RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd

[2010] WASCA 128

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT :   THE COURT OF APPEAL (WA)

CITATION:   RJ BAKER NOMINEES PTY LTD -v- PARSONS MANAGEMENT GROUP PTY LTD [2010] WASCA 128

CORAM:   OWEN JA

NEWNES JA
MURPHY J

HEARD:   17 MARCH 2010

DELIVERED          :   7 JULY 2010

FILE NO/S:   CACV 94 of 2009

BETWEEN:   RJ BAKER NOMINEES PTY LTD (ACN 008 852 168)

Appellant

AND

PARSONS MANAGEMENT GROUP PTY LTD (ACN 074 618 885)
Respondent

ON APPEAL FROM:

Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA

Coram  :BEECH J

Citation  :R J BAKER NOMINEES PTY LTD -v- PARSONS MANAGEMENT GROUP PTY LTD [2009] WASC 206

File No  :CIV 1977 of 2007

Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA

Coram  :BEECH J

Citation  :R J BAKER NOMINEES PTY LTD -v- PARSONS MANAGEMENT GROUP PTY LTD [2009] WASC 206 (S)

File No  :CIV 1977 of 2007

Catchwords:

Contract - Invitation to appellant to tender for road construction in subdivision ‑ Offer by respondent to pay for work by transfer of two lots in subdivision - Oral acceptance of appellant's tender - Whether acceptance of tender included agreement to transfer two lots - Whether inferred contract ‑ Relevant principles - Turns on own facts

Costs - Whether evidence of what occurred at mediation conference admissible on costs question - Order made by registrar that such evidence may be given on costs question - Supreme Court Act 1935 (WA), s 71 - Evidence not admissible 'under the rules of court' - Calderbank offer - Whether appellant's failure to accept offer was unreasonable

Legislation:

Supreme Court Act 1935 (WA), s 71

Result:

Appeal dismissed
Notice of contention dismissed
Cross­appeal dismissed

Category:    B

Representation:

Counsel:

Appellant:     Mr A Metaxas

Respondent:     Mr D H Solomon

Solicitors:

Appellant:     Metaxas & Hager

Respondent:     Solomon Brothers

Case(s) referred to in judgment(s):

Abigroup Contractors Pty Ltd v ABB Service Pty Ltd [2004] NSWCA 181; (2005) 21 BCL 12

Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647

Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153

Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424

Brymount Pty Ltd v Cummins (No 2) [2005] NSWCA 69

Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471

Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95

Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115

Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551

Grbavac v Hart [1997] 1 VR 154

Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298

Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Australia) Pty Ltd, (1988) 5 BPR 11,110

Kriketos v Livschitz [2009] NSWCA 96; (2009) 14 BPR 26,717

Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44

MacRobertson Miller Airline Services v Commissioner of State Taxation (Western Australia) (1975) 133 CLR 125

Meates v Attorney-General [1983] NZLR 308

Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451

Pegrum v Fatharly (1996) 14 WAR 92

R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206

R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206 (S)

Sagacious Procurement Pty Ltd v Symbion Health Ltd (formerly Mayne Health Group Ltd) [2008] NSWCA 149

Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32

1. OWEN JA & MURPHY J:  We agree with Newnes JA that the appeal should be dismissed.  We also agree with his Honour's reasons for coming to that conclusion, save that we do not find it necessary to express a view, and we express no view, on the matters to which he refers in [66] of his reasons.

2. NEWNES JA:  This is an appeal against a decision of Beech J in which his Honour dismissed a claim for damages by the appellant arising out of a contract to carry out work on a subdivision being constructed by the respondent.  His Honour allowed an alternative claim by the appellant for the contract price of the work:  R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206.

3. In the action, the appellant claimed that it had entered into a contract with the respondent under which the appellant was to perform certain work on a subdivision being carried out by the respondent and the respondent was to transfer to it two lots in the subdivision in part payment for the work.  The appellant pleaded that it had carried out the work but the respondent had failed to transfer the two lots.  The appellant claimed damages, being the difference between what it said was the agreed value of the two lots and their market value.  In the alternative, the appellant claimed the agreed price for the work.  In the further alternative, the appellant claimed that it was entitled to be paid on a quantum meruit basis for the work.

4. The respondent denied that any contract had been made and denied that the appellant was entitled to recover any amount on a quantum meruit basis.

5. The primary judge found there was no concluded contract for the transfer of two lots to the appellant as consideration for the work and accordingly dismissed its claim for damages.  His Honour upheld the appellant's alternative claim for the agreed price of the work, which his Honour found to be in the sum of $283,283.35.  The appellant appeals against the dismissal of its claim for damages.

6. The respondent has filed a notice of contention seeking to uphold the decision of the primary judge to dismiss the claim for damages on the further basis that the appellant failed to prove any loss.  The respondent also cross‑appeals against the finding of the primary judge that the respondent had entered into an enforceable contract for the work, and against the order made by his Honour as to the costs of the action.

The background

1. In 2005, Chadway Holdings Pty Ltd (Chadway) was proposing to subdivide land it owned in Harold Street, Gosnells.  Both Chadway and the respondent were companies controlled by the Parsons family.  The sole director and shareholder of Chadway was Mr Kerry Parsons.  Mr Kerry Parsons and his son Mr Craig Parsons were the directors and shareholders of the respondent.  The terms of the arrangement between the respondent and Chadway in respect of the subdivision were not explained in the evidence.

2. The appellant was controlled by Mr Ronald Baker and his wife, Nina Baker.  It traded under the name RJ Baker & Co.  The appellant had previously done work for companies controlled by the Parsons family and a good relationship existed between the parties.

3. On 4 March 2005, consulting engineers acting on behalf of the respondent put out an invitation to tender for certain road construction and associated works in connection with the subdivision (Original Scope of Work).  The invitation was made to a number of contractors including the appellant.  The invitation to tender stated that the preparatory earth works (Forward Earthworks) for the subdivision would be done by other contractors.

4. On 20 May 2005, the appellant provided the respondent with a quotation (numbered '320') to carry out the Original Scope of Work for the sum of $160,454 plus GST.

5. In late May or early June 2005, Mr Craig Parsons asked Mr Baker if the appellant would be interested in taking two lots in the subdivision in part payment for work on the subdivision (exhibit C [14]).  Mr Baker told Mr Craig Parsons that the appellant was willing to negotiate to receive two of the lots in part payment (ts 45, 72).

6. By letter dated 8 June 2005, Mr Craig Parsons, on behalf of the respondent, wrote to the appellant 'to propose an agreement regarding the payment of the work'.  Mr Parsons proposed that the appellant be paid $130,000 plus GST for the Original Scope of Work and that, in addition, it be paid for any extra work that was authorised by the respondent before the extra work was commenced.  The letter continued:

   When title are ready [sic], two blocks are to be earmarked for RON J BAKER & CO and the difference between all work done and $190,000 is to be paid to Parsons Management Pty Ltd.  Stamp duty on the two blocks will have to be paid by RON J BAKER & CO.

   If this is acceptable could you please advise which blocks you would like along the new constructed road.

   I hope this is what we have agreed to and I await your reply, if [you] have any queries please do not hesitate to contact me.

7. The effect of the proposal, if accepted, would therefore have been to reduce the appellant's price for the Original Scope of Work from $160,454 (plus GST) to $130,000 (plus GST), and for payment of the contract price to be effected by the transfer of two blocks in the subdivision to the appellant at a price of $190,000, with the appellant to pay the difference between the two amounts to the respondent.

8. Mr Baker gave evidence that while he did not accept the reduction in the contract price, in his own mind he accepted the value attributed to the two lots although he did not communicate that to the respondent (ts 45).

9. The respondent subsequently provided the appellant with an amended drawing for drainage and asked it to submit a second quotation.  The appellant provided a quotation, dated 17 August 2005 and numbered 320B, (exhibit A, page 31) (the Second Quotation) in the total sum of $193,254 plus GST.  This quotation included:

   (1)$160,454 plus GST (the amount of the appellant's quote of 20 May 2005) for the Original Scope of Work; and

   (2)$32,800 plus GST for additional work (the Additional Work) which comprised:

   (a)amended drainage work;

   (b)demolishing and disposing of kerbing on Harold Street and reinstating a new kerb;

   (c)construction and installation of 445 square metres of footpath with two disabled ramps; and

   (d)additional excavator services.

