| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : OPTEON PROPERTY (WESTERN AUSTRALIA) PTY LTD -v- ORCHARD HOLDINGS PTY LTD [No 2] [2014] WADC 31 CORAM : BOWDEN DCJ HEARD : 5 MARCH 2014 DELIVERED : 14 MARCH 2014 FILE NO/S : CIV 3383 of 2012 BETWEEN : OPTEON PROPERTY (WESTERN AUSTRALIA) PTY LTD Plaintiff
AND
ORCHARD HOLDINGS PTY LTD
First Defendant
KEITH ROBERT ANDERSON
Second Defendant
Catchwords: Contracts - Guarantee - Whether signed in capacity as director or personally - Consideration - Estoppel - 'Settlement' - 'As soon as possible' - Is liability limited to only to the amounts referred to in guarantee Legislation: Nil Result: Judgment for the plaintiff
Representation: Counsel:
Plaintiff : Mr A Metaxas
First Defendant : In person
Second Defendant : In person
Solicitors:
Plaintiff : Metaxas & Hager
First Defendant : Not applicable
Second Defendant : Not applicable
Case(s) referred to in judgment(s):
Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168
Bowes v Chaleyer [1923] HCA 15; (1923) 32 CLR 159
City & Suburban Group Pty Ltd v Gambetta Holdings Pty Ltd[ 2011] WASCA 233
Clark Equipment Credit of Aust Ltd v Kiyose Holdings Pty Ltd (1989) 21 NSWLR 160
Clark Equipment, National Commercial Banking Corporation of Australia v Cheung (1983) 1 ACLC 1
Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337
Hancock Prospecting Pty Ltd v BHP Minerals Pty Ltd [2003] WASCA 259
Lilley v Midland Brick Co Pty Ltd (1992) 9 WAR 339
McCann v Switzerland Insurance Australia Ltd [2002] HCA 65; 203 CLR 579
McCourt v Cranston [2009] WASC 56
Padstow Corp Pty Ltd v Fleming (No 2) [2011] NSWCA 1572
Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd (1985) 9 ACLR 909
SWV Pty Ltd v Spiroc Pty Ltd [2006] NSWSC 668
Vines v Djordjevitch [1955] HCA 19; (1955) 91 CLR 512
Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45
The plaintiff's position 1 The plaintiff (Opteon) claims $77,201.90 for valuation services provided to the first defendant (Orchard) in connection with Supreme Court Litigation (the litigation). 2 Opteon says the second defendant (Mr Anderson) guaranteed the payment of these accounts by letter dated 9 September 2011 (the agreement).
The defendant's position 3 I granted leave for Mr Anderson, a shareholder and director, of Orchard to represent Orchard as it was unable to afford representation, he also represented himself. 4 Orchard accepts that Opteon provided the valuation services but says that in accordance with their agreement their liability to pay for those services was dependent upon the successful outcome of the litigation and the agreement should be construed as meaning Orchard has no obligation to pay until the litigation is settled such that it is possible for Orchard to pay Opteon 5 Orchard says there was not a successful outcome to the litigation because they did not recover as much damages as they wished and the litigation is not settled, as costs have not been taxed and any appeals from that taxation finalised. 6 They, and Mr Anderson, say Orchard is estopped from asserting that the litigation has settled or that payment is due before it is possible for them to pay. 7 Mr Anderson denies that he ever guaranteed the payment of the Opteon's accounts and says Orchard is estopped from asserting that he signed the letter of 9 September 2011 in his personal capacity. 8 He also says Orchard misrepresented the capacity in which he was signing that letter and says the guarantee is unenforceable for want of consideration and if it is enforceable, is so only to the amount of $30,640 being the amount referred to in the guarantee. 9 It is not disputed that the work was performed in the quantum alleged by Opteon and that Orchard, despite demand, has not paid the invoices.
