Prime Ceramics Property Services Pty Ltd v Alan Patrick
[2011] VCC 493
•24 March 2011
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-09-04859
| PRIME CERAMICS PROPERTY SERVICES PTY LTD | Plaintiff |
| (ACN 006 492 137) | |
| v | |
| ALAN PATRICK PTY LTD | Defendant |
| (ACN 072 067 497) |
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| JUDGE: | HER HONOUR JUDGE KINGS |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 25 and 26 February 2010 |
| DATE OF JUDGMENT: | 24 March 2011 |
| CASE MAY BE CITED AS: | Prime Ceramics Property Services Pty Ltd v Alan Patrick Pty Ltd |
| MEDIUM NEUTRAL CITATION: | [2011] VCC 493 |
REASONS FOR JUDGMENT
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Catchwords: CONTRACT – terms and conditions – breach – repudiation.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D H Colman | Geoff Dillon & Co Pty Ltd |
| For the Defendant | Mr M G R Gronow | B2B Lawyers |
| HER HONOUR: |
1 Prime Ceramics Property Services Pty Ltd (“Prime”) is a commercial tiling contractor. Mr Christopher Shellie is a director of Prime.
2 Alan Patrick Pty Ltd (“Patrick”) is a supplier of commercial tiles. Mr Robert Harrison is the managing director.
3 Prime and Patrick have conducted business for over twenty years.
4 The present proceeding arises because of the nature of the documentation recording the arrangements the parties reached about the purchase of tiles by Prime and the supply of tiles by Patrick.
5 In the claim, Prime relies upon an agreement which was partly in writing, partly oral and partly to be implied. In the Defence and Counterclaim, Patrick relies upon a further agreement it alleges was partly in writing, partly oral and partly to be implied. I heard evidence from Mr Shellie and Mr Harrison. The evidence of the critical conversations in which the arrangement was finalised and the subsequent events, was in many instances inconsistent. The result of the litigation will depend in large part upon objective examination of documentation and the chronology of events.
6 For Prime’s part there is a claim for the return of the deposit monies in the sum of $37,479.75 it paid for a container of 1,202 square metres of Winckleman’s tiles, which it ordered on 25 September 2008, on the basis that delivery would be either as soon as possible or that the tiles would be despatched by mid-October, ensuring arrival in Melbourne and delivery to Prime by no later than the end of the first week of December 2008.
7 There is a dispute as to what occurred between the parties between 2 October 2008 and January 2009. The first container had not arrived, and in January 2009, by letter dated 22 January 2009, Prime cancelled the order and demanded the return of its deposit on the first container.
8 Patrick’s counterclaim is for the contract price of 4,000 square meters of tiles in the sum of $236,000 less the deposit already received from Prime ($37,479.75), being a balance of $198,520. Patrick contends that the agreement was for the purchase of 4,000 square metres of tiles, of which the first shipment of 1,202 square metres would be supplied as soon as possible.
9 Patrick agrees that it has not delivered the tiles under the agreement. This is because it had no legal obligation to do so. Patrick alleges that Prime ordered 4,000 square metres of tiles. The terms of the contract were that the tiles would be delivered in various shipments. The first shipment was for 1,202 square metres for shipment as soon as possible, with 50 per cent deposit on the purchase price payable by Prime to Patrick upon Patrick’s supplier advising that it was ready to send the shipment and requesting the deposit to be paid. The balance was payable upon arrival in Melbourne. Time was of the essence in respect to payment and if Prime failed to pay on time, Patrick could refuse to deliver any of the tiles until payment of the total price had been received by Patrick (Clause 3 and 3.1 of the terms and conditions of Patrick).
10 Further, as the shipments were being ordered from a third-party at Prime’s request, Prime would be, and remain liable for, the greater of either the total cost to Patrick for such orders or acquisitions or the total price, whichever is greater, irrespective of whether or not Prime terminated the agreement prior to the delivery of the shipments or not (Clause 5 of the terms and conditions of Patrick).