10. Mr Baker said in his witness statement that, in about October 2005, Mr Craig Parsons told him that the respondent accepted the Second Quotation.  Mr Baker said that, at about that time, he told Mr Parsons that he was prepared to agree to the proposal for payment by the transfer of two lots instead of cash and that he would take lots 81 and 83 (exhibit C [22]).  In cross‑examination, however, Mr Baker said he could not recall when after 17 August 2005 the discussion about the transfer of the lots had occurred, but that it had occurred in the same conversation in which Mr Parsons told him the respondent accepted the Second Quotation.  Mr Baker said that there was no agreement at that time that the lots would be transferred for $190,000 (ts 47).  The trial judge accepted Mr Baker's evidence in cross­examination that the transfer of the lots and the respondent's acceptance of the Second Quotation occurred in the same conversation.

11. Mr Craig Parsons subsequently made various attempts to contact Mr Baker regarding a start on the work.

12. It is evident that by the end of October Mr Parsons was becoming frustrated at what he regarded as the appellant's delay in commencing the work.  On 27 October 2005, an employee of the respondent, sent a facsimile to Mr Baker (exhibit A page 35), saying:

    Don't forget you promised [Mr Craig Parsons] you would go out to Harold Street before the end of the week.

13. On 31 October 2005, Mr Parsons wrote to Mr Baker in the following terms:

    After numerous phone calls, with no success.  You have disillusioned me to the point that I am writing this letter.

    I waited for a extra 2 months for the quote, and now you can not give us an exact time when you will be on site and to when the work will be started and completed.

    As per our previous written conversation we agreed to $190,000.00 plus GST and Stamp duty for the 2 blocks that you required, but since then the blocks have been valued at $220,000.00 ‑ $240,000.00 and we are waiting to work on the titles, but require the work to be done by yourself.  It is our opinion that if the work does not start within the next 5 days then we feel strongly that there should be a new agreement made based on the above.

    I await your reply, if have any queries please do not hesitate to contact me on ….  (original emphasis).

14. In the meantime, on 24 October 2005 a real estate agent, L J Hooker Thornlie, had sent a facsimile to the respondent's offices providing suggested marketing prices for 11 of the 13 lots in the subdivision.  Two of the lots (described as Lot 1 and Lot 4) were described as 'contractor' with no suggested price stated. 

15. On 4 November 2005, Mr Craig Parsons, on behalf of the respondent, wrote again to Mr Baker (exhibit A page 38), complaining about the appellant's delay in commencing the work.  The letter was in the following terms.

    As per our previous correspondence on the 31st October 05, I relayed that we (Parsons Management) had contacted you numerous times, with no still success [sic].  You relayed to me earlier this week that someone would be on site this week.  We drove out to look today and no workers were on site and no work had been done.

    This is led me to write this letter [sic].

    This is not satisfactory I have worked with you on many previous jobs and we have never had this problem and I thought our working relationship was good.  If there is not substantial work done next week we will then value the 2 blocks at $240,000.00 plus GST and Stamp duty.

    If this is not acceptable than we will have to look for an alternative contractor.

    I await your reply, as soon as possible so that I can plan the development.  (original emphasis)

16. Mr Baker said in evidence that he did not respond to the respondent regarding a start on the work because the Forward Earthworks, which were not the appellant's responsibility, had not been carried out (ts 50).

17. On 8 November 2005, the appellant engaged a contractor to strip grass from within the road reserves on the subdivision.  Mr Baker said in evidence that this was to permit the appellant to evaluate the extent of work required for the Forward Earthworks (ts 50).  Two other contractors were subsequently engaged by the appellant to carry out some work associated with the Forward Earthworks.

18. On about 25 November, a meeting took place at the Fremantle Boat Park attended by Mr Craig Parsons, Mr Kerry Parsons and Mr Baker at which other work was discussed but there was no discussion of the Harold Road subdivision.

19. In December 2005, the appellant engaged a subcontractor to perform certain drainage work which was part of the Original Scope of Work.  This was the first part of the Original Scope of Work carried out by the appellant (ts 51).

20. On 5 December 2005, Mr John Rechichi of L J Hooker Thornlie, Chadway's real estate agent for the sale of the proposed lots in the subdivision, sent a facsimile to the appellant requesting that it execute an authority for L J Hooker Thornlie to act as its agent to sell lots 84 and 81.  Mr Baker gave evidence that after reading the facsimile he telephoned Mr Rechichi and told him that he could not commit to Mr Rechichi's firm until he had written confirmation of his arrangement with Mr Craig Parsons (exhibit C [33], ts 54).  On the facsimile Mr Baker wrote a note to that effect, dated 5 December 2005, and added the words 'confirmed intended lots 83 and 81'.  Subsequently, Mr Baker put a line through the '4' in 'lot 84' on the facsimile and wrote '3' underneath, to indicate the respondent was taking lot 83, not lot 84.  He dated the alteration '20/1/06' and initialled it.  It appears that he sent the fax back to Mr Rechichi on or shortly after 20 January 2006.

21. On 18 January 2006, there was a meeting between Mr Baker and Mr Craig Parsons at the respondent's office on Mews Road, Fremantle.  Mr Baker gave evidence that at the meeting Mr Parsons asked him to do the Forward Earthworks for the subdivision.  Mr Baker told Mr Parsons he would take lots 81 and 83 in payment and that he was prepared to undertake the Forward Earthworks for cost plus 10%.  Mr Parsons told him that his proposal for the Forward Earthworks was acceptable.  Mr Baker asked Mr Parsons for written confirmation of the agreement and Mr Parsons replied he would formalise the agreement later by letter.  Mr Baker said in evidence that there was no discussion at the meeting about the price for the lots (exhibit C [36] ‑ [38], ts 56).

22. On 18 January 2006, an employee of the respondent sent a facsimile, under Mr Craig Parsons' name, as follows:

    Thanks for coming to see us today? [sic]

    Can you please confirm that the Blocks you are taking are 81 and 83 as we need to know for the valuers.

23. On 1 February 2006, Mr Craig Parsons, on behalf of the respondent, wrote to Mr Baker in the following terms:

    As per our meeting on the 18th January 06, I thought that I would formalise the meeting in point form:-

    -Ron J Baker & Co to take blocks 81 & 83.

    -Parsons Management Group accept the first quote for $160,500.00

    -Parsons Management Group accept the second quote for $32,800.00

    -Parsons Management Group accept that Ron J Baker & Co will organise the forward works at cost plus 10% (invoices to be forwarded)

    -Ron J Baker & Co to move 500 ‑ 750mm of the POS, to be placed on the blocks.

    -Ron J Baker & Co organise the power quote.

    -Ron J Baker & Co and Parsons Management Group to make sure that the power contractor has all the appropriate insurance details.

    -Ron [Baker] to liaise with Peter Golder, regarding the site/drainage.

    The final point that was raised is that I believe that the 2 blocks are to be valued at $100,000.00.

    I await your reply, to let me know the state of play, hope all is well.

24. Mr Baker accepted in cross‑examination that the eight matters listed with dashes correctly recorded things agreed at the meeting of 18 January 2006 (ts 55).  But Mr Baker denied that a figure of $100,000 for the lots had been mentioned (exhibit C [38], ts 56).  He said that no amount had been discussed.

    The appellant responded to the respondent's letter of 1 February 2006 by a letter dated 16 February 2006.  The letter included the following:

    I agree with all items mentioned in your letter of acceptance, save for the final point the figure we agreed was for $190,000 for both blocks.  I am intending to commence roadwork's next week 22/2/06 [sic].

    Please confirm your intention to standby [sic] the original agreement.

25. Mr Baker said in cross‑examination that the reference in that letter to an agreed price of $190,000 and to the 'original agreement' were references to an oral agreement in discussions in July or August 2005, following that figure being put to him by the respondent in the letter of 8 June 2005 (exhibit C [40], ts 57 ‑ 58). (I should interpose that insofar as that evidence suggested a discussion between Mr Baker and Mr Parsons between 8 June and 17 August 2005 as to a transfer of the lots at a price of $190,000, the primary judge rejected it, such a discussion not having been pleaded and being inconsistent with other evidence given by Mr Baker [88]. His Honour's finding is not challenged.)

