Northmead Holdings Pty Ltd v Westralian Fruits Pty Ltd - [2022] WASC 390

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   NORTHMEAD HOLDINGS PTY LTD -v- WESTRALIAN FRUITS PTY LTD [2022] WASC 390
CORAM:   CURTHOYS J
HEARD:   9 & 10 JUNE 2021
DELIVERED          :   22 NOVEMBER 2022
FILE NO/S:   CIV 2776 of 2019
BETWEEN:   NORTHMEAD HOLDINGS PTY LTD
Plaintiff
AND
WESTRALIAN FRUITS PTY LTD
Defendant

Catchwords:

Contract - Informal contracts - Sale of goods - Inferring or implying a term from conduct - Payment of goods after rendering of statement or invoice - Relationship between inference or implication of term and limitation period

Limitation of actions - When cause of action arose - 14-year period between sale of goods and claim - Whether cause of action statute barred

Legislation:

Limitation Act 1935 (WA), s 36
Limitation Act 2005 (WA), s 13
Sale of Goods Act1895 (WA), s 48(1)

Result:

Judgment for plaintiff of $201,058.90, balance of claim, $1,185,793.02, dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	P A Walker
Defendant	:	A P Hershowitz

Solicitors:

Plaintiff	:	Taylor and Taylor Lawyers Pty Ltd
Defendant	:	Bowen Buchbinder Vilensky

Cases referred to in decision:

Bell Group Ltd (in liq) v Westpac Banking Corp [No 9] [2008] WASC 239; (2008) 39 WAR 1
Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541
Bunbury Foods Pty Ltd v National Bank of Australasia Ltd [1984] HCA 10; (1984) 153 CLR 491
Byrne v Australian Airlines [1995] HCA 24; (1995) 185 CLR 410
Coburn v Colledge [1897] 1 QB 702
Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337
Donnelly v National Australia Bank (Unreported, WASC, Library No 920283, 19 May 1992)
Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539
Melreef Pty Ltd v Glenn [2015] WASCA 111
Reeves v Butcher [1891] 2 QB 509
Swansea City Council v Glass [1992] QB 844
Westpac Banking Corporation v Bell Group Ltd (in liq) [No 3] [2012] WASCA 157; (2012) 44 WAR 1

CURTHOYS J:

Introduction

In this action the plaintiff, Northmead Holdings Pty Ltd (Northmead), sues the defendant, Westralian Fruits Pty Ltd (Westralian), for goods sold and delivered between 1 July 2002 and 1 August 2017. Northmead's sale of goods is governed by the Sale of Goods Act1895 (WA).
Northmead operates a family-run agricultural supply business in Gingin. It trades under the name 'W&J Greenwell' and operates out of a general store and yard. The business sells hardware, fertilisers, chemicals, agricultural products, and various other goods.
Westralian is a former operator of a horticultural farm in the Gingin area that produced various fruits. It was a regular customer of Northmead from at least 1999 until 2017.
Westralian has declined to pay for agricultural goods supplied by Northmead between 2002 and 2017.
Northmead commenced these proceedings by writ on 9 October 2019.
There is no dispute between the parties about the existence of a contract for the sale of goods nor the price of those goods.
The dispute centres around the terms of the contract between the parties as to when Westralian was obliged to pay Northmead for the goods supplied and the proof of the actual goods supplied.
Westralian contends that part of Northmead's claim is statute barred by reason of the Limitation Act1935 (WA) (repealed) and the Limitation Act 2005 (WA). The extent to which that defence can be made out depends on the point at which the cause of action arose under the contract.

Background

From at least 1999 until 2017, Northmead supplied numerous agricultural goods to Westralian. Westralian did not pay for such goods at the time of supply.
From time to time during the early period of supply, Northmead rendered invoices or statements of account to Westralian for the goods it had supplied and Westralian made payments for the purchase of such goods.
By June 2004, Northmead had purportedly rendered invoices or statements of account covering supplies of goods made prior to 1 July 2002.
Northmead continued to supply Westralian with goods but did not send any further invoices or statements of account until 6 July 2018.
Westralian made requests from time to time for invoices or statements of account for the goods supplied by Northmead. None were provided.
In April 2018, Westralian's finance manager, George Nehme, contacted Northmead's director, Alan Greenwell, and inquired about the amount that was owed.[1] Mr Greenwell provided Mr Nehme with an estimate, by email, that the amount was between $1.1 and $1.3 million.[2]
[1] Exhibit A, tab 17, 208.
[2] Exhibit A, tab 15, 206.
On 6 July 2018, Northmead sent Westralian an invoice or statement of account covering goods supplied to Westralian between 1 July 2002 and 1 August 2017. The amount of the invoice was $1,386,851.92.[3]
[3] Exhibit A, tab 35, 295 - 332; see also exhibit B, tab 1, 538 - 1182.
Westralian has declined to pay the invoiced amount.

The evidence

Northmead called oral evidence from the following witnesses at trial:
(a)Mr Greenwell, the aforementioned director of Northmead who effectively ran the business;[4]
(b) Margaret Greenwell, who was largely responsible for Northmead's accounts;[5] and
(c) John Marten, a former employee of Westralian.[6]
[4] ts 15 (9/6/2021).
[5] ts 79 (9/6/2021).
[6] ts 61 ‑ 62 (9/6/2021).
Westralian did not lead evidence.

