Melreef Pty Ltd v Glenn
[2014] WADC 75
•27 MAY 2014
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: MELREEF PTY LTD -v- GLENN [2014] WADC 75
CORAM: STAUDE DCJ
HEARD: 23 APRIL 2014
DELIVERED : 27 MAY 2014
FILE NO/S: APP 103 of 2013
BETWEEN: MELREEF PTY LTD
Appellant
AND
LAURENCE ANTHONY GLENN
Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram :MAGISTRATE P G COCKRAM
File No :GCLM 5358 of 2011
Catchwords:
Appeal - Magistrates Court - Contract - Implied contract - Contract for livestock handling and agistment services - Whether contractual obligation to pay can be inferred - Whether error shown in finding that the defendant did not intend to contract with the plaintiff
Legislation:
Nil
Result:
Appeal dismissed
Representation:
Counsel:
Appellant: Mr J R Birman
Respondent: Mr P G Giudice
Solicitors:
Appellant: Birman & Ride
Respondent: George Giudice Law Chambers
Case(s) referred to in judgment(s):
Banque Brussels Lambert v Austen National (1989) 21 NSWLR 502
Edwards v Skyways Ltd (1964) 1 WLR 349, 255; (1964) 1 All ER 495
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Pavey v Matthews [1987] HCA 5; (1987) 162 CLR 221
STAUDE DCJ:
Introduction
This is an appeal from the decision given in the Magistrates Court at Perth on 27 November 2013 in which the appellant's claim against the respondent for $20,335.98 for livestock handling and agistment fees was dismissed.
The issue is whether the learned magistrate erred in finding that no legally enforceable contract was made between the parties in respect of the services for which the fees were charged.
Grounds of appeal
The grounds of appeal pleaded in the appeal notice dated 18 December 2013 are as follows:
1.His Honour erred in law in finding that the Appellant (as the Plaintiff) had the onus of proving that the Respondent intended to enter a legally enforceable agreement with the Appellant to pay for its services.
Particulars
(a)The transaction occurred in a commercial context;
(b)In commercial transactions the law presumes the existence of an intention to create legal relations; and
(c)The party seeking to deny the enforceability of a commercial transaction (i.e, the Respondent) bears the onus of proving it was not intended to be binding.
2.His Honour erred in law and fact in concluding that on an objective analysis of the facts (as he determined them) vis:
(a)At all material times the Respondent owned the cattle in question;
(b)When the cattle were delivered to the Appellant:
(i)the Respondent had an honest but mistaken belief that he had sold the cattle to Halleen;
(ii)the Respondent and his agent advised the Appellant that Halleen had purchased the cattle;
(iii)there was no other discussion about who would pay for the agistment; and
(iv)the Respondent was not Halleen's agent,
it could be inferred that the Respondent did not intend to enter into a legal relationship with the Appellant.
3.His Honour erred in law and fact from inferring that the Respondent had indicated to the Appellant that he would not be paying for the Appellant's services by his representation to the Appellant that he had sold the cattle to Halleen.
Particulars
(a)The representation was false and misleading;
(b)Even if the representation was true, it was impossible to determine from the information alone that the Respondent would not be liable for payment of the Appellant's services; and
(c)Approximately 2-3 days after the Respondent delivered the cattle to the Appellant, the Respondent agent advised the Appellant that Halleen had rejected the cattle.
4.If there was no legally enforceable agreement between the parties, his Honour should have awarded damages to the Appellant:
(a)on a quantum meruit basis; or
(b)by reason of the Respondent's breaches of the Fair Trading Act 1987.
Factual background
The appellant's position at trial was as follows. The respondent operated Corunna Downs Station. Roger Leeds, a selfemployed commissioned agent engaged by Elders Pty Ltd, was at the material time the respondent's agent. On 16 July 2009 Mr Leeds drew up a pro forma agreement for the sale by the respondent to Halleen Australasian Livestock Traders Pty Ltd (Halleen) of 243 short horn steers for export (Halleen agreement). The agreement provided that the cattle would be delivered on the same day to South Hedland. The respondent would be paid $1.20 per kg live weight and would pay weighing fees of $1.25 per head.
The Halleen agreement was not in fact an agreement between the respondent and Halleen. Mr Leeds was the respondent's agent, not Halleen's. He was, however, sourcing cattle for export by Halleen from Elders' clients.
