Noyes Bros Pty Ltd v Evans Deakin Industries Limited

[1993] HCATrans 14

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No B57 of 1992

B e t w e e n -

NOYES BROS PTY LTD

Applicant

and

EVANS DEAKIN INDUSTRIES LIMITED

Respondent

Application for special leave
to appeal

MASON CJ TOOHEY J GAUDRON J

Noyes 1 5/2/93

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 5 FEBRUARY 1993, AT 2.31 PM

Copyright in the High Court of Australia

MR J.D.M. MUIR, QC: If the Court pleases, in this matter I

appear with my learned friend, MR J. SULLIVAN, for

the applicant. (instructed by Neil O'Sullivan &

Rowell)

MR P.A. KEANE, QC: If the Court pleases, I appear with my

learned friend, MR J.K. BOND, for the respondent.

(instructed by Minter Ellison Morris Fletcher)

MASON CJ: Yes.

MR MUIR:  Your Honours, it is submitted that the matter

merits special leave for two reasons: the

principal ground is that the Court of Appeal, in

concluding that a contract had come into existence

between the parties as a result of an exchange of

telexes, erred in two ways. Firstly, it sought to

apply part of a statement of principle by

Sir Garfield Barwick in The Council of the Upper

Hunter County District and Australian Chilling and
Freezing Co, concerning the resolution of ambiguity

and words used in a contract, not for that purpose

but in order to make a contract in the absence of

agreement as to a fundamental term. The approach so

taken by the court is capable of general

application and we submit that the point thus

warrants review by this Court.

The application is also supported on the

grounds that the conclusion reached by the Court of

Appeal is plainly wrong and the applicant would suffer an injustice where the judgment be permitted

to stand. More particularly, Your Honours, the

court, in concluding as it did, ignored and did

violence to the long established principle that

acceptance of an offer cannot be inferred from

silence, save in the most exceptional

circumstances.

Your Honours, we now propose to show that the

court had to have regard or resort to some

principle such as that set out at page 49 of the

order to reach the result that it did.	record, that is the citation from Upper Hunter, in the Court of Appeal at page 14 - I will not take
Your Honours to it - that the only question raised
is whether there was a contract. At that reference
it is also said that whether or not there was a
contract depends on the effect to be attributed to two written communications between the parties on
2 October 1986. That, with respect, is something
of an oversimplification although the facts are very simple.

Noyes 2 5/2/93

The case pleaded was that there was an

agreement in writing for the sale of some 98 ball valves contained in six identified documents. It is plain on the face of the pleaded correspondence

and, in particular, to the two telexes referred to

earlier in the judgment of the Court of Appeal that

there was no express agreement as to the date of

delivery of the goods.

The date of delivery was a matter of

fundamental importance because, amongst other

things, provision was made in the purchase order

which is one of the pleaded documents,

Your Honours, for liquidated damages in the event

of delay in delivery. That appears from page 14 of
the record where part of the purchase order is set

out and the liquidated damages clause appears at

the foot of the page. The Court of Appeal also

recognized the fundamental importance of the

delivery date by stating, at page 49 of the record,

that the delivery date was too important to be left

unresolved.

I now come back, very briefly, to what

happened. If I could take Your Honours to page 15

of the record. We see there the -

MASON CJ:  We are familiar with the general course of

correspondence.

MR MUIR:  Yes, Your Honour. Your Honour, all I was hoping

to do was to go to, very briefly, a couple of the

key parts of the correspondence in order to lead

Your Honours into the application of Upper Hunter.

Your Honours, on page 15 we see at about

line 775 the rejection of the offer by the

applicant, that is the offer contained in the

purchase order, and I direct Your Honours'attention

then to paragraph (5) and Your Honours will see

that there is reference to a delivery time in the

first sentence of paragraph (5), and it concludes -

and this is important for our argument - with the

statement that, "will obtain latest delivery

position from our supplier".

Your Honour, unfortunately there is a mistype

in the learned judge's reasons there, and in the

third last line the words "latest delivery to 20

weeks from" should be deleted, as should in the

next line "order date but will obtain", so that it
reads, "we cannot guarantee delivery prior to 20

weeks from order date but will obtain latest

delivery position from our supplier".

Noyes 3 5/2/93

Then, Your Honours will see in paragraph (6)

that the matter of the fire safety test is dealt

with discretely in that advice in respect of

paragraphs 2 and 3 is requested. Those paragraphs,

Your Honours will see, deal with the fire safety

test.

Your Honours, we then go to the reply at the foot of the page over to paragraph 5 on page 16

where the respondent replies:

Early Jan 87 date is critical to programme please advise latest delivery position.

