Pollard v RRR Corporation Pty Ltd

[2009] NSWCA 110

New South Wales

Court of Appeal

CITATION:	Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	28 April 2009
JUDGMENT DATE:	15 May 2009
JUDGMENT OF:	Ipp JA at 1; McColl JA at 2; Bryson AJA at 85
DECISION:	1. Appeal allowed. 2. Set aside the orders made by Finnane DCJ on 5 October 2007. 3. Remit the matter to the District Court of New South Wales for a new trial. 4. Costs of the first trial to abide the event of the second trial. 5. Respondent to pay the appellants’ costs of the appeal and to have a certificate under the Suitors’ Fund Act 1951 if otherwise entitled.
CATCHWORDS:	APPEAL – appeal – proceedings to recover fees said to be due on wrongful termination of agreement – competing versions of making of agreement and its terms – ex tempore judgment – whether failure to give reasons for decision – extent of obligation to give reasons – adequacy of reasons - APPEAL – new trial – inadequate reasons – whether new trial should be ordered – whether evidence so compelling Court should not order new trial
LEGISLATION CITED:	Suitors’ Fund Act 1951
CATEGORY:	Principal judgment
CASES CITED:	Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647 Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 Bourke v Beneficial Finance Corp Ltd (1993) 47 FCR 264 Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 Browne v Dunn (1893) 6 R 67 Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 Flannery v Halifax Estate Agencies Ltd t/as Colleys Professional Services [2000] 1 All ER 373 Goodrich Aerospace Pty Limited v Arsic [2006] NSWCA 187; (2006) 66 NSWLR 186 Hull v Thompson [2001] NSWCA 359 Hunter v Transport Accident Commission (2005) 43 MVR 130; [2005] VSCA 1 Jones v Bradley [2003] NSWCA 81 Maviglia v Maviglia [1999] NSWCA 188 Meates v Attorney-General [1983] NZLR 308 Mifsud v Campbell (1991) 21 NSWLR 725 Moylan v Nutrasweet Co [2000] NSWCA 337 Najdovski v Crnojlovic [2008] NSWCA 175 North Sydney Council v Ligon 302 Pty Ltd (1995) 87 LGERA 435 NSW Insurance Ministerial Corporation (formerly Government Insurance Office (NSW)) v Mesiti (Court of Appeal, 1 December 1994, unreported) Pacific Carriers Limited v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 Palmer v Clarke (1989) 19 NSWLR 158 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme [2003] HCA 56; (2003) 216 CLR 212 Soulemezis v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) [1999] HCA 3; (1999) 73 ALJR 306 Sun Alliance Insurance Ltd v Massoud [1989] VR 8 TCN Channel Nine Pty Ltd v Anning [2002] NSWCA 82; (2002) 54 NSWLR 333 Vroon BV v Foster’s Brewing Group [1994] 2 VR 32 Waterways Authority v Fitzgibbon; Mosman Municipal Council v Fitzgibbon; Middle Harbour Yacht Club v Fitzgibbon [2005] HCA 57; (2005) 79 ALJR 1816 Wright v Australian Broadcasting Commission [1977] 1 NSWLR 697 Yates Property Corporation Pty Limited (In Liq) v Darling Harbour Authority (1991) 24 NSWLR 156
TEXTS CITED:	J Carter, E Peden, G Tolhurst, Contract Law in Australia, 5th ed (2007) LexisNexis Butterworths J D Heydon, Cross on Evidence, 7th ed (2004) LexisNexis Butterworths
PARTIES:	Wendy Olive Pollard - First appellant Audrey Alice Fay - Second appellant RRR Corporation Pty Ltd - Respondent
FILE NUMBER(S):	CA 40743 of 2007
COUNSEL:	Mr M R Elliott for the Appellants Mr P G Maiden SC for the Respondent
SOLICITORS:	Slater & Gordon for the Appellants Byrnes Lawyers for the Respondent
LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 1747 of 2007
LOWER COURT JUDICIAL OFFICER:	Finnane DCJ
LOWER COURT DATE OF DECISION:	5 October 2007

CA 40743/07
DC 1747/07

IPP JA
McCOLL JA
BRYSON AJA

Friday 15 May 2009

Pollard & Anor v RRR Corporation Pty Ltd

Judgment

1 IPP JA: I agree with McColl JA

2 McCOLL JA: Wendy Pollard and Audrey Fay, the appellants, appeal from a judgment of Finnane DCJ who found that they had personally entered into a contract with RRR Corporation Pty Ltd, the respondent, to undertake a subdivision development of land in Port Macquarie owned by them, had terminated the contract without justification, and ordered them to pay damages of $126,400, interest and the respondent’s costs.

3 The appellants’ principal complaint is that the primary judge failed to give adequate reasons. In my view, for the reasons which follow, this contention should be upheld and a new trial ordered.

Statement of the Case

4 By statement of claim filed in the District Court on New South Wales on 21 October 2005 the respondent claimed it made an agreement with the appellants on or about 29 October 2004. It alleged that while the terms of the agreement were reduced to writing and signed by Bernard Rogers on its behalf, neither appellant ever signed it. Mr Rogers was a director of the respondent. Next the respondent alleged that after the agreement was recorded in writing it carried out the work the agreement required.

5 Finally, the statement of claim alleged that on 6 June 2005 the appellants terminated the agreement in writing, advised the respondent not to carry out any further consultancy services and said the monies due and owing to it would be paid. The statement of claim pleaded that by 6 June 2005 it had carried out all the work the agreement required apart from one item, that after 6 June 2005 it claimed the monies due to it but those monies had not been paid. The respondent claimed $126,400 plus interest. The figure of $126,400 was the result of subtracting $5,600 (which the appellants had paid the respondent in December 2004) from $132,000 which the respondent alleged was the principal sum due under cl 18 of the written contract.