11 Patrick advised Prime that the supplier had indicated that the second shipment was available, and demanded a deposit on the second container.
Factual Narrative
Events up to 25 September 2008
12 Prime tendered for the installation of tiles (4,000 square metres) at the ANZ Bank head office at Docklands (“the project”). The project was a high-rise building that would be completed in stages.
13 The specification for the tender was ‘Winckleman’s tiles 100 x 100 Gris’ and the recommended supplier was Patrick. Winckleman’s was a French tile manufacturer. Benex was the French agent for the tile manufacturer.
14 The project required approximately 4,000 square metres of Winckelmans’ Gris 100 x 100 tiles, and Patrick would obtain the tiles from France. A price for the tiles was provided to Mr Shellie to enable him to tender for the project. The project was large and was going to extend over a period. Mr Shellie required a staged delivery of tiles – a minimum of four instalments staged according to the builder’s program. This was conveyed to Mr Harrison and is confirmed by Mr Harrison’s email to his agent in France, dated 30 July 2008:
“Good Morning Gilbert,
The contractor for the Winckelmans Gris 10x10 project we have has asked if they can purchase the order in 4 shipments of around 1000 m[2] each and supplied at about 3 monthly intervals starting in October and finishing around June 09. They would like the production to be of one batch.
They have requested this because it is a high rise building and that will be completed in stages of about ¼ at a time. Obviously we cannot purchase the material and store it for 9 months so it’s a case of what the factory can do.
Your earliest response including the current delivery delay will be appreciated.
Regards
Robert Harrison.”[2] T 118
15 Mr Harrison stated that the first two paragraphs contained information which he received from Mr Shellie. Mr Harrison gave evidence that he had a number of conversations with the supplier as the request required a non- standard production due to the volume required and the sheeting of the tiles. Before 25 September 2008, Mr Harrison said that Mr Shellie had rung him on a couple of occasions about the price and questions about the product, including warranties.
16 On 12 August 2008, an email was sent by Benex to Patrick. It is unclear whether it was received on that day by Mr Harrison. It was received by Mr Harrison on 26 September 2008 when it was forwarded to him by Benex. I was not referred to the email in evidence or in submissions. It appears to be a response to the email of Mr Harrison’s of 30 July 2008.
Events of 25 September 2008
17 Prime was the successful tenderer.
18 On 25 September 2008, Mr Shellie wrote out the Purchase Order in the presence of Mr Harrison, which was as follows:
“Re: Winkelmans Gris 100 x 100.
Requirement for project approx 4000 m2.
Please arrange 1st container approx 1200 m2 for production and despatch ASAP.
Details for further containers to be confirmed.
Price $59/m2 + GST.
Agreed Terms: 50% on orderBalance on arrival.” [1][1] Court Book (“CB”) 43
19 On 26 September 2008, Mr Harrison placed an order with Benex as follows:
“M2 Wincklemans 100x100 mm Gris
Quantity 4000
Meshbacked
This will be delivered in three lots of full containers.
The first will be required asap – the second around January next year and the final 2 containers around March. One batch lot would be preferred.” 2
20 The order was in similar terms to the order placed by Mr Shellie with Patrick the preceding day.
21 Mr Harrison said the email he received from Gilbert on 26 September 2010 was informing him that if the order was confirmed that week, the factory could include it in its September production for despatch mid-October. The email said the factory would then accept to produce, in one shot, “the remainder of your order and keep the stock … .”
22 Mr Harrison responded in an email of 29 September 2008, which stated:
“Our client is not concerned if the first delivery is a different batch than
the remainder of the order. … “[3]
[3] CB 88
23 Mr Harrison’s evidence was he had been advised that there was a small quantity of the product at the factory unsheeted.
24 On 29 September 2008, Mr Harrison sent a facsimile to Mr Shellie enclosing the invoice and updating Mr Shellie on despatch information of the first container and timings for the subsequent containers. The facsimile stated:
“Chris
The attached invoice is for first container that will be produced against deposit payment, which should be made this week. This will ensure dispatch by mid October. Our bank details are on the invoice.