The position is thus, that the applicant, having made no offer has to affirm delivery date, and having said that it would make inquiries of its suppliers, the respondent stresses the critical

nature of the delivery date and seeks advice from the applicant as to the latest delivery position. The applicant did not further address the matter of

a delivery date, Your Honours, nor did the

respondent.

The only further relevant communication took

place on 2 October in the two telexes which is set

out on page 18 of the record.	They deal with the
fire safety testing, and that alone.	Your Honours,

nevertheless, the Court of Appeal concluded that

there was an agreement as to final delivery date.

Your Honours, the court appeared to accept

that on the proper construction of the documents -

TOOHEY J: Is that right, Mr Muir, the court concluded that

there was a final agreement as to the, how did you

put it, the latest delivery date?

MR MUIR:  Yes, Your Honour. Well, the court, we would

submit, did a fairly curious thing. The court

seemed to accept that there was no final agreement

about the final delivery date. If I can take

Your Honours to page 49 to the fifth line of that

page:

We think that the fact that there is room for

argument as to what was finally agreed,

expressly or implicitly, about final delivery

date should not be held to defeat the

respondent.

But they go on:

If, as may well have been so, on the proper construction of the documents no specific

Noyes 5/2/93

delivery time was agreed, then that would not

in itself show there was no contract.

Your Honours, that seems to accept, and we

submit the conclusion is inevitable, that there

was, in fact, no agreement on a specific date

between the parties. The court then concluded that

the parties had not implicitly agreed on the

delivery date stipulated by the respondent, and we

see that at line 2595 on the same page. We submit

that, given those findings which are clearly the

more obvious conclusion was that there was no

contract because there had not been an acceptance

by either party of an offer made by the other.

TOOHEY J:  But why does that follow? The court was not

concerned to spell out the terms of the contract,

but to determine whether or not the parties had

entered into a concluded arrangement. If they had

said nothing about delivery date at all, there may

be room for implication as to whether delivery

should be within a reasonable time or otherwise.

MR MUIR:  Yes.

TOOHEY J: But that was not the exercise that the court was

engaged on.	Your client was saying there was no
concluded arrangement.	The other party was saying,
ttWell, yes there was.	We did not agree

specifically as to a delivery date, but you said

you could not guarantee delivery except after 20

weeks, and when you look at the totality of the

correspondence, we did not reject that and

therefore it is possible to spell out at least the

existence of a contracttt, which is all the court

was required to do.

MR MUIR:  Yes, except that, Your Honour, we of course

contended that there had been no agreement as to a

fundamental term of that contract, namely, the
delivery date.	The court accepted that delivery

date was, in fact, fundamental and then dealt, as

we submit they had to, with that point. And,

Your Honours, there is a logical difficulty with

the way in which that issue was resolved.

What the court did was to say that the parties

did not agree on the delivery date stipulated by
the respondent. But, Your Honours, the problem

with that solution by the court was that, if

Your Honours will recall the exchange of

correspondence the applicant said that it could not
meet the January delivery date in its telex to the

respondent. The respondent's telex in reply stood

firm on the respondent's insistence on the January

delivery date, and all that happened after that was

the two telexes which did not deal with the

Noyes 5/2/93

delivery date, but which dealt with the fire

testing.

Now, in the light of that we submit that it

was impossible for the court to conclude that the

date put forward by the applicant had been accepted

by the respondent. There is no logical way in

which that conclusion could be reached, we submit,

because, in fact, the respondent had rejected the

applicant's date at a date after the applicant had

rejected the respondent's date. The next telex was

from the applicant and the final telex was from the

respondent, and that is why we submit,

Your Honours, the Court of Appeal was forced to

resort to a principle such as that set out in the

middle of page 49 in order to supply the gap in the

chain of correspondence.

Your Honours, that principle, we submit,

clearly has no application to the circumstances

under consideration. If Your Honours accept our

contention that, for the reasons we have just

advanced, there was indeed an hiatus in the chain

of correspondence such that one, on looking at it,
could not find the concluded agreement. It was

impossible to rely on the principle in Upper Hunter

to fill the void.

I should remind Your Honours that on page 49

the court appears to accept that as a matter of

construction there was in fact no agreement as to

delivery time.	They say at line 2570, the line
below that:

If, as may well have been so, on the proper construction of the documents no specific

delivery time was agreed -

MASON CJ:	The emphasis is on "specific", is it not?
MR MUIR:	Yes, Your Honours, but we submit that either you

had a specific delivery time or you had nothing in

light of the fact that the respondent in its

purchase order had sought a specific delivery time.

