Ronstan International Pty Ltd v Thomson - [2002] VSCA 75

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No. 5230 of 1997

RONSTAN INTERNATIONAL PTY. LTD.

ACN 068 111 053

Appellant

PETER THOMSON

Respondent

PETER THOMSON

Cross-Appellant

RONSTAN INTERNATIONAL PTY. LTD.

ACN 068 111 053

Cross-Respondent

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JUDGES:	BUCHANAN, CHERNOV and EAMES, JJ.A.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	29 April 2002
DATE OF JUDGMENT:	31 May 2002
MEDIUM NEUTRAL CITATION:	[2002] VSCA 75

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Contract – Incorporation of printed terms into contract – Penalty or liquidated damages – Interest payable on default in timely payment – Not a genuine pre-estimate of loss.

C.J. Belmore Pty. Ltd. v. A.G.C. (General Finance) Ltd. [1976] 1 N.S.W.L.R. 507, not followed.

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APPEARANCES:	Counsel	Solicitors
For the Appellant and Cross-Respondent	Mr A. Archibald, Q.C. with Mr D. Batt and Mrs S. Marks	Deacons Lawyers
For the Respondent and Cross-Appellant	Mr C. Golvan and Mr A. Klotz	PricewaterhouseCoopers Legal

BUCHANAN, J.A.:

In and after September 1994 the respondent, a photographer and designer, was engaged to perform work by the appellant, a manufacturer of marine parts. On those occasions when the price of the work was substantial, the respondent prepared and gave to the appellant an estimate generated by a computer. When an estimate was accepted, usually orally, the respondent would print out and give to the appellant another copy of the estimate headed “Invoice” instead of “Estimate”. The estimates and invoices contained a number of printed terms.

In February 1995 the appellant engaged the respondent to produce a catalogue of the parts manufactured by the appellant. After discussions between the respondent, Andrew Coutts, joint general manager of the appellant, and Adrian Maloney, promotions and corporate services manager of the appellant, the respondent prepared an estimate. The estimate was accepted orally and on 28 March 1995 the respondent sent an invoice for the production of a catalogue consisting of 92 pages of typesetting, 450 photographs and 100 illustrations at a price of $214,410. The invoice recorded that the sum of $210,000 had been paid.

The appellant’s approach to the project was somewhat haphazard. Products were sent to the respondent in unsorted boxes and the respondent had to consult product managers to allocate products so that they could be grouped in ranges. Products which were not intended to be catalogued were sent to the respondent. Products which were to be catalogued were not sent. Although the respondent had been told that the appellant would supply products to be photographed which were specially selected, checked for imperfections and hand polished to remove any flaws, many of the products were marred by blemishes and defects. The appellant required several changes to be made to typesetting. In mid 1995 the appellant decided to substantially expand the range of products to be included in the catalogue, which was now to be produced to “world’s best standards”. Another 187 images and 48 pages were added. From time to time additional work was requested by the appellant such as extra photographs, the addition of products included in the data base, extra…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2002] VSCA 75
Decision Date: 31 May 2002

CaseChat Overview and Summary

The case of Ronstan International Pty Ltd v Thomson came before the court, with Ronstan being the plaintiff and Thomson the defendant. The primary issue was whether certain printed terms, including a clause requiring the payment of interest in the event of a default in timely payment, were incorporated into the contract between the parties. Additionally, the court had to determine if the interest requirement constituted a penalty or a genuine pre-estimate of the loss incurred by the plaintiff due to late payment.

The legal issues revolved around the principles governing the incorporation of printed terms into a contract and the distinction between a penalty and liquidated damages. The court examined the circumstances in which the terms were presented to the defendant and whether there was an effective communication and acceptance of these terms. The second issue required the court to assess whether the interest clause represented a genuine pre-estimate of the loss or an excessive punishment, thus functioning as a penalty.

The court found that the printed terms were indeed incorporated into the contract, as they were brought to the attention of the defendant in a manner that was sufficient for the purposes of contract law. However, the court held that the interest clause did not represent a genuine pre-estimate of the loss that would be incurred by the plaintiff due to a late payment. Instead, it amounted to a penalty, as it was disproportionate to the legitimate interest of the plaintiff in the performance of the contract. The court thus ruled that the clause was unenforceable.

The court ordered that the interest clause requiring the defendant to pay interest in the event of a default in timely payment was unenforceable. The remainder of the contract would, however, continue to be binding on the parties.

Orders