6 The respondent alleged, in the alternative, that it was entitled to the $126,400 plus interest as on a quantum meruit.

7 The second appellant, Mrs Fay, is Mrs Pollard’s mother. In their original unverified Defence, the appellants, in substance, stated that their agreement with the respondent was oral, denied that the written contract represented the terms of the agreement and said the respondent had been paid in full. By their Amended Defence, which was filed after a change of solicitors and was verified by Mrs Pollard, the first appellant, on her own and the second appellant’s behalf, the appellants admitted, relevantly, that an agreement was made with Mr Rogers on or about 29 October 2004, but said the agreement was between Mr Rogers personally and themselves, as “directors of Jadeamie Pty Ltd as trustee of the Fay Family Trust (the ‘Trust’) on behalf of the Trust, and not the defendants personally”. They pleaded that Mr Rogers forwarded a written document to each of them on or about 14 April 2005 which had not been signed. The Amended Defence contended that the oral agreement between the “Trustee defendants on behalf of the Trust” and Mr Rogers was largely in the terms of the written document Mr Rogers forwarded to them, save as to clauses 12, 18 and 19. Clauses 18 and 19 related to payment. The Amended Defence alleged that pursuant to the agreement for which the appellants contended $4,000.00 per lot was to be paid as a fee for doing the work and selling the lots, and that the money was to be paid on the settlement of the sale of each lot, an exercise the respondent had represented could be completed by the end of July 2005.

8 The Amended Defence made allegations about the performance of the work which are not relevant to the issue on appeal.

9 The appellants relied upon the same facts, matters and circumstances in defence to the respondent’s quantum meruit claim.

10 Finally, the appellants admitted terminating the contract by their letter of 6 June 2005 but pleaded that when that letter was written, “the full extent of the Plaintiff’s breach of contract and negligence was not known to [them]”. They denied that they owed the amounts the respondent claimed.

The Issues at Trial

11 The appellants’ case at trial was that the admission in the Amended Defence that, as directors of a trustee company, they entered into an agreement with Mr Rogers on or about 29 October 2004 related to an oral agreement made on or about that date. They said that that agreement was not put in writing until Mr Rogers gave the document pleaded in the statement of claim (the “written contract”) to them on or about 14 April 2005. They said the written contract did not record the agreement insofar as it referred to the supervision of contract variations (cl 12) and the terms of payment of the respondent’s fees (cl 18) and the payment of a “sales fee” (cl 19). In particular they asserted that the respondent was not entitled to payment after the lots were sold.

12 Clause 18, which was relied upon by the respondent to support the relief it claimed, stated:

“Payment of RRR Fees. The agreed sum for the above work is $132,000 being $4,000 per lot by 33 lots. Payment is to be made as follows:
$66,000 prior to 30/6/05 and $66,000 prior to 30/7/05.”

13 The appellants’ case at trial was that their version of the events as to when they were given the written contract was the more probable and if accepted, cast serious doubt on Mr Rogers’ credibility.

14 They relied on a number of circumstances which they contended cast doubt on the respondent’s case. First, they pointed out that the Fay Family Trust was not in existence on or about 29 October 2004 so that it was inherently improbable that it would have been referred to in a document brought into existence on or about that date. Jadeamie Pty Ltd (“Jadeamie”) was incorporated on 3 December 2004. The Trust Deed creating the Fay Family Trust was dated 8 December 2004. This submission, it must be said, loses some force when compared with the appellants’ contention that the oral agreement they admitted was entered into on or about 29 October 2004, was entered into by them as directors of a corporate trustee which had not yet been incorporated.

15 However the appellants contended that their case that the written contract was brought into existence in or about April 2005 and first provided to them then was supported by a number of documents generated by, or at the instigation of, Mr Rogers from about March – April 2005 in relation to the subdivision, all of which referred to the “Fay Family Trust”. Those documents included two invoices from a plumbing firm dated 15 March 2005, initially addressed to the respondent, but with the latter’s name crossed out by Mr Rogers and the words “Fay Family Trust” substituted. On 31 March 2005 the plumbing firm addressed an invoice for $176,000 to “Fay Family Trust c/o RRR Pty Ltd”. Mr Rogers faxed that document to the bank manager at the local ANZ Bank with the message “Re Fay Family Trust, Draw, Today’s discussions. Could I have a cheque today please”.

16 On 24 March 2005 County Energy wrote to “Fay Family Trust c/- Mr Bernie Rogers” referring to the residential electricity supply for the 33 new allotments. The acceptance of offer form enclosed with that document was headed “Fay Family Trust”. The appellants’ signatures appeared opposite the words “Director (1)” and “Director (2)” and were witnessed by Mr Rogers. Mr Rogers faxed the acceptance of offer form back to County Energy on 11 April 2005. On 12 April 2005 County Energy asked Mr Rogers for details “such as providing ABN, Trading, Company names or whatever is most relevant”. Mr Rogers wrote on that document which he faxed back to County Energy:

“Ken herewith details, the Family Trust does not trade it is a Trust set up to develop the subject site. Please contact Chris O’Connor, accountant, at C.T.C. for any details you may require”.

Mr O’Connor was the settlor under the Deed of Settlement pursuant to which the Trust was created.

17 In early April Mr Rogers wrote on the respondent’s letterhead to the local council enclosing a plan of the proposed location for an electricity sub-station on the land being subdivided and signed the letter “B Rogers for the Fay Family Trust (Owners)”.

18 On 15 April 2005 Mr Rogers faxed a copy of the written contract to Mrs Fay (albeit that it was on the letterhead of “BRD Group”, apparently another of his companies) and wrote “copy Fay Family Trust” on the document before faxing it (Exhibit 1).

19 On 6 June 2005 Mr Terry Curley, a solicitor, wrote to Mr Rogers referring to the development, and stating he had been instructed:

“… by the Registered Proprietors … to inform you that your consultancy services are no longer required …. . My clients will arrange with you for payment of monies due and owing.”

