United Equipment Pty Ltd v Australian Portable Buildings Pty Ltd [No 2]
[2017] WADC 73
•7 JUNE 2017
UNITED EQUIPMENT PTY LTD -v- AUSTRALIAN PORTABLE BUILDINGS PTY LTD [No 2] [2017] WADC 73
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2017] WADC 73 | |
| Case No: | CIV:1506/2015 | 19 - 21 SEPTEMBER 2016 | |
| Coram: | LEVY DCJ | 7/06/17 | |
| PERTH | |||
| 52 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiffs' claim allowed Damages allowed | ||
| PDF Version |
| Parties: | UNITED EQUIPMENT PTY LTD AUSTRALIAN PORTABLE BUILDINGS PTY LTD |
Catchwords: | Agency Novation Abandonment Waiver |
Legislation: | Nil |
Case References: | Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; (2008) 251 ALR 322 Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 Bell Group Ltd (in liq) v Westpac Banking Corporation (No 10) [2009] WASC 107 Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1 Bonette v Woolworths Ltd (1937) 37 SR (NSW) 142 Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 Branwhite v Worcester Works Finance Ltd [1969] 1 AC 552 Dean-Willcocks v Commissioner of Taxation (2004) 51 ACSR 353; [2004] NSWSC 1058 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; (1978) 19 ALR 223 Enzed Technology Pty Ltd v Benge (1989) 1 WAR 164 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 Fazio v Fazio [2012] WASCA 72 Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473 Fitzgerald v Masters (1956) 95 CLR 420 Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 216; (2012) 45 WAR 29 Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23; (2008) 35 WAR 520 Marist Brothers Community Inc v Shire of Harvey (1994) 14 WAR 69 Nationwide News Pty Ltd v Naidu [2007] NSWCA 377; (2007) 71 NSWLR 471 NMFM Property Pty Ltd v Citibank Ltd (No 10) [2000] FCA 1558 Olsson v Dyson (1969) 120 CLR 365 Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854; [1983] 1 All ER 34 Pole v Leask (1863) 8 LT 645 Press v Mathers [1927] VLR 326 Reynell v Lewis (1846) 153 ER 954 Sargent v ASL Developments Ltd (1974) 131 CLR 634 Slater v Strawberry John Pty Ltd [2002] WASC 204 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 Upper Hunter County District Council v Australian Chilling and Freezing Co Pty Ltd [1968] HCA 8; (1969) 118 CLR 429 Vantage Systems Pty Ltd v Priolo Corp Pty Ltd [2015] WASCA 21 Vickery v Woods [1952] HCA 7; (1952) 85 CLR 336 Vroon BV v Foster's Brewing Group Ltd [1994] VicRp 53; [1994] 2 VR 32 Wendt v Bruce (1931) 45 CLR 245 Yasuda Fire & Marine Insurance Co of Europe Ltd v Orion Marine Insurance Underwriters Agency Ltd [1995] QB 174 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
AUSTRALIAN PORTABLE BUILDINGS PTY LTD
Defendant
Catchwords:
Agency - Novation - Abandonment - Waiver
Legislation:
Nil
Result:
Plaintiffs' claim allowed
Damages allowed
Representation:
Counsel:
Plaintiff : Mr S M Davies SC with Mr J Cook
Defendant : Mr W C Zappia
Solicitors:
Plaintiff : Mendelawitz Morton
Defendant : Clayton Utz
Case(s) referred to in judgment(s):
Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; (2008) 251 ALR 322
Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424
Bell Group Ltd (in liq) v Westpac Banking Corporation (No 10) [2009] WASC 107
Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1
Bonette v Woolworths Ltd (1937) 37 SR (NSW) 142
Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153
Branwhite v Worcester Works Finance Ltd [1969] 1 AC 552
Dean-Willcocks v Commissioner of Taxation (2004) 51 ACSR 353; [2004] NSWSC 1058
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; (1978) 19 ALR 223
Enzed Technology Pty Ltd v Benge (1989) 1 WAR 164
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Fazio v Fazio [2012] WASCA 72
Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473
Fitzgerald v Masters (1956) 95 CLR 420
Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 216; (2012) 45 WAR 29
Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23; (2008) 35 WAR 520
Marist Brothers Community Inc v Shire of Harvey (1994) 14 WAR 69
Nationwide News Pty Ltd v Naidu [2007] NSWCA 377; (2007) 71 NSWLR 471
NMFM Property Pty Ltd v Citibank Ltd (No 10) [2000] FCA 1558
Olsson v Dyson (1969) 120 CLR 365
Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854; [1983] 1 All ER 34
Pole v Leask (1863) 8 LT 645
Press v Mathers [1927] VLR 326
Reynell v Lewis (1846) 153 ER 954
Sargent v ASL Developments Ltd (1974) 131 CLR 634
Slater v Strawberry John Pty Ltd [2002] WASC 204
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52
Upper Hunter County District Council v Australian Chilling and Freezing Co Pty Ltd [1968] HCA 8; (1969) 118 CLR 429
Vantage Systems Pty Ltd v Priolo Corp Pty Ltd [2015] WASCA 21
Vickery v Woods [1952] HCA 7; (1952) 85 CLR 336
Vroon BV v Foster's Brewing Group Ltd [1994] VicRp 53; [1994] 2 VR 32
Wendt v Bruce (1931) 45 CLR 245
Yasuda Fire & Marine Insurance Co of Europe Ltd v Orion Marine Insurance Underwriters Agency Ltd [1995] QB 174
- LEVY DCJ:
Introduction and Overview of pleadings
1 The plaintiff, United Equipment Pty Ltd (United), seeks to recover damages against the defendant, Australian Portable Buildings Pty Ltd (APB), for breach of contract.
2 In the period between 2012 and 2013, United and APB entered into six separate long term rental agreements relating to equipment leased by United to APB (the Original Rental Agreements).
3 On or about 18 January 2013, APB sold part of its business (the Modular Manufacturing Business) to another company, Britco APB Pty Ltd (Britco), and thereafter stopped making payments to United pursuant to the Original Rental Agreements.
