Tiliacos-Trowthe v Gymea Miranda Bowling & Sports Club Ltd

[2008] NSWSC 1299

CITATION:	Tiliacos-Trowthe v Gymea Miranda Bowling & Sports Club Ltd [2008] NSWSC 1299
HEARING DATE(S):	2 and 3 December 2008
JUDGMENT DATE :	3 December 2008
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
EX TEMPORE JUDGMENT DATE:	3 December 2008
DECISION:	Judgment for Defendant.
CATCHWORDS:	CONTRACT – UNCONSCIONABLE CONDUCT – Whether Defendant had made oral contract on certain terms – whether Plaintiff had later signed less favourable contract because of unconscionable conduct of Defendant. - HELD: Parties had not made oral contract.
LEGISLATION CITED:	Trade Practices Act 1974 (Cth) – s.51AA, s.51AC, s.87
CATEGORY:	Principal judgment
PARTIES:	Helen Tiliacos-Trowthe (Plaintiff) Gymea Miranda Bowling and Sports Club Ltd (Defendant)
FILE NUMBER(S):	SC 4768/08
COUNSEL:	N.A. Cotman SC (Plaintiff) J.S. Whyte (Defendant)
SOLICITORS:	Brown & Partners (Plaintiff) Solari Legal (Defendant)

PALMER J.

4768/08 Tiliacos-Trowthe v Gymea Miranda Bowling & Sports Club Ltd

JUDGMENT – Ex tempore
3 December, 2008

Introduction

1    The Plaintiff carries on business as a caterer. The Defendant is an incorporated social club. 2    By an agreement in writing dated 18 September 2007 (“the Written Agreement”), the Defendant (“the Club”) granted to the Plaintiff a licence to use certain parts of its premises to provide catering services for members of the Club and for Club functions. The duration of the Written Agreement was for twelve months, expiring on 18 September 2008. The Written Agreement provided that, at the expiry of the term, the parties would enter into an agreement for a further term of twelve months, but only if both parties agreed. 3    On 29 August 2008, the Defendant wrote to the Plaintiff advising that, upon expiry of the term of the Written Agreement on 17 September 2008, the Defendant would not agree to the grant of a further term and requested the Plaintiff to vacate the premises. The Plaintiff, by letter dated 14 September 2008, requested that she be allowed until 1 January 2009 to vacate. The Defendant declined that request.


By proceedings commenced on 22 September 2008, the Plaintiff seeks:

– a declaration that there was a binding oral agreement made between the Plaintiff and the Defendant in January or February 2007 whereby the Defendant agreed to grant a licence generally in accordance with the Written Agreement but for a term of three years, with an option for the Plaintiff to renew it for a further term of three years (“the Oral Agreement”);

– an order that the Defendant specifically perform the Oral Agreement by permitting the Plaintiff to remain in occupation of the premises for the remainder of the three year term;

– in the alternative, a declaration that the Defendant is estopped from denying the Oral Agreement because of representations made by the Defendant to the Plaintiff upon which the Plaintiff relied;

– a declaration pursuant to s 87 of the Trade Practices Act 1974 (Cth) that the Written Agreement is void because the Plaintiff's execution of it was procured by undue influence or undue pressure or in breach of the terms of the Oral Agreement;

– alternatively, an order pursuant to s 51AC or s 51AA of the Trade Practices Act that the Written Agreement be varied by inserting a term providing for a licence period of three years with an option to renew for a further three year period.

4    The issues as defined by the pleadings may be summarised thus:


– did the Plaintiff and the Defendant enter into the Oral Agreement in January or February 2007 as alleged;

– did the Defendant represent to the Plaintiff in August 2007 that a draft contract, including a term of three years with an option to renew for another three years, faithfully recorded the Oral Agreement and that the Defendant would shortly execute that agreement;

– did the Plaintiff rely on such representations so that the Defendant is estopped from denying that there is a presently binding contract in the terms of the Oral Agreement or in the terms of the draft given to the Plaintiff in August 2007;

– did the Defendant breach the Oral Agreement by threatening in August and September 2007 to terminate it unless the Plaintiff accepted a contract for a term of one year, that is, the Written Agreement;

– did the Defendant procure execution by the Plaintiff of the Written Agreement by undue influence or pressure so that the Written Agreement should be set aside under the general law;

– did the offer of the Written Agreement constitute unconscionable conduct for the purposes of s 51AC(2) Trade Practices Act so that the Written Agreement or contract should be set aside.