26. In the meantime, Mr Craig Parsons had written to the appellant, by letter dated 15 February 2006 (exhibit A page 59), again complaining about the lack of progress in the work.  It was in the following terms:

    Since our meeting on the 18th January 06, I can not see any work that has been done.

    You relayed to me earlier this week that someone would be on site this week, I drove out to look today and no workers were on site and it looked like only a few loads of soil had been dropped [off] and no work had been done.

    I have Real estate agents / partners complaining to me (Weekly), when the work will be completed.

    Also as per my letter to you on the 1st February, 06, the work on the POS has not been done and I still have not received a power quote (as we require).

    You have left me with no option that if the box out and sub grade of the road has not been done within seven (7) days than [sic] our agreement is voided.

    I have contacted Peter Golder and he assures me that there are no reasons that you should be delaying this project.

    I await your reply.

1. A meeting took place on 17 February 2006 between Mr Kerry Parsons and Mr Baker.  At that meeting, Mr Parsons told Mr Baker that lots 81 and 83 would not be transferred to the appellant for $190,000.  Mr Parsons said the appellant had dragged its feet on the project and the respondent would pay the appellant cash or transfer the blocks at valuation less 10%.  Mr Baker said he was not interested in being paid cash.  Mr Parsons told Mr Baker he should think it over and inform him of his attitude later (exhibit C [41]).

2. About 20 minutes after the meeting Mr Baker telephoned Mr Parsons and said that he 'intended to stick to the original agreement' (exhibit C [42]).

3. On the same day, Mr Kerry Parsons wrote to Mr Baker (exhibit A page 61) as follows:

   As per our discussion today the 17^th February 2006, the following are the options either of which we are prepared to accept for you to continue the work at Harold Street Gosnells.

   1.We pay you cash for the project (in other words no block contribution).  Just submit a claim for work done to date and as soon as we see work being carried on the boxing of the road we will pay that Invoice and of course future progress claims up to the quoted price.

   2.We continue with the 2 block payment but it is based upon prices at completion less 10% and net of GST and commission.

   Option 2 would easily give a $30,000.00 minimum windfall profit.

   The reason for this letter is that I have not heard from you regarding your acceptance of either of the above, appreciate your continuing work hoping that some compromise can be reached. (original emphasis)

4. Mr Baker responded by facsimile dated 9 March 2006, saying (among other things):

   With regard to your letter of 23 February 2006 and referring to our site meeting at Fremantle Boat Park on 17 February 2006 I acknowledge the points 1 and 2 made at our meeting (this action was necessary due to Ron J Baker & Co dragging their feet, according to you).  I told you at the time that I preferred Option 3 which was to stick to the original agreement, which was cruisy, cruisy since I had to service other jobs to carry this work.  You told me to go away and think on it over the weekend and that you would put it in writing.  I rang you back within 20 minutes of that discussion when I reached my next site meeting at Tony Ale's at Jandakot to confirm my intention to stick to the original agreement.  I also stated that I would assist with completing the forward works and helping where possible to redress the apparent deterioration of our standing in your eyes.  I took a chance on committing myself to accept these two blocks as payment and can't help but wonder if we would have had this conversation if the price/valuation went the other way.

   I know that you are a very honest, capable, ethical, decent business man.  I have always looked up to you and admired you and I am supremely confident that you will do the right thing and stick to the original agreement.

5. In response, on 14 March 2006 an email was sent from Mr Craig Parsons' email address, but under the name Kerry Parsons, to Mr Baker.  The email acknowledged the respondent's facsimile of 9 March 2006 and said (relevantly):

   Yes, I am a very honest capable ethical and decent business man as you said in your Fax and I would have adhered to the original agreement if you had.  I am sure you will see the funniness of what I have stated and accept the compromise or take cash.

   If the blocks had of gone down in price I would have asked you for compensation for our losses because of your late start.

6. On 23 March 2006, Mr Baker wrote to Mr Kerry Parsons setting out what Mr Baker said was the history of the matter.  In that letter, Mr Baker said that the term that the contract price was payable by the transfer of lots 81 and 83 for $190,000 was first proposed in Mr Craig Parsons' letter of 8 June 2005, reaffirmed in Mr Parsons' letter of 31 October 2005 and implicitly restated in his letter of 4 November 2005.  Mr Baker required the respondent to confirm in writing by 27 March 2006 that it would abide by the terms of the agreement.  I note in passing that it was not stated that the figure of $190,000 had been agreed orally.

7. Mr Kerry Parsons wrote to the appellant on 24 April 2006 (exhibit A pages 95 ‑ 96).  In that letter, Mr Parsons complained that Mr Baker had not, as he had promised to do, provided by 21 April 2006 the appellant's offer regarding the pricing of the lots and any compromise he was prepared to make.  Mr Parsons went on to say that he was making his last offer.  He said the last sale of a lot in the subdivision had been for the sum of $150,000.  He proposed that the two lots be transferred to the appellant at a total price of $252,000.  Mr Parsons said that that would give the appellant a windfall profit of approximately $48,000 and was more than a fair compromise.

8. On 26 April 2006, Mr Baker wrote to Mr Kerry Parsons (exhibit A page 97) saying that the appellant was in the process of finalising its account and requesting that an offer and acceptance be made out in the name of the appellant for an agreed price of $190,000 for both lots.

9. Mr Kerry Parsons responded by a letter of 28 April 2006 (exhibit A page 98).  In that letter he said:

   We have received your fax dated 26^th April 2006 with regards to Offer & Acceptance being written out for the Blocks … to the value of $190,000.  There will not be any such paperwork as there no longer exists any such agreement, as per our many discussions.  There was an agreement early last year but as per your verbal response if not at all, then a substantial part of the massive delays where [sic] caused by you hence any agreement was negated by your negligence.

   As previously stated both blocks have increased in value substantially, therefore the price increase will be applied to these blocks, if you wish to proceed.

10. The appellant subsequently commenced action against the respondent.  In the action, as it had developed by the trial, the appellant claimed the sum of $193,254 plus GST for the Original Scope of Work and the Additional Work; the sum of $70,703.95 for the Forward Earthworks; and damages by reason of the failure of the respondent to transfer the two lots in the subdivision as part payment for the work.

The appellant's claim against the respondent

1. The appellant's claim was put in various alternative ways at the trial.  They were, in substance, as follows:

   1.In or about October 2005, the appellant (by Mr Baker) verbally informed the respondent (by Mr Craig Parsons), in effect, that subject to acceptance of the Second Quotation by the respondent, the appellant would accept in part payment for the work the subject of the Second Quotation the transfer to the appellant of lots 81 and 83 in the subdivision for the sum of $190,000 plus GST.  Mr Parsons verbally informed Mr Baker that the respondent accepted the Second Quotation.  There was thereby a verbal agreement that the appellant would carry out the work the subject of the Second Quotation for the sum of $193,254 plus GST, part payment for which would be made by the transfer of lots 81 and 83 at a price of $190,000 plus GST and the difference would be paid by the respondent to the appellant (par 12 ‑ 13 of the statement of claim).

   2.An implied agreement substantially to the same effect was made in or about November/December 2005, arising from the respondent's offer of 8 June 2005, the provision by the appellant of the Second Quotation, the respondents' letter of 31 October 2005 stating that the respondent would increase the price of the blocks if the respondent did not commence work within 5 days, the request in the respondent's letter of 4 November 2005 for the appellant to commence work, the work subsequently carried out by the appellant in November and December 2005, and, on 5 December 2005, the letter from L J Hooker requesting an authority to act as agent for the respondent to sell lots 81 and 83 (par 15 ‑ 27).

   3.A verbal agreement was made at the meeting on 18 January 2006 during which Mr Craig Parsons and Mr Baker agreed, among other things, that the appellant would carry out the work the subject of the Second Quotation for the sum of $193,254 plus GST, the appellant would carry out the Forward Earthworks for cost plus 10%, and the two lots would be transferred to the appellant at a price of $190,000 (plus GST) to be set off against the cost of the work.  It was agreed that the difference between the sum of $190,000 and the cost of the work would be paid by the respondent (par 28 ‑ 30).