The plaintiff's evidence 10 Evidence for Opteon was given by its directors, Mr Duncan Cameron and Mr Jeremy McGrade, and Mr Christopher Murphy who was an employee of Opteon at the time these events unfolded. 11 This evidence establishes that on 11 February 2011 solicitors for Orchard requested Opteon provide expert evidence on the value of certain properties. On 16 February 2011 Mr Cameron provided an estimate of the fees to perform that work. 12 Opteon subsequently performed the work and rendered three tax invoices totalling $30,640 to Orchard on 31 March 2011, 20 April 2011 and 4 August 2011. It is not disputed that Opteon performed the work, nor is there any dispute as to the quality of the work or the quantum of the invoices. 13 After these three invoices were rendered, Mr Murphy was requested by solicitors for Orchard, to perform additional work in connection with the litigation including reviewing and conferring with other valuer's. 14 Before performing the additional work, Mr Murphy says he spoke to Orchards solicitor, Mr England, to discuss the unpaid tax invoices and as a result of that conversation contacted Mr Anderson. 15 Mr Murphy says that he then rang Mr Anderson and told him that they could not perform any additional work until they were paid to which Mr Anderson replied that the invoices could not be paid at the moment and asked Opteon to continue and said he was confident of a good result at trial and when he won he would pay. 16 Mr Murphy said that he told Mr Anderson that he (Mr Murphy) would need to discuss that with his director. Following that phone call, Mr Murphy says he met with Mr Cameron. 17 After that meeting Mr Murphy says he telephoned Mr Anderson again and said words to the effect that they required him to sign a letter acknowledging his personal liability for the invoices issued and any future work to be performed and that if he did not acknowledge personal liability they would not proceed with any further work to which Mr Anderson replied 'I'm happy to acknowledge my personal liability.' 18 Mr Murphy says that he then told Mr Anderson he would send him a letter which he wished to be signed and returned. That letter says: 9 September 2011
Chris Murphy
Opteon (Western Australia) Pty Ltd
Level 1, 130 Hay Street,
SUBIACO WA 6008
Dear Chris, Re: Outstanding Invoices for Valuation Consultancy Work Supreme Court Action CIV 1762 of 2010
Parties: Orchard Holdings Pty Ltd & Ors v Paxhill Pty Ltd & Ors
Further to the letter of instruction issued by Lawton Gillon Lawyers dated 11 February 2011 and our recent telephone conversations, I acknowledge and confirm my personally liability for the outstanding invoices relating to your Company's valuation services prepared to date, in addition to the liability attached to Orchard Holdings Pty Ltd as detailed below: Your Reference Invoice No Outstanding Invoice Amount
Q84907 114104 $14,150
Q84964 113442 $3,300
Q98047 120572 $13,190
Total $30,640 In addition I personally acknowledge: • Your quotation relating to the letter of instruction issued by Simon England from Lawton Gillon dated 9 September 2011 at $5,500 inclusive of GST plus searching costs (ie Certificates of Title, Strata Plans and Sale Transfer documents). • The ongoing fees associated with the critique of another valuer's report, preparation and attendance for conferral meetings with other experts, barristers and solicitors and preparation and attendance at the Supreme Court (if required) will be charged at an hourly rate in addition to the above fees of $340 per hour inclusive of GST. • Your company's standing terms of engagement as detailed within the invoices summarised above, requiring payment in full within a 14 days of issuance of the invoice. • Liability in settling all outstanding fees upon settlement of the litigation matter as soon as possible. • In the event the total accounts are unpaid by 31 December 2011, Opteon (Western Australia) Pty Ltd reserve the right to charge interest on any outstanding monies until the accounts are fully settled. Interest will be charged at the rate fixed by the ANZ Bank on overdrafts (interest rate applicable to the value commensurable with the outstanding balance in these invoices) plus 2% per annum, plus any costs incurred in recovering the debt.
Yours faithfully
Keith Anderson (signed)
Keith Anderson
Orchard Holdings Pty Ltd
72 Johnston Street
Mosman Park.