On 16 and 17 July 2009 the respondent delivered the cattle to the appellant's Hedland Export Depot where they were drafted, weighed and penned by the appellant's manager, David LawlessPyne.
In addition to the 243 cattle which were the subject of the Halleen agreement, the respondent also delivered to the appellant's depot a further 315 head of cattle intended for sale. The total number of cattle delivered by the respondent was 558.
The Hedland Export Depot is also known as the South Hedland yards. It receives and agists cattle to hold for export and reconsignment. Part of its operation is the weighing of cattle to provide weights for contracts of sale and purchase.
Each delivery of cattle by the respondent was accompanied by a National Vendor Declaration and Waybill (NVD), Part A of which is completed by the owner or person responsible for the husbandry of the cattle and is accompanied by a declaration of the truth of the contents of that part. Part A contains a description of the cattle by number, breed and brands or earmarks and information relating to animal health.
On 4 August 2009 the respondent was paid $67,902.78 for the 243 cattle sold to Halleen in accordance with the sale agreement. An account of the sale and a tax invoice in respect of Elders' commission and other charges is annexed to the respondent's written statement, which is exhibit 3. Exhibit 8 is Elders' statement of account with respect to Halleen for August 2009. It notes that on 4 August 2009 Halleen was charged $73,428.96 for the 243 cattle purchased from the respondent through Elders.
The appellant was unable to prove in documentary form a contract between it and the respondent. Its case relied on an inferential finding that by delivering the cattle to the depot, together with other cattle intended for sale, the respondent evinced an intention to enter into a legally enforceable contract for the appellant's services, an implied term of which was that he would pay the appellant's reasonable fees.
There is no dispute in this matter concerning the quantum of the claim. The appellant had a published schedule of fees dated 8 July 2009, a copy of which had been sent to Mr Leeds, the respondent's agent.
On 29 August 2009 the appellant invoiced the respondent in the amount of $28,650.07 for services rendered in respect of the respondent's cattle. The tax invoice is annexed to the respondent's witness statement, exhibit 3.
By letter dated 5 October 2009 the respondent disputed the fees with respect to the 243 cattle which he had agreed to sell to Halleen. In the letter (attachment CJC 5 to exhibit 2, the witness statement of Dr Christopher John Cooper), the respondent stated:
Invoice is wrong. Total number is wrong. 243 cattle were sold to Halleen Exports on 16/7/09, I have account sale to prove this. Therefore total number of cattle should be 315 head.
The respondent agreed that he was liable to pay the fees charged with respect to the 315 head of cattle which he had also delivered. As a consequence of this letter the appellant reinvoiced the respondent an amount of $9,076.10 as per the respondent's calculation of fees with respect to 315 cattle which the respondent paid.
More than a year later, on 16 November 2010, the appellant issued a new invoice for $20,335.98 being the balance between the original invoice and the undisputed amount paid by the respondent, adjusted by $762.01 by which the original invoice undercharged the respondent.
There is no dispute that on 16, 17 and 18 July and 9 and 10 August 2009 the respondent delivered 558 head of cattle to the depot. NVDs were signed with respect to each consignment. On each occasion the appellant weighed the cattle on arrival and provided the other services for which the fees were charged.
Claim
The appellant's statement of general procedure claim dated 24 April 2012 pleads a breach of a contract to pay fees as the basis of the claim, but does not plead any details of the contract. It merely pleads that on 8 July 2009 the appellant sent Mr Leeds its schedule of fees for its services, that on 16 and 17 July 2009 the respondent delivered 248 cattle to the depot, and that on 15 August 2009 the respondent caused the cattle to be removed from the depot.
There is a discrepancy between the 243 cattle which were the subject of the Halleen agreement and the 248 head of cattle in respect of which the appellant's claim is made. It is not an issue that bears on this appeal. The cattle that are the subject of the appellant's claim are those delivered pursuant to the Halleen agreement. The numerical discrepancy is not material as quantum is agreed.
Defence
In his statement of defence dated 15 May 2012 the respondent denies ever having made a contract with the appellant in relation to the services for which the fees were charged. The respondent admits that he delivered the cattle in question to the depot, but says that he did so, to the knowledge of the appellant, pursuant to the Halleen agreement. The respondent contends that property in the cattle passed to Halleen prior to delivery of the cattle to the depot. The respondent says that the amount in question is not owed by him. Specifically, the respondent pleads:
The Plaintiff accepted delivery of the cattle for and on behalf of the purchaser. Alternatively, the Plaintiff accepted delivery of the cattle, knowing that the cattle did not belong to the Defendant with no agreement between the Plaintiff and the Defendant as to payment for services in relation to the cattle and accepted delivery on the express basis that the purchaser would be responsible for the costs of services supplied in relation to the cattle or by implication on those terms.