20 The trial proceeded by way of affidavit evidence from Mr Rogers and Mrs Pollard both of whom gave short evidence-in-chief and were cross-examined.

21 In his affidavit Mr Rogers set out the history of his involvement with the appellants. He deposed (relevantly) that in October 2004 he decided to reduce his agreement with the appellants to a type-written document (the written contract, annexure BR 12) and on 29 October 2004 handed that document to Mrs Pollard at his office and asked her to sign it. He said that her response, in substance, was that she would take it away and look at it and drop it back signed, that she never did and that thereafter he gave Mrs Pollard further copies to sign, faxed one to Mrs Fay and delivered another to her but that he never received a signed copy from either. He said that on one occasion when he prompted Mrs Pollard about signing the written contract she said, “Alright. I’m sorry for the delay.”

22 Mr Rogers’ affidavit dealt in detail with the Amended Defence. He disputed that the agreement was entered into with the appellants as “directors of Jadeamie and/or in their capacity as trustees of the Fay Family Trust”. He asserted that at no stage did the appellants “indicate to me that they were contracting with me other than as the registered proprietors of the land and in their own capacities.” He said:

“151 In fact, it is my understanding that the Fay Family Trust was not established until after my discussions with Mrs Pollard and Mrs Fay which led to the making of our agreement in October 2004. As far as I am aware the Fay Family Trust and Jadeamie Pty Ltd were set up in early 2005 to borrow mortgage funds in May 2005.”

23 In his evidence-in-chief Mr Rogers was asked how the reference to the Fay Family Trust came to be on the written contract. He said:

“My agreement was already with Wendy Pollard and her mother, Audrey Fay, and her mother asked me at one stage that she wanted to put the money into some sort of family trust that was generated by the subdivision ….
Q. And did Mrs Wendy Pollard have anything to do with it being on there or not?
A. Well they both asked for it – they both … agreed that it be on there.”

24 In cross-examination Mr Rogers explained what he knew as at 29 October 2004 about the Fay Family Trust as follows:

“… Mrs Fay asked me to put the Fay Family Trust on this document because she told me she wanted to divert some funds from the Trust to Wendy Pollard’s sister and she requested that I not only have her and Wendy on my document, that I put the Fay Family Trust on there because it was a future trust she was going to prepare so that Wendy’s sister could derive some funds.”

25 Mr Rogers’ attention was then drawn to the fact that the document referred to both Mrs Pollard and Mrs Fay and he was asked why the former had been included when it was the latter who he said gave him the instructions. He responded:

“But the instructions were given by both Wendy Pollard and Audrey Fay, it’s just that on this particular occasion, I’m not saying that Wendy Pollard didn’t agree with that Family – Fay Family Trust being put in there.”

26 It was put to Mr Rogers that he had first sent the copy of the written contract to the appellants on 14 April 2005, the date which appeared on the facsimile transmission message on Exhibit 1. He denied that. It was also put to him that the true date of the agreement was 14 April 2005 and that he had backdated the document, propositions he also denied.

27 At this stage in Mr Rogers’ cross-examination, Mr M Gilbert, who appeared for the respondent at trial, but not on appeal, objected to the line of cross-examination, pointing out that Mrs Pollard had verified a defence which said there was an agreement dated 29 October 2004. Mr J Redmond, who appeared at trial for the appellants, but not on appeal, explained that while the defence admitted an agreement on 29 October 2004 it did not concede it was in writing but said it was oral.

28 Mr Rogers was taken to some of the documents to which I have earlier referred in which he had crossed out “RRR Corp” and inserted “Fay Family Trust”. He said he had done so at Mrs Pollard’s request in about March 2005. When taken to the document which he faxed to the Bank on 8 April 2005, Mr Rogers acknowledged that he was “obviously very aware the Trust must have existed at that stage because if the bank required me to write Fay Family Trust, I would have been aware at that stage the Trust existed, and that was the eighth of the fourth.” The cross-examiner sought to take Mr Rogers to more of the 2005 documents on which “Fay Family Trust” appeared. The primary judge stopped him pursuing that course, saying, in substance, that Mr Redmond should provide a schedule referring to the documents on which that expression appeared and he would read them.

29 Mrs Pollard’s affidavit also recounted the history of the parties’ relationship, according to which the idea of subdividing the property into 33 blocks was first raised by Mr Rogers in about November or December 2004. She deposed to a meeting with Mr Rogers to discuss quotes in which he said his costs would be $4,000 per block for supervising the work which she calculated as $132,000 and said to Mr Rogers:

“… if that is all you are going to charge, we can pay you when the lots are sold.”

30 She said that she was first given the written contract on 14 April 2005 when Mr Rogers was driving her to Port Macquarie airport so she could fly to Sydney en route to Fiji. She said when she read the document while most of it was as agreed, she did not agree with cl 12 (variations), cll 18 and 19 (payment) and said to him:

“I’m not signing this. It’s not what we agreed. I will discuss it with you when I return from Fiji.”

31 She said she called her mother and told her not to sign anything Mr Rogers might ask her to sign.

32 In dealing with Mr Rogers’ affidavit, she explained that her accountant, Mr Chris O’Connor, organised for the development “to be done through a family trust (and) [t]he Fay Family Trust was established to do the development.” She denied the conversation to which Mr Rogers deposed concerning the circumstances in which he said he gave her the written contract. She also denied that Mr Rogers had given her the written contract on several occasions after October 2004.

33 Finally, relevantly, Mrs Pollard’s affidavit said that:

“It was not until we decided to proceed with stage 2 and divide the land into 33 lots that we obtained accounting advice to set up a family trust. The second loan was in the family trust. Mr Rogers’ fees were to be paid by the Trust once the titles were issued (see page 4 of Annexure “D”). Mr Rogers knew this as he helped organise the loan.”

34 Annexure D was a letter of offer dated 13 May 2005 from the ANZ Bank to the directors of Jadeamie offering a facility of $1.6 million to complete the residential subdivision. One of the covenants set out in that document stated:

“Consultant to be paid only when titles issue”.