19 Under cross-examination Mr Murphy agreed that he did not diarise the conversations but said he was clear of the context because the directors were alarmed at the outstanding invoices and told him that he needed to secure payment for the outstanding invoices before performing any additional work. 20 He maintained that he had two conversations with Mr Anderson. He denied Mr Anderson said to him 'On behalf of Orchard Holdings I can't pay the invoices at the moment'. He said he did not dispute reference was made to invoices addressed to Orchard Holdings and repeated that he told Mr Anderson that they required him to take personal liability and said that Mr Anderson replied he would be happy to do so to continue to engage their services (ts 37). He said they did agree to defer payment until the outcome of the matter was settled (ts 36). 21 He denied he was confusing the conversation with Mr England with the conversation with Mr Anderson and denied that Mr Anderson said that Orchard's ability to pay Opteon for its valuation services was dependent upon the successful outcome of the litigation, and further denied that he acknowledged that remark. 22 He said that there was never a discussion about Orchard acknowledging their debt to Opteon because Orchard already had a liability to Opteon and said the whole intent of the letter was to ensure personal liability for existing and ongoing services was accepted by Mr Anderson. 23 He denied that he was told that Opteon's services would be paid on a successful outcome of the matter and said they would not have been engaged under those circumstances.
The defendant's evidence 24 Mr Anderson was the only witness called by the defendants. He said that the letter of 9 September 2011 was prepared and sent to him by Opteon to sign on behalf of Orchard and was sent at a time when the litigation had been set down for a nine-day hearing commencing on 17 October 2011. 25 He says he spoke to Mr Murphy on the phone on only one occasion before he received the letter and Mr Murphy said words to the effect that Opteon needed Orchard to sign a letter acknowledging Opteon's outstanding invoices and payment terms. He said Opteon needed Orchard to acknowledge their liability for the invoices because it’s 'business' (ts 69). 26 He says he told Mr Murphy that Orchards ability to pay depended upon the successful outcome of the litigation and says Mr Murphy acknowledged that statement. He says that shortly after the conversation, he received the letter from Mr Murphy which he signed. 27 Mr Anderson deposes to not signing the letter in his own personal capacity but as director of the Orchard and signed it only as acknowledging the indebtedness of Orchard. 28 Mr Anderson said judgment in the litigation was delivered in favour of Orchard on 27 July 2012 and damages assessed on 20 August 2012 at $450,000. He agreed that $225,000 had been paid into his solicitor's trust account (ts 57). 29 Mr Anderson deposed that Orchard was awarded cost, but that award was appealed and on 9 December 2013 Orchard was ordered to pay the defendants to the litigation costs after the date of a Calderbank offer (which included the hearing days). 30 Mr Anderson said the proceedings were not successful because, from a monetary point of view, the damages were discounted considerably (ts 56) and Orchard was not therefore obliged to pay Opteon's invoices. 31 He said the only successful part was the judgment against the real estate companies, and although that was a good thing, it was not a good result overall (ts 61). 32 He said that Orchard had no money or assets. 33 He agreed that he did not tell Opteon that they would get paid from the outcome of litigation after other people were paid, however he maintained he told them that Orchard's ability to pay was dependent upon the successful outcome of the litigation. 34 Mr Anderson said he was not confident of a good result at the trial, but did not know how it was going to do. He said that before trial, Orchard had refused an offer of $1,000,000 because there would be no judgment in their favour and a confidentiality clause meant they were not able to discuss matters 'with anybody'. 35 He said the decision to refuse the $1,000,000 was not based on monetary considerations. 36 He said that even though the trial was about 40 days away, when he had the discussion with Mr Murphy it would not have concerned him if Opteon had not continued to work for Orchard because they would have been able to replace them. 37 He agreed that he did not add or delete anything from the letter of 9 September and said there was no provision for him to sign personally and he signed it on behalf of Orchard Holdings. 38 He denied that Mr Murphy said anything to him about personal liability and said that the words 'personal liability' or 'guarantee' were never used. 39 He said the litigation was not finished because taxation of costs had not occurred. 40 He said the phrase 'liability in settling all outstanding fees upon settlement of litigation matter as soon as possible' led him to believe that payment was to be made from the successful conclusion of the litigation and if they were not concluded no one got paid. 41 He agreed that he had, in the course of business, previously signed personal guarantees with financial institutions to obtain funds for Orchard because if he did not, those institutions would not have lent the funds.