The facts

5    The Plaintiff is an experienced commercial caterer and has been in business for some years. She was assisted in the negotiations with the Defendant by her husband who is a finance broker. Both the Plaintiff and Mr Trowthe are commercially knowledgeable and experienced in business. 6    In early January 2007, the Plaintiff saw a newspaper advertisement in which the Defendant called for expressions of interest in tendering for catering within the Club. 7    On 19 January 2007, the Plaintiff and her husband attended a meeting with the Club's chairman, Mr Prince, and the secretary manager, Mr Campbell. The general terms of the catering proposal were discussed. According to the Plaintiff and Mr Trowthe, Mr Prince said in the course of those discussions that the caterer selected as a result of the interview process would have a three month trial period and then would be offered a three year contract with an option to renew for a further three year term. 8    Mr Prince and Mr Campbell say that no term of the catering contract was mentioned during this interview. They say that all that Mr Prince said was that the successful applicant would have a three month trial period and that, if that were successful, the parties would negotiate a contract on mutually agreeable terms. 9    On 25 January 2007, the Plaintiff and Mr Trowthe attended a second meeting with Mr Prince, Mr Campbell and another director of the Defendant, Mr Tolley. There was no discussion at this meeting of the duration of the catering contract which might be offered. At this meeting the Plaintiff gave to Mr Prince a business plan outlining how she intended to perform the catering services if she were the successful applicant. The Plaintiff had prepared this business plan since the first meeting on 19 January. 10    The duration of a proposed contract would, obviously, be a highly important term for a person in the position of the Plaintiff to take into account in preparing a business plan. It is significant, in my view, that the Plaintiff does not mention the duration of the proposed catering contract in the business plan, whether it be for a term of three years or any other term. 11    A short time after the second meeting the Plaintiff was informed that she had been successful in the interview process and that her trial period of three months catering in the Club would commence on 7 February 2007. The Plaintiff commenced catering in the Club on that date. No capital investment by the Plaintiff in the catering business within the Club was required. No rent or occupation fee was payable. What the Plaintiff had to do was to acquire food and stock for sale and to provide staff for the catering business. This she did. There is no dispute that the Plaintiff performed successfully during the trial period. 12    At the end of the trial period in May 2007, the Plaintiff and Mr Trowthe on a number of occasions asked Mr Campbell about the contract which would be entered into with the Defendant. According to the Plaintiff Mr Campbell said: "I will talk to the Board and see what I can do” . 13    In May, Mr Trowthe telephoned the Club's solicitor, Mr Solari, and asked him what was happening with the contract. Mr Solari said that he was waiting on instructions from the Club. 14    In June 2007, Mr Solari provided to Mr Campbell a draft catering contract which provided for a term of three years with an option to renew for a further three years. Mr Campbell, Mr Prince and another director, Mr Tolley, say that that draft agreement used as a template an earlier agreement with other caterers, and that it retained from that template the term of three years with an option as a starting point for discussions with the Plaintiff. The Plaintiff and Mr Trowthe say that the term stated in the draft contract reflected what had already been agreed between the parties in January of that year. 15    A sub-committee of the Defendant's Board discussed amendments to the draft contract. A copy of the draft was provided to the Plaintiff on about 18 August. It contained the provision for the term of three years with an option for another three years. There were discussions between the parties as to certain amendments to the draft, but not about the duration of the contract. 16    In August 2007, the Plaintiff asked Mr Campbell when the contract would be signed. Mr Campbell said that elections for the Board would be held shortly and it should be left to the new Board to enter into the catering contract with the Plaintiff. 17    The annual general meeting of the Defendant was held on 26 August 2007 and a new Board was elected. Amongst the new directors was Mr James, who was given the responsibility for supervising contracts on behalf of the Defendant. 18    At a meeting of the Board on 27 August, it was resolved to offer the Plaintiff a catering contract for a term of twelve months, with a further term of twelve months if the parties agreed. 19    On 28 August, Mr Campbell wrote to the Plaintiff as follows:

“At the meeting of the Board of Directors of Gymea Miranda Bowling and Sports Club Ltd held on Monday 27th August 2007 the Catering requirements of the Club were discussed at length.

As a result of this discussion the Board has directed that I present you with the following offer:

The Club extends to you the opportunity to provide for the catering requirements of the Club and its members in the areas known as the Bennelong Lounge and Main Auditorium.

The Club also extends to you the first offer to provide catering for all functions booked in the Greens Room and BBQ areas.

On acceptance of this offer the Club will enter into a written catering agreement for a term of one year with the opportunity for a mutually agreed further period of one year on completion of the initial term.