The relevant pleadings

By its amended statement of claim filed on 25 March 2021, Northmead pleads that there was an informal agreement between the parties that was partly oral and/or to be inferred by conduct.[7]
[7] Amended statement of claim filed 25 March 2021 [4] (Statement of Claim).
Paragraph 5 pleads that it was a term of the agreement, either express, inferred by conduct or arising by implication, that Westralian would pay Northmead for the goods after Northmead sent its bill for the goods supplied and within 30 days of the sending of the bill, or alternatively, within a reasonable time after the sending of the bill.
To the extent that the term was express, that term is pleaded to be stipulated:
(a) in the conversation between Mr Greenwell on behalf of Northmead, and a manager of Westralian in about 1996, at Northmead's business premises; and
(b)in a further conversation, in about 2006 to 2009, between Mr Greenwell on behalf of Northmead, and Hugh Middendorp, Mr Marten and Michael Middendorp on behalf of Westralian, at Northmead's business premises.[8]
[8] Statement of Claim [5(a)].
Northmead referred to further oral conversations in its written submissions as identified further below.[9]
[9] See [54].
To the extent that the term was inferred by conduct, it is pleaded to be inferred from at least the following:
(a) the conversations referred to in par [21] above;
(b)Northmead purchasing or ordering, and Northmead supplying to Westralian, goods between at least 28 October 2000 and August 2017;
(c) Northmead, between 28 October 2000 and June 2004, sporadically rendering invoices or statements of account for goods supplied to Westralian prior to 1 July 2002;
(d) Westralian, from time to time between 28 October 2000 and June 2004, making payments to Northmead for goods supplied or to be supplied;
(e)to the knowledge of Westralian, Northmead establishing by no later than 28 October 2000, and keeping thereafter, an order book or docket book for Westralian and recording in that book the identity and price of various goods purchased or ordered by and supplied to Westralian from time to time;
(f)the existence of a statement, on invoices or statements of account rendered by Northmead to Westralian from time to time, that Northmead's invoice terms were 30 days; and
(g)the fact that, from time to time after June 2004, and to the knowledge of Northmead and Westralian, Westralian continued to purchase or order, and receive supplies of, goods from Northmead, but did not (until about 6 July 2018):
(i)receive any further invoices or statements of account, or any other record of the nature or price of goods purchased or ordered, or of the state of Westralian's account with Northmead;
(ii)receive from Northmead any other request for payment for goods supplied; or
(iii)otherwise make any payments to Northmead for goods supplied or to be supplied.[10]
[10] Statement of Claim [5(b)].
To the extent that the term arose by implication, the term is pleaded to be implied in fact because such term is necessary for the reasonable or effective operation of the agreement, having regard to the matters referred to in pars [21], [22](b) - (e) and [22](g) above.[11]
[11] Statement of Claim [5(c)].
Although Northmead pleaded the existence of an express term, that pleading was not pursued in Northmead's opening submissions.[12] Despite that, there was some examination by Northmead of its witnesses directed to establishing an express term. However, in any event, the evidence did not support the existence of an express term to the effect pleaded.
[12] ts 7 (9/6/2021).
Therefore, if Northmead is to succeed in its claim, it must establish that there was an inferred or implied term that payment only became due after the invoice had been sent.
Westralian, by its amended defence filed 17 May 2021, denies the above allegations made by Northmead and pleads that to the extent the term is alleged by Northmead to be inferred, it is not necessary to give business efficacy to the agreement between them, it is not obvious, it contradicts the trading relationship that endured between the parties, and it is unreasonable.[13]
[13] Defendant's amended defence filed 14 May 2021 [5.1] (Defence).
Instead, Westralian pleads the following alternative implied terms of the agreement:
(a)Northmead would render an invoice to Westralian within a reasonable period of time after Northmead sold goods to Westralian and no longer than 60 days after the purchase of any goods; and
(b)Westralian would pay for the goods purchased within a reasonable period of time after Northmead rendered an invoice to Westralian.[14]
[14] Defence [5.2] - [5.3].
The terms are pleaded to be implied because they give business efficacy to the agreement between the parties, are obvious, necessary, and do not contradict any express term of the agreement.[15]
[15] Defence [5].

The legislation

The Sale of Goods Act

There was no dispute about the application of the relevant provisions of the Sale of Goods Act.
Section 27 of the Sale of Goods Act provides that '[i]t is the duty of the seller to deliver the goods, and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale'.
Section 28 of the Sale of Goods Act provides that '[u]nless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller must be ready and willing to give possession of the goods to the buyer in exchange for the price, and the buyer must be ready and willing to pay the price in exchange for possession of the goods'.
Section 48(1) of the Sale of Goods Act provides that '[w]here, under a contract of sale, the property in the goods has passed to the buyer, and the buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods'.

The Limitation Acts

The action concerns goods sold between 2002 and 2017. The bulk of the claim is governed by the Limitation Act 2005. However, the relevant limitations legislation that applied prior to 15 November 2005 was the Limitation Act 1935.
Under s 36 of the Limitation Act 1935, the relevant limitation period for an action concerning the sale of goods is six years.
Section 13 of the Limitation Act 2005 similarly provides that 'an action on any cause of action cannot be commenced if six years have elapsed since the cause of action accrued'.
For the purposes of this action there is no relevant difference between the two Acts. In either event, the limitation period is six years from when the cause of action arose.