4 United's primary case in these proceedings is that an agency by agreement existed between APB and Britco. On the plaintiff's case, the agreement was partly express and partly implied. The plaintiff submits that on or about 12 June 2014, pursuant to that agency agreement, Britco acting as agent on behalf of APB made an agreement with United to vary the rental agreements to provide that the agreements would be terminated early in consideration of the payment of $350,551.45 to United. Having received no payment, United claims that APB is liable to pay the sum of $350,551.45 under the varied rental agreements.
5 United's alternative case is that, if the rental agreements were not varied as it alleges, APB is liable under the Original Rental Agreements to pay $433,051.45 on the grounds that APB breached the Original Rental Agreements by ceasing to carry on a material part of its business by parting with possession of the equipment and/or by failing to pay amounts due under the Original Rental Agreements.
6 APB denies any liability to United on the basis that, following the sale of its Modular Manufacturing Business to Britco on 18 January 2013 onwards:
(a) the Original Rental Agreements were either novated; or, alternatively
(b) United, by its conduct, either abandoned the Original Rental Agreements or waived its rights against APB to sue for breach of the Original Rental Agreements.
7 In relation to the issues raised by APB by way of defence, the defendant bears the burden of proof on the balance of probabilities.
8 At the heart of this case is whether Britco was acting as an agent for APB or whether, as contended for by the defendant, the plaintiff and Britco entered into a new legal relationship by the novation of the Original Rental Agreements and thereby abandoned or waived the Original Rental Agreements. Consequently, it is convenient to note the general principles of law relating to the Law of Agency, Novation, Abandonment and Waiver.
General principles relating to the Law of Agency
9 An agency may arise in any of the following three ways:
(a) agency by agreement;
(b) non-contractual agency; and
(c) ostensible agency.
10 Like any contract, agency by agreement can be partly express and partly implied. What must be established is that there is a voluntary assumption of a legally enforceable duty: Australian Woollen Mills Pty Ltd v The Commonwealth(1954) 92 CLR 424, 457 (Dixon CJ, Williams, Webb, Fullagar and Kitto JJ).
11 To be a legally enforceable duty, there must not only be identifiable parties to the arrangement, but the terms of the agreement must be certain: Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 [24] (Ermogenous) (Gaudron, McHugh, Hayne and Callinan JJ).
Agency by agreement
12 An agency by agreement arises when there is the express or implied assent or consent of both the principal and the agent.
13 Express agency is created where the principal by express agreement appoints the agent.
14 Implied agency arises from the nature of the conduct or circumstances of the parties involved.
15 Consequently, the two critical elements of an agency relationship are:
(a) the consent (or assent) of both principal and agent; and
(b) the authority given by the principal to the agent to act on the principal's behalf.
16 In considering the question of consent, the question is whether the relationship created by the parties, when viewed objectively, evinces an intention to create a relationship amounting in law to be an agency relationship. The principal must intend that the agent will act for him or her and the agent must intend to accept the authority and act on it. Consequently, the existence of agency depends on whether the facts of a particular case objectively manifest the consent of the parties to create an agency relationship.
17 In that regard, whether the parties subjectively intended to create an agency relationship is not determinative of the question of whether one or other legal arrangement was created. Indeed, the parties may not even appreciate the legal concept of agency, but may nonetheless create an agency relationship if what they have done is so properly construed at law: Branwhite v Worcester Works Finance Ltd [1969] 1 AC 552, 587.
18 So far as the creation of an agency is concerned, it may be manifested simply by placing another in a situation in which, according to the ordinary rules of law, or according to the ordinary usages of mankind, that other is understood to represent and act for the person who has so placed him: Pole v Leask (1863) 8 LT 645, 648.
19 It does not require a positive act by the principal. It may be created by the principal's acquiescence: Bonette v Woolworths Ltd (1937) 37 SR (NSW) 142, 150.
Authority
20 The second critical element of an agency relationship requires the agent to be authorised to act on behalf of the principal: NMFM Property Pty Ltd v Citibank Ltd (No 10) [2000] FCA 1558 [522].
21 Such authority can be either express or implied, or a combination of both. Where it is said to be implied, it may be inferred from both the conduct and the circumstances of the parties involved.
22 In considering whether an agency relationship exists between parties, a starting point in addressing whether a person has authorised another to do an act or series of acts on his or her behalf is to consider whose benefit or in whose interest it was intended that the acts be done: Press v Mathers [1927] VLR 326, 332 (Dixon A J); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 [70]; (2004) 219 CLR 165.
Non contractual agency
23 It is not necessary that there be a legally binding contract of agency for the creation of the agency relationship. It is sufficient that there be an instruction or request from the principal and an undertaking of the duty or task by the agent. It is sufficient if both the principal and agent consent to the exercise of the principal's authority by the agent on behalf of the principal: Yasuda Fire & Marine Insurance Co of Europe Ltd v Orion Marine Insurance Underwriters Agency Ltd[1995] QB 174, 185; Slater v Strawberry John Pty Ltd [2002] WASC 204 [184] and [185].
Ostensible agency
24 The relationship of agency can arise where the person (who is to be classed as the agent) does an act not authorised, but the person (to be classed as the principal) has held out to the third party that the person doing the act does have authority to do that act on his or its behalf.
25 This principle is concerned with protecting the interests of innocent third parties dealing with parties who are apparently or ostensibly authorised to act on behalf of another. The law prevents the putative principal from denying that authority where the putative principal has represented to those third parties that the agent has that authority. Where there is the requisite holding out, this result arises even in the absence of a pre-existing agency relationship: in Reynell v Lewis (1846) 153 ER 954, 958.
General Principles relating to the Law of Novation
26 Novation arises in circumstances where there is the rescission of an existing contract and the substitution of a new contract in place of the old contract: Olsson v Dyson(1969) 120 CLR 365, 388 (Olsson).
27 A novation is not a transfer of liability, but a replacement of the party liable with another party. Whilst a novation does not require an express tripartite agreement, it does require the involvement of all parties to the new and old contracts to intend that it occur: Olsson (388).