The explanation given by the appellant as to the delay between the issue of the invoice in respect of the undisputed amount of $9,076.10 and the invoice for the amount in question is that the appellant sought to establish in that time whether Halleen or Elders, as the respondent's agent, would accept responsibility for the fees. Obviously, neither did.
Magistrate's decision
His Honour held that there was no express agreement between the parties for payment of the appellant for its services. The alleged contract could only be a matter of inference from the respondent's conduct.
The following factual findings were made, none of which is challenged in this appeal.
The respondent told the appellant's Mr Lawless-Pyne that the cattle belonged to Halleen.
The relevant NVDs (exhibit 1, pages 4 ‑ 5) stated that the cattle were consigned to Halleen.
The respondent believed that he had sold the cattle to Halleen.
The respondent told Mr Lawless-Pyne to separate the Halleen cattle and this was done.
Mr Leeds telephoned Mr Lawless‑Pyne on 16 July 2009 and informed him that cattle would be delivered to the depot on behalf of Halleen.
At page 9 of the reasons his Honour held:
I am satisfied that when Mr Glenn delivered the disputed cattle to the depot, he believed that Halleen, in his mind being the purchaser of the disputed cattle, would be paying Melreef for its services. I accept that Mr Glenn, on his own evidence, did not have the authority to contract on behalf of Halleen. I am further satisfied, however, that it was not Mr Glenn's intention to enter into any agreement with Melreef on behalf of Halleen. He said nothing to Mr Lawless-Pyne to indicate such an intention. In his mind, Mr Glenn was merely delivering the disputed cattle to the depot for Halleen (as instructed by Mr Leeds).
The learned magistrate, after referring to the principles applicable to the formation of a legally enforceable contract, stated that he was not satisfied that the necessary intention to contract could be inferred from the respondent's conduct when he delivered the Halleen cattle to the depot.
At page 12 he held:
When he delivered the disputed cattle to the depot [Mr Glenn] told Mr Lawless-Pine that the disputed cattle belonged to Halleen; they had been sold through Elders to Halleen. Consistent with that advice, the disputed cattle were put in separate pens. Had Mr Lawless-Pyne commenced to place the disputed cattle in with the other cattle delivered by Mr Glenn, Mr Glenn would, no doubt, have been prompted to ask why. That did not happen and there was, therefore, no reason for Mr Glenn to say anything further. Had Mr Glenn delivered the disputed cattle to the depot and said nothing to Mr Lawless-Pyne about Halleen, the situation would have been different. It would have been reasonable to infer from that conduct that he intended to pay for any services provided by Melreef for the disputed cattle. The inference I draw from his advice to Mr Lawless‑Pyne about Halleen was that he was indicating to Mr Lawless‑Pyne that he would not be paying for services provided for the disputed cattle by Melreef. Mr Lawless-Pyne did not seek to clarify the position before he took delivery of the disputed cattle. Given what he had been told by Mr Leeds and Mr Glenn, it would have been prudent for him to have done so.
Ground 1
Ground 1 is based on the proposition that in a commercial transaction the parties are presumed to intend to create legal relations such that the onus of proving the absence of such intention rests with the party who makes that assertion: Edwards v Skyways Ltd (1964) 1 WLR 349, 255; (1964) 1 All ER 495, 500 (Megaw J); Banque Brussels Lambert v Austen National (1989) 21 NSWLR 502 (Rogers CJ). The appellant asserts that the contract was for the supply of business services and was therefore a commercial one. Accordingly, the parties are presumed by law to have intended that the contract be legally binding.
The presumption does not displace the general rule that the onus is on the party asserting the existence of a contract to prove that a contract was made. In this respect his Honour cited Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 (Gaudron, McHugh, Hayne and Callinan JJ) at [24] (citations omitted):
'It is in the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty'. To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet '[t]he circumstances may show that [the parties] did not intend or cannot be regarded as having intended to subject their agreement to the adjudication of the courts'.