When did the cause of action arise?

Northmead and Westralian rely on different implied or inferred terms as to payment for the goods supplied. To favour the term or terms alleged by one party over the other has implications for whether part of Northmead's claim is statute barred.
Northmead submits that the rendering of an invoice or statement was a condition precedent to Westralian's liability to pay.[16] Specifically, Northmead pleads that the debt was payable after the rendering of an invoice irrespective of how much time had elapsed after the delivery of goods. On this view, the cause of action would have arisen when Northmead sent its invoice or statement on about 6 July 2018 and Westralian failed to pay for the goods in accordance with such invoice or statement. If the court was to adopt Northmead's term, Northmead would be relatively unimpeded in bringing its claim.
[16] ts 7 (9/6/2021).
Westralian pleads that it was an implied term that Northmead would render an invoice to Westralian within a reasonable period of time after Northmead's sale of goods and no longer than 60 days after purchase of any goods. The upshot is that Northmead could not wait for an indefinite period to render an invoice. Payment for the goods would become due and payable within a reasonable period after delivery of the goods or within 60 days of delivery.[17] On this view, time would have started running a reasonable time after delivery of the goods or 60 days after such delivery. The corollary is that Northmead's claim would be limited to the six-year period prior the commencement of its action on 9 October 2019.
[17] Defendant's outline of submissions filed 4 June 2021 [70] (Defendant's Submissions).
The logical first question that therefore arises is what term should be implied or inferred as to the agreement between the parties. Before turning to this issue, it is necessary to consider the relevant legal principles, the conduct that is alleged to support the existence of Northmead's pleaded term and the submissions of the parties.

Legal principles

Limitation periods

It is relevant to consider the principles concerning limitation periods because they are relevant to the issue of whether the term pleaded by Northmead should be implied or inferred.
The rationales of limitation periods are well accepted and have been the subject of several judicial recitations. McHugh J identified four broad rationales for the enactment of limitation periods in Brisbane South Regional Health Authority v Taylor:[18]
(1)as time goes by, relevant evidence is likely to be lost or its integrity compromised;
(2)it is oppressive to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed;
(3)people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them; and
(4)the public interest requires that disputes be settled as quickly as possible.
[18] Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541, 552 - 553.
A cause of action for the recovery of a debt arises at the time when the debt could first have been recovered by action. The right to bring an action may arise on various events; but it has always been held that the statute of limitation runs from the earliest time at which an action could be brought.[19]
[19] Reeves v Butcher [1891] 2 QB 509, 511.
In Swansea City Council v Glass,[20] the Court of Appeal of England and Wales heard an appeal on a preliminary question decided by the primary judge concerning the application of the relevant statute of limitations to the local authority's claim. The local authority sought the payment of costs for works it had undertaken on a dwelling. The defendant contended that the cause of action accrued when the works were completed and thus the action would be statute barred. The local authority contended that the correct date was when the demand for payment was served or when it became operative.
[20] Swansea City Council v Glass [1992] QB 844.
Taylor LJ (Gibson and Purchas LJJ agreeing) dismissed the appeal and determined that the primary judge was correct in finding that the cause of action accrued when the works were completed. On his Honour's construction of the relevant statute of limitations, although the requirement to serve a demand for payment is a procedural condition precedent to bringing proceedings, it is not part of the cause of action.[21] Taylor LJ stated:[22]
I am fortified in this view by consideration of what could result if the local authority were right. Upon their argument, the local authority could delay service of a demand indefinitely. Then, having served their demand long after the works were complete, they would have a further six years in which to take proceedings in the High Court or the county court. In Coburn v Colledge[1897] 1 QB 702, 709, Lopes LJ said:
'There is nothing in the section, so far as I can see, inconsistent with the view that the cause of action arises when the work is completed. It was urged that, if this construction were adopted, a solicitor would have a shorter time during which he may abstain from bringing his action for work done than the rest of Her Majesty's subjects. That may be so; but on the other hand, if the plaintiff's contention is correct, the solicitor may abstain from delivering his bill for 20 years, and then at the end of that time he may deliver it and sue after the expiration of a month from its delivery. It seems to me that that would be a very anomalous and inconvenient result.'
[21] Swansea (130).
[22] Swansea (130).
Although Swansea does not relate to the sale of goods, but rather the provision of services, the principle is the same. Normally a party's right to payment arises on delivery of the goods and the cause of action arises on delivery absent some agreement to the contrary.