Findings on creditability 42 There was no real challenge to the creditability of Mr Cameron or Mr McGrade, I accept their evidence as honestly given, reliable and accurate. 43 Mr Anderson challenged the creditability of Mr Murphy. 44 I found Mr Murphy's evidence to be clear, cogent and persuasive. I accept he is a witness of the truth and prefer his evidence to Mr Andersons. Mr Murphy is no longer employed by Opteon and did not appear to me to be doing anything other than telling it how it was. 45 Clearly, the litigation did not turn out as Mr Anderson desired. That litigation was commenced because essentially a selling agent led him to believing that pre-sales for Orchard's development have been achieved when they had not (ts 55). 46 Mr Anderson was not successful in recovering the damages he anticipated. Before the trial, Orchard rejected an offer of $1,000,000 to settle the matter, ultimately damages were assessed at $450,000 and Orchard was ordered to pay the other parties costs from the date the offer was made, which included the trial days. Orchard now has no assets or money. 47 Whilst I accept that he must be a very disappointed litigant, his evidence in these proceedings, quite frankly, seemed to be tailored to suit his and Orchard's purposes. Allowances must be made for the fact that he was unrepresented and the stresses involved in ongoing litigation, however it appeared that he would say anything to avoid liability. 48 I find Mr Anderson's evidence to be evidence of convenience. It was, I find, designed to avoid paying Opteon. I found his evidence that the $1,000,000 offer was refused because of confidentiality clauses, implausible. Similarly, his evidence that such a decision was not a 'monetary thing' was implausible. 49 More significantly, the objective surrounding circumstances that I accept existed at the time, that is, Opteon had performed work for Orchard, Orchard had not paid, Orchard wanted further work to be performed and Opteon was not prepared to perform that work unless personal liability for past and present invoices were acknowledged by Mr Anderson, makes it inherently more probable that Mr Murphy's evidence is correct. 50 Mr Anderson's evidence that Opteon agreed to be paid after settlement only when Orchard were in a position to pay, was disputed by Mr Murphy and is, as I find, inherently improbable in circumstances where Opteon was already concerned about approximately $30,000 of unpaid invoices before they embarked on another approximately $36,000 worth of work. 51 I accept Mr Murphy's evidence that they just would not have worked or been engaged on those terms. It seemed to me that having not achieved the financial aims of Orchard in the Supreme Court litigation, Mr Anderson was doing whatever he could to ensure that he personally was not responsible for any costs of that litigation and I reject his evidence. 52 Where the evidence of Mr Murphy conflicts with that of Mr Anderson, I accept, without hesitation, the evidence of Mr Murphy.
The issues 53 The issues to be resolved are as follows: 1. Did Mr Anderson sign the letter of 9 September 2011 as director of Orchard and not in his personal capacity? 2. Is Orchard estopped from denying Mr Anderson signed the letter in his capacity as a director of Orchard? 3. Is the letter unenforceable against Mr Anderson due to the lack of consideration? 4. What is meant by ' settlement of the litigation ' and if so has the matter settled? 5. What is meant by 'as soon as it is possible after settlement of the action'? does it mean Orchard and Mr Anderson’s obligation to pay only arise as soon as it is possible for Orchard to pay Opteon after settlement of the litigation? 6. Is Opteon estopped from denying Orchard and Mr Anderson's obligation to pay only arises as soon as it is possible for Orchard to pay? 7. If there was a guarantee from Mr Anderson, Is Mr Anderson only liable for the amounts referred to in the letter? 8. Is Opteon entitled to charge interest? If so, at what rate?
