SUPREME COURT OF VICTORIA
COMMERCIAL JURISDICTION Do not Send for Reporting Not Restricted
No. 2067 of 1998
Folio 4931
| POWERCOR AUSTRALIA LTD (ACN 064 651 109) | Plaintiff |
| v | |
| PACIFIC POWER | Defendant |
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JUDGE: | Gillard J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 10, 15-18, 22-25 and 29-31 March 1999; 7, 8, 12-15, 19-22, 28 and 29 April 1999; 3-6 , 17-20, 24-27 and 31 May 1999; 1-3, 7, 8, 10, 15-17, 21-24, 28-30 June 1999; 1, 5-7, 12-15, 19-22, 26-29 July 1999; 10, 11, 12, 16-19, 23-26, 30 and 31 August 1999; 1, 2, 5 and 6 September 1999. | |
DATE OF JUDGMENT: | 18 November 1999 | |
CASE MAY BE CITED AS: | Powercor Australia Ltd v Pacific Power | |
MEDIA NEUTRAL CITATION: | [1999] VSC 110 | |
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Commodity Derivative Contracts – electricity industry – hedge against risk
ISDA Master Agreement – purpose – future transactions – effect on negotiations – transaction part of Master Agreement
Formation of contract – intention to contract
Estoppel by convention – no change to contractual provisions
Equitable estoppel – to establish contract – no estoppel established
Authority of employee to conclude a contract – apparent authority – authority to convey offer and receive an acceptance
Ratification of alleged lack of authority in employee to make a contract – ratification after contract repudiated – ratification after contract commenced
Mistake – common and unilateral mistake in contract
Section 52 Trade Practices Act – claims for alleged breach
Specific performance – possible division of relief between damages and performance
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr A. Myers, QC with Mr J. Delaney and Mr M. Carey | Phillips Fox |
| For the Defendant | Mr G. Downes, QC with Mr G. Blake, Mr P.R. Moloney and Mr D.T. Forbes | Davis O'Neill Sistrom Hassall & Byrne (as agents for Davis O'Neill Sistrom) |
TABLE OF CONTENTS
PARTIES..................................................................................................................................................................................... [2]
GENERATION, SUPPLY AND RISK............................................................................................................................. [7]
THE ELECTRICITY INDUSTRY IN VICTORIA AND NEW SOUTH WALES.......................................... [14]
EXEMPT FUTURES MARKET........................................................................................................................................ [35]
DERIVATIVE CONTRACTS........................................................................................................................................... [41]
BASIC FACTS........................................................................................................................................................................ [76]
THE PROCEEDING............................................................................................................................................................. [91]
PERSONNEL.......................................................................................................................................................................... [92]
PATTERN OF TRADING.................................................................................................................................................. [95]
DISPUTED CONTRACTS............................................................................................................................................... [121
ISSUES.................................................................................................................................................................................... [141]
THE WITNESSES AND CREDIBILITY.................................................................................................................... [144]
25 NOVEMBER 1997.......................................................................................................................................................... [195]
THE ISDA MASTER AGREEMENT........................................................................................................................... [255]
THE EFFECT......................................................................................................................................................................... [337]
WHEN A BINDING CONTRACT?............................................................................................................................. [354]
TELEPHONE DEALING SUPPLEMENT.................................................................................................................. [380]
AUTHORITY........................................................................................................................................................................ [393]
ESTOPPEL BY CONVENTION.................................................................................................................................... [398]
ESTOPPEL BY CONVENTION - PRINCIPLES..................................................................................................... [416]
ESTOPPEL - CONCLUSION......................................................................................................................................... [457]
CONTRACT OR NO CONTRACT?............................................................................................................................ [482]
A. Contract - Principles......................................................................................................................................... [491]
B. Was there a contract?....................................................................................................................................... [546]
C. Essential minimum terms................................................................................................................................... [570]
(I) Contract No. 33 (formerly 22)......................................................................................................................... [582]
PP'S SUBMISSIONS......................................................................................................................................................... [657]
(II) Contract No. 35.................................................................................................................................................. [686]
PP'S SUBMISSIONS......................................................................................................................................................... [717]
(III) Contract No. 38.................................................................................................................................................. [755]
PP'S SUBMISSIONS......................................................................................................................................................... [783]
(IV) Contracts Nos. 39, 40 and 41.......................................................................................................................... [798]
PP'S SUBMISSIONS......................................................................................................................................................... [861]
(V) Contracts 43-47.................................................................................................................................................. [912]
PP'S SUBMISSIONS......................................................................................................................................................... [991]
SUMMARY ON 11 DISPUTED CONTRACTS.................................................................................................... [1017]
INTENTION AND ALLEGED HOLDING BACK.............................................................................................. [1019]
PCA'S RELIANCE ON ESTOPPEL........................................................................................................................... [1094]
AUTHORITY...................................................................................................................................................................... [1190]
A. The Contentions................................................................................................................................................. [1198]
B. Principles Concerning Authority.............................................................................................................. [1210]
C. Authority of Mr Murphy............................................................................................................................ [1257]
I. Actual authority................................................................................................................................................... [1257]
OSTENSIBLE AUTHORITY........................................................................................................................................ [1453]
AUTHORITY TO COMMUNICATE OFFERS AND ACCEPTANCES...................................................... [1473]
AUTHORITY OF MR TREACY..................................................................................................................................…
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- Case
- [1999] VSC 110
- Decision Date
CaseChat Overview and Summary
The court examined whether the contracts were properly formed by assessing if there was an intention to contract and if the ISDA Master Agreement applied to future transactions. It found that there was no estoppel by convention as the parties had not changed their contractual provisions. The court also ruled that there was no equitable estoppel as Powercor could not establish the contract's existence. Regarding the authority of the employee, the court held that there was apparent authority for the employee to convey the offer and receive an acceptance, but the ratification of the lack of authority did not apply after the contract was repudiated and after it had commenced. The court further held that there was a common and unilateral mistake in the contract, which did not affect its validity. Finally, the court considered whether there were any claims for alleged breaches under section 52 of the Trade Practices Act and whether specific performance was a possible division of relief between damages and performance.
The court found in favour of Pacific Power, dismissing Powercor's claims and holding that the contracts were valid and enforceable. The court did not grant specific performance but left open the possibility of damages being awarded. Powercor's appeal was subsequently dismissed by the Full Court of the Federal Court.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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