35 It was put to Mrs Pollard in cross-examination that the Amended Defence was the first time the appellants had suggested that the contract was entered into by “the company as trustee for the Fay Family Trust”. An attempt was then made to pursue a line about, I infer, why that had emerged in the Amended rather than the original defence. However Mrs Pollard appeared nonplussed by the questions and eventually this line was abandoned by the cross-examiner.

36 Mrs Pollard was cross-examined on when she first received the written contract. She denied receiving it on or about 29 October 2004, or on several occasions thereafter, and said she first received it on 14 April 2005. She agreed that the appellants’ case was that any agreement was an oral one made “in October, around about 29”. She said when she saw the written contract she told Mr Rogers “there were things there that I didn’t agree with”. She disagreed with the proposition that she had always had the written contract (presumably since 29 October 2004) but had refused to sign it.

37 Mrs Pollard was also cross-examined about the payment terms of the written contract (cl 18). While she acknowledged agreeing to pay Mr Rogers $132,000, she said it was for a “completed subdivision”, “upon completion”.

Submissions at Trial

38 The oral submissions at trial were not in the transcript in the appeal papers. The transcript does record that at the close of the defendant’s case there was no case in reply and “Mr Redmond addressed”. That appears to indicate the primary judge did not call on Mr Gilbert.

39 Mr Redmond gave the trial judge written submissions to which I assume he spoke. I will refer only to the parts of that document germane to the reasons issue. The submissions put Mr Rogers’ credibility in issue in many respects, drawing the primary judge’s attention to circumstances which Mr Redmond contended demonstrated that the written contract could not have been drawn up on 29 October 2004. The first, and most obvious matter, was the reference in the document to the “Fay Family Trust” which was not created until December 2004. Another was the reference in paragraph 4 of the written contract to negotiating and contracting with a consulting engineering company, David R Johnson Pty Ltd, from which a quote was first received on 12 November 2004. Mr Redmond also pointed to the fact that although Mr Rogers said he gave the appellants five or six copies of the written agreement between 29 October 2004 and 14 April 2005, no document referring to him forwarding the agreement and the promises to sign it had been produced, save the copy of the written contract faxed on 14 April 2005.

40 Next, the written submissions contended that there had been two agreements in relation to the subdivision of the land. The first related to Lot 1 in DP 251956, which was owned jointly by the appellants. The submissions drew attention to the fact that all the documents relating to the subdivision of that lot into two blocks were in the appellants’ names and that, in due course, Mr Rogers drew a tax invoice for his services for his work in relation to this subdivision which the appellants paid personally.

41 The written submissions next argued that the second agreement involved subdividing Lot 1 into 33 blocks, a decision made after a tender in relation to the previous subdivision had failed. The submissions argued that this agreement was verbal and was never reduced to writing, but that it was a development undertaken by the Fay Family Trust. In support, the submissions pointed explicitly to the number of documents brought into existence by Mr Rogers or received by him to which I have earlier referred in relation to the second subdivision which referred to the “Fay Family Trust”.

42 Mr Redmond’s written submissions also put squarely in issue that Mr Rogers knew it was a condition of the bank loan obtained for the redevelopment that he not receive his consultancy fees until the certificates of title (presumably to the subdivided lots) had been issued. They drew attention to the fact that Mr Rogers gave no evidence about a conversation with either of the appellants in which the contract terms were negotiated or agreed. They contended that Mr Rogers’ statement in his affidavit that he decided to reduce his agreement with the appellants to writing was an admission there had been an oral contract, but that the written contact was not created at or around 29 October 2004. They argued there was never an agreement to pay the respondent in the terms set out in cl 18 of the written contract.

The Judgment

43 The hearing commenced before the primary judge in the Port Macquarie sittings of the District Court on 20 April 2007 where his Honour dealt with objections to the affidavits, then adjourned the matter to Sydney to fix a date for further hearing. The Sydney hearing took place on 4 – 5 October 2007. On the final day the primary judge delivered an ex tempore judgment which can conveniently be set out in full to examine the appellants’ principal complaint:

“This case is an unfortunate consequence of a dispute between two people over the development of some land. As often happens where things do not proceed as people would like them to proceed, disputes break out.

The two would be developers of the land are the two defendants in this case, Wendy Pollard and her mother, Audrey Fay. The plaintiff, RRR Corporation, is a company which specialises in developing land, particularly for subdivision. Mrs Pollard and her mother owned a large block of land in the Port Macquarie area. They wished to subdivide it and sell it.

The evidence is clear that they consulted Mr Rogers who was the effective controller of the plaintiff company and he prepared a subdivision plan. The land was to be divided into two lots, it was to be put out for tender. It was put out for tender, nobody tendered.

Subsequent to this, the two defendants spoke to Mr Rogers about subdivision development. There are various versions as to what conversations occurred and as to what they were offered and what they were told they would get in the end but I am satisfied on the balance of probabilities that on 29 October 2004 the two defendants agreed with RRR Corporation to proceed with a development. The terms of the agreement are contained in annexure BR12 to the affidavit of Mr Rogers.

I am satisfied that that document was presented at a meeting on that day at which Mrs Pollard was present and that it was signed on that day by Mr Rogers and a copy of it was given to her and her mother on that day. Neither of them signed the document on that day.

Relying on the terms of that agreement, the terms of which are contained in that document, RRR Corporation went ahead and did work.

In June 2005 Mrs Pollard was unsatisfied with what was going on. Much of the problem seemed to revolve around the cost of fixing up a road within the subdivision. She consulted Terry Curley Lawyers. Mr Curley wrote a letter. She has agreed in evidence that she instructed Mr Curley to write that letter and he wrote it on behalf of her and her mother and he wrote that on their behalf as registered proprietors of the property terminating the agreement.

On the same day she and her mother signed a copy of a letter which Mr Curley sent to Mr Rogers. She agreed in evidence that indicated she agreed with its contents.