Inferred and implied terms

In the context of limitation periods, it is useful to turn to the authorities concerning inferred and implied terms.
The essential distinction between an inferred term and an implied term is that while the former seeks to give effect to the actual intent of the parties manifested by their words, acts and conduct, the latter represents a finding of presumed or imputed intention. Lee AJA described this distinction in Westpac Banking Corporation v Bell Group Ltd (in liq) [No 3]:[23]
The content of an inferred contract is ascertained by determining the extent of the mutual assent of the parties, that is, the actual intent of the parties manifested by their words, acts and conduct: see Hawkins v Clayton (1988) 164 CLR 539 at 570 per Deane J; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422 per Brennan CJ, Dawson and Toohey JJ.
As acknowledged in Breen v Williams (1996) 186 CLR 71 at 91 per Dawson and Toohey JJ, 'The line between inference and implication will not always be easy to draw'.
Whereas the terms of an inferred contract represent a conclusion as to the actual intent of the parties, an implied term is the finding of a presumed or imputed intention of the parties made necessary to provide for the reasonable or effective operation of a contract for which the parties have not attempted to spell out the full terms: see Hawkins v Clayton (at 573) per Deane J; Byrne v Australian Airlines (at 422) per Brennan CJ, Dawson and Toohey JJ, (at 442) per McHugh and Gummow JJ.
…
Although the task of considering whether a term is to be implied in an informal contract may receive some assistance from the criteria identified in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 as those to be satisfied before a term is implied in a formal contract in which the parties have attempted to set out agreed terms, a term will only be implied in an informal contract where it can be seen that it is necessary to do so for the effective operation of the contract or it is a term that is so obvious in the circumstances that it goes without saying: see Byrne v Australian Airlines (at 442) per McHugh and Gummow JJ. The second criterion may be taken to have a necessary connection with the first.
[23] Westpac Banking Corporation v Bell Group Ltd (in liq) [No 3] [2012] WASCA 157; (2012) 44 WAR 1 [335] - [337], [341].

As to the existence of an inferred term, the question for the court is whether, viewed as a whole and objectively from the point of view of reasonable persons on both sides, the dealings show a concluded bargain.[24] It has been said that inferring a contract from conduct will not be done lightly.[25] As the Court of the Appeal observed in Melreef Pty Ltd v Glenn:[26]
A contract may be inferred from conduct. However, the parties must indicate unambiguously their intention to contract on the particular terms sought to be established: see Laidlaw v Hillier Hewitt Eisley Pty Ltd [2009] NSWCA 44 [5] ‑ [9]. In Adnunat Pty Ltd v ITW Construction Systems AustraliaPty Ltd [2009] FCA 499 [39], Sundberg J said:
[The] existence or otherwise of an enforceable agreement depends ultimately on the manifest intention of the parties, objectively ascertained: see Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548 ‑ 50 (Gleeson CJ) and his Honour's reference to Gissing v Gissing [1970] UKHL 3; [1971] AC 886; see also Cheshire & Fifoot's Law of Contract (9th ed, LexisNexis, 2008) at [3.5] and [3.9]. Where mutual promises are sought to be inferred, the conduct relied upon must, on an objective assessment, evince a tacit agreement with sufficiently clear terms. It is not enough that the conduct is consistent with what are alleged to be the terms of a binding agreement. The evidence must positively indicate that both parties considered themselves bound by that agreement: Industrial Rollformers [2001] NSWCA 111; (2001) Aust Contract R 90 ‑ 129 at [137] ‑ 138] and [142]; Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2005] FCA 288 (Pacific Brands) at [47].
(emphasis added)
[24] Melreef Pty Ltd v Glenn [2015] WASCA 111 [20].
[25] Melreef [20]; Bell Group Ltd (in liq) v Westpac Banking Corp [No 9] [2008] WASC 239; (2008) 39 WAR 1 [2661].
[26] Melreef Pty Ltd v Glenn [2015] WASCA 111 [20].
A term will only be implied where it is necessary to do so for the reasonable or effective operation of the contract.[27] In Hawkins v Clayton,[28] Deane J stated:
The most that can be aid consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties.
(emphasis added)
[27] Byrne v Australian Airlines [1995] HCA 24; (1995) 185 CLR 410, 442 (McHugh & Gummow JJ); Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539, 573 (Deane J).
[28] Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539, 573 (Deane J).
The need to imply a term arises from the failure of the parties to turn their minds to the inclusion of that term. However, as Owen J observed in Westpac Banking Corporation v Bell Group Ltd (in liq) [No 3], the failure of the parties to consider whether it was appropriate to add the term to their contract does not of itself make that term to be implied as part of the presumed intention of the parties in respect of the content of their contract. The implication of a term is not a licence to improve the contract without regard to the need to restrict implication of a term to the extent necessary to give business efficacy to the contract and thus the presumed intent of the parties.[29] It is not sufficient that it would be reasonable to imply a term; it must be clearly necessary.[30]
[29] Westpac Banking Corporation v Bell Group Ltd (in liq) [No 3] [342].
[30] Codelfa ConstructionPty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at 346.

The relevant conversations and course of dealing

Northmead contends that the term on which it relies should be inferred or implied from various oral conversations and from the parties' course of dealing between August 1999 and August 2017.