28 Like any other contractual arrangement, there must be contractual intention and consideration for the new contract: Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473 [78].
29 Consideration for the new contract may be given by the release by the continuing party of an original party to the agreement and the new contracting party standing in the shoes of the released party: Olsson (388 - 389).
30 Commonly, novation involves an agreement between parties to an existing contract substituting a third party for one or more parties to that contract: Olsson (389).
31 Novation may be express, or implied from the conduct of the parties in their dealings with each other. Novation may be inferred from evidence of communications between parties, including informal conversations, and the subsequent consistent pattern of conduct of the parties: FightvisionPty Ltd v Onisforou [83] - [86] citing Barwick CJ in Upper Hunter County District Council v Australian Chilling and Freezing Co Pty Ltd[1968] HCA 8; (1969) 118 CLR 429(437). If the relevant parties conducted themselves on the basis that a novated contract existed between them, a court may readily infer that such a novated contract has been brought into being: Fightvision [80].
The Doctrine of Abandonment
32 In Fitzgerald v Masters (1956) 95 CLR 420, 432 the High Court concluded that an inference from the parties' conduct that a contract has been abandoned is really an inference 'that the contract has been discharged by agreement, each party being entitled to assume from a long continued ignoring of the contract on both sides that the matter is off altogether'.
33 In Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854, 914; [1983] 1 All ER 34, 47, Lord Brandon said that the doctrine of abandonment can arise in two separate ways. Firstly, where 'the conduct of each party, as evinced to the other party and acted on by him, leads necessarily to the inference of an implied agreement between them to abandon the contract'. The second way is where the conduct of one party towards another party 'has been such as to lead A reasonably to believe that B has abandoned the contract, even though it has not in fact been B's intention to do so, and that A has significantly altered his position in reliance on that belief'. Clearly, the first way involves 'actual abandonment' by both parties. The second way involves the creation of a situation by one party in which they are subsequently estopped from asserting, as against the other party that they have not abandoned the contract.
34 Whilst Lord Brandon's explanation of the law of abandonment has not been universally accepted in Western Australia (see McLure P in Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 216; (2012) 45 WAR 29 [211]) it has been adopted in cases such as Enzed Technology Pty Ltd v Benge (1989) 1 WAR 164, 170. Furthermore, it is the case that Australian authorities support a doctrine of termination by abandonment, even where there is no estoppel or implied contract to abandon: DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; (1978) 19 ALR 223.
35 In Fazio v Fazio [2012] WASCA 72 [74] - [75], Murphy JA, with whom Newnes JA agreed, explained that '[t]he abandonment of a contract, in the sense of the mutual release of future obligations, being an inferred agreement, does not depend upon the subjective intention of the parties, but upon whether their conduct (both acts and omissions) viewed objectively manifests an intention to discharge the contract'. Furthermore, 'whether there is an abandonment involving an agreement for release will depend upon the inference to be drawn from the conduct of the parties, viewed objectively'.
The Doctrine of Waiver
36 In Agricultural & Rural Finance Pty Ltd v Gardiner(2008) 238 CLR 570; (2008) 251 ALR 322 [50] Gummow, Hayne and Kiefel JJ, with whom Heydon J agreed, noted that the term 'waiver' is a concept in law that has been applied in a variety of senses and that '[l]eading scholars have long cautioned against, even condemned, its use'. Furthermore, '[w]aiver has often been used in senses synonymous with election or estoppel' and that waiver may be 'indistinguishable from one or other of those doctrines.'
37 In this case, I note that the defendant relies on the notion of waiver to denote the doctrines of election and variation of a contract (novation).
38 Consequently, a waiver can occur both where there is an election between inconsistent rights or a variation of contract: Agricultural & Rural Finance Pty Ltd v Gardiner[95] and [96].
39 To be an election, it has to be an intentional act, done with knowledge, whereby a person abandons a right by acting in a manner inconsistent with that right. The elector must exercise the right in question by unequivocal words or conduct to evince an intention to exercise the right: Agricultural & Rural Finance Pty Ltd vGardiner[84] - [87].
40 The relevant test is whether a reasonable person in the position of the recipient was left in no doubt that the right has been exercised.
41 Once an election is made, it is final in the sense that a party having clearly elected to pursue a particular course is unable to later resile from that election: Sargent v ASL Developments Ltd(1974) 131 CLR 634, 655 - 656; Wendt v Bruce(1931) 45 CLR 245, 257.
The plaintiff and defendant
United Equipment Pty Ltd (United)
42 At all material times, the plaintiff United, which traded under the name of 'United Forklift and Access Solutions', carried on the business of renting equipment to other parties for reward and profit.
Australian Portable Buildings Pty Ltd (APB)
43 The defendant APB, which traded under the name of 'Australian Portable Buildings', carried on a business which included manufacturing portable and modular buildings (the Modular Manufacturing Business), as well as a modular rental business for reward and profit. APB operated its Modular Manufacturing Business out of its facility located at 14A Thorpe Way, Kwinana.
44 According to Mr David Vernon Maxwell, a director of United, APB had been a customer of the plaintiff's since about 2009.
45 As already noted above, on 18 January 2013, APB sold its Modular Manufacturing Business, in which the equipment the subject of the Original Rental Agreements was used, to Britco APB Pty Ltd, which traded under the name APB Britco (Britco) (see exhibit 14). The sale of the Modular Manufacturing Business was part of a larger transaction that also involved the acquisition of APB by two unrelated, publicly listed Canadian companies, Black Diamond Group Ltd and WEQ Britco LP and its subsequent demerger.
46 APB's sale of the Modular Manufacturing Business to Britco was in consideration for the issue to APB of 3,445,000 shares in Britco. The plaintiff contends that on the issue of the shares, Britco became a subsidiary of APB. This is disputed by APB.