The factory has advised the first shipment will be a different batch than the balance which they will do their best to keep to one production.
The next shipment will be available to leave around end of December for arrival approximately late February. Subsequent dispatches can occur as required with the factory willing to hold the material until around March/April.
Could you please fax a copy of the bank transfer confirmation.”
25 The above facsimile was keeping Mr Shellie informed.
26 On 2 October 2008, Prime sent a facsimile to Patrick confirming payment of the deposit against the invoice sent by Patrick.
Events between 2 October 2008 and 18 November 2008
27 There is divergence in the evidence given by Mr Shellie and Mr Harrison about the number and content of the conversations they conducted in the period 2 October to 18 November 2008 and thereafter. Both agreed that there was a delay in the despatch of the first container.
28 Mr Shellie’s evidence was that there was at least one discussion about the delay, then in a discussion prior to 18 November 2008, Mr Harrison requested the deposit on the second container, before he was prepared to despatch the first container. The invoice for the deposit for the second container was not issued until 24 November 2008.
29 Mr Harrison’s evidence was that there were a number of conversations about the delay, that Mr Shellie, knowing of the delay, said things had changed and if two containers were on site in early March this would overcome the delay problem. Further, Mr Shellie asked Mr Harrison to send an invoice for the second container. Mr Shellie denied ordering the second container and requesting the invoice for the second container.
30 On 10 November 2008, Benex sent an email to Mr Harrison:
“Hello Robert,
Please find attached our proforma for one Tc loaded at 21 400 kgs. Is it ok or do we load more ??
It will be ready for loading end of week 48 beg. of 49. Please organise the transfer accordingly. In order to organise the loading, please confirm all details regarding the forwarder in charge of shipment.
Thanks and regards, Isabel.”
31 Mr Harrison said that the email of 10 November 2008 was an advice from Benex as to what was available and the week of availability. I accept that the email was informing Mr Harrison that the first container was ready for despatch at the end of week 48, or the beginning of week 49, and Benex asked him whether it was ok to send one container or whether to load more. There was no evidence that the email was responded to by Mr Harrison.
Events between 27 November 2008 and 22 January 2008
32 The following emails were exchanged between Patrick and Benex which Mr Shellie said he was not aware of until they were discovered:
(a) Email of 27 November 2008: “Hello Helen and Robert,
The first container will be ready for loading end of this week. Please confirm if the transfer was done. Please send us all detail in order to trace it with our bank. Thanks and regards, Isabel.”
Benex is proceeding on the basis that it will despatch the first container end of week 47. There is no mention by Benex of subsequent containers.
(b) Email of 28 November 2008: “Good morning Isabel,
We may have to defer the shipping because to ship now would mean the container arrives in Melbourne during our holiday period and the container will cost us a lot of money if it is not cleared within a few days after arrival. We are trying to come to some arrangement to overcome this and I will advise you as soon as we can confirm what we will need to do.
Regards
Robert Harrison.”
(c) Email of 1 December 2008 “En response à votre message du 28/11/2008 à 11:27 [In response to your message of 28/11/2008 at 11:27]
“Hello Robert
Thanks for information.
If container is shipped mid December, he will dock end of January in
Melbourne only.Please advise us ASAP as Winckelmans are using pre treated pallets, in order to avoid fumigation charges, provided Tc is loaded within 3 weeks, if not, transport company will have to fumigate the Tc again.
Please keep us informed ASAP.
Best regards, Isabel.”
“Hello Robert
Winckelmans is calling us every day. Please keep us o[i]nformed (sic)
Best regards, Isabel.”
33 The email of 28 November 2008 from Mr Harrison to Benex refers to deferring shipping of “the container”. Mr Shellie gave evidence that he did not give instructions to defer the shipping of Container 1. He said that he was wanting the tiles; it was causing him enormous grief that they had not been shipped.