The oral conversations

The oral conversations include those pleaded in Northmead's statement of claim and further conversations particularised in Northmead's written opening submissions, namely:
(1) a conversation between Mr Greenwell and a manager of Westralian (Mr Rohde) in the 1990s to the effect that Northmead could open an account for Westralian, under which Westralian's staff could buy or order supplies as needed and on credit, and where Northmead would then send a statement out from time to time which Westralian would need to pay;
(2) a conversation between Mr Greenwell and Mr Hugh Middendorp, Mr Marten and Mr Michael Middendorp of Westralian in about 2006 - 2009 to the effect that Westralian owed Northmead a lot of money and Westralian would pay when Northmead sent its bill;
(3) a conversation between Mr Greenwell and Mr Marten of Westralian in about 2005 to the effect that it was okay with Northmead for Westralian to cease an earlier practice it had of paying round-sum amounts to Northmead, and that Westralian thereafter could just pay for goods supplied by Northmead when Northmead sent out its invoice; and
(4) other conversations between Mr Greenwell and Mr Marten of Westralian from time to time after 2004 to the effect that Northmead would get around to sending out its invoice to Westralian but the business was under pressure.
In its oral opening, counsel for Northmead downplayed the importance of these conversations, describing them as not a critical part of Northmead's case.[31]
[31] ts 10 - 11 (9/6/2021).
There is nothing in the oral evidence of Mr Greenwell[32] nor Mr Marten[33] to support its pleaded case there was an express agreement that Westralian would pay Northmead for the goods supplied only after Northmead sent Westralian its invoice.
[32] ts 18 ‑ 19, 32 ‑ 34, 42 ‑ 43 (9/6/2021).
[33] ts 68 ‑ 69, 74 ‑ 75 (9/6/2021).
In fact, Mr Greenwell's evidence is that there was no such discussion with Westralian.[34]
[34] ts 48 (9/6/2021)
There was no need to make a credibility finding concerning this evidence because the evidence, even if accepted, does not support Northmead's case.

The course of dealing

Northmead submitted that even if it was unable to prove the oral conversations to the relevant standard, the course of dealing between the parties is itself sufficient for the court to infer or imply the term.[35]
[35] ts 11 (9/6/2021).
Northmead accurately stated the procedure for the delivery of goods and the rendering of invoices by Northmead to Westralian between August 1999 and August 2017. I respectfully draw from its submissions in this regard.
The primary records establish that Westralian purchased or ordered, and Northmead supplied to Westralian, many thousands of goods between August 1999 and August 2017. Westralian generally made multiple such purchases or orders each week across this period which equated to hundreds, perhaps thousands, of separate transactions. There was no uniformity or consistency in terms of what Westralian purchased or ordered and when Westralian placed an order.
Across this period, Northmead, to the knowledge of Westralian, kept a docket book into which it recorded the identity and price of goods purchased or ordered by and supplied to Westralian.

December 1999 to June 2004

Between at least December 1999 and June 2004, Northmead sporadically rendered to Westralian invoices or statements of account for goods supplied. There was no predictability or consistency in terms of when Northmead sent out these statements of account, what supplies of goods they covered, or over what supply period.
Westralian made payments to Northmead from time to time between January 2000 and June 2004.
Most of the payments were in round sums, and not responsive to any particular statement of account.
The payments were (as Westralian was informed by the statements of account sent out by Northmead in this period) recorded by Northmead as a 'credit' on Westralian's account with Northmead, and then netted off against the price for various supplies of goods made by Northmead to Westralian as shown on the statements of account (as a debit).
On a few occasions, Westralian made payments to Northmead that were directly responsive to a statement of account rendered by Northmead, and in payment of the outstanding amount recorded on such statement on account for particular supplies of goods by Northmead to Westralian in earlier periods of time.

July 2004 to July 2018

As at June 2004, Northmead had only sent out statements of account covering supplies of goods to Westralian up to 1 July 2002. That is, Northmead was already about two years behind in invoicing for particular supplies. After about June 2004, Westralian continued to purchase or order and receive from Northmead supplies of goods. However, from that time and until about 6 July 2018 - a period of 14 years - Westralian did not:
(a)receive any further statements of account, or any other record of the nature or price of goods purchased or ordered, or of the state of its account with Northmead;
(b)receive from Northmead any other request for payment for goods supplied; or
(c)otherwise make any payment to Northmead for the goods supplied.
Westralian otherwise made various requests of Northmead to render invoices. However, no such invoices were rendered before about July 2018.

Mr Greenwell's evidence

Mr Greenwell gave evidence about W&J Greenwell's dealings with customers and the setting up of accounts. The setting up of a customer's account was described as an oral agreement between W&J Greenwell and a customer who is '[n]ine times out of 10' someone that Mr Greenwell would virtually know. Mr Greenwell was mostly responsible for setting up accounts. Mrs Greenwell would on occasion set up accounts if Mr Greenwell was not in the store.[36]
[36] ts 17 (9/6/2021).
Before setting up the account, Mr Greenwell would 'ask around' about the customer's credit rating to ascertain whether to provide the customer credit.[37] In setting up the account, Mr Greenwell would not tell the customer how much credit W&J Greenwell could extend to them, how the customer should pay for the goods on the account, or how often W&J Greenwell would send out the statement of account.[38]
[37] ts 17 (9/6/2021).
[38] ts 18 (9/6/2021).
Mr Greenwell said that it is a 'bit of a standing joke' that W&J Greenwell does not send out statements of account but also observed that it has brought some customer accounts up to date on the request of the customer.[39] Mr Greenwell's evidence was that '30 days' is written on the invoice. He clarified that the 30 days ran from when the customer received the statement of account.[40]
[39] ts 17 (9/6/2021).
[40] ts 18 (9/6/2021).
Mr Greenwell's evidence was that in the period between 2002 and 2004, Northmead and Westralian came to an agreement, to which he was not privy, that Westralian would pay $5,000 per month to Northmead, on account, for goods supplied for which invoices or statements had not been rendered by Northmead. At one stage a credit of $95,000 had been built up. The payments of $5,000 stopped in April 2004 when an employee of Westralian ceased employment.[41]
[41] ts 29 ‑ 31 (9/6/2021).
The evidence of Mr Marten was that at one point Westralian was making round sum payments of $12,500. His evidence was that the reason for that was 'to pay some money so that it wasn't such a big bill at the end'.[42]
[42] ts 68 (9/6/2021).
The evidence relating to why invoices were not sent by Northmead is not that it was part of a course of conduct but rather that Northmead's accounting system was a 'complete mess'.[43]
[43] ts 44 (9/6/2021).
Mr Greenwell was, and I assume still is, an extremely high net worth individual. Perhaps that explains why he did not issue invoices for so long.