47 APB sold the Modular Manufacturing Business to Britco as a going concern. It is not in dispute that Britco assumed ownership and control of that business including the majority of its employees (see exhibit 14, the Business Sale Agreement between APB and Britco which included 'Schedule 4 Employees' - relevant employees 'transferred' with the business included Aron Nicholson, John Hodgkinson and Claire Leatham), its leased premises and all plant and equipment required to run it. The equipment it took control of included the equipment the subject of the Original Rental Agreements.
The Evidence at Trial
48 The plaintiff relies upon the evidence of four witnesses, all of whom were either employees or a director of United. Although witness statements were tendered on behalf of each witness, each witness also gave vivo voce evidence during the trial and was cross-examined by counsel for the defendant. The witnesses for United, in the order they were called, were:
• Mark David Pemberton, National Major Accounts Manager, employed by United (witness statement, exhibit 1)
• David Vernon Maxwell, a company director of United (witness statement, exhibit 2)
• David Edward Parker, Rental Manager, employed by United (witness statement, exhibit 3)
• Paul Kettle, National Credit Manager, employed by United (witness statements, exhibits 4.1 and 4.2).
50 The defendant did not call any witnesses. Instead, the defendant relies upon a body of documentary evidence tendered during the trial.
The Original Rental Agreements (exhibits 8 – 13)
51 It is not in dispute that in the period between May 2012 to January 2013 United and APB entered into six separate long term rental agreements which collectively form the Original Rental Agreements. The terms and conditions of each of these rental agreements related to the lease of certain equipment (four fork lifts and two scissor lifts). Pursuant to the agreements, United was the 'Owner' of the equipment and APB was the 'Renter'. The six individual rental agreements had varying commencement dates and terms, but were otherwise, for all intents and purposes, identical. Collectively, the operative period of the Original Rental Agreements spanned a period of between 14 June 2012 and 25 January 2016. The dates and periods of the individual Original Rental Agreements were as follows:
(i) Rental agreement dated 15 May 2012 relating to equipment with the hire numbers 63-AS51729 and 63-AS51730 and commenced on or about 18 July 2012 for a period of 36 months;
(ii) Rental agreements (3) dated 15 May 2012 in relation to equipment with the hire numbers 61-FD49493, 61-FIA1631 and 61-FIA1547 commenced on or about 14 June 2012 for a period of 36 months;
(iii) Rental agreement dated 12 December 2012 in relation to equipment with hire number 61-FC51640 commencing on or about 25 January 2013 for a period of 36 months;
(iv) Rental agreement dated 4 January 2013 in relation to equipment with hire number 61-RA53202 commencing on or about 19 April 2012 for a period of 24 months.
The Business Sale Agreement made between APB and Britco (exhibit 14)
52 As already noted above, on or about 18 January 2013, APB sold the Modular Manufacturing Business to Britco and thereafter stopped making payments to United pursuant to the Original Rental Agreements.
53 Relevantly, the Business Sale Agreement included the following clauses:
Clause 7.1 – Benefits of Contracts
The Buyer [Britco] is entitled to the benefit of the Contracts with effect from Completion and;
(a) the Seller [APB] assigns to the Buyer [Britco] on Completion the benefit of each contract which can be assigned without consent and appoints the buyer as its agent to give notice of assignment to each counterparty to each Contract which is assigned to the Buyer under this clause 7.1(a); and
(b) if the benefit of any Contract cannot be effectively assigned to the Buyer [Britco] except by novation of that Contract or with the consent of the relevant counterparty, the Seller [APB] must from completion unless and until novation has occurred or that consent has been obtained:
(i) account to the Buyer [Britco] for any benefits received under that Contract as soon as reasonably practicable after receipt;
(ii) enter into all reasonable arrangements and do all other things reasonably requested by the Buyer [Britco] to enable the Buyer [Britco] to obtain the benefit of that Contract; and
(iii) give all assistance reasonably requested by the Buyer [Britco] to enable the Buyer [Britco] to enforce the rights of the Seller [APB] under that Contract.
Clause 7.2 - Obligations and liabilities under Contracts
With effect from Completion:
(a) the Buyer [Britco] must, to the extent that it lawfully can, perform on behalf of the Seller [APB] all obligations of the Seller [APB] and discharge all liabilities of the Seller [APB] under each Contract due to be performed or discharged after Completion.
(b) If the Buyer [Britco] cannot lawfully perform any obligation of the Seller [APB] or discharge any liability of the Seller [APB] under that Contract due to be performed or discharged following Completion then unless and until that Contract is a novated to the Buyer [Britco]:
(i) the Seller [APB] must, on request and at the expense of the Buyer [Britco] , perform that obligation or discharge that liability in accordance with the buyer's [Britco's] reasonable directions; and
(ii) the Buyer [Britco] must at its own expense do all things reasonably necessary to assist the Seller [APB] to comply with clause 7.2 (b) (i).
Clause 7.3 – Novation
The Seller [APB] and the Buyer [Britco] agreed to use their reasonable endeavours to novate:
(a) the Leases; and
(b) each Contract which is material to the business (when assessed either by the value of the Contract or by the term of the Contract), to the buyer [Britco] on or as soon as possible after Completion.
54 There is no dispute between the parties that the Original Rental Agreements could not be assigned.
Did Britco inform United of the change of ownership of the Modular Manufacturing Business? If they did, when did this occur?
55 Since the defendant has raised by way of defence that the Original Rental Agreements were novated, it bears the burden of proving that there was an intention on the part of United to novate them. Intention is crucial to show a novation: Vickery v Woods[1952] HCA 7; (1952) 85 CLR 336, 345 (Dixon J); Fightvision Pty Ltd v Onisforou [78] (Curiam). Consequently, in the context of this case, the question of whether Britco informed United of the change of ownership of the Modular Manufacturing Process assumes significance in determining whether or not United had an intention to novate the Original Rental Agreements.
56 The defendant submits that letters were sent to all its suppliers, including United, advising them of the change in ownership of the Modular Manufacturing Business known as APB Modular (the Supplier Letters).