Delivery time was very much of the essence and

there was a liquidated damages clause which would

apply for failure to deliver.

The applicant had rejected the time put

forward in the purchase order and, Your Honours,

had not responded with any specific time. After

that the respondent had asserted that it wished to

maintain the specific time in the purchase order

and nothing further happened. So in the absence of

a specific time, there was no time agreed.

Noyes 6 5/2/93

TOOHEY J: Say the parties had not adverted to the question

of delivery, a pretty unlikely situation I agree,

but say they had not, but the documents pointed

clearly to a contract. There was an order form and

an acceptance by the seller. What is the position

contractually between the parties?

MR MUIR:  Your Honours, it may in some circumstances be

possible to imply a term that delivery take place within a certain time, but that cannot apply here

in the light of the correspondence to which I have directed Your Honours' attention, we would submit.

TOOHEY J: It seems to me that there are two questions that

are blurred here, Mr Muir, namely, whether there

was a contract and if so what its terms were. The

only matter the court had to consider was whether

there was a contract and whether the correspondence
between the parties so far as it related to

delivery precluded a contract from corning into

existence. The court said that in the

circumstances it did not think that it did.

MR MUIR: With respect, Your Honour, it was always the

contention of this applicant that there was no

concluded contract and that was very much the -

TOOHEY J:  I appreciate that, but that is what I am saying.

That was the matter on which the court was

focusing, so that the issue was not so much the
determination of a precise delivery date but

whether the telexes between the parties by

particular reference to the delivery of these

valves precluded a contract from corning into

existence. The Court of Appeal said that on its

view of the documentation it did not.

MR MUIR:	Yes, Your Honour.
TOOHEY J: Well, that is a view of the documents.

MR MUIR: Well, yes, Your Honour, it is certainly a view of

the documents, but it is a view which we submit is
obviously reached on the basis of the application
of the principle in the Upper Hunter case, which

cannot, we submit, say anything about the result

that the court achieved.

TOOHEY J: Well, that may be. The Upper Hunter case is

really concerned with the construction of a

contract that has come into existence.

MR MUIR:  Yes, Your Honour.

TOOHEY J: But if you put that to one side, is the Court of

Appeal not entitled to reach the conclusion that it did, having regard to the exchange of telexes

Noyes 5/2/93

between the parties, that conclusion being only so

far as was required, that a contract had come into

existence.

MR MUIR: Well, Your Honour, for the reason we advance, we

submit that it definitely could not, because,

Your Honour, the applicant said that it could not

accept an early January delivery date. The

respondent then replies saying, "Listen, that date's critical." Neither address the matter again. All they do is exchange correspondence

about a discrete matter, which Your Honours will

have seen from the earlier correspondence was dealt

with discretely, yet the court held that in order

to reach the conclusion that there was a concluded

contract, it held that the respondent accepted the

applicant's timing and not vice versa.

Your Honours, there is simply no logic in it.	The
respondent had been, as we pointed out, last to
reaffirm its position.

The other difficulty with the approach of the

court is that it really seeks to get a contract not out of, Your Honours, the language of the documents

themselves, but it seeks to use silence in order to

supply a contractual intention or term that is

otherwise absent from the written communications of

the parties.

MASON CJ:  But it is not mere silence. What the court is

doing is giving paramount effect to the last

exchange between the parties, which of course does

not specifically deal with delivery date.

MR MUIR:  No, Your Honour.

MASON CJ: But having regard to the construction that the

court puts upon that last exchange, it comes to the

conclusion that there is an acceptance of the

applicant's position in relation to delivery,	namely it could not deliver in less than 20 weeks
from the order.

MR MUIR: Yes, we accept that that is what they have done.

Of course, in the face of the quite specific

assertions in the correspondence that certain

dates -

MASON CJ: Well, you have mentioned that before; I mean, you

have managed to get that message across, I think.

MR MUIR:  Yes. Those are the points that we rely on,

Your Honours.

MASON CJ: Yes, thank you, Mr Muir. The Court need not

trouble you, Mr Keane. The Court is not persuaded

that the proposed appeal raises any question of

Noyes 5/2/93

general principle and on that score the application

for special leave to appeal is refused.

MR KEANE:  We ask for costs, Your Honours.

MASON CJ: Yes. Mr Muir, you cannot oppose an order for

costs?

MR MUIR:	No, Your Honour.
MASON CJ:	The application is refused with costs.

AT 2.52 PM THE MATTER WAS ADJOURNED SINE DIE

Noyes 9 5/2/93