The parties' submissions as to the inferred or implied terms

Whether the term should be inferred

In view of the conversations and course of dealing discussed above, Northmead submitted that the court should infer that it was agreed between the parties that payment would occur upon Northmead sending an invoice or statement because a reasonable person would conclude that the parties must have agreed to such a term. To this end, Northmead emphasised that:
(1) the goods supplied from 1 July 2002 were not provided gratuitously but as part of a business arrangement;
(2) goods continued to be supplied for 14 years after June 2004 in the absence of any payment for supplies after 1 July 2002, and further, with no request for such payment between June 2004 and July 2018;
(3)Westralian, from time to time, asked Northmead for invoices to be rendered and that no payments were made by Westralian in the absence of such invoices; and
(4)given the very significant number of supplies being provided over a long period of time and the lack of predictability or consistency in those supplies, in the absence of Northmead first sending out an invoice or statement covering particular supplies, Westralian could not be expected to know, or to be able to work out, what it was required to pay.[44]
[44] Plaintiff's outline of submissions filed 1 June 2021 [27] (Plaintiff's Submissions).
Northmead contended that sensible commercial parties would not behave in the above manner if Westralian was significantly in default of any obligation to pay for the supplies. The conduct was submitted to indicate the existence of an understanding that something had to happen - namely, the rendering of an invoice or statement - before Westralian would be obliged to pay for the goods.[45] Northmead contended there was no evidence to suggest the existence of any time-related condition precedent to Northmead's right to render an invoice, and thus to be paid, for particular supplies.[46]
[45] Plaintiff's Submissions [28].
[46] Plaintiff's Submissions [30].
As to the time for Westralian pay, Northmead submitted that it is to be inferred that Westralian would need to pay within 30 days of receipt of the invoice or statement or, in the absence of an express time stipulation, it would be implied that payment would occur within a reasonable time of receipt.[47]
[47] Plaintiff's Submissions [31].
Northmead alternatively described the course of dealing as an arrangement for the supply of goods on credit. In that regard, Northmead submitted that the credit period could not have been intended to expire until after the invoice or statement was rendered identifying the amount of the credit that had been extended to Westralian and demanding payment for the amount.[48]
[48] Plaintiff's Submissions [29]
Northmead relied upon Bunbury Foods Pty Ltd v National Bank of Australasia Ltd[49] and Donnelly v National Australia Bank[50] as authority for the proposition made at [79(4)] that an obligation to make demand as a condition precedent to a liability to pay may properly be implied or inferred if the party obliged to make payment could not otherwise be expected to know or to work out the amount owing in advance of receiving the demand.[51]
[49] Bunbury Foods Pty Ltd v National Bank of Australasia Ltd [1984] HCA 10; (1984) 153 CLR 491 at 503 - 504.
[50] Donnelly v National Australia Bank (Unreported, WASC, Library No 920283, 19 May 1992) 8 - 12.
[51] ts 15 (10/6/2021).
Bunbury Foods is a case relating to a notice of demand issued under a mortgage; it is not a sale of goods case, nor is it analogous to a sale of goods case. In fact, the High Court stated that 'it is not essential to the validity of a notice calling up a debt that it correctly states the amount of the debt'.[52] It is not authority for the proposition advanced by Northmead.
[52] Bunbury Foods (503 - 504).
Donnelly is another case relating to a notice of demand issued under a mortgage. Rowland & Ipp JJ did not decide whether a term should be implied that the defendant bank was obliged to provide sufficient information to enable the plaintiff to ascertain the correct amount owing. The appeal was against summary judgment. It was sufficient for their Honours to find that it was arguable. It is also not authority for the proposition advanced by Northmead.
Westralian submits that Northmead has not discharged its onus to prove the existence of an inferred term that payment would occur upon the rendering of an invoice or statement.[53] It says no reasonable person would conclude, based on the conversations and conduct relied upon by Northmead, that the parties agreed to such a term.[54]
[53] Defendant's Submissions [63].
[54] Defendant's Submissions [56].
In support of the purported 'absurdity' of the inferred arrangement, Westralian submitted that:
(1)no reasonable person would suggest that the goods supplied were to be provided gratuitously;
(2)the fact that Northmead made no requests for payment for 14 years does not suggest to a reasonable person that the parties agreed the supplier could render an invoice at any time which would then have to be paid but rather suggests that Northmead's business operations were either in disarray or were negligently managed or had been overlooked or for some other unknown reason had not been implemented;
(3)the fact that Westralian asked Northmead for invoices to be rendered from time to time prior to July 2018 indicates that the contended term was not agreed or understood;
(4)the failure by Northmead to properly account for and render invoices to Westralian could have resulted from various reasons and it was not for Westralian to have to speculate about this;
(5)even if the dealings were an arrangement for the supply of goods on credit, it does not follow that the goods would be paid for once the credit period expired. Northmead did not allege it to be a term of the agreement that there was a credit period that was due to expire and that in fact it did expire; and
(6)the fact that Westralian may not have indicated to Northmead it would refuse to pay for supplies unless an invoice was rendered by a particular time is not something expected in a commercial relationship.[55]
[55] Defendant's Submissions [57].
The proper conclusion as to the expectations of reasonable commercial operators, Westralian asserts, is for the payment of goods to be made within usual commercial terms or within a reasonable period and no more than 60 or 90 days after the goods were purchased.[56]
[56] Defendant's Submissions [57(a)].
Westralian further submitted that to infer a term that would permit payment whenever an invoice or statement was rendered is inconsistent with the purpose and provisions of the Limitation Acts. The purpose of limitation periods in precluding stale claims was said to weigh against Northmead's contention that a reasonable person would conclude that the parties agreed to the inferred term.[57]
[57] Defendant's Submissions [59] - [61].
Westralian's view is that the time as to payment should adhere to the standard position under Sale of Goods Act, that is, that the seller's action for the price of goods accrues when property passes to the buyer, in the absence of any agreement to the contrary as to the time for payment.[58]