Your earliest response to this offer would be appreciated.”
20    On 29 August, the Plaintiff wrote to Mr Campbell advising that she had appointed her husband “to act with me in any negotiations in relation to the catering agreement/contract” . There was no protest in writing that the offer of a contract for twelve months was contrary to what had already been agreed. Neither was there an oral protest at that time. 21    The Plaintiff says that, shortly prior to 18 September 2007, Mr Campbell gave her a catering contract in which the term for twelve months with a further renewal of twelve months was provided. She says that she then spoke to Mr Trowthe about the contract, went back to Mr Campbell and told him: “I am not happy about this. This is not what we agreed” . Mr Campbell says that the Plaintiff did not protest about the terms of the contract at this time. 22    The Plaintiff and Mr Trowthe say that, shortly afterwards, they had a meeting with Mr James in which they protested about the term of the contract. They say that Mr James said: “This is the only contract you are getting. Take it or leave it” . Mr James denies this conversation. He says that if the Plaintiff had refused to sign the contract in the terms approved by the Board he would have expected the parties to negotiate further. 23    The Plaintiff and Mr Trowthe say that they discussed the proffered contract between themselves. The Plaintiff says that she said: “It does not look like we have any choice. I will have to sign it” . Mr Trowthe said: “Not happy, Jan” . Mr Trowthe confirms that he advised the Plaintiff against signing the contract. 24    On 18 September 2007, Mr Campbell, Mr James and Mr Tolley came to see the Plaintiff at the Defendant's premises and gave her a contract in the form of the Written Agreement. The Plaintiff says that she then said that she was not happy to sign it, but that she was given no choice. Mr Campbell, Mr James and Mr Tolley say that the Plaintiff signed the contract without protest. There is no suggestion at all that Mr Campbell, Mr James or Mr Tolley placed any pressure on the Plaintiff to sign the contract by threat of force or by any conduct which could be regarded as intimidating. 25    On 14 August 2008, the Plaintiff sent a notice to the Defendant in the following terms:

“I, Helen Taliacos-Trowthe in the State of New South Wales, give this written notice of our intention to exercise the option to renew our lease/commercial in confidence agreement of the above premises as set out in the agreement 18th day of September 2007 pursuant to and in accordance with clause 11 for a term of one year only as set out in the said agreement.

Would you take the required action in accordance with this agreement and option clause.

Dated: 14th day August 2008”
26    On 29 August 2008, Mr Campbell wrote to the Plaintiff advising that the Board of the Defendant had declined to extend the term of the Written Agreement for a further year. 27    On 14 September 2008, the Plaintiff and Mr Trowthe wrote to the Board in the following terms:

“Raymond and I are in receipt of the letter dated 29th August from the Board of Directors advising that the decision has been made to change the current catering provider and that the contract that we have in place with you will not be renewed for a further 12 months.

In light of this we would like to request that we are granted until the 1st January 2009 to vacate the premises. The reason for this request is that we currently have on hand a lot of stock build up and would like the opportunity to reduce this prior to departing as this has incurred a cost to us that we will not be able to recover. The bistro has also been taking bookings for various functions to cater and would like the opportunity to see these bookings through, as these were received from regular patrons, members and guests of the club and to be honest we do not want to let these customers down.

We are disappointed that we were not given any opportunity for discussion or that any room for negotiation was made available for the contract to cater for the club for a further 12 months as we feel that we have helped and contributed to a considerable amount of business to the club over the past 18 months. We have provided cheap meals of extremely good quality and have established a great reputation in the area.

Since taking over the catering in February 2007 we have seen the patronage grow from 20 covers per week to over 400 covers per week. We have catered so many functions, up until the 1st August 2008 we have catered 152 to be exact and over 9500 customers served at these functions, which vary from weddings, birthdays, engagement parties and christenings.

We would not like to leave on bad terms with the Club or the Directors and we really do hope that the above request for the 1st January 2009 will be seriously considered for the date for us to depart.

We are still very much interested in talking to the Board to see whether or not there is any room for negotiation on the current decision, as we really do enjoy catering for the Club and we would appreciate the opportunity to cater for a further 12 months.

Your reply to the above letter and your decision on the date that we have requested above is greatly appreciated and we look forward to receiving your reply.”

It will be noted that there is no reference in this letter to a contract for three years and no protest that the Defendant was not within its rights in declining to continue the Written Agreement for a further twelve months.

28    The Defendant declined the Plaintiff's request to remain in the premises until 1 January 2009. 29    On 17 September 2008, the Plaintiff's solicitor wrote to the Defendant alleging the existence of the Oral Agreement for a term of three years and that the Plaintiff had been forced to sign the Written Agreement under commercial duress.