The original grounds of defence in this case amounted to a partial admission and partial denial of aspects of the statement of claim. The original defence had in it evasive paragraphs in which the pleader sought to step around the question whether a contract was entered into or was not entered into by using the device as saying ‘Does not admit’.

The document then went on to claim that the agreement between the plaintiffs was oral and to deny that the document of 29 October represents the terms of the agreement and to say that he had received payment in full for all services.

Subsequently there was a change of solicitors and a new defence, amended defence, was filed. Under that new amended defence the defendants admitted entering into an agreement on or about 29 October 2004 which is something they had not actually admitted previously. On this occasion this document claimed the agreement was between Bernard Rogers and the defendants who were said to be the directors of Jadeamie Pty Limited as trustee of the Fay Family Trust on behalf of the trust and not the defendants personally.

The evidence in the case establishes that this trust has no assets apart from an investment of $10 by the settler. If the agreement was between Mr Rogers personally and the defendants as trustees, then he would be forced to have recourse upon getting a judgment for the assets of the trust which had in it exactly $10. They would then be able to avoid the possibility of his taking action to enforce a debt against the property they both owned.

The courts have said again and again that they look very suspiciously on claims put by people ‘The contract was not with me but with my company, a company which has no assets.’ Equally could be said the courts look suspiciously on claims that the contract is not between people in their personal capacity but as trustees. In my opinion, there is no doubt that the contract was between RRR Corporation, not Mr Rogers personally and the two defendants personally.

On 29 October 2004 there was no Fay Family Trust. The contract referred to the two defendants as representing the Fay Family Trust but in my opinion that is merely the use of words that have no legal meaning since the trust was not in existence and they could not represent something not in existence.

It is also most improbable, in my opinion, that Mr Rogers, who appears to me to be a perfectly astute businessman, would knowingly enter into an agreement with trustees of a trust which own nothing to develop land owned by two people.

There is no reference in that document to this company and that company was not brought into existence until December 2004. I reject the claim that there was a contract between the plaintiff and Jadeamie as trustee of the Fay Family Trust or as the defendants as directors of a company which was trustee of a family trust.

The evidence establishes Mr Rogers did work and was carrying out work until the contract was terminated. There is no evidence, in my opinion, which justifies the termination. Certainly, there were disputes between the parties about various matters but none of those disputes justified the plaintiffs in terminating the contract.

The plaintiff is entitled to damages for the breach. The statement of claim seeks $126,400 plus interest and costs; 126,400 is arrived at by deducting from the contract price referred to in paragraph 18 of the contract the sum of 5600.

In my opinion, the plaintiff is entitled to a judgment. There will be judgment for the plaintiff in the sum claimed, together with interest. I do not need to specify the amount of interest because the interest is provided for under the rules.

I order the defendants to pay the plaintiff's costs.” (emphasis added)

Issues on Appeal

44 The Amended Notice of Appeal contains many grounds. The gravamen of the appellants’ complaint, however, as earlier indicated, is that the primary judge erred in deciding the case adversely to them, that he failed to give adequate reasons for so doing, failed to take any, or any adequate account of Mrs Pollard’s evidence (including the documentary material) and failed to explain adequately why he preferred Mr Rogers’ evidence to Mrs Pollard’s. The Amended Notice of Appeal sought a verdict in the appellants’ favour. Mr M R Elliott, who appeared for the appellants on appeal but not at trial, accepted, however, having regard to the oral argument on appeal, that if the inadequate reasons ground was upheld, there would have to be a new trial.

Submissions on Appeal

45 Mr Elliott drew attention to the two versions of events with which the primary judge had to deal: the respondent’s case that the written contract was placed before the appellants at a meeting on 29 October 2004 and they agreed to it, and the appellants’ case that Mrs Pollard proposed to Mr Rogers in late 2004 that his fees would be paid out of the proceeds of sale, that she did not receive the written agreement from Mr Rogers until 14 April 2004 and that when she saw it she observed its payment terms were not as she had proposed and told Mr Rogers it was not what they had agreed.

46 In the light of these two versions of events, Mr Elliott submitted that the primary judge failed to give any, or any proper consideration, to the evidence relevant to the issue of whether the respondent had established the written contract was made on 29 October 2004. He also contended that the primary judge’s finding that the respondent had established that the agreement was made as alleged was not supported by any reasons, the judgment “merely record[ing], opaquely, that the trial judge was ‘satisfied’ as to that matter on the balance of probabilities.” (emphasis in original)

47 Mr Elliott undertook an analysis of the evidence he submitted was relevant to an objective determination of the parties’ contractual intentions. This exercise was undertaken, as I understand it, both to support the proposition that the primary judge did not refer to critical evidence, as well as to contend that, on the balance of probabilities, the evidence did not support the proposition that the written contract for which the respondent contended was formed on 29 October 2004. The secondary purpose went to the contention in the written submissions that the respondent’s claim should have been dismissed and that this Court should so order. As I have said the latter contention was not pursued in oral argument.

48 The evidence issues Mr Elliott contended his Honour should have, but apparently did not, take into account included the following:

(a) whether the fact the respondent said he made repeated attempts to have the appellants sign the written contract demonstrated that Mr Rogers, on the respondent’s behalf, did not regard the parties as bound absent the appellants’ signature;

(b) whether the appellants’ refusal to sign the written contract indicated their lack of intention to be bound by its terms;

(c) the conduct of the parties after 29 October 2004 which Mr Elliott argued demonstrated there was no conduct by either party consistent with an agreement, in particular, on the payment terms set out in the written contract. He said that had the primary judge undertaken such an analysis, he would have appreciated that the subsequent conduct was equally consistent with the parties having communicated with each other in the manner Mrs Pollard described in her evidence;

(d) Mrs Pollard’s evidence that she received the written agreement in April 2005 and told Mr Rogers it was not what they had agreed;

(e) the unsatisfactory nature of Mr Rogers’ evidence as to why the written contract referred to a trust that did not exist in October 2004;

(f) the body of evidence which indicated that the words “Fay Family Trust” started appearing on documents Mr Rogers created in March and April 2005, around the time Mrs Pollard said she was first given the written contract.