57 During the course of the trial, at least three different Supplier Letters were tendered in evidence. Two have dates. Exhibit 26 bears the date of 'February 26th, 2013'. Exhibit 88 bears the date '5/7/2013.' A third, which was addressed to Johnson Concrete & Landscape', did not bear a date. Whilst exhibit 26 was tendered by the defendant with the consent of the plaintiff, the weight and effect of the document is very much in dispute. The plaintiff denies that it received any Supplier Letter prior to 6 February 2014.
58 The defendant ultimately conceded during the course of the trial that there was no evidence that United received a Supplier Letter prior to 6 February 2014. Nonetheless, the defendant submits that when all the objective facts are analysed, the only reasonable inference open is that by December 2013 United was aware that there had been a change of ownership of the Modular Manufacturing Business.
59 In order to properly address these issues, it is necessary to analyse the relevant emails and documents tendered in the trial, as well as to consider the evidence of a number of the witnesses called by United. The relevant documents include exhibits 26, 67, 72, 76 and 88. The relevant documents will be considered chronologically.
60 The first of the relevant documents is the Supplier Letter dated 26 February 2013 (exhibit 26). The letter clearly makes reference to an earlier letter dated 'February 12th, 2013' purported to have been sent out to APB's suppliers. It also includes:
We [Britco] are writing to inform you that as a result of this restructuring, on March 4th, 2013 all outstanding purchase orders and back orders will be re-issued by these two new entities.
61 It should be noted that the defendant does not rely upon any letter dated 12 February 2013 in these proceedings. Exhibit 26 is reproduced and appended to this judgment as Appendix 'A'. As already noted above, the defendant does not contend that this Supplier Letter came to the attention of United prior to the receipt of an email from Britco on or about 6 March 2014 (although an earlier one, dated '5/7/2013' was forwarded via an email to the plaintiff on or about 6 February 2014 - see exhibit 88, which is reproduced and appended to this judgment as Appendix 'B').
62 So far as the claim that 'as a result of this restructuring, on March 4th, 2013 all outstanding purchase orders and back orders will be re-issued by these two new entities,' there is no evidence that actually occurred on or about that date. Indeed, it was not until January 2014 that Britco ultimately refused to pay invoices from United addressed to APB (see [100] below).
63 On15 May 2013, at 11.38 am an email from the account of John Hodgkinson (Britco) was sent to the email account of Geoff Cameron (Britco). It was copied to other employees of Britco, namely Steve Morgan, Kerry Meacher and Robert Borg. The email relevantly read as follows:
Geoff,
I know that you developed a list of suppliers for a letter earlier this year advising them of the ownership change. We no [sic] to do a letter to all our suppliers given that building licenses will be available in wa [sic] and qld [sic] shortly. In order to do the letter can you please run a report to show the following:
1) All suppliers in the last 12 months ranked by $ value … we will also need mail addresses (I want to get by dollar value for procurement purposes)
Please eliminate any suppliers from whom we have bought nothing in the last 12 months
2) A separate list of all existing customers with addresses.
64 On 16 May 2013, at 7.33 pm, an email was sent from the account of Kerry Meacher to the email accounts of John Hodgkinson and Steve Morgan (all employees of Britco). The email included the following:
As discussed yesterday – please find attached a draft letter to be sent out re: current small hire agreements (forklifts, photocopiers, etc), notifying them of new Company details and requesting any trade/credit apps, etc.
I am trying to avoid the requirement to novate all of these agreements if possible – my preference is that we take over leases as is, and get them changed into APB Britco name on expiry of existing term.
My understanding is that the Commercial/Procurement teams in each state will be responsible for correlating the info, so I have left provision at the bottom of the letter to insert relevant detail of APB contract.
Mail out letters will be a state responsibility, so if you are happy with the draft, please disseminate to relevant Managers for action.
65 It should immediately be noted that, in relation to the reference in the email by Kerry Meacher that 'I am trying to avoid the requirement to novate all of these agreements if possible – my preference is that we take over leases as is, and get them changed into APB Britco name on expiry of existing term', the plaintiff does not seek to rely upon that statement to prove that the agreements were not in fact novated. Rather, the email was admitted as being relevant to the question of when and/or if Britco advised United of the change of ownership. In any event, I note what Buss JA said in Vantage Systems Pty Ltd v Priolo Corp Pty Ltd [2015] WASCA 21 [99] (Buss JA), namely that '… the search for an intention to create contractual relations is not a search for the uncommunicated subjective motives or intentions of the parties'.
66 On 1 July 2013, at 6.20 pm, an email was sent from the account of Kerry Meacher to John Hodgkinson and Steve Morgan in relation to the subject 'SUPPLIERS'. It included the following:
Gents,
Apologies for the delay, as discussed on Friday, please find attached the suggested supplier letter. I have re-drafted from Steve's initial offering to remove any request for a trade/credit app - as we agreed, we are simply going to tell them we are looking forward to trading with them and place the onus on them to instigate any new applications.
(Emphasis and underlining added)
I have also attached the excel sheet of existing suppliers, broken down into states/entities. There are currently 8 lists (Switchrooms is broken out separately per state; and I have included a 'multiples' category for Suppliers that service more than one region/business arm).
Can you please advise who is to be the nominated procurement person for each batch? I will then have the letters drafted and sent out to all suppliers. After that, it will be the responsibility of the nominated person to receive/complete any apps, deal with supplier queries, etc in the first instance.
Internally we also need to make the relevant procurement personnel aware of our actions. I would suggest an email to the procurement personnel along the lines of the following, cc'ing the commercial teams; [sic]
As a result of the business acquisition it is important that we create new accounts with all of our existing suppliers in the name of APB Britco.
A letter will shortly be sent to all of our existing APB Modular suppliers, notifying them of our new Company details.
As a result of this letter, we anticipate that a number of suppliers will require trade/credit applications to be completed.
As the procurement representative for your state it will be your responsibility to complete the applications and liaise with the suppliers regarding any queries they may have.
Please ensure that any applications you receive are completed and sent to the relevant commercial team member as expeditiously as possible.
