Legal Research
Cases
PRA Electrical Pty Ltd v Perseverance Exploration Pty Ltd

PRA Electrical Pty Ltd v Perseverance Exploration Pty Ltd

Link copied

Case Copied 18 December 2007 59 min read

Contents

On this page

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No 9700 of 2005

PRA ELECTRICAL PTY LTD (ACN 062 906 487)	Appellant
PRA ELECTRICAL PTY LTD (ACN 062 906 487)	v
PERSEVERANCE EXPLORATION PTY LTD (ACN 010 604 878)	1^st Respondent
PERSEVERANCE EXPLORATION PTY LTD (ACN 010 604 878)	and MR RICHARD MANLY SC	2^nd Respondent

---

JUDGES:	MAXWELL P, NETTLE AND ASHLEY JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	4 December 2007
DATE OF JUDGMENT:	18 December 2007
MEDIUM NEUTRAL CITATION:	[2007] VSCA 310

---

Contract – Offer and acceptance – Term of agreement that contract not come into effect until formal instrument of agreement executed by parties – Whether condition precedent to formation of contract or condition entitling supplier of services to suspend performance of contract in event of non-compliance – Whether contract should be implied in terms of agreement other than term concerning execution of formal instrument – Whether supplier of services estopped from denying that executed formal document not required, and that binding contract existed between parties.

---

APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr B Jenner	Russell Kennedy
For the 1^st Respondent	Mr J Digby QC with Mrs K L Stynes	Clayton Utz
For the 2^nd Respondent	No Appearance ( see n 7)

MAXWELL P:

I have had the considerable advantage of reading in draft the reasons for judgment of Ashley JA. For the reasons given by his Honour, I too would dismiss the appeal.

NETTLE JA:

I have had the advantage of reading in draft the reasons for judgment of Ashley JA.

I agree with his Honour that this is a case of implied contract or, perhaps more precisely, one in which the parties agreed by their conduct[1] to act on an agreement embracing all of the terms set out in or referred to in the letter of 16 August 2004, except for Special Condition SC4.
[1]Brogden v Metropolitan Railway Co (1877) 2 App Cas 666, 693; Vroon BV v Foster’s Brewing (1994) 2 VR 32, 79; cf Gjergja v Cooper [1987] VR 167, 205 (Ormiston J).

I reject as untenable the suggestion made by counsel on behalf of the appellant (PRA) that it was caught unaware on the issue. It is true that the point was not agitated below. But the issue of estoppel was the subject of debate; and, in my view, it would be fanciful to suppose that there might be evidence relevant to the question of implied agreement that was not thought to be relevant to the issue of estoppel.

Views may differ, perhaps, as to the precise point of time at which the agreement came into existence. As McHugh JA said in Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd:[2]
[2](1988) 5 BPR 11,110, 11,117-8, Brambles Holdings Pty Ltd v Bathurst City Council (2001) 53 NSWLR 153, 176 [71]-[82] (Heydon JA).

… in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read PRA Electrical Pty Ltd v Perseverance Exploration Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2007] VSCA 310
Decision Date: 18 December 2007

CaseChat Overview and Summary

PRA Electrical Pty Ltd took legal action against Perseverance Exploration Pty Ltd in the Supreme Court of New South Wales. The dispute centred on whether a binding contract had been formed between the parties, despite the absence of a formal instrument of agreement. The crux of the matter was whether a term in the agreement, stipulating that the contract would not come into effect until a formal document was executed by both parties, acted as a condition precedent to the formation of the contract or if it was instead a condition that allowed PRA to suspend its performance of the contract if the condition was not met.

The court had to determine the precise nature of the term concerning the formal instrument and whether the contract should be implied in terms other than this condition. Additionally, the court examined whether PRA was estopped from asserting that the formal document was not required and that a binding contract had been formed between the parties. The court evaluated the conduct of both parties and the surrounding circumstances to discern the true intention of the parties as expressed in their agreement.

The court concluded that the term in question was a condition precedent to the formation of the contract, rather than a condition that entitled PRA to suspend its performance. This meant that without the execution of the formal instrument, no binding contract existed between the parties. The court also found that PRA was not estopped from denying that the executed formal document was not required for the contract to be binding. Consequently, the court dismissed the claim, ruling that no contract had been formed between the parties due to the failure to execute the formal instrument.

Orders