, damages for breach of warranty under s 52(1).
24 It is in this context that the application to adduce further evidence falls to be considered.
25 It is apparent from the reasons for judgment that there was evidence given at the trial that certain parts were missing. The following passage in par [20] of her Honour's reasons sets out the position:
"The defendant contends that this is in reality an action for specific performance and relies on the non-delivery of the vehicle or parts. The defendant further claims that the plaintiff's action for specific performance cannot succeed because the plaintiff is not ready, willing and able to meet its obligations under the contract. The defendant relies on evidence of what are referred to as 'Missing Parts' in document exhibit 4. I note that exhibit 4 purports on its face to list 16 missing parts but there was not sufficient evidence to support that contention. Exhibit 4 'Missing Parts' was apparently a list of items from the inventory attached to the agreement which do not appear in a report prepared by Mr Geoff Nicol when he conducted a non-dismantling and visual inspection of the parts on 7 July 1999. Mr Nicol, however, said in evidence that he only looked at the parts that Mr Slako told him were relevant. There was no direct
(Page 13)
- evidence of all the parts being looked at and Mr Slako was not called by the defence to give evidence of what he showed Mr Nicol. The only reliable evidence about exhibit 4 titled 'Missing Parts' is Mr Hartz evidence that items 7 and 8 were missing due to a fire."
26 As I have already mentioned, the learned Judge held that the action was not an action for specific performance but a claim under s 48(2) of the Act for payment at the price which was due on a specified day irrespective of delivery. The evidence referred to in par [20] of the reasons provided the basis for an action for damages for breach of warranty.
27 There is no doubt that this Court has the power to admit fresh evidence on an appeal under O 63 r 10(1) of the Rules of the Supreme Court which relevantly provides that the Full Court has on appeal:
"… full discretionary power to receive fresh evidence on questions of fact, such evidence to be either by oral examination in Court, by affidavit or by deposition taken before an examiner or commissioner … Upon appeals from a judgment after trial … such further evidence … shall be admitted on special grounds only, and not without the special leave of the Court."
28 In order to justify the admission of evidence that was not used at the trial, it must be reasonably clear that, if the evidence had been available and used at the first trial, it is highly likely that it would have produced an opposite result and that no reasonable diligence on the part of the defeated party would have enabled him to procure the evidence: Orr v Holmes (1948) 76 CLR 632 at 640 per Dixon J; and Greater Wollongong City Council v Cowan (1955) 93 CLR 435 at 444 per Dixon CJ. The test as so formulated was applied by this Court in Australian Electrical Electronics Foundry & Engineering Union Western Australia Branch v Hamersley Iron Pty Ltd (1997) 19 WAR 145 at 162 per Malcolm CJ (with whom Kennedy and Owen JJ agreed); see also Australian Democrats WA Division Inc v Australian Democrats Vic Division Inc, unreported; FCt SCt of WA; Library No 980589; 7 October 1998 at 8 per Owen J. In the latter case it was made clear that to satisfy the relevant test the fresh evidence should be apparently credible.
29 In the present case there was an admission by the respondent when cross-examined that certain parts were missing as a result of a fire, but the matter was not further pursued by counsel who appeared for the
(Page 14)
- respondent at the trial. The respondent was not asked to state the date of the fire, although he specified what parts were missing as a result. No explanation has been offered on behalf of the appellant to this Court for the failure of counsel at the trial to pursue the matter further. There was a clear opportunity for the matter to be further explored at the trial to ascertain the date of the fire and its location.
30 It follows that the relevant evidence would have been available at the trial had the matter been pursued in cross-examination. Consequently, the appellant has failed to demonstrate that the evidence could not with reasonable diligence on the part of the appellant have been made available to the appellant. The respondent gave evidence in cross-examination that both the original front spoiler (Part No 7 in the relevant list) and the spare glass door (Part No 8 in the relevant list) were missing. The respondent was not asked when the fire occurred. The matter was simply not further explored. No evidence was sought to be led from the respondent or Mr Walker about the date of the fire or whether the respondent was in a position to obtain and supply replacement parts of the same description.
31 In my opinion the application to adduce the so-called fresh evidence fails at the threshold because it has not been demonstrated that evidence of the date of the fire was not available to the appellant at the time of trial by the exercise of reasonable diligence.
32 For these reasons I would refuse the application. As a result the further application on behalf of the appellant for leave to issue a subpoena to Mr Slako to be called to give the relevant evidence should also be refused.
33 WALLWORK J: I agree with the reasons for judgment of Malcolm CJ and to the orders proposed by his Honour.
34 STEYTLER J: I have had the advantage of reading the reasons for decision proposed to be published by the Chief Justice. I agree with them and have nothing to add.
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