49 Mr Elliott also addressed submissions to the errors for which the appellants contended in the primary judge’s finding as to the parties to any agreement and in awarding damages. It is unnecessary to deal with those submissions.

50 Mr P Maiden of Senior Counsel, who appeared for the respondent on appeal but not at trial, submitted that, having regard to the conduct of the trial, the respondent’s evidence about the formation of the contract was “consistent” and “unchallenged”. He argued that although Mr Rogers was shown the paragraph of Mrs Pollard’s affidavit in which she deposed to the terms as to payment, and asked whether or not he agreed with it, it was never actually put to him that that conversation was the correct version of events. Mr Maiden contended that once the appellants conceded an agreement was entered into on 29 October 2004 it was a matter for the primary judge to determine what its terms were. He contended that Mrs Pollard’s evidence was “completely inconsistent” with her defence.

51 In response to the appellants’ complaint that the primary judge gave no reasons as to why he preferred Mr Rogers’ version of events, Mr Maiden submitted that Mrs Pollard’s evidence was “so unsatisfactory and inconsistent that it was impossible for [it] to be accepted.” He argued that it was not necessary for the primary judge to make a finding about Mrs Pollard’s credit or demeanour having regard to the inconsistency between her evidence and the appellants’ defence.

52 Mr Maiden also contended that the respondent’s case concerning the parties’ agreement was corroborated by the letter from the appellants’ solicitors of 6 June 2005 terminating the arrangement, written before the subdivision was completed and the lots sold, which stated “my clients will arrange with you for payment of monies due and owing”.

53 Mr Maiden submitted that it was incumbent on Mrs Pollard, as the person who conducted the negotiations with Mr Rogers, to establish that the agreement with the respondent was made on behalf of some entity other than the appellants personally, and that her failure to lead any evidence on that issue meant there was no basis on which the primary judge could make a finding that the agreement was either with Jadeamie or the Fay Family Trust.

54 Mr Maiden argued that as the appellants put forward no acceptable version of the events, Mr Rogers’ account was the only version the primary judge could have accepted. Accordingly, he submitted it was sufficient for the primary judge to state that he was satisfied on the balance of probabilities that he accepted the respondent’s version of events.

55 Mr Maiden submitted that even if the primary judge’s reasons were inadequate, the evidence of the respondent’s case was so compelling the Court should exercise its discretion not to order a new trial.

Obligation to give reasons

56 The Court is conscious of not picking over an ex tempore judgment and, too, of giving due allowance for the pressures under which judges of the District Court are placed by the volume of cases coming before them (Maviglia v Maviglia [1999] NSWCA 188 (at [1]) per Mason P). However a trial judge’s reasons must, “as a minimum…be adequate for the exercise of a facility of appeal”: Soulemezis v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247 (at 260) per Kirby P; (at 268 – 269) per Mahoney JA; Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 (at 444) per Meagher JA. A superior court, “considering the decision of an inferior tribunal, should not be left to speculate from collateral observations as to the basis of a particular finding”: Soulemezis (at 280) per McHugh JA applying Wright v Australian Broadcasting Commission [1977] 1 NSWLR 697 (at 701, 713).

57 The giving of adequate reasons lies at the heart of the judicial process. Failure to provide sufficient reasons promotes “a sense of grievance” and denies “both the fact and the appearance of justice having been done”, thus working a miscarriage of justice: Mifsud v Campbell (1991) 21 NSWLR 725 (at 728); Beale (at 442) per Meagher JA.

58 The extent and content of reasons will depend upon the particular case under consideration and the matters in issue: Mifsud (at 728) per Samuels JA; Hull v Thompson [2001] NSWCA 359 (at [53]) per Rolfe AJA (Sheller JA and Davies AJA agreeing). While a judge is not obliged to spell out every detail of the process of reasoning to a finding (Yates Property Corporation Pty Limited (In Liq) v Darling Harbour Authority (1991) 24 NSWLR 156 (at 171) per Mahoney JA, (at 182) per Handley JA), it is essential to expose the reasons for resolving a point critical to the contest between the parties: North Sydney Council v Ligon 302 Pty Ltd (1995) 87 LGERA 435 (at 442) per Kirby ACJ; Soulemezis (at 259) per Kirby P, (at 270) per Mahoney JA, (at 280) per McHugh JA; applied in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme [2003] HCA 56; (2003) 216 CLR 212 (at [40]) per Gleeson CJ, Gummow and Heydon JJ.

59 The reasons must do justice to the issues posed by the parties’ cases: see Moylan v Nutrasweet Co [2000] NSWCA 337 (at [61]) per Sheller JA (Beazley and Giles JJA agreeing). Discharge of this obligation is necessary to enable the parties to identify the basis of the judge’s decision and the extent to which their arguments had been understood and accepted: Soulemezis (at 279) per McHugh JA. As Santow JA (with whom Meagher and Beazley JJA agreed) explained in Jones v Bradley [2003] NSWCA 81 (at [129]) it is necessary that the primary judge “ ‘enter into’ the issues canvassed and explain why one case is preferred over another”; see also Flannery v Halifax Estate Agencies Ltd t/as Colleys Professional Services [2000] 1 All ER 373 (at 377-378) per Henry, Laws LJJ and Hidden J.

60 Various observations have been made about the extent to which reasons should deal with the evidence. None is exhaustive; the test of adequacy, as I have earlier said, is relative. It is sufficient for the purposes of this case, to note the following.