   4.One or other of the above agreements was made, but the appellant was to be paid the sum of the sum of $193,254 plus GST for the Original Scope of Work and cost plus 10% for the Forward Earthworks.  That is, the agreements did not involve a transfer of the lots by way of consideration (par 13A, 27A, 30A).

   5.The appellant was entitled to be paid a reasonable sum for the Original Scope of Work and the forward works ‑ the quantum meruit claim (par 34).

The findings of the primary judge

1. The primary judge dealt first with the three alternative agreements by which it was alleged the parties had agreed that the two lots would be transferred at a price of $190,000; that is, the oral agreement alleged to have been made in about October 2005, the implied agreement, and the oral agreement alleged to have been made at the meeting on 18 January 2006.

2. The primary judge noted at the outset that Mr Baker did not give direct evidence of any conversation with a representative of the respondent in which it was agreed that the two lots would be transferred at a price of $190,000.

3. His Honour found that there was no discussion between the respondent's letter of 8 June 2005 and the submission of the Second Quotation on 17 August 2005 in which the figure of $190,000 for the two lots was agreed [88]. It was Mr Baker's evidence that he had never communicated to Mr Parsons that he accepted the land value of $190,000 referred to in the 8 June 2005 letter. The primary judge noted that while the letter of 8 June 2005 may have influenced Mr Baker's understanding of what had been agreed, his subjective understanding of its effect was not significant in determining whether, and, if so, on what terms, a contract had been made [90].

4. The primary judge found that the only evidence of any relevant conversation following the Second Quotation of 17 August 2005, and prior to January 2006, was Mr Baker's evidence of his conversation with Mr Craig Parsons in or about October 2005 (the October conversation) in which Mr Parsons accepted the Second Quotation [76]. On Mr Baker's evidence, in that conversation the price for the lots was not mentioned. The primary judge found that during the October conversation there was no agreement as to the price of the lots [85].

5. In relation to the letter of 31 October 2005, in his witness statement (exhibit C [25]) Mr Baker said that he did not regard the suggestion in the letter that the price for lots 81 and 83 be varied as an issue for discussion, because there was already an agreement that the land was to be valued at $190,000. His Honour found that the statement was neither admissible nor persuasive evidence of the existence of such an agreement and no weight could be given to it. It was merely the assertion of a conclusion [78].

6. The primary judge considered that Mr Baker's references to the 'original agreement' in his evidence and in his correspondence were generalised and conclusionary in nature and did not sustain a finding of any agreement in 2005 as to a figure of $190,000 for the lots [91].

7. Nor, his Honour concluded, did the evidence support a finding that such a figure was agreed in the meeting of 18 January 2006. It was Mr Baker's evidence that the price to be attributed to the lots was not discussed at all in that meeting [92].

8. The primary judge rejected the appellant's submission that there were admissions in the respondent's correspondence of 31 October 2005, 15 February 2006, 14 March 2006 and 28 April 2006 which sustained a finding that the parties had entered into the oral agreement. His Honour concluded that the reference to a 'written conversation' in the respondent's letter of 31 October 2005 was a reference to a written communication. He concluded that 'we' in the letter referred to the respondent and the most likely meaning of the statement in the letter, 'we agreed to $190,000', was that the respondent was willing to proceed on the basis of a price of $190,000. It was not a reference to a bilateral agreement [95]. In any event, the primary judge was not persuaded that any admission by the respondent in the letter supported the alleged oral agreement [96].

9. His Honour found that the statement in the respondent's letter of 15 February 2006 that if certain things were not done 'our agreement is voided', was a reference to the matters listed in the dot points in Mr Parsons' letter of 18 January 2006 [97]. That agreement included a transfer of the lots but no agreement as to the price to be attributed to them for that purpose. Nor did his Honour consider that the email of 14 March 2006 from Mr Kerry Parsons assisted the appellant. Mr Kerry Parsons had not been a party to the negotiations in 2005 and the language of the email reflected what was said in the last two paragraphs of the appellant's email of 9 March 2006. It did not constitute an admission of the alleged oral agreement [98].

10. The appellant's contention that the statement in the respondent's letter of 28 April 2006 that 'there was an agreement early last year' constituted an admission of the oral agreement, was also rejected. The author, Mr Kerry Parsons, was not a party to the negotiations in early 2005 and the reference to 'early last year' appeared to be a reference to the letter of 8 June 2005. That again appeared to reflect what the respondent was prepared to do rather than a bilateral agreement [99].

11. The primary judge concluded that to the extent any of the correspondence might constitute an admission of the alleged agreement, it had to be weighed with the direct evidence of Mr Baker, in which there was no evidence of any oral agreement but only conclusionary assertions [100].

12. His Honour found that the alleged oral agreement had not been made out.

13. The primary judge also rejected the implied agreement. His Honour concluded that there was nothing in the matters relied upon by the appellant about the price at which any lots would be transferred [106]. There was therefore no basis to imply an agreement that the lots would be transferred at a price of $190,000 in part payment for the appellant's work.

14. The appellant's counsel accepted that there was no evidence to support the alleged oral agreement of 18 January 2006 and that issue was not pressed.

15. The primary judge held, however, that the appellant had established an oral contract made in October 2005 under which it was agreed that the appellant would carry out the work the subject of the Second Quotation (that is, the work in the Original Scope of Work and the Additional Work) for the sum of $193,254 plus GST [130]. His Honour found that the Second Quotation had been accepted verbally by the respondent at some time between 17 August 2005 and 27 October 2005 [113]. His Honour rejected the respondent's submission that the agreement to do the work could not be divorced from the transfer of the lots, so that in the absence of agreement as to the price of the lots no concluded agreement had been reached. His Honour found that the intention of the parties was that agreement as to the price for the lots was not essential to the obligation of the respondent to pay the contract price for the work [120].

16. The primary judge further held that the parties had entered into an oral agreement on 18 January 2006 that the appellant would carry out the Original Scope of Work and the Additional Work for the sum of $193,254 plus GST and would carry out the Forward Earthworks for cost plus 10% [138].

17. His Honour found that in respect of the Original Scope of Work and the Additional Work the appellant was entitled to the total sum of $212,579.40, being the sum of $193,254 plus an amount of $19,325.40 for GST, and in respect of the Forward Earthworks, to the sum of $70,703.95, a total sum of $283,283.35 [140].

18. Although strictly speaking it was unnecessary to do so in light of that finding, his Honour also went on to consider the appellant's claim for a quantum meruit.  He found that the appellant would have been entitled on that basis to be paid for all the work it did, apart from the work in November 2005 in connection with the Forward Earthworks, and that a reasonable value for the work was the price agreed by the parties; that is, the sum of $283,283.35 [189], [193].

The grounds of appeal

1. It is unnecessary to set out in full the grounds of appeal on which the appellant relies.  In substance, the appellant contends that the primary judge erred in finding that:

   1.Mr Baker's evidence and the written communications between the parties failed to establish the existence of an oral agreement made in October 2005 that the lots be transferred to the appellant for $190,000;

   2.none of the respondent's letters of 31 October 2005, 15 February 2006, 14 March 2006 and 28 April 2006 contained admissions which supported the oral agreement pleaded by the appellant; and

   3.the matters relied upon by the appellant did not support a finding of an implied agreement, when the respondent's letters of 8 June, 31 October and 4 November 2005, the respondent's commencement of work in November and its continuation in December 2005, and the facsimile from L J Hooker Thornlie to the respondent of 5 December 2005, were consistent only with an agreement having been made that the lots would be valued at $190,000 plus GST.

The disposition of the appeal

1. It is well-established that whether a contract has been formed and the terms of the contract are to be determined objectively.  The legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon subjective beliefs or intentions:  Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 [34]; Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 [25]; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 [22].

2. It is the case, as the primary judge observed, that in the context of determining whether communications between parties amount in law to a binding contract, care must be taken in determining the weight given to the use by the parties of words such as 'agreement'.  His Honour referred in that connection to the following oft-cited passage in the judgment of Gleeson CJ in Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551, 14,552, as follows:

   In a case such as the present, there are two, sometimes related, questions which require to be considered.  The first is whether the parties to the putative contract intended to make a concluded agreement.