34 Mr Harrison’s evidence was, in respect to the email of 28 November 2008:
“Because of the circumstances we were shipping two containers and they were required early March. Because the goods weren’t required, there was nothing to be gained by having them arrive early. The warehouse closed for five weeks between Christmas and January. If they were despatched early January then they’d arrive mid-February”.
35 The email of 1 December 2008 from Benex to Mr Harrison is responding to Mr Harrison’s 28 November 2008 email, saying that if the container is shipped mid-December, it would dock end of January in Melbourne, and it wanted advice as to whether the container would be loaded as the pallets were ready. As at 1 December 2008, Benex is referring to one container.
36 Mr Harrison gave evidence that this was discussed in conversations with the agent and Mr Shellie. He thought he was talking with Mr Shellie about every other day up until Christmas. Mr Harrison said the conversations were always about payment of the second container to enable shipment to take place.
37 Mr Harrison said he sent an email on 5 December 2008 requesting payment of the deposit on Container 2. Mr Shellie’s evidence was he told Mr Harrison that he was not paying it as he had not received Container 1 and not ordered Container 2.
38 On 13 January 2009, Mr Harrison sent an email to Mr Shellie which requested payment of the deposit on Container 2. Mr Shellie said that had the first container been despatched at the end of week 47, he would have received it by mid-January, which would have been acceptable. He realised the container had not been sent and did not think it would be sent unless he agreed to pay the deposit on the further second container which he had not ordered. As a result, he sent a letter dated 22 January 2009 cancelling the purchase order of 25 September 2008 and requesting the return of the deposit.
Analysis
The Terms of the Contract
39 What is in dispute is what was said and agreed in conversations between Mr Shellie and Mr Harrison prior to completing the order on 25 September 2008. Because the accounts given by Mr Shellie and Mr Harrison are inconsistent, I must be assisted by the plain terms of the contemporaneous documents and the chronology of events.
40 Both parties rely upon the order of 25 September 2008 and upon oral conversations between Mr Shellie and Mr Harrison on or about 25 September 2008.
41 In addition, Prime relies upon the facsimile transmission dated 29 September 2008 sent to it by Mr Harrison, whereby Mr Harrison said if payment was made that week, it would ensure despatch by mid-October. Prime says it was a term of the agreement that the tiles were to be despatched by mid-October 2008.
42 Prime contends that it ordered 1,200 squares metres of tiles on 25 September 2008, that it would eventually require 4,000 square metres, but was placing an order for one container to be delivered as soon as possible. Patrick alleges the contract was for 4,000 square metres, of which 1,200 square metres was to be supplied as soon as possible. The price was agreed at $59 per square metre plus GST. The agreed terms were 50 per cent on order, balance on arrival.
43 Prime’s written order dated 25 September 2008, and the course of dealings between the parties, lead me to the conclusion that Prime placed an order for 4,000 square metres of tiles to be delivered in stages. The order of 25 September 2008 stated “requirement for the project approximately 4,000 m2”. The reference to “the first container” implied there would be further containers. The statement “details for further containers to be confirmed” supports the contention that there was to be more than one container, and that the date and arrangements for the delivery of the further containers of tiles would be confirmed, not whether they would be delivered at all. The wording “for production and despatch ASAP” indicated the relevant term about the timing of the first container as delivery depended on the factory in France, which, at that time, was unknown to the parties. The price was included; that was not in dispute. The terms for payment were also included. The terms were agreed as 50 per cent on order, balance on arrival. I accept that “50 per cent on order” meant that Prime was required to pay 50 per cent deposit on the ordering of each container.
44 I find that the contract was contained in the order of 25 September 2008 and was for the supply of 4,000 square metres of tiles to be delivered in stages. The contemporaneous evidence is that the containers of tiles were to be delivered in stages at about three-monthly intervals with the factory (the supplier) willing to hold the material until around March/April. Subsequent despatches were to occur “as required”. The parties did not consider the issue of the containers overlapping.