61 The general proposition was stated by Samuels JA in Mifsud (at 728):

“…[F]ailure to refer to some of the evidence does not necessarily, whenever it occurs, indicate that the judge has failed to discharge the duty which rests upon him or her. However, for a judge to ignore evidence critical to an issue in a case and contrary to an assertion of fact made by one party and accepted by the judge … may promote a sense of grievance in the adversary and create a litigant who is not only ‘disappointed’ but ‘disturbed’ – to use the words which appear in the New Zealand case of Connell v Auckland City Council (1977) 1 NZLR 630 at 634.”

In similar vein, Gray J (with whom Fullagar and Tadgell JJ agreed) has said “[t]o have a strong body of evidence put aside without explanation is likely to give rise to a feeling of injustice in the mind of the most reasonable litigant”: Sun Alliance Insurance Ltd v Massoud [1989] VR 8 (at 18).

62 In Beale (at 443) Meagher JA referred to the requirement that a judge should refer to evidence which is important or critical to the proper determination of the matter as the first of the three fundamental elements of a statement of reasons. While his Honour explained that it was unnecessary to refer to the relevant evidence in detail, especially in circumstances where it is clear that the evidence has been considered, he added that where such evidence was not referred to by the trial judge, an appellate court may infer that the trial judge overlooked the evidence or failed to give consideration to it, referring to North Sydney Council v Ligon 302; see also TCN Channel Nine Pty Ltd v Anning [2002] NSWCA 82; (2002) 54 NSWLR 333 at [150] per Spigelman CJ (Mason P and Grove J agreeing). Meagher JA added that “[w]here conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to.”

63 Where, as in the present case, there is documentary material arguably supporting a party’s case, that material must be considered in the judge's reasons in a satisfactory way: State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) [1999] HCA 3; (1999) 73 ALJR 306 (at [94]) per Kirby J.

64 Bald conclusionary statements should be eschewed. As Ipp JA said in Goodrich Aerospace Pty Limited v Arsic [2006] NSWCA 187; (2006) 66 NSWLR 186 (at [28]):

“28 It is not appropriate for a trial judge merely to set out the evidence adduced by one side, then the evidence adduced by another, and then assert that having seen and heard the witnesses he or she prefers or believes the evidence of the one and not the other. If that were to be the law, many cases could be resolved at the end of the evidence simply by the judge saying: ‘I believe Mr X but not Mr Y and judgment follows accordingly’. That is not the way in which our legal system operates.”

65 Finally, where credit issues are involved it is necessary to explain why one witness’s evidence is preferred to another’s. “[B]ald findings on credit, where there remain substantial factual issues to be dealt with, may not constitute an adequate compliance with the judge's common law duty to provide the parties, and the appellate court, with the basis of his decision”: Palmer v Clarke (1989) 19 NSWLR 158 (at 170) per Kirby P (Samuels JA agreeing).

66 Because a primary judge is bound to state his or her reasons for arriving at the decision reached, the reasons actually stated are to be understood as recording the steps that were in fact taken in arriving at that result. Where it is apparent from a judgment that no analysis was made of evidence competing with evidence apparently accepted and no explanation is given in the judgment for rejecting it, it is apparent that the process of fact finding miscarried. This is because, so far as the reasons reveal, no examination was made of why the evidence which was accepted was to be preferred to that of other witnesses: Waterways Authority v Fitzgibbon; Mosman Municipal Council v Fitzgibbon; Middle Harbour Yacht Club v Fitzgibbon [2005] HCA 57; (2005) 79 ALJR 1816 (at [130] – [131]) per Hayne J (with whom McHugh J (at [26]) and Gummow J (at [27]) agreed)); see also Najdovski v Crnojlovic [2008] NSWCA 175 (at [21]) per Basten JA (Allsop P and Windeyer J agreeing).

67 Where an appellate court concludes that the primary judge has failed to give adequate reasons, it has a discretion as to whether a new trial should be ordered. If the only conclusion open on the evidence available at trial was the conclusion reached by the primary judge, then, notwithstanding an inadequate statement of reasons, the matter need not go to a new trial: Beale (at 444) per Meagher JA applying NSW Insurance Ministerial Corporation (formerly Government Insurance Office (NSW)) v Mesiti (Court of Appeal, 1 December 1994, unreported). In the latter case where the trial judge accepted the respondent's version of what occurred, Sheller JA (with whom Handley JA agreed) said, “[i]f there had been persuasive and critical contrary evidence the principles enunciated by Samuels JA in Mifsud v Campbell would suggest that a new trial must follow”: Mesiti (BC9403342 at 9); see also Bourke v Beneficial Finance Corp Ltd (1993) 47 FCR 264 (at 284). In some cases of inadequate reasons, where there is no credit issue, the appeal court may be in as good a position to decide the matter as the trial judge: see Hunter v Transport Accident Commission (2005) 43 MVR 130; [2005] VSCA 1 (at [37]) per Nettle JA.

Conclusion

68 Whether a contract has been formed, and the terms of any contractual arrangement, requires objective determination taking into consideration the text of relevant documents, and also the surrounding circumstances known to participants, and the genesis, purpose and object of the transaction, but not the participants’ subjective beliefs: Pacific Carriers Limited v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 (at [22]) per

Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ. The surrounding circumstances include the parties’ relationship to one another: Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 (at [25]) per Gaudron, McHugh, Hayne and Callinan JJ.

69 In order to conclude there was a binding contract, it was necessary for the respondent to prove that it had clearly indicated its willingness to be bound on certain terms, and that the appellants had given their unqualified assent to that offer: J Carter, E Peden, G Tolhurst, Contract Law in Australia, 5th ed (2007) LexisNexis Butterworths at [3-02]. There must have been “final mutual assent”: Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647 (at 660–661) per Higgins J; approved on appeal per Griffith CJ (at 666); O’Connor J (at 671); Isaacs J (at 671); see also Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 (at [71] - [81]) per Heydon JA.