   The second is whether they succeeded in doing so...

   As the decision in [Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd(1988) 18 NSWLR 540] illustrates, the fact that parties to negotiations have agreed upon the major matter under discussion, confidently believing that the remaining matters to be decided will be sorted out later between them or their lawyers, without any difficulty, can sometimes create a misleading appearance of consensus.  Such parties may well believe that they have a 'deal' or a 'bargain', and speak and act accordingly, whilst at the same time knowing and intending that further and more detailed agreement is necessary.  For that reason, conduct such as shaking hands, or using the language of agreement, can be ambiguous.  The resolution of the ambiguity may require more detailed factual and legal analysis.

1. It was not in issue between the parties on the appeal that subsequent conduct of the parties is admissible on the question of whether a contract has been formed: see Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647; Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 [25]; Kriketos v Livschitz [2009] NSWCA 96; (2009) 14 BPR 26,717.

2. Evidence of the parties' subsequent communications is admissible for the light it casts on their dealings from which the contract was alleged to have arisen:  Abigroup Contractors Pty Ltd v ABB Service Pty Ltd [2004] NSWCA 181; (2005) 21 BCL 12 [63]. A statement that there is or is not a concluded contract, if admissible, may carry significant weight or little weight depending on the circumstances, and the weight of any admission will depend upon the source of knowledge of the person making the admission: Sagacious Procurement Pty Ltd v Symbion Health Ltd (formerly Mayne Health Group Ltd) [2008] NSWCA 149 [106].

3. Against that background I turn to the issues on the appeal.

The October 2005 oral agreement

1. In its grounds of appeal, the appellant challenged a number of the underlying findings made by the primary judge and it is necessary to traverse those.

2. It was submitted on behalf of the appellant that the primary judge should have found that the statement by Mr Baker in his conversation with Mr Craig Parsons in October 2005, that he (Mr Baker) 'was prepared to agree to [Mr Parsons] proposal for payment by the transfer of 2 lots … rather than cash' (exhibit C [22]) was a reference to and acceptance of the proposal contained in the respondent's letter of 8 June 2005 that two lots be transferred at a price of $190,000.  There was therefore an agreement in that conversation of a price of $190,000 for the lots.  I do not accept that submission. 

3. Mr Baker gave evidence that he did not accept the proposal in the letter of 8 June 2005 because it would have involved a reduction of $30,000 in the quoted price of $160,454.  He agreed in cross‑examination that prior to the October conversation he had not said, nor in the October conversation did he say, to the respondent that if the lots were to form part of the consideration they should be at a price of $190,000 (ts 47).  Mr Baker said that while a transfer of two lots at a price of $190,000 as set out in the 8 June letter was acceptable to him as a form of payment for work on the subdivision, he did not communicate that to the respondent (ts 45). 

4. The October conversation related to a different proposal to that contained in the 8 June 2005 letter.  In the October conversation there was no negotiation as to the contract price; the respondent simply accepted the appellant's proposed contract price of $193,254 - including the appellant's price of $160,454 for the Original Scope of Work.  Mr Baker's statement that he was prepared to agree to the proposal for payment by the transfer of two lots was therefore made in a context in which he had not at any stage communicated the appellant's view as to the price to be attributed to the lots and the parties were entering into a different agreement to that proposed in the 8 June letter, some four months after the latter proposal had been made.

5. In relation to the October conversation, Mr Baker gave the following evidence in cross-examination:

   You said to him you would like to take lots 81 and 83 in the subdivision?‑‑‑Yes, that's correct.

   During the discussion … you didn't reach agreement with Craig Parsons at that time or around that time that lots 81 and 83 would be valued at a total of $190,000, did you?‑‑‑No, I did not (ts 47).

6. In the circumstances, I am not persuaded that the primary judge erred in concluding that Mr Baker's statement that he was prepared to agree to the proposal for payment by the transfer of two lots rather than a cash payment, meant just that and no more.  It did not involve an agreement as to the price to be attributed to the lots.

7. The appellant further submitted that the primary judge was in error in finding that the statement in par [25] of Mr Baker's witness statement ‑ that in November 2005 there was already an agreement that the two lots were to be valued at $190,000 - was neither admissible nor persuasive evidence of the existence of such an agreement. Counsel argued that where no objection had been taken by the respondent to the admissibility of the statement, it should have been accorded 'appropriate weight'. As I understand his Honour's reasons, however, while he observed it was inadmissible, he also considered that it was not persuasive. He found it was not persuasive because it simply asserted a conclusion that an agreement was in existence [78]. I do not consider his Honour erred in finding that it was not persuasive evidence that an agreement had been made. This submission must be rejected.

8. The appellant also attacks his Honour's finding [91] that Mr Baker's various references to an 'original agreement' did not sustain a finding that an agreement as to a value of $190,000 was made in 2005.  It was submitted that his Honour's finding that Mr Baker did not communicate to Mr Parsons that he accepted the price of $190,000 was based solely upon Mr Baker's evidence in relation to his response to the respondent's letter of 8 June 2005.  It was submitted that his Honour's reliance on Mr Baker's evidence that the price was not discussed in the October 2005 conversation overlooked the fact that by accepting in that conversation the respondent's proposal for the transfer of two lots, the appellant accepted the price of $190,000 that the respondent had proposed for the lots in its letter of 8 June 2005.  And it was further submitted that the primary judge failed to have regard to all of the documents and evidence about discussions between Mr Baker and Messrs Parsons, but considered par 22 of Mr Baker's witness statement (relating to the discussion in October 2005 when the Second Quotation was accepted) and his cross‑examination, in isolation.  Counsel argued that the communications between the parties were consistent only with there having been an agreement that the lots were to be transferred at a value of $190,000.

9. I do not accept those contentions.  As I have said, Mr Baker gave evidence that following receipt of the 8 June 2005 letter he did not communicate that he was prepared to accept payment by way of a transfer of two lots at a price of $190,000.  There was no evidence that anything had been said in that regard up to the time of the October 2005 conversation.  As I have said, the October 2005 conversation concerned a different proposal and again there was no discussion of the price to be attributed to the lots.

10. I do not accept the submission that the primary judge erred by overlooking or failing properly to take into account the communications between the parties, either individually or cumulatively. 

11. In that connection, the appellants contended that in considering the respondent's letter of 31 October 2005, his Honour failed to take into account the last sentence in the passage:

    As per our previous written conversation we agreed to $190,000.00 plus GST and Stamp duty for the 2 blocks that you required, but since then the blocks have been valued at $220,000.00-$240,000.00 and we are waiting to work on the titles, but require the work to be done by yourself.  It is our opinion that if the work does not start within the next 5 days then we feel strongly that there should be a new agreement made based on the above.

12. It was submitted on behalf of the appellant that the reference to 'a new agreement' was a reference to an agreement at a value of $220,000 to $240,000 and that necessarily meant there had been an earlier agreement about price.  That earlier agreed price could only be a price of $190,000. 

13. The letter must, of course, be read as a whole.  As I mentioned above, his Honour found that the words 'we agreed' (to the transfer of the lots at a price of $190,000) referred to what the respondent was prepared to agree to, not to a bilateral agreement.  His Honour so concluded in circumstances where the only evidence of any communication between the parties as to price was the respondent's proposal in the letter of 8 June 2005, in respect of which, on Mr Baker's evidence, there had been no communication of acceptance by the appellant.  The passage referred to by the appellant must be read in that context.  When so read I do not consider it sustains the appellant's contention.  Accordingly, I am not persuaded that his Honour was in error. 

14. The appellant also submitted that the primary judge had misconstrued the statement in the respondent's letter of 15 February 2006, that if certain things were not done 'our agreement is voided'.  Counsel submitted that in construing the letter his Honour failed to have regard to other communications from the respondent which made it clear that the 'agreement' referred to in the letter was as to the price of the lots, not (as his Honour had found) to the engagement to do the work agreed at the meeting of 18 January 2006.  I do not accept that submission.