Did Mr Anderson sign the letter of 9 September 2011 as director of Orchard and not in his personal capacity? 54 Opteon says Mr Anderson personally acknowledged his liability for payment of services which had been and were in the future to be provided by Opteon to Orchard by the letter of 9 September 2011. 55 Mr Anderson says he signed that letter as a director of Orchard and not in his personal capacity. 56 The question of whether a person is a party to a contract is an objective test. 57 The relevant principals were referred to by Murphy JA in City & Suburban Group Pty Ltd v Gambetta Holdings Pty Ltd[ 2011] WASCA 233 [46 - 48] where he stated: In Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603, Campbell JA (with whom Mason P agreed) said [262]: For the purpose of deciding whether a contract has been entered, or what construction it bears, the common intention that the court seeks to ascertain is what is sometimes called the 'objective intention' of the parties. That is the intention that a reasonable person, with the knowledge of the words and actions of the parties communicated to each other, and the knowledge that the parties had of the surrounding circumstances, would conclude that the parties had, concerning the subject matter of the alleged contract: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461 [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40]; Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912–913; 1 All ER 98 at 114–115; Taylor v Johnson (1983) 151 CLR 422 at 429; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549–550. Further, in Air Tahiti Nui Pty Ltd v McKenzie [2009] NSWCA 429; (2009) 77 NSWLR 299, Allsop P and Handley AJA (Hodgson JA agreeing) said [28]: The identity of the contracting party is to be determined looking at the matter objectively, examining and construing any relevant documents in the factual matrix in which they were created and ascertaining between whom the parties objectively intended to contract. This is, to a point, a process of construction similar to the task of identifying whether a clearly contractual document (such as a bill of lading) is made with one party or another (such as a shipowner or time charterer): Starsin at [132] and the cases considered in M Wilford et al Time Charters, 5th Ed, Informa Publishing, 2003, Ch 21. Where the documents are silent or ambiguous, but there is undoubtedly a contract, the identity of the parties must be determined objectively from the surrounding circumstances: see Barroora Pty Ltd v Provincial Insurance Ltd (1992) 26 NSWLR 170 at 174; Protean (Holdings) Ltd v American Home Assurance Co (1985) 4 ANZ Ins Cas 60-683 at 74,055–74,056; Coulls v Bagot's Executor and Trustee Co Ltd [1967] HCA 3; 119 CLR 460 at 477, 478–479 and 486. Similarly, in Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd (1985) 9 ACLR 909, 923, McHugh JA (as he then was) said: A commercial document, however, must be construed in its commercial setting - in accordance with the surrounding circumstances known to the parties: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352-353. This is so whether the issue concerns construction in the strict sense or whether, as here, the issue concerns the capacity in which a person signs a document. 58 Thus the question of an intention of a party to be legally bound is not answered by reference to a party's subjective thoughts or intentions, the relevant intention is intention objectively manifested: Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168 [46] and a party's professed subjected belief that they did not wish to sign as a guarantor is irrelevant: Alonso v SRS Investments (WA) Pty Ltd [48]. 59 It is accepted that a signature is a relevant circumstance in ascertaining whether there is an objective or manifest intention of a person to be legally bound as a party to an agreement: Alonso v SRS Investments (WA) Pty Ltd [49]. However, it is only one circumstance to be considered, even when there is a qualification attached to the signature (ie director), the content of the document may indicate that a signature is bound in another capacity (personally): Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd (1985) 9 ACLR 909, 923. 60 Whether a party is bound by a signature depends upon the construction of the document as a whole, including but not limited to any qualification attached to the signature, in the light of the surrounding circumstances to the extent to which evidence thereof is permissible: Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd (1989) 21 NSWLR 160 cited with approval in Alonso v SRS Investments (WA) Pty Ltd [52]. 