Some suppliers may have initial queries; in brief – please advise them as follows; [sic]
- We are continuing to trade as APB Modular for the foreseeable future.
- The APB Britco account is to be set up in addition to that which already exists for APB Modular.
- That they continue to invoice to the entity to which the provided PO relates.
If you have any queries, please do not hesitate to contact Kerry Meacher for any further info.
67 On 2 July 2013, at 2.27 pm, an email was sent from John Hodgkinson to Kerry Meacher and copied to Steve Morgan in relation to the subject 'Suppliers'. That email informed the recipients of the names of the supply coordinators. Mr Hodgkinson also advised that he approved of the proposed letter prepared by Mr Meacher.
68 On 3 July 2013 at 7.10 pm and email was sent from the email account of Kerry Meacher to various employees of Britco including John Hodgkinson; Steve Morgan; Tina Silverthorne and Vanessa Linderboom under the subject of 'Supplier Accounts - APB Britco - Action Required'. It attached a Supplier Letter as well as an APB Britco Active Supplier Address List May 2013 in spreadsheet form. The list included 'United Equip Pty Ltd' (exhibit 76).
69 The email advised the recipients that:
As a result of the business acquisition it is important that we create new accounts with our existing suppliers in the name of APB Britco.
Consequently, by C.O.B. Friday 5TH July, a letter will have been sent to all of our existing APB modular suppliers, notifying them of our new Company details. (Attached is a draft of that letter FYI).
We hope that the majority of Suppliers will simply open new accounts, however, it is anticipated that a [sic] some will require trade/credit applications to be completed beforehand.
As the procurement representative for your state/business entity, your details will be populated onto the letter is preferred contact for your nominated Suppliers. It will be your responsibility to complete any applications we receive and to liaise with suppliers regarding any queries they may have.
Some suppliers may contact you with initial queries; [sic] in brief - please advise them as follows; [sic]
- We are continuing to trade as APB modular for the foreseeable future.
- The APB Britco account is to be set up in addition to that which already exists for APB modular.
- That they continued to invoice to the entity that provides the PO.
………………………………………
As it is our intention to move Pronto over to APB Britco sooner rather than later, please ensure that your nominated suppliers have either created new accounts returned our applications for zone, by the end of this month. I will touch base with you nearer the time to see how you are tracking.
………………………………………
Kerry Meacher
70 The undated 'Supplier Letter' referred to in the email at [69] above and which was attached, was addressed to 'Johnson Concrete & Landscape'. The undated Supplier Letter formed part of exhibit 76 and is reproduced and appended to this judgment as Appendix 'C'. Like exhibit 26, it too referred to an earlier letter dated 'February 12th, 2013.'
71 The plain words of Britco's internal email of 1 July 2013, together with the subsequent emails, make it clear that in early July 2013 Britco was proposing to its employees that the current status quo would be maintained unless issues were raised by their suppliers.
72 On 29 August 2014, at 1.37 pm, an email was sent from the account of Steve Morgan [email protected] to the email account of Rhett Grasso and copied to Geoff Cameron and Rudran Sanmuganathan, in relation to the subject of 'SUPPLIERS'. It attached an 'APB Britco Active Supplier Address List May 2013'. The list included United Equip Pty Ltd (see exhibit 72 which includes the same attachments as exhibit 76). It also attached what appears to be the earlier proposed supplier letter from John Hodgkinson appended to this judgement as Appendix 'C'.
73 A comparison between the Supplier Letter being exhibit 26 with the draft letters that are part of exhibits 72 and 76 respectively, reveals that they are not the same letter simply differently dated. Some of the differences between the letters include:
• a different address for APB Britco (an address in New South Wales as opposed to the Kwinana premises in Western Australia).
• The 'separate entities' are referred to as 'APB Britco Pty Ltd' and 'Black Diamond Pty Ltd' in exhibit 26, as opposed to 'APB Britco Pty Ltd' and 'Australian Portable Buildings Pty Ltd' in the documents attached to exhibits 72 and 76 respectively;
• The letters attached to exhibits 72 and 76 included: 'There is no change to the hire side of the business which will continue to trade as Australian portable buildings'. These words do not appear in the Supplier Letter that is exhibit 26 which, instead, includes the words 'all outstanding purchase orders and back orders will be re-issued by these two new entities'.
74 All of the emails and documents referred to above at [60] - [73] demonstrate that Britco clearly intended to inform its suppliers of the change of ownership. The emails and various attachments referred to above all represent internal communications within Britco. They do not of themselves and, as accepted by the defendant, could not prove that United had in fact been informed of the change of ownership.
75 There is no dispute that on 6 March 2014 Britco advised United by email (exhibit 91) that all invoices had been rejected for payment as they were in the incorrect name and that United should re-issue the invoices in the name of APB Britco Pty Ltd before they would be paid. The email also attached a copy of the 'Supplier Letter' which bore a date of 'February 26th, 2013' (exhibit 26).
76 Paul Kettle, United's National Credit Manager, in his statement (exhibit 4.1) set out the 'step by step process' that was employed by the plaintiff with respect to its incoming postal mail. In his supplementary statement (exhibit 4.2) he deposed that 'the only source of [exhibit 26] is the email dated 6 March 2014.' There is no evidence to contradict Mr Kettle.
77 Whilst the letter dated 26 February 2013 (exhibit 26) clearly expresses Britco's intention to send out letters to its various suppliers, including United, to advise them that they were trading as APB Britco, there is no evidence that this letter was actually sent to, nor received by, United prior to 6 March 2014. However, for reasons that will be discussed below, it is clear that by 9 January 2014 United were aware that the Modular Manufacturing Business was operating under a different name and that Britco was a separate entity to APB.
78 It should also be noted that whilst there is evidence that Britco took steps to notify the suppliers of the Modular Manufacturing Business that there had been a change of ownership, there is no evidence that APB did anything itself to notify the suppliers of this change. This tends to support the plaintiff's contention that on the issue of the shares, Britco became a subsidiary of APB. Ultimately, it is not necessary to determine the question of whether Britco was in fact a subsidiary of APB. However, the blurring of the line between APB and Britco is considered below.