15. At the meeting on 18 January 2006, an agreement was reached in respect of all of the work the appellant was to carry out on the subdivision, including the Forward Earthworks for which the respondent was to be paid cost plus 10%.  The respondent's letter of 1 February 2006 set out the agreement in dot point form.  The respondent's letter of 15 February starts with a complaint that since the meeting of 18 January no work has been done by the appellant and goes on to say that the respondent has real estate agents and partners complaining about the lack of progress in the work.  It was in that context the respondent said that unless the 'box out and sub grade of the road' was carried out within seven days then 'our agreement is voided'.  I note, too, that that work was part of the Forward Earthworks which the appellant had first agreed to undertake at the 18 January 2006 meeting.

16. I consider that the primary judge correctly found that the 'agreement' referred to was that made on 18 January 2006.  It does not seem to me that the other correspondence relied upon by the respondent affects that conclusion.

17. The appellant further submitted that the primary judge had failed to consider the significance of the meeting on 17 February 2006.  It was submitted that it was significant that, notwithstanding the statement in Mr Baker's letter of 16 February 2006 that an agreement had been made at a price of $190,000, at the meeting the next day Mr Parsons did not suggest that there was no prior agreement but rather said the lots would not be transferred at that price because the appellant had dragged its feet.  That was explicable only on the basis that such a figure had previously been agreed.

18. That, it seems to me, is to seek to draw from the discussion more than it is capable of yielding.  The reason for the meeting was not explained in the evidence but it is evident that it occurred in the shadow of the respondent's complaint, made in its letter of 15 February 2006, regarding the appellant's failure to commence the work.  Mr Parson's statement is consistent with the initial offer having been made in the 8 June 2005 letter for the sum of $190,000 but the respondent no longer being prepared to transfer the lots at such a price in view of the appellant's tardiness in carrying out the work.  No error has been made out.

19. I am not persuaded that the primary judge erred in concluding that the respondent's email of 14 March 2006 was not an admission of the existence of an agreement that the lots were to be priced at $190,000.  As I understand his Honour's reasons, he found that the letter had to be read in light of the fact that Mr Kerry Parsons, the author, had not participated in the earlier negotiations and was responding, in somewhat spirited terms, to the final paragraphs of the appellant's letter of 9 March 2006 where the expression 'the original agreement' was used.  In my view, given the circumstances and nature of the letter, his Honour was not in error in finding that it could not be read as confirmation of the oral agreement allegedly made by Mr Craig Parsons in October 2005.

20. The appellant further contended that the primary judge erred in finding that the respondent's facsimile of 28 April 2006 did not contain an admission of the alleged agreement.  It was submitted that the statements in the letter that:

    [T]here no longer exists any such agreement [for the lots at a value of $190,000], as per our many discussions.  There was an agreement early last year but.

    were consistent only with there having been such an agreement.

21. The primary judge construed the reference to 'early last year' as a reference to the respondent's letter of 8 June 2005 and the reference to an 'agreement' to the willingness of the respondent at that time to agree to a figure of $190,000, rather than to a bilateral agreement.  As the only reference to a figure of $190,000 prior to October 2005 was in the letter of 8 June 2005, if the respondent was not referring to the 8 June letter it is not easy to see to what it might have been referring.   And on the appellant's own case, no agreement to a figure of $190,000 was made in early 2005.  The appellant's case was that the agreement was made in October 2005.  I do not accept that the primary judge was in error in construing the letter as he did.

22. The difficulty that pervaded the appellant's case was, as the primary judge observed [76], there was no evidence of any conversation between Mr Baker and a representative of the respondent in which a price of $190,000 for the two lots was agreed.  The references by Mr Baker in his evidence to an 'original agreement' were, as the primary judge pointed out, generalised and conclusionary in nature.  They appear to have been based upon an assumption by Mr Baker that such an agreement had been, or must have been, reached.  The contention that in the October discussion it was implicit in the appellant's acceptance of the respondent's proposal to transfer two lots by way of payment that the lots would be transferred at the price of $190,000 referred to in the 8 June 2005 letter, may have reflected Mr Baker's subjective view of what had occurred, but in my view it did not reflect the objective facts. 

23. The proposition that admissions of the oral agreement were to be found in the respondent's correspondence depended upon imposing upon loosely worded communications a construction they were unable to bear.  With due respect, both Mr Kerry Parsons and Mr Craig Parsons did not write with any grammatical precision in the correspondence and, relevantly, they used the words 'agreement' and 'agreed' loosely, in the sense to which I have referred.  Indeed, that is apparent from the outset where, in the letter of 8 June 2005, Mr Craig Parsons put the proposal for payment by a transfer of two lots for a price of $190,000 and at the same time went on to say that he hopes 'this is what we have agreed to'.  It is evident that a strict textual reading of their correspondence would be not only unproductive but misplaced.  When read in their context, none of the communications, taken individually or cumulatively, supported the alleged oral agreement of a price of $190,000 for the lots.

24. In my view, no error has been shown in his Honour's conclusion that the appellant failed to make out the oral agreement.

The inferred agreement

1. It is now established that it is not necessary that a contract be found using the 'classical theory of contract formation based upon offer and acceptance':  Brambles Holdings Ltd v Bathurst City Council [1]. As Stephen J explained in MacRobertson Miller Airline Services v Commissioner of State Taxation (Western Australia) (1975) 133 CLR 125, 136:

   This doctrine, of the formation of contracts by offer and acceptance, encounters difficulties when sought to be applied, outside the realms of commerce and conveyancing, to the everyday contractual situations which are a feature of life in modern urban communities.

2. Thus a contract may be inferred from the acts and conduct of parties as well as, or in the absence of, their words.  The question is whether the conduct of the parties, viewed in the light of the surrounding circumstances, shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract:  Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Australia) Pty Ltd, (1988) 5 BPR 11,110. Not only must the conduct point to the existence of a contract but it must point to the existence of the contract in the terms alleged in the proceedings: Laidlaw v Hillier Hewitt Elsley Pty Ltd[2009] NSWCA 44 [9].

3. In Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32, Ormiston J cited with evident approval the following observation of Cooke J in Meates v Attorney-General [1983] NZLR 308, 377:

   The acid test in the case like the present is whether, viewed as a whole

   
   

   and objectively from the point of view of reasonable persons on both

   
   

   sides, the dealings show a concluded bargain (82).

4. To a similar effect, in Brambles Holdings Ltd v Bathurst City Council, Heydon JA (as his Honour then was) in discussing the formation of a contract in the absence of an identifiable offer and acceptance, said:

   [I]t is relevant to ask: in all the circumstances can an agreement be inferred? Has mutual assent been manifested? What would a reasonable person in the position of the Council and a reasonable person in the position of the defendant think as to whether there was a concluded bargain? [81].

5. In Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424, Allsop J (as his Honour then was) (Drummond and Mansfield JJ agreeing) put the position as follows:

   [Contracts] can also arise when business people speak and act and order their affairs in a way without necessarily stopping for the formalities of dotting 'i's and crossing 't's or where they think they have done so. Here, the 'i's were not dotted and the 't's were not crossed … Sometimes this failure occurs because, having discussed the commercial essentials and having put in place necessary structural matters, the parties go about their commercial business on the clear basis of some manifested mutual assent, without ensuring the exhaustive completeness of documentation. In such circumstances … if it can be stated with confidence that by a certain point the parties mutually assented to a sufficiently clear regime which must, in the circumstances, have been intended to be binding, the court will recognise the existence of a contract. Sometimes this is said to be a process of inference or implication. For my part, I would see it as the inferring of a real intention expressed through, or to be found in, a body of conduct, including, sometimes, communications, even if it be the case that the parties did not consciously advert to, or discuss, some aspect of the relationship and say: 'and we hereby agree to be bound' in this or that respect. The essential question in such cases is whether the parties' conduct, including what was said and not said and including the evident commercial aims and expectations of the parties, reveals an understanding or agreement or, as sometimes expressed, a manifestation of mutual assent, which bespeaks an intention to be legally bound to the essential elements of a contract [369].

6. A contract will only be inferred where the evidence is clear and such a conclusion is a necessary inference from the proven facts:  Pegrum v Fatharly (1996) 14 WAR 92, 94‑95.