Whether Oral Agreement made

30    Whether or not the Plaintiff was told in her first meeting with Mr Prince and Mr Campbell on 19 January 2007 that the successful applicant would have a three months trial and, on satisfactory completion, a contract for three years, must depend upon an assessment of the credit of the witnesses and the inherent probabilities. There is no contemporaneous documentary evidence of what was said. The Plaintiff and Mr Trowthe say that they are firm in their recollection of what was said at this meeting. Mr Prince and Mr Campbell are equally firm in their recollection that nothing about the term of the contract was said to the Plaintiff or to any of the other twelve or so applicants. 31    I regard the evidence of Mr Prince and Mr Campbell as inherently more probable for the following reasons. 32    First, if the term of the proposed contract had been referred to in the first meeting, one would reasonably have expected to see explicit reference to it in the business plan which the Plaintiff gave to Mr Prince, Mr Tolley and Mr Campbell at the meeting on 25 January 2007. The term of the contract was, after all, of very considerable significance to both parties. 33    Second, I do not regard it as inherently improbable that a term of three years came into the draft contract provided by the Defendant to the Plaintiff because it was in the template provided by Mr Solari for discussion. The evidence of Mr Campbell, Mr Prince and Mr Tolley was firm and convincing in that regard. 34    Third, if there had been made an agreement in January in the terms suggested by the Plaintiff, I would have expected her to have protested, both orally and in writing, much more vigorously than she did when she was informed of the new offer on 28 August 2007. The Plaintiff, to my observation and on her own admission, is an assertive business woman. She is capable of expressing herself eloquently, volubly and forcefully when she feels that her rights have been infringed as is evidenced by a very strong letter of complaint about a non-related matter which she wrote to the Board of the Defendant on 16 November 2007. The Plaintiff is experienced in business. She had an equally experienced business advisor in her husband, who was closely involved with the negotiations for the contract. 35    I find it difficult to accept that, if there had been an Oral Agreement made in the terms alleged, the Plaintiff and Mr Trowthe agreed to a radical departure from it in August 2007 with only a muted protest. 36    Fourth, and in the same vein, I find it improbable that the Plaintiff would have sought renewal of the Written Agreement for one year and, when that request was declined, sought to remain in the premises for a further period as a matter of grace if she had really believed that the Defendant had broken a promise to her made in January 2007 and had therefore taken advantage of her. 37    Mr Whyte of Counsel, who appears for the Defendant, put to the Plaintiff in cross examination that she had sent the letter dated 14 September 2008 requesting a period of grace to vacate the premises because she was not really relying upon any agreement for a term of three years. The Plaintiff found it very difficult to answer this question. Eventually she said: “I was willing to go there but not with the treatment I got” . That evidence suggests to me that if the Plaintiff had been granted the period of grace she requested, then she would have vacated the premises on 1 January 2009 and this litigation would never have arisen. However, having been refused a period of grace, she went to her solicitor in anger and a case was constructed for the first time as appears in her solicitor's letter of 17 September 2008. 38    For those reasons, I conclude that there was no Oral Agreement between the parties as the Plaintiff alleges. I accept the evidence of the Defendant's witnesses in this regard. I find that the parties agreed only that the Plaintiff would have a trial period of three months and that, if that trial was completed satisfactorily, as it was, the parties would negotiate for a contract on mutually satisfactory terms. 39    It follows that in proffering a contract in late August 2007 for a term of twelve months, the Defendant was not in breach of any earlier agreement or representation. There was nothing unconscionable in the Defendant propounding the agreement which it did. Doubtless the Plaintiff was not happy about a term of twelve months when an earlier draft of the contract had put forward a term of three years, but I am far from satisfied that the Plaintiff had no commercial choice but to accept a term of twelve months. There is no evidence of financial pressure or substantial loss if the Plaintiff declined to proceed with the contract. It is said that eight months of the Plaintiff's work would be wasted, but there is no evidence that the Plaintiff did not derive any profit or reward from that eight months’ work. 40    Mr Trowthe advised the Plaintiff not to sign the contract on 18 September 2008. As an experienced businessman he must have appreciated that the Plaintiff had a commercial choice whether to sign or not. I am satisfied that the Plaintiff exercised that choice freely when she signed the Written Agreement. 41    For these reasons, all of the Plaintiffs claims for relief fail on the facts. 42    The orders of the Court are: judgment for the Defendant on the Plaintiff's Statement of Claim. The Plaintiff will pay the Defendant's costs of the proceedings.

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