Other communications between Britco and United
79 An analysis of the communications between United and Britco in the period after APB sold the Modular Manufacturing Business to Britco reveals that on the face of the emails and documents sent by Britco to United, it is at times difficult to distinguish between APB and Britco. That fact makes the task of determining whether Britco acted as APB's agent, or as asserted by the defendant, whether the Original Rentals Agreements were novated, more complex. Consequently, it is necessary to carefully examine the various emails, letters and other documents.
Britco's adoption of APB's email accounts and logos
80 Prior to APB's sale of the Modular Manufacturing Business to Britco, employees of APB used the logo 'apb MODULAR' on various emails and documents that were sent to United. APB's employees also used email accounts using the same logo and email accounts 'apb.com.au'.
81 Following the sale of the business on 18 January 2013 by APB to Britco, Britco continued to communicate with United under the name APB. Evidence of this includes the various emails set out at [82] - [83].
82 Emails sent by Britco from various email accounts with the address '@apb.com.au' and using the logo 'apb MODULAR' to United employees include:
• 22 January 2013 - email from Vanessa Linderboom (accounts payable) - [email protected]
• 15 February 2013 - email from Vanessa Linderboom (accounts payable) - [email protected]
• 19 February 2013 - email from Aron Nicholson, Project Manager - [email protected]
• 26 February 2013 email from Tina Silverthorne, Procurement Manager - [email protected].
(Exhibits 15, 17, 20 and 21)
83 Emails sent by Britco to United from various email accounts with the address '@apb.com.au' attaching 'Forklift Checklists' produced under the logo 'apb MODULAR,' include the following:
• 26 February 2013 - email from Claire Leatham - [email protected] attaching 'apb' checklist dated 25.2.13.
• 27 February 2013 - email from Claire Leatham - [email protected] attaching 'apb' checklist dated 27.2.13.
• 6 March 2013 - email from Claire Leatham - [email protected] attaching 'apb' checklist dated 27.2.13.
• 7 March 2013 - email from Claire Leatham - [email protected] attaching 'apb' checklist dated 7.3.13.
• 14 March 2013 - email from Claire Leatham - [email protected] attaching 'apb' checklist dated 13.3.13.
• 15 March 2013 - email from Claire Leatham - [email protected] attaching 'apb' checklist dated 13.3.13.
• 20 March 2013 - email from Claire Leatham - [email protected]
(Exhibits 25, 31, 35, 45 - 47 and 51)
84 After April 2013, although the emails sent by Claire Leatham changed in the sense that they were now sent from an account using [email protected] and the logo on the emails referred to 'apb britco', they still attached 'Forklift Checklists' which were produced under the logo 'apb MODULAR'. This continued until at least 2 July 2013 (exhibit 71).
85 Remittance Advices sent by Britco to United used the logo 'apb MODULAR.'
86 Examples include:
• 17 April 2013 (invoices from United dated 1 February 2013 - 28 February 2013)
• 4 June 2013 (invoices from United dated 1 April 2013 and 30 April 2013)
• 3 July 2013 (invoices from United dated 1 April 2013 – 31 May 2013).
(Exhibits 60, 68 and 75)
87 The first remittance advice sent by Britco to United under the logo 'apb britco' was dated 31 July 2013. This appears to be in compliance with the direction given by Mr Meacher of Britco which was set out in an email sent to various Britco employees on 3 July 2013 at 7.10 pm (see [69] above). From that time on, the remittance advices sent by Britco to United were referenced as 'apb britco'.
88 A certificate of insurance currency identifying APB Britco Pty Ltd as the insured, dated 25 June 2013 was forwarded by Britco to United via an email dated 7 August 2013.
89 In the period between March 2013 and June 2013, United continued to send to Britco, and Britco continued to accept, emails attaching invoices that were addressed to 'Australian Portable Buildings Pty Ltd'. This included invoices dated 31 January 2013, 28 February 2013 and 31 March 2013 (exhibits 45 and 48).
90 On 25 June 2013, at Britco's request, United forwarded to it the statement for May 2013 with respect to United's invoices to APB for the period between 31/3/2013 – 31/5/2013 (exhibit 70).
91 Various invoices were sent by United to Britco via email dated 3 July 2013, including invoices dated 30 June 2013 and 31 July 2013. The invoices related to the period between 1 May 2013 – 30 June 2013 (exhibit 74).
92 In the months following the sale of the Modular Manufacturing Business by APB to Britco, Britco continued to deal with issues that had arisen between United and APB prior to the sale. This goes directly to the question of whether in so doing Britco was acting as APB's agent, or whether the Original Rental Agreements had in fact been novated. Evidence of Britco dealing with issues that pre-dated the sale of the modular Manufacturing Business includes:
• in March 2013 Britco refused to pay an invoice from United to APB dated 30 November 2012 on the basis that the equipment was out of service; and
• at about this, Britco was also seeking permission from United for APB to 'off hire' equipment that was the subject of rental agreements made between United and APNB before the sale of the Modular Manufacturing Business.
(See exhibits 37, 38 and 39).
93 Whilst the logo used by Britco changed around early April 2013, Britco continued to deal with issues relating to APB (see emails dated 1 April 2013 and 5 April 2013 from Tina Silverthorne, Procurement Manager - [email protected] to United relating to 'service invoices' and a dispute that 'Manufacturing' at Britco had in relation to damaged equipment).
94 Notably, on 11 April 2013, Tina Silverthorne, Procurement Manager, sent an email to Chris McMahon and David Parker at United in response to an earlier email from Chris McMahon. The email from Tina Silverthorne advised as follows:
Thank you for your assistance with sorting out the outstanding invoice. APB are willing to pay 50% of the damage cost therefore can I have an amended invoice that I process asap from purchasing.
95 Notably, United responded by raising the requested amended invoice which was sent by email by United to Britco on 30 April 2013. That invoice, which was addressed to APB, was backdated to 31 March 2013 and related to equipment leased in the period between 19/4/2012 and 30/4/2013 (exhibit 61).