61 Thus a signature with the qualification 'director' attached is not conclusive of an intention to be legally bound only in that capacity. There are many examples where a signature with such a qualification has been found to bind a person in their personal capacity including: Scottish Amicable Life Assurance Society; Padstow Corporation Pty Ltd v Fleming (No 2) [2011] NSWCA 1572 and Alonso v SRS Investments (WA) Pty Ltd. Similarly, there are other cases where such a signature has resulted in a conclusion that the party was signing only as a director of a company: Clark Equipment, National Commercial Banking Corporation of Australia Ltd v Cheung (1983) 1 ACLC 1, 326. 62 It is therefore necessary to look at the terms of the agreement. 63 The determining factors, in my opinion, are as follows. 64 Firstly, the letter of 9 September 2011 includes the phrase: 65 In my opinion, by reference solely to the letter, a reasonable person in the position of the parties would infer that Mr Anderson was signing in his personal capacity. 66 Words such as 'I acknowledge and confirm my personal liability … in addition to the liability attached to Orchard Holdings Pty Ltd … I personally acknowledge …' are not in my opinion capable of any other interpretation. 67 The defendants submit that as Opteon prepared the letter the contra proferentem rule is to be applied. That rule applies only as a last resort and where an ambiguity exists which cannot be resolved: McCourt v Cranston [2009] WASC 56 per Templeman J [55]. 68 The fact that Mr Anderson's signature appears above his name, which in turn appears above Orchards, does not cause me to doubt the conclusion I have reached. 69 In my view, there is no ambiguity in the terms of the letter and it compels the conclusion that Mr Anderson signed the letter in his personal capacity. 70 If it is considered there is an ambiguity as to whether Mr Anderson signed in his personal capacity because of the words appearing immediately below his signature and one then resorts to the surrounding circumstances, there is clearly an objective manifest intention that he be a party to that document. 71 The relevant surrounding circumstances known to both parties accepted by me are that work had been performed for Orchard at their request by Opteon, Opteon rendered invoices which remained unpaid, Orchard wished Opteon to perform further work, Opteon was concerned about the non-payment of the invoices and only prepared to do so such further work if Mr Anderson acknowledged personal liability both for payment of past invoices and any future invoices. 72 Either way the position is examined, that is, by construing only the terms of the letter of 9 September 2011 or considering, if there is any ambiguity, all of the surrounding circumstances known to both parties at the time of the letter, the result is the same. The objective manifest intention of the parties was that Mr Anderson was a party to that agreement and would be personally bound by it.
Is Opteon estopped from denying Mr Anderson signed the letter in his capacity as a director of Orchard? 73 Mr Anderson said there was only one conversation with Mr Murphy shortly before he signed the letter and the only matter discussed was Orchard's liability for past and future invoices and there was no mention of any personal liability on his behalf for any of those invoices. He deposes to Mr Murphy telling him they needed Orchard to acknowledge Opteon's outstanding invoices and payment terms. 74 Mr Anderson says that it was after this discussion that he received the letter prepared by Opteon, who knew he was Orchards director, and points out that the letter had his name immediately above Orchards and submits that as a result of what Mr Murphy told him, Opteon is estopped from denying that he signed the letter only in his capacity as a director of Orchard and that Mr Murphy misrepresented the capacity that he would be signing the letter in. 75 I reject Mr Anderson's evidence. I find there was absolutely no representation made by Mr Murphy that the signing of the letter was only intended to bind Orchard, on the contrary I prefer the evidence of Mr Murphy as to the discussions occurring during the two conversations. 76 I find there were no words or conduct on behalf of Mr Murphy that could be construed as forming the basis for an estoppel or as misrepresenting the position to Mr Anderson. 77 To establish an estoppel, at the very least, there would have to be a finding that Mr Murphy unequivocally promised or represented a position to the defendants and in reliance of that representation, the defendants took some action or altered his or their position and now Orchard wishes to assert a legal right, which contradicts the representation previously made by Mr Murphy and therefore should be estopped from doing so. 78 The only relevant representation that Mr Murphy made to Mr Anderson in this regard was effectively that Opteon would not perform any further work unless Mr Anderson accepted personal liability for past invoices and any future invoices. 79 There is simply nothing in any of Mr Murphy's conversations or conduct that could form the factual basis of any estoppel nor is there anything that could be described as any misrepresentation.