7. On the appeal, the appellant contended that the primary judge had erred in finding that none of the matters relied on by the appellant supported a conclusion that the parties impliedly made an agreement that the lots would be transferred at a price of $190,000.  It was submitted, in substance, that the respondent's letters of 8 June, 31 October and 4 November 2005, the appellant's commencement of the work in November and its continuation in December, and the facsimile from L J Hooker Thornlie of 5 December 2005, were consistent only with an agreement that the lots would be transferred to the appellant at a price of $190,000.

1. I do not accept that submission.  The facts relied upon, considered objectively, do not in my view show a concluded bargain on the terms alleged by the appellant.  For the reasons I gave in relation to the alleged oral agreement, I do not consider the primary judge erred in rejecting the appellant's contention that the communications concerned were referable only to an agreement to transfer the lots at a price of $190,000.   The fact that the appellant carried out some 'investigative clearing' in connection with the Forward Earthworks in early November and commenced work under the Second Quotation in December 2005, cannot in the circumstances be regarded as referable only to such a contract.  And the facsimile from L J Hooker Thornlie of 5 December 2005, does not provide any assistance for the appellant's case.  It did not refer to a price for the lots and, as mentioned above, Mr Baker was not prepared to engage that firm pending written confirmation of the appellant's arrangements with the respondent. 

2. I am not persuaded that any error has been shown in the finding of the primary judge that the appellant failed to make out the alleged implied agreement.

Conclusion on the appeal

1. In my view, no grounds have been made out for disturbing the decision of the primary judge.  I would dismiss the appeal.

Notice of contention

1. In the event it was found that the respondent was in breach of the oral agreement or the implied agreement, the respondent sought to uphold the decision of the primary judge to dismiss the appellant's claim for damages on the further ground that the appellant had failed to prove loss or damage.  It was contended that only nominal damages should therefore be awarded.

2. In light of his finding that no agreement had been made to transfer the lots for $190,000, the primary judge did not consider the question of the damages to which the appellant would be entitled if the respondent were found to be in breach.  As I would not disturb the finding of the primary judge that no agreement had been made, I do not think it is necessary to embark upon the issue raised by the notice of contention.

Cross-appeal

1. The respondent has cross-appealed against the findings of the primary judge that a contract was made between the parties between 17 August 2005 and 27 October 2005 for the appellant to carry out the work the subject of the Second Quotation for a fixed price, and that a further contract was made on 18 January 2006 for that work to be carried out for a fixed price and the Forward Earthworks for cost plus 10%.  The respondent contended, in substance, that in each case:

   1.no such agreement had been made;

   2.alternatively, it was an essential term of the agreement that the respondent would pay the contract price wholly or in part by transfer of two lots in circumstances where the price to be attributed to the lots had not been agreed;

   3.further alternatively, any agreement was too uncertain to constitute an enforceable contract.

   The respondent has also appealed against the decision of the primary judge that the appellant was entitled to recover on the basis of a quantum meruit.  The respondent submitted that the primary judge should have found the appellant had failed to establish that the respondent had derived a benefit from the work, as the work was performed on land owned by Chadway and conferred no benefit on the respondent.  It the alternative, it was submitted that the appellant had failed to prove the reasonable value of the work.

2. Finally, the respondent has cross-appealed against the order of the primary judge as to the costs of the action.

The disposition of the cross-appeal

1. It is convenient to deal first with the cross-appeal against the findings of the primary judge that an enforceable agreement was entered into between 17 August and 27 October 2005, and that a further enforceable agreement was entered into on 18 January 2006.

2. The respondent argued that at the time the respondent accepted the Second Quotation it was agreed that the appellant would be paid, or partly paid, by the transfer of two lots.  However, the price at which the lots were to be transferred was not discussed and no agreement as to price was ever reached.  It was submitted that payment in cash was a fundamentally different obligation to payment by the transfer of lots created by the work.  Accordingly, there could be no binding agreement in the absence of agreement on the price of the lots.  The fact that subsequently the respondent pressed the appellant to commence the work, and that the appellant did so, was not of great significance; parties often act in anticipation of a contract being concluded. 

3. It was submitted that it was not open to his Honour to find, as he had, that viewed objectively the intention of the parties was that agreement on the price of the lots was not essential to the creation of an obligation on the part of the respondent to pay for the work done under the Second Quotation.

4. I do not accept that submission. It was admitted by the respondent in par 11.2 of its defence that, in about October 2005, Mr Craig Parsons verbally informed Mr Baker that the respondent accepted the Second Quotation. As his Honour noted, it must have been apparent at the time the Second Quotation was accepted that it was not inevitable agreement would be reached on the price of the lots [118]. Nevertheless, on the evidence, once the respondent had accepted the Second Quotation it pressed the appellant to commence the work as soon as possible. In its letter of 31 October the respondent specifically complained about the delay and in its letter of 4 November 2005 there is the suggestion that the respondent may terminate the contract if the work is not commenced without delay. By December at the latest the appellant had commenced the contract work and it then carried it through to completion.

5. In the circumstances, I am not persuaded his Honour erred in finding that the price to be attributed to the lots was not intended to be essential to an enforceable obligation on the respondent's part to pay the price in the Second Quotation.

6. The respondent also attacked the finding of the primary judge that on 18 January 2006 the parties replaced that agreement with an agreement to the same effect but containing an additional term as to the Forward Earthworks [135], [139]. The primary judge reached that conclusion for reasons corresponding to his reasons in relation to the earlier agreement [138].

7. It was submitted on behalf of the respondent that the primary judge had failed to give sufficient weight to the evidence of Mr Baker that receipt of the two lots was 'a significant' term of that agreement (ts 56), and to the evidence that in November 2005 the appellant had commenced work which was part of the Forward Earthworks at a time when, on any view, no agreement had been reached in relation to that work.  Counsel argued that the fact that the appellant was prepared to undertake the latter work in those circumstances weighed heavily against the inference drawn by the primary judge.

8. Again, in my view, that contention is not made out. There is no doubt that the primary judge was conscious of Mr Baker's evidence [137]. And while the fact that the appellant had done some work in connection with the Forward Earthworks was a relevant factor, it is evident from Mr Baker's evidence that that work was done to evaluate the site and that it was relatively minor (exhibit C [29] ‑ [30]). On the other hand, the appellant was once again pressed by the respondent to carry out the contract work without delay. Indeed, on 15 February 2006 the respondent wrote to the appellant to say that unless certain work was completed within seven days the agreement would be terminated. It was Mr Baker's evidence that the appellant was in fact carrying out work on the subdivision at that time (exhibit C [39] ‑ [40]).

9. I do not accept the respondent's submission that in the circumstances the primary judge should have found that any agreement to carry out the work was still in the process of negotiation, and remained incomplete and unenforceable in the absence of agreement as to the value of the two lots.  In my view, no error has been shown.

10. I would dismiss the cross-appeal insofar as it relates to the two contracts.

11. I do not consider it is necessary to consider the cross-appeal against the findings of the primary judge on the appellant's quantum meruit claim.  No orders were made by his Honour on that claim and in light of my conclusion that there was an enforceable contract for the price of the work, the issue does not arise.

12. The final ground of the cross-appeal relates to the order as to costs made by the primary judge: R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206 (S). The background against which his Honour made the order as to costs requires some brief explanation.

13. The action heard and determined at trial was the consolidation of two actions.  The appellant commenced the first action (CIV 1527 of 2006) in May 2006.  In that action, the claim was for transfer of the land by an order for specific performance or for damages.  There were no alternative claims.

14. A second action (CIV 1977 of 2007) was commenced by the appellant on 21 September 2007.  In that action, the primary claim was for the transfer of the lots or their value, but it also included, as an alternative, claims for the payment of invoices for the Forward Earthworks.  The other claims for the contract price were added at the commencement of the trial.

15. At trial it was submitted on behalf of the respondent that the appellant should pay the respondent's costs of the consolidated action on the basis that prior to trial the respondent had made offers of settlement in amounts greater than the amount recovered by the appellant at trial.

16. The primary judge rejected that submission.  His Honour found that in light of the circumstances in which they were made, little weight could be given to two of the alleged offers [42] and the other offer was in fact for an amount less than that recovered by the appellant [47].  He ordered that the appellant pay the respondent's costs in action CIV 1527 of 2006 up to and including 20 September 2007 and the respondent pay the appellant's costs of the consolidated action from 21 September 2007.  The respondent appeals against the latter order.