Whether the term should be implied

[58] Defendant's Submissions [62].

Even if the court declines to infer Northmead's suggested term, it contends that the term should alternatively be implied as a matter of presumed or imputed intention between the parties.
The implication of the term, Northmead submitted, is supported by the essential nature of the arrangement between the parties as evidenced by the course of dealing discussed at [59] - [69].[59]
[59] Plaintiff's Submissions [35].
Northmead contended that the implication of the term is necessary for the reasonable and effective operation of the parties' contractual arrangement.[60] In this respect, Northmead reiterated the matters in [79] - [81].
[60] Plaintiff's Submissions [36].

Westralian submitted that the term sought to be implied is so unreasonable that it offends all policy considerations concerning limitation provisions.[61] It said it could never be reasonable and equitable to suggest that a supplier of goods could render an invoice to a purchaser 15 years after the event and then demand for it to be paid.[62]
[61] Defendant's Submissions [65].
[62] Defendant's Submissions [66].
Further, Westralian disagrees with the contention that the implication of the term is necessary to give business efficacy to the contract. Instead, it argues that to give business efficacy to the contract would require the implication of a term that the payment of goods would be made within a reasonable time after delivery and no later than 60 days after delivery.[63]
[63] Defendant's Submissions [67].

What were the terms of the contract?

Mr Greenwell's evidence establishes that the reason that invoices or statements were not rendered had nothing to do with any inferred or implied term.
Invoices or statements were not rendered because Mr Greenwell had heart issues, the amount of trade of the business had greatly expanded and the Greenwells' son had left the business.[64] Mrs Greenwell's evidence essentially confirmed Mr Greenwell's evidence as to why invoices or statements had not been rendered.[65]
[64] ts 17, 39 ‑ 40, 42 ‑ 43 (9/6/2021).
[65] ts 97 ‑ 98 (10/6/2021).
Similarly, the fact that Westralian made payments in round amounts and not responsive to a particular invoice reflects Northmead's chaotic accounting system, not an intention to contract on particular terms.
The reality is that Northmead's failure to render invoices or statements arose as a result of Northmead's 'complete mess' of an accounting system. That practice cannot provide a basis for an inference as to an agreement. Northmead's failure to send invoices was not a result of any intention on the part of the parties to contract on a particular basis; the failure to send invoices was not intentional.
It is not the case, as Northmead submits, that 'there is no other sensible way the parties could have intended their arrangement to work in the whole of the circumstances', because there was no relevant intention on the part of Northmead or Westralian.
The arrangement was not for the supply of goods on credit. It was a standard sale of goods transaction.
Northmead argues, in the alternative, that in the absence of an express stipulation as to time for payment it would be implied that Westralian had to make the payment within a reasonable time of the sending or receipt of the invoice or the statement covering the relevant supplies.[66]
[66] Plaintiff's Submissions [32].
In fact, Mr Greenwell's evidence was that he 'would not have demanded supply from any supplier for that long without receiving an account. I would have stopped and gone elsewhere'.[67]
[67] ts 44 (9/6/2021).
Mr Marten's evidence was that he understood payment was due 30 days from the date of delivery.[68]
[68] ts 73 ‑ 74 (9/6/2021).
Mrs Greenwell's evidence was that payment was due within 30 days of the presentation of a statement for payment.[69]
[69] ts 93 ‑ 94 (10/6/2021).
The words or conduct of the parties do not support a common intention that payment was to occur after the rendering of an invoice or statement. There is accordingly no basis to infer Northmead's pleaded term.
Northmead submitted that even if there is no inferred term as suggested, the essential nature of the arrangement between the parties nevertheless requires the implication of a term to the same effect.
In Coburn v Colledge,[70] Lopes LJ astutely observed that if the cause of action arose upon delivery of the plaintiff solicitor's bill, 'the solicitor may abstain from delivering his bill for 20 years, and then at the end of that time he may deliver it and sue after the expiration of a month from its delivery. It seems to me that that would be a very anomalous and inconvenient result.' To accept Northmead's contention that payment was to occur upon the rendering of an invoice or statement would similarly produce an anomalous and inconvenient result.
[70] Coburn v Colledge[1897] 1 QB 702, 709.
I do not accept that a reasonable commercial party such as those in this case would accept that a seller could wait an infinite period to issue an invoice or statement and then expect payment within 30, 60 or 90 days. If it had been suggested to a buyer that the seller could wait 14 years to issue an invoice or statement and still expect payment, the buyer would have been incredulous.
In the circumstances, for a cause of action to arise whenever a party decided to render an invoice or statement is contrary to the public policy considerations underpinning limitation periods and runs directly contrary to ordinary conceptions of business efficacy.
I am accordingly not satisfied that the implication of Northmead's pleaded term is necessary for the reasonable or effective operation of the parties' contract for the sale of goods.
The four rationales of limitation periods identified by McHugh J in Brisbane South Regional Health Authority set out at [43] tell against the inferred or implied term pleaded by Northmead. To imply or infer such a term is completely contrary to those factors.
I therefore reject that Northmead's pleaded term existed by inference or implication.
The appropriate terms to be implied are those pleaded by Westralian, namely that:
(1)Northmead would render an invoice to Westralian within a reasonable period of time after Northmead sold goods to Westralian and no longer than 60 days after the purchase of any goods; and
(2)Westralian would pay for the goods purchased within a reasonable period of time after Northmead rendered an invoice to Westralian.[71]
[71] Defence [5.2] - [5.3].
To allow a party to wait years to issue invoices and then expect payment makes no commercial sense. To require a seller to issue an invoice within a reasonable period makes eminent commercial sense.