The question in this case was not simply whether the parties intended to subject their agreement to the adjudication of the courts, that is, whether they had an intention to create legal relations, but whether, upon an objective assessment of the relevant circumstances, there was any contractual intent at all.
It is on that fundamental issue of formation that his Honour correctly held that the appellant bore the onus of proof. As the plurality held in Ermogenous at [26], 'where issue was joined about the existence of a binding contract between the parties, there could be no doubt that it was for the appellant to demonstrate that there was such a contract'.
The positive findings of fact form, in my opinion, a proper basis for an objective conclusion that Mr Glenn did not intend to contract with the appellant. The findings of fact made by his Honour did not permit an inference to be drawn to the contrary. In the absence of an express agreement between the parties, no voluntary assumption of a legally enforceable duty on the part of the respondent could be inferred. The outcome, his Honour accepted, would have been different if Mr Lawless‑Pyne had not been told by Mr Leeds and the respondent that the cattle were Halleen's and had not in fact separated them from other cattle on that basis.
The position was obviously different in respect of the 315 other cattle delivered by the respondent. It would have been unnecessary to prove an express contract in relation to them as an obligation to pay for the appellant's services could be inferred from the circumstances of delivery.
The proposition relied on by the appellant applies in circumstances where an agreement is shown, yet an intention to create legal relations, as an essential element of enforceability, is disputed. It does not apply to the circumstances as found by the learned magistrate.
Ground 2
Ground 2 challenges the learned magistrate's conclusion that it could be inferred that the respondent did not intend to contract. It is argued that his Honour based his conclusion on the respondent's subjective intention, rather than 'an objective assessment of the state of affairs between the parties', contrary to principle: Ermogenous [25]. There the plurality held that 'intention' in the context of contractual formation 'describes what it is that would be objectively conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened'.
The facts found by his Honour as to what was said and done did not objectively convey a contractual intention. To the contrary, they demonstrated that the respondent did not intend that he be liable for the cattle. Those facts, set out above, were open on the evidence and are not challenged.
The appellant argues that other facts expressly found by the learned magistrate were not taken into account, i.e., that the respondent signed the NVDs as owner, that Mr Leeds as the respondent's agent told Mr Lawless‑Pyne that the cattle were for Halleen, that the respondent had no authority to contract for Halleen and that the respondent would have known that the appellant would charges fees for its services in respect of the cattle. None of these facts, in my opinion, invalidates the inference drawn by the learned magistrate. It is clear that the respondent's conduct as a whole with respect to both the Halleen cattle and the other cattle was analysed.
Whilst it is the case that a person who engages the services of another is ordinarily taken to accept an obligation to pay for them, in this case the conduct of the respondent viewed objectively did not convey an intention to contract with the appellant. His Honour found by inference that the conduct of the respondent indicated that he would not be paying for the cattle. The appellant in those circumstances, not having obtained an express agreement, could not imply a contract.
Ground 3
The third ground contends that the learned magistrate erred by not finding for the appellant on the basis or misrepresentation or a quantum meruit. Neither of these alternatives to the principal relief sought by the appellant was pleaded or argued at first instance.
This ground can be dismissed without the court descending into discussion about whether the alternative claims can be raised on appeal.
The factual findings exclude deceptive and misleading conduct for the purposes of s 10 of the Fair Trading Act 1987. The reasons at [12], quoted above, make it clear that the respondent's conduct, in word and act, conveyed to the appellant's manager that he would not be paying for the services to be provided to the cattle which the respondent told Mr Lawless-Pyne were Halleen's cattle. The respondent did not represent that he would pay, or that he was an agent for Halleen.
As to the quantum meruit argument, the remedy sought is restitutionary. This is not a Pavey v Matthews [1987] HCA 5; (1987) 162 CLR 221 situation where a contractual obligation to pay is found to be unenforceable, yet the defendant has accepted the benefit of work done at its request, giving rise to an obligation of a different character. In this case, no non-contractual obligation has been demonstrated. It has not been shown that the respondent benefitted from the appellant's services. Nor can it be shown that the respondent requested the services on his own behalf. Uncertainty as to who is liable to pay for the appellant's services is the very genesis of the dispute.
Conclusion
Unfortunately, the appellant is significantly out of pocket. The loss is due to a failure to secure a legally enforceable agreement to pay in circumstances where no such agreement could be inferred.
The appeal is dismissed.
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