17. The appellant contended, in substance, that the primary judge's discretion as to costs miscarried because he erred in finding that the respondent had not made an offer before trial in an amount greater than the amount recovered by the appellant.  It was submitted that his Honour should have found that such an offer was made and, accordingly, the appellant should have been ordered to pay the respondent's costs of the action. 

18. Before the primary judge, the respondent had relied upon offers it said were contained in a letter to the appellant of 17 February 2006, an email of 14 March 2006, and a letter dated 26 June 2007.  The primary judge pointed out that the first two communications reflected the parties' competing positions at the time the dispute emerged and before much of the contract work was done.  He regarded those as being of little weight on costs.  In my respectful view, his Honour was plainly correct.

19. The letter of 26 June 2007 fell into a different category.  It was made after the proceedings had commenced and contained a specific offer of settlement.  In that letter the respondent made an offer, said to be 'without prejudice save as to costs', to pay the sum of $270,000 in full settlement of the appellant's claims in the action; that is, a Calderbank offer.  In the offer the sum of $270,000 was expressed to be made up of $193,300 for the claim in CIV 1527 of 2006 and $76,700 in respect of the foreshadowed claim for the Forward Earthworks. 

20. The respondent contended before the primary judge that the amount of the offer was greater than the amount the appellant had recovered at trial and the respondent was therefore entitled to an order that the appellant pay its the costs of the action from the date of the offer.  It was submitted that while the offer did not expressly mention GST, it should be construed as including an offer to pay the relevant GST. 

21. In that connection, the respondent sought to rely upon an affidavit of Christopher Williams, a solicitor employed by the respondent's solicitors. The appellant objected to much of the affidavit, including (relevantly) paragraph 8, which dealt with what had occurred at a mediation in CIV 1527 of 2006, held on 15 May 2007, pursuant to the rules of court. The primary judge upheld the objection. His Honour held that the evidence was inadmissible by reason of s 71 of the Supreme Court Act 1935 (WA). The respondent contends that his Honour erred in so finding.

22. Section 71 is, so far as relevant, as follows:

    71.  Privilege

    (1)Subject to subsection (3), evidence of -

    (a)anything said or done;

    (b)any communication, whether oral or in writing; or

    (c)any admission made,

    in the course of or for the purposes of an attempt to settle a proceeding by mediation under direction is to be taken to be in confidence and is not admissible in any proceedings before any court, tribunal or body.

    (2)Subject to subsection (3) -

    (a)any document prepared in the course of or for the purposes of an attempt to settle a proceeding by mediation under direction;

    (b)any copy of such a document; or

    (c)evidence of any such document,

    is to be taken to be subject to a duty of confidence and is not admissible in any proceedings before any court, tribunal or body.

    (3)Subsections (1) and (2) do not affect the admissibility of any evidence or document in proceedings if -

    (a)the parties to the mediation consent to the admission of the evidence or document in the proceedings;

    …

    (c)the proceedings relate to a costs application and, under the rules of court, the evidence or document is admissible for the purposes of determining any question of costs; …

    …

    (5)In subsections (3) …

    costs application means an application for the costs of the mediation or of the costs to which mediation relates.

23. The case management registrar made an order on 29 January 2007 (relevantly) in the following terms:

    By consent the mediation be conducted on a confidential basis.  The parties shall not tender in evidence in any proceedings or disclose to any person who did not attend the mediation anything said or done, any communication (whether oral or in writing), or any document made or created in the course of or for the purpose of the mediation except:

    …

    (b)in regard to any questions of costs.

24. It was submitted on behalf of the respondent that the evidence as to what occurred at the mediation was admissible pursuant to s 71(3)(c). It related to 'a costs application' and it was admissible 'under the rules of court'. The respondent argued that the second of those criteria was met in the following way. The case management registrar's order of 29 January 2007 'set the terms or conditions' for the mediation pursuant to O 29A r 3(2)(j) and (l) of the Rules of the Supreme Court 1971 (WA) (the Rules). Having regard to the meaning of 'under' in the Interpretation Act 1984 (WA), the order was made 'under the rules of court' in that it was made 'by', in 'accordance with', 'pursuant to' and/or 'by virtue of' O 29A r 3(2)(j) and (l) and O 29A r (6)(b). The evidence was therefore admissible because an order made under the Rules permitted its disclosure on a costs application.

25. The primary judge accepted that the evidence related to 'a costs application' but did not accept that it was admissible 'under the rules of court'. His Honour found that on the proper construction of s 71(3)(c), documents or evidence are admissible 'under the rules of court' for the purpose of determining any question of costs only if the Rules make express provision to that effect. In reaching that view, his Honour took into account the insertion into the Act, at the same time as s 71 was introduced, of s 167(1)(q) which gave the court the power to make rules providing for 'the admissibility of evidence in relation to a mediation for the purpose of determining the costs of the mediation or the costs of the proceedings between the parties to the mediation.' The primary judge observed that the subject matter of the rule-making power created by s 167(1)(q) resonated with the subject-matter of the rules of court referred to in s 71(3)(c).

26. The respondent submitted on the appeal that the primary judge had erred by failing to give due consideration to the definition of 'under' in the Interpretation Act.  I do not accept that submission.  It is apparent from his Honour's reasons that he considered that the definition in the Interpretation Act did not assist the respondent.  I consider, with respect, that he was correct to so conclude.  In my respectful opinion, the primary judge properly found, for the reasons he gave, that the evidence was inadmissible in the absence of an express provision in the Rules which made it admissible.  There was no such provision. 

27. In addition, whilst the primary judge found the evidence to be inadmissible, he also said that he did not consider that it would have made any difference to his conclusion on costs [8]. Having read par 8 of the affidavit, I have no difficulty understanding why his Honour reached that view. In my opinion, no little or no weight is to be attached to the fact, as deposed to by Mr Williams, that at the mediation there was no discussion of GST in the context of settlement offers.

28. It is well-established that where a party does not accept a Calderbank offer the court will not depart from the ordinary rules as to costs unless, in the circumstances, the offeree's failure to accept the offer was unreasonable:  Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 [23]; Brymount Pty Ltd v Cummins (No 2) [2005] NSWCA 69 [16]. The party who made the offer bears the onus of establishing that its rejection was unreasonable and an offeree will not be found to have acted unreasonably in rejecting an offer except on clear grounds: Ford Motor Company of Australia Ltd v Lo Presti [19], [21] ‑ [22]. Whether a refusal was unreasonable will depend upon all the circumstances and will always involve matters of judgment and impression: Hazeldene's Chicken Farm [24]. Generally, it will not be unreasonable for an offeree to reject an offer that leaves the offeree in any reasonable doubt as to what is being offered: Grbavac v Hart [1997] 1 VR 154, 155.

29. In this case, the failure of the appellant to accept the offer cannot be said to have been unreasonable.  The offer made by the respondent was explicit in its terms.  The offer was for a total sum of $270,000.  That was less than the sum of $283,283.35 the appellant recovered at trial because it did not include an amount for GST.  I do not accept the respondent's submission that the appellant ought reasonably to have understood the offer to include the payment of GST.  In my respectful view, the primary judge correctly found that the appellant was not unreasonable in understanding the offer as excluding any payment for GST.  In any event, to the extent there may have been any doubt as to whether the offer included GST the appellant was not unreasonable in rejecting it.  I do not consider it was incumbent upon the appellant to enquire whether the offer was intended to include a further payment for GST not mentioned in it.   

30. In my view, there was no basis for the respondent's contention that a conventional estoppel arose which prevented the appellant departing from a common assumption of the parties that the offer meant that the respondent would pay a further amount equivalent to the GST.  I am not persuaded that such a common assumption was made out.  In any event, as his Honour found, no such estoppel was capable of arising on the facts.

1. I would dismiss these grounds of cross‑appeal.

Conclusion on the cross-appeal

1. In my opinion, none of the grounds of the cross‑appeal have been made out and I would accordingly dismiss the cross‑appeal.

Overall conclusion

1. It follows that I would dismiss the appeal, the notice of contention, and the cross‑appeal.