45 Accordingly, I do not accept that the facsimile dated 29 September 2008 constituted a term of the contract, namely that if payment was made that week, despatch would be by mid-October. I find that the contract was formed on 25 September 2008. The order form contained the terms of the contract: price, payment, and terms in respect to delivery ASAP. Further, acting upon the order, on the following day, 26 September 2008, Patrick placed an order with Benex, the agents for the tiles, using the term “ASAP”, as was used by Mr Shellie in the order of 25 September 2008. The law is that subsequent conduct of the parties is relevant only to the extent that it throws light on what was agreed at the time.[4] The facsimile of 29 September 2008 was updating Prime on the timing and delivery. That is if payment was made that week, it would ensure despatch by mid-October.
[4] Roxburgh v Crosby & Co [1918] VLR 118
Terms of the Contract about Subsequent Despatches
46 Counsel for Patrick submitted that the words “details for further containers to be confirmed” meant that it was Patrick’s call when the second and subsequent containers were to be delivered.
47 I do not accept that the deposit on the second and subsequent containers fell due for payment when either the factory or Patrick determined to send the containers. Patrick knew that the order was to be staged.
48 There was a discussion of the containers being delivered at three-monthly intervals over a period. Whilst the order of 25 September 2008 was created by Mr Shellie, there was contemporaneous evidence that the staging of the containers was discussed by Mr Harrison and Mr Shellie. I refer to the facsimiles of 30 July 2008 sent by Patrick to Benex setting out Prime’s requirements, and of 29 September 2008, where Mr Harrison referred to subsequent containers being available to leave around the end of December for arrival in approximately late February and further despatches occurring as required with the factory willing to hold the material until around March/April.
49 Further, at the earliest, the second container was not due for despatch under the agreement until around the end of December, and that was assuming that the first container was despatched around mid-October.
50 In view of the contemporaneous evidence, I do not accept that it was Patrick’s call as to when delivery was to be made. Further, Mr Harrison’s evidence was that the reason the deposit on the second container was due to be paid was because Mr Shellie asked for the second container and the invoice. This suggests that in Mr Harrison’s mind, it was up to Prime to decide when subsequent containers were to be despatched, which is consistent with the documentary evidence, in particular, the emails of 30 July 2008 and 29 September 2008.
Ordering and Payment for the Second Despatch
51 At around the time he placed the order, Mr Shellie’s evidence was that he understood Mr Harrison was to come back and confirm the arrangements for the first container, as well as provide him with an invoice. He agreed that there was no great certainty as to when the first container would be shipped at the time he placed the order. He thought Mr Harrison had told him the container would be shipped as soon as possible, but did not commit to a date. His evidence was that if Mr Harrison had told him at the time of placing the order that the first container would not be despatched until the first week of December, alarm bells would have rung. Mr Shellie agreed that there was at least one discussion about the delay, but denied ordering the second container and requesting the invoice for the second container.
52 Mr Harrison said the price that was quoted was based on a 4,000-square- metre’ production and the terms of delivery were to be confirmed.[5] Mr Harrison said there were a number of conversations about the delay and that Mr Shellie, knowing of the delay, said things had changed and if two containers were on site in early March, this would overcome the delay problem. Further, Mr Shellie asked Mr Harrison to send an invoice for the second container.
[5] CB 44
53 I accept that there were discussions about the delay. I do not accept Mr Harrison’s evidence that Mr Shellie agreed that the issue of delay would be overcome by two containers being on site by early March and by requesting the invoice for the second container. This is because Patrick did not plead a variation of the contract in its Defence and Counterclaim in accordance with the evidence of Mr Harrison. Secondly, the conversation in relation to the two containers being on site in early March was not put to Mr Shellie in cross- examination. Thirdly, Mr Shellie denied the requesting of the invoice for the deposit on the second container. Mr Shellie said he could have paid the deposit on the second container but it did not fit the financial strategy of the job. Fourthly, there was no email to Benex to the effect that Prime required two containers in early March, nor did Patrick respond to the email of 10 November sent by Benex. Fifthly, Mr Harrison’s version of events is inconsistent with the contemporaneous documentation, the subsequent emails sent on 22 November, 28 November and 1 December 2008, and the evidence of Mr Shellie, which I accepted as truthful. Sixthly, it was not in issue that the parties had not discussed the possibility of the containers overlapping and the consequences, if any.