The limitation defence

Having concluded that Northmead failed to prove its pleaded term, the bulk of its claim would be statute barred by reason of the Limitation Acts.
Northmead was obliged to issue an invoice within a reasonable time from the delivery of goods to Westralian.
Payment was due and payable within a reasonable period of time from the delivery of the goods or within 60 days of delivery of the goods.
The action was commenced on 9 October 2019 and a period of six years prior to the date of the commencement of action is 8 October 2013.
Accordingly, the plaintiff's claim for the period up to 8 October 2013 is statute barred.

Proof of the goods supplied and the dates of supply

The remaining issue is what goods were actually supplied to Westralian and the dates at which those goods were supplied.
Northmead's essential position is that the documentary evidence comprising records of Northmead's business prove the particular supplies of goods and the dates of such supply.[72]
[72] Plaintiff's Submissions [47].
I am satisfied that the particular goods were supplied on the dates alleged by Northmead. Northmead has satisfactorily proven these matters by the docket books applicable to the period from 1 July 2002 to August 2017 and the evidence of Mr and Mrs Greenwell as to their record keeping procedure.[73]
[73] ts 41 - 48 (9/6/2021).
The docket books qualify as 'financial records' kept by Northmead as a body corporate under s 286 of the Corporations Act 2001 (Cth). They are accordingly prima facie evidence under s 1305 of that Act of what they state or record, specifically, the deliveries or supplies of goods as identified in the docket books on the dates recorded in those docket books.

Amount owing and costs

Westralian accepts that claims for goods delivered after 8 October 2013 are not statute barred.[74]
[74] ts 111 (10/6/2021).
Westralian's statement of account dated June 2018 and marked '32' particularises 17 separate amounts owing for goods supplied between 3 April 2013 and 26 November 2013.[75] The total amount due as of 26 November 2013 (from 1 July 2002) is stated to be $1,198,994.99. Of the 17 itemised invoices, four (invoices 9430, 9431, 9432 and 9433) relate to goods supplied after 9 October 2013. Those four invoices total $13,202.84.
[75] Exhibit A, tab 35, 301.
If one deducts $13,202.84 from the $1,198,994.99 total, the balance is $1,185,792.13. That balance is the amount of Northmead's claim that is statute barred.
The total amount claimed by Northmead is $1,386,851.92.[76] The amount that is statute barred is $1,185,792.13. That leaves an outstanding balance of $201,058.90 for goods supplied after 8 October 2013.
[76] Exhibit A, tab 35, 295.
Northmead does not claim interest for the amount claimed.[77]
[77] ts 54 (9/6/2021).
Northmead has succeeded only to the extent of $201,058.90. That sum was never really in dispute. It failed completely in relation to that part of its claim that was in dispute. Accordingly, Northmead should pay Westralian costs of the claim to be taxed if not agreed.

Orders

I accordingly make the following orders:
(1)Judgment for the plaintiff of $201,058.90.
(2)The action against the defendant is otherwise dismissed.
(3)The plaintiff is to pay the defendant's costs of the action to be taxed if not agreed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SB
Associate to the Honourable Justice Curthoys
22 NOVEMBER 2022