Is the agreement of 9 September 2011 unenforceable against Mr Anderson due to lack of consideration? 80 There is some confusion in respect of this argument. 81 In the defendant's substituted defence par 8.4 it states that no consideration was provided by Mr Anderson and the letter is not enforceable against Mr Anderson. 82 In the defendants outline of submissions par 16 it states: In any event any guarantee contained in the Opteon letter is unenforceable for want of consideration moving from Opteon to Mr Anderson: Legione v Hateley (1983) 152 CLR 406. 83 And par 17 states: If only one of the parties was intended to benefit, no consideration is provided and the agreement is unenforceable': Vanbergen v St Edmonds Properties Ltd [1933] 2 KB 23 (CA). 84 I reject the submission that there is no consideration provided by Mr Anderson as pleaded in the defence. The consideration was his acceptance of personal liability for Orchards past unpaid invoices and for future invoices for work performed by Opteon for Orchard. 85 As to the argument that there was no consideration from Opteon to Mr Anderson, as claimed in the submissions, a similar submission was dealt with in Lilley v Midland Brick Co Pty Ltd (1992) 9 WAR 339. 86 In that case it was found that the true consideration provided by the guarantee was a continued supplied of bricks by the brick yard on credit to the company of which the guarantor was a director. The guarantor had argued, inter alia, that the consideration provided was past consideration. In that case there was sufficient ambiguity within the document as to its true consideration to admit oral evidence. On appeal, it was found that the trial judge did not err in admitting oral evidence and finding that the true consideration was the agreement by Midland Brick to continue to supply bricks on credit, to the company of which the guarantor was a director. 87 Clearly, in this case the consideration moving from Opteon was the agreement to continue to provide services on credit to the company of which Mr Anderson was a director. There was consideration from Opteon and it was more than past consideration and there was clearly a benefit to all parties.
What is meant by 'settlement of the litigation' and if so has the matter settled? 88 The terms of the document provide that 'liability in settling all outstanding fees is upon settlement of the litigation matter as soon as possible'. 89 The defendants says that the case has not settled because although judgment was delivered on 27 July 2012 and the appeal dealing with costs orders, has been finalised, the costs are yet to be taxed and any appeal that may result from the taxation is yet to be dealt with. 90 Opteon argues that settlement of the action occurs when an agreement to finalise the action is made by the parties or judgment in the action is delivered. 91 To settle is to resolve the matters then in dispute between the parties. A settlement of litigation can be achieved by compromise or adjudication by the court. That is the clear meaning of the word in the context in which it is used in the agreement. 92 I do not consider the phrase is ambiguous, however if it is and evidence of the surrounding circumstances is admissible to assist in the interpretation of that word, the conclusion remains the same. 93 Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45 clearly establishes the primacy of Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337, 352 where Mason J, Steven J and Wilson J concurring, stated: The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed. It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parole evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification. Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract. 94 The surrounding circumstances known to both parties at the time of the agreement of 9 September 2011 which I find exist where: (a) the litigation was about 40 days away from being heard; (b) Orchard wanted Opteon to provide further work relating to the litigation; (c) Orchard had not paid outstanding invoices for work already performed by Opteon; and (d) Opteon was not prepared to do any further work unless there was a personal acceptance of liability by Mr Anderson for the past and any future invoices. 95 A commercial agreement should be given a business like interpretation and construed practically to give effect to its commercial purpose: McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; 203 CLR 579, 589, Hancock Prospecting Pty Ltd v BHP Minerals Pty Ltd [2003] WASCA 259 [72]. 96 Objectively considered, examining the objective framework of facts known to both parties within which that agreement came into existence, a reasonable person would have understood 'settlement of the litigation' to refer to either the settlement of the issues then in dispute by agreement between the parties or by a judgment being delivered. 97 In my view, a reasonable person would have not interpreted those words as meaning the litigation was not settled until all avenues of appeal against the judgment and any subsequent costs orders are exhausted. 98 Once the judgment is delivered, there is a resolution of the dispute then existing between the parties. The fact that a party may take steps to challenge that resolution or other disputes develop such as arguments over costs, does not mean the matter was not settled when the judgment was delivered. 99 I find therefore that the litigation was settled when Justice Allanson delivered his judgement.