54 I accept that Mr Harrison was seeking payment for the deposit on the second container up until Christmas and when he returned to work in January 2009.
55 Patrick submitted that it was entitled to demand a deposit for the second container, because the plaintiff requested an invoice for the second container. I do not accept Mr Harrison’s evidence on that point. I find that the demand for payment of the deposit on the second container on 18 November 2008, and the forwarding of the invoice on 24 November 2008 by Mr Harrison, was premature. I accept that under the contract, Prime was required to order the second and subsequent containers. The parties understood that the order was for a project that was to be completed in stages. The request was to purchase the order in four shipments at about three-monthly intervals (see the email of Mr Harrison to Benex dated 30 July 2008). The purchase order of 25 September 2008 recorded “details for further containers to be confirmed”. Patrick’s order of 26 September 2008 to Benex stated:
“The first will be required asap – the second around January next year.”
56 The facsimile of Patrick to Mr Shellie on 29 September 2008 stated:
“The next shipment will be available to leave around end of December for arrival approximately late February. Subsequent despatches can occur as required with the factory willing to hold the material until around March/April.”
57 I find that Mr Shellie did not agree to vary the order of 25 September 2008. Nor did he order or request the second container.
Despatch of the First Container
58 The evidence is that the first container was ready for despatch the end of the week commencing 24 November 2008. Mr Shellie’s evidence was that he wanted the container. The container was not despatched at that time and was never despatched.
59 The term for production and despatch in the agreement was “asap”. The evidence was that there had been a delay in the production at the factory. Benex emailed Patrick on 10 November 2008, informing it that the first container was ready for loading at the end of week 48 and beginning of week 49. On Thursday, 27 November 2008, in an email to Patrick, Benex updated the loading details, stating that the first container was ready for loading at the “end of this week”. The evidence is that the first container was available for despatch by 28 November 2008. Under the agreement reached between the parties, the timing “for production and despatch” was “asap”. Had the first container been loaded on 28 November 2008, from the evidence I can infer that the first container would have been on site on or about 13 January 2009 when Mr Shellie returned to work. The evidence was that Mr Shellie wanted the tiles on site by 13 January 2009.
Conclusion
60 In light of these circumstances, I find that there was a breach of the agreement by Patrick, in that Patrick failed to deliver to Prime the first container of tiles ordered by Prime. Further, Patrick had not advised Prime that the tiles were available for delivery to Prime, or when they would be available for delivery to Prime. I accept that Patrick repudiated the agreement by virtue of its non-delivery and that Prime accepted the repudiation of the agreement so that the agreement has thereby terminated.
61 By failing to load the first container in accordance with the email of 27 November 2008, I find that Patrick breached the contract.
62 There was a dispute as to whether Patrick’s standard terms and conditions formed part of the contract. It was not in dispute that the standard terms and conditions were printed on the reverse side of the invoice and that Mr Shellie was aware that Patrick had terms and conditions printed on the reverse side of its invoices. The issue in this contract was that the invoice was faxed to Prime without the terms and conditions. This was only the second occasion in which Prime had ordered tiles through Patrick from an overseas supplier. Mr Harrison said the terms and conditions would have been provided to Prime at a later date. Given that I have found that Patrick repudiated the contract, it is not necessary for me to consider whether or not the standard terms and conditions were incorporated into the contract.
63 Accordingly, the plaintiff is entitled to the return of the deposit payment made to the defendant on 2 October 2008 in the sum of $37,479.75.
64 I dismiss the counterclaim.
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