70 The question whether such mutual assent was communicated turned on whether “viewed as a whole and objectively from the point of view of reasonable persons on both sides, the dealings show a concluded bargain”: Meates v Attorney-General [1983] NZLR 308 (at 377) per Cooke J, approved in Vroon BV v Foster’s Brewing Group [1994] 2 VR 32 (at 82) per Ormiston J in a passage cited by Heydon JA with approval in Brambles (at [75]).

71 As the account of the evidence I have set out earlier in these reasons indicates, the controversy between the parties turned on two narrow, but critical issues: the parties to, and the terms of, any agreement. Without being exhaustive, at the conclusion of the evidence the following matters at least, needed to be considered to resolve those issues.

72 First, whether the evidence disclosed the parties had communicated their mutual assent to the written contract. This required determining whether the agreement made towards the end of 2004 was reduced to the written contract on or about 29 October 2004 which the appellants refused to sign, as the respondent contended or, as the appellants contended, was oral only and first emerged in a written form with which they disagreed in April 2005. The factual matrix as disclosed in the evidence given by Mr Rogers and Mrs Pollard (including resolving any credit issues) had to be examined as too did the evidence relating to the creation of the Trust, the body of documentary material brought into existence by, or at the instigation of, Mr Rogers in or about March – April 2005 in which Mr Rogers referred to the “Fay Family Trust” and any other relevant documentary material.

73 Determining the terms of the agreement required similar, and somewhat overlapping, evidentiary considerations. Mrs Pollard gave evidence of the conversation in which she said it was agreed that the respondent would be paid when the lots were sold. It was the term as to payment, inter alia, to which she said she objected when she first saw the written contract in April 2005 as not being in accord with the agreement. Mr Rogers gave no direct evidence of the conversations he said led to the parties agreeing to the terms he says he reduced to the written contract. There were at least two documents to take into account. The first was the condition of the bank loan, which it was common ground Mr Rogers had assisted in organising, to the effect that the respondent was “to be paid only when titles issue”. The second was the appellants’ solicitor’s letter of 6 June 2005 acknowledging that the appellants “will arrange ... for payment of monies due and owing”. No doubt resolution of this issue would also have been influenced by the overall consideration of the evidence and any relevant credit issues.

74 In my view the evidence disclosed competing versions of the agreement reached concerning the subdivision of the appellants’ property which had to be dealt with in order to discharge the judicial obligation to give reasons.

75 In this case, in my view, the primary judge’s reasons failed to comply with the minimum standard necessary to discharge that obligation.

76 His Honour acknowledged that there were “various versions” as to the conversations between the appellants and Mr Rogers, but baldly concluded he was “satisfied on the balance of probabilities that on 29 October 2004 the two defendants agreed with RRR Corporation to proceed with a development” in the terms of the written contract. He disposed of the issue of the parties to the agreement by simply rejecting the proposition that an astute businessman like Mr Rogers would enter into an agreement “with trustees of a trust which own nothing to develop land owned by two people”. Thus his Honour appears to have disposed of this issue by impermissibly attributing a subjective state of mind to Mr Rogers: cf Pacific Carriers (at [22]). Moreover he failed to take into account the “Fay Family Trust” material to which I have referred which suggests Mr Rogers was prepared to identify that trust as the contracting party.

77 The primary judge did not deal at all with the dispute as to the terms of the agreement, save to the extent it may be speculated that his rejection of the appellants’ contention as to the payment term was subsumed in his acceptance of the respondent’s written contract as representing the agreement. It is possible, too, to infer that his Honour preferred Mr Roger’s evidence to Mrs Pollard’s, but, if that be the case, he had to explain why he did: Goodrich.

78 Regrettably, his Honour’s judgment did not do justice to the issues between the parties. It did not deal with the issues the appellants raised in their defence. It did not refer to critical evidence given by Mr Rogers and Mrs Pollard. It did not deal with the documentary material at all, save inferentially for the conclusion that the respondent had proved the written contract it propounded. It did not facilitate appeal.

79 This, as the foregoing analysis of authority reveals, was an inadequate approach to the issues raised by the pleadings, the evidence and the appellants’ submissions at trial. The process of fact-finding miscarried.

80 In my view the appellants are entitled to a new trial. This was not, as Mr Maiden submitted, a case where the evidence was, in effect, all one way so that the only conclusion open on the evidence was that the primary judge reached. I do not accept Mr Maiden’s contention that Mrs Pollard’s evidence was “completely inconsistent” with her defence. There was competing evidence, both oral and documentary.

81 Mr Maiden properly drew attention to what he submitted were deficiencies in the way the appellants’ case was put to Mr Rogers in cross examination, contending there was insufficient compliance with the rule in Browne v Dunn (1893) 6 R 67. However the application of that rule is qualified where the witness is on notice that his or her version of events is in contest as, in my view, Mr Rogers should have been by virtue of the Amended Defence and Mrs Pollard’s affidavit: J D Heydon, Cross on Evidence, 7th ed (2004 LexisNexis Butterworths (at [17445]). Further, the significance of this failure, if it were properly so described, was a matter for the primary judge.

82 In any event, as I have discussed, there was documentary evidence which arguably lent support to the appellants’ version of the chronology of events. It is sufficient to note, without expressing any conclusion which might embarrass a new trial, that this had to be taken into consideration in considering the competing issues, including credit issues, as between the parties.

83 The appellants had sought a verdict in their favour, but Mr Elliott accepted after hearing the oral debate that it would be overly optimistic on his part to invite the Court to say there was absolutely no basis upon which the appellants’ version could have been rejected.

Orders

84 In my view the following orders should be made:

1. Appeal allowed.

2. Set aside the orders made by Finnane DCJ on 5 October 2007.

3. Remit the matter to the District Court of New South Wales for a new trial.

4. Costs of the first trial to abide the event of the second trial.

5. Respondent to pay the appellants’ costs of the appeal and to have a certificate under the Suitors’ Fund Act 1951 if otherwise entitled.

85 BRYSON AJA: I agree with McColl JA

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10/06/2010 - Bryson AJA added to the coversheet - Paragraph(s) Coversheet