What is meant by 'as soon as it is possible after settlement of the action' 100 The agreement refers to 'Liability in settling all outstanding fees upon settlement of the litigation matter as soon as possible'. 101 The defendant contends that the words 'as soon as possible' mean 'as soon as it is possible for Orchard to pay or as soon as Orchard is in a position to pay'. I reject this interpretation 102 In Bowes v Chaleyer [1923] HCA 15; (1923) 32 CLR 159, Isaacs and Rich JJ (at page 175) regarded 'as soon as possible' as 'somewhat more stringent than "within a reasonable time"' and interpreted it as meaning 'as soon as reasonably practicable' having regard to other factors relevant to the vendors position Starke J said (at page 193) the words meant '"within a reasonable time", regard being had to the ability of the vendor to obtain the goods from the manufacturers and to dispatch them to the purchaser'. 103 In Vines v Djordjevitch [1955] HCA 19; (1955) 91 CLR 512 the court said (at page 522): 'Presumably, ''as soon as possible" requires a higher degree of expedition. Perhaps the most satisfactory paraphrase is to say with all reasonable expedition of which the circumstances allow.' 104 In SWV Pty Ltd v Spiroc Pty Ltd [2006] NSWSC 668 after reviewing those cases it was said firstly the words take their meaning from the context in which they are used; second, they do not indicate the greatest degree of speed humanly achievable; third, they import a requirement of reasonable expedition or such despatch as is reasonably practicable; and, fourth, a 'reasonable time' marks the very outer limit of 'as soon as possible'. 105 The evidence establishes that the judgement was delivered on 27 July 2012 and damages assessed at $450,000 on 20 August 2012, of that, sum $225,000 has been paid into the Orchard's solicitors trust account on a date that does not emerge from the evidence. This writ was issued on 6 November 2012. 106 I do not import into those words a requirement that the Orchard pay Opteon only when it is possible for them to pay. 107 The objective framework of facts known to both parties at the time the agreement came into existence, would lead a reasonable person to understand that work performed by Opteon was for the purposes of the litigation and it was anticipated that they would or may be required to perform further work before the litigation was complete and effectively they were granting credit to the defendants up until the matter was settled by delivery of a judgment and once that occurred, payment was required as soon as possible, which on the most favourable construction for the defendants, means within a reasonable period of time and a reasonable period of time from the date of judgment had certainly passed by the date the writ was issued.
Is Opteon estopped from denying that the defendants' obligation to pay them only arises as soon as is possible for Orchard to pay after settling the action? 108 The evidentiary basis for the plea of estoppel in this regard is Mr Anderson's evidence that this is what he told Mr Murphy in the phone conversation and that position was acknowledged by Mr Murphy. The defendants' argue that Opteon is now estopped from asserting a legal position contrary to the position Mr Murphy acknowledged in that phone call. 109 I reject Mr Anderson's version of the conversation with Mr Murphy. 110 Having accepted Mr Murphy's evidence as to the content of the discussions with Mr Anderson, there is no evidentiary basis to establish any representation by words or conduct by Mr Murphy that Opteon would only seek payment of the invoices after settlement of the litigation when it was possible for the Orchard to pay them. 111 There is no factual basis for any estoppel.
Is Mr Anderson only liable to pay Opteon for amounts referred to in the letter? 112 Mr Anderson says that on the true construction of the 9 September agreement his liability must be limited to the amounts stated in the letter of $30,640. No further details are provided as to why this is so. 113 I reject this submission. 114 The proper construction of the agreement shows Mr Anderson is acknowledging personal liability for the past invoices directed to Orchard of $30,640 and for future work performed by Opteon for Orchard. 115 I have already dealt with the past consideration and no consideration point. 116 There is no basis upon which Mr Anderson's liability is limited to the amounts stated in the letter.
Is Opteon entitled to charge the interest it claims? 117 Opteon has abandoned their claim for interest pursuant to the agreement and claims only interest pursuant to s 32 of the Supreme Court Act 1935
Conclusion 118 For reasons explained in this judgement, I accept the evidence of Mr Cameron, Mr McGrade and Mr Murphy and reject Mr Anderson's evidence and find that Orchard and Mr Anderson are jointly and severely liable to Opteon for the sum of $66,703.02 for services performed by Opteon for Orchard together with interest pursuant to s 32 of the Supreme Court Act at 6% and I shall hear from the parties as to that calculation. |