96 The nature and content of these emails, when objectively analysed, tends to suggest that Ms Silverthorne was communicating on behalf of Britco who was, at least until that time (11 April 2013), if not expressly acting as APB's agent with respect to these issues, at the very least, their agent by ostensible authority. The defendant submits that Britco was not so much acting as an agent, but rather acting pursuant to the terms of the Business Sale Agreement which required Britco to 'perform on behalf of APB all obligations that APB had under the Original Rental Agreements with United'(see cl7.2(c)) of the Business Sale Agreement). The distinction is considered further below.
97 On the plaintiff's case, the effect of the receipt of a Supplier Letter on or about 6 February 2014 was that Britco became a disclosed agent, as opposed to it previously being an undisclosed agent, acting on behalf of APB.
Britco's change of attitude to invoices in the name of APB
98 On 10 December 2013, at 8.29 am, an email was sent by Britco to United via the email account [email protected], in relation to the subject 'Company Name Change'. The email purports to have come from Athlie Du Preez, finance administrator. It reads as follows:
Dear Supplier,
Please be advised that, as of January 2013 we stopped trading in the name Australian Portable Buildings. Letters were sent out to all suppliers advising of the change.
We are completely separate entity's [sic] and should be treated as individual companies.
However, we are still receiving invoices in the name of Aus. Portable Buildings.
All invoices from the 1st November 2013 are being rejected and should be re-issued in the Name [sic] of APB Britco Pty Ltd.
- (Exhibit 83)
99 The above email makes it clear that, notwithstanding the claim that Britco had informed its suppliers of the name change, Britco continued to deal with invoices from United which had been addressed to APB in the period between January 2013 and 1 November 2013.
100 On 9 January 2014, Britco sent an email to United confirming that all invoices other than those in the name of APB Britco Pty Ltd would be rejected. The email attached Britco's company details (see exhibit 85).
101 United acknowledged Bricto's email of 9 January 2014 on the same date. United's response, sent by Jasmin Ball, credit officer, included forwarding to Britco a credit application on the basis that, because Britco was a separate entity to APB, they would need to apply for credit and that United could then issue invoices to Britco in the correct name (exhibit 86).
102 Given the above exchange of emails between Britco and United, it is an inescapable conclusion that, as at 9 January 2014, United were aware that:
• the Modular Manufacturing Business was no longer trading under the name of APB; and
• APB and Britco were separate entities.
103 On 22 January 2014, Britco sent an email to United confirming that 'all invoices [had] been rejected and should be re-issued in the name of APB Britco Pty Ltd'. The email from Britco to United also included a completed Commercial Credit Application Form in the name of APB Britco Pty Ltd (see exhibit 87).
104 On 6 February 2014, an email was sent by Tina Silverthorne at Britco to United informing them that Britco could not pay the invoices addressed to APB. The invoices were all dated either 1/12/2013 or 1/1/2014. The email from Ms Silverthorne also attached a further version of the 'Supplier Letter'. This letter (Appendix 'B', which is part of exhibit 88), is essentially the same Supplier Letter the subject of exhibits 72 and 76, save for the fact that it is addressed to 'United Equipment,' bears a date of '5/7/2013', and includes contact details for 'Peter Jacques'.
105 As noted above, on 6 March 2014 Britco again advised United (by email exhibit 91) that all invoices had been rejected for payment as they were in the incorrect name and that United should re-issue the invoices in the name of APB Britco Pty Ltd before they would be paid. The email also attached a copy of the 'Supplier Letter' (Appendix 'A', exhibit 26).
106 Whilst it was ultimately conceded by the defendant that there was no evidence that United received any 'Supplier Letter' from Britco prior to 6 February 2014, the defendant submits that by that time the plaintiff had elected to novate the Original Rental Agreements and abandoned any claim against the defendant.
Communications between United and Britco in the period between 1 April 2014 and 12 June 2014
107 As will become apparent, two separate and distinct processes involving United and Britco were underway at the same time. The one process involved a request made by Britco to United for the early termination of three of the Original Rental Agreements. The other process was the apparent commencement of the creation of new long term rental agreements between United and Britco relating to the equipment the subject of the Original Rental Agreements.
108 As already noted above, despite the fact that the Supplier Letter dated 26th February 2013 (exhibit 26) which was attached to Britco's email to United sent on 6 March 2014 (exhibit 91) asserted that 'on March 4th, 2013 all outstanding purchase orders and back orders will be re-issued by these two new entities', the fact is that Britco continued to pay invoices produced by United in the name of APB until at least early January 2014. Furthermore, United continued to produce invoices and statements in the name of APB.
109 On 1 April 2014 United sent invoices to Britco in the name of APB Britco Pty Ltd. Despite this, United still forwarded a statement to Britco dated 31/03/2014 addressed in the name of APB. I am satisfied that by this document United continued to assert its rights against APB pursuant to the earlier invoices. Consequently, it is clear that as at 1 April 2014 United had not abandoned any claim against APB.
110 Nonetheless, from 3 April 2014 onwards, United commenced a process of apparently seeking to modify or vary the Original Rental Agreements that previously existed between it and APB by revising the entity name from APB to Britco and issuing invoices to Britco in the name of APB Britco.
The process of the creation of new rental agreements
111 After becoming aware of the change of name of the business and that Britco and APB were separate entities, on 14 February 2014 the rental controller at United, Ms Alison Satterthwaite, sent an email to Mr Pemberton, United's, National Accounts' Manager. The email was also sent to Mr David Parker, United's Rental Manager on that date. The email from Ms Satterthwaite advised them that United was going to need 'all new LTR's (long term rental agreements) signed in the correct entity name' (exhibit 89). Thereafter, Mr Pemberton began the task of arranging for new rental agreements to be created between United and Britco. In the period between 3 April 2014 and 11 April 2014 Mr Pemberton of United forwarded to Britco via email new rental agreements in the name of Britco, instead of APB (see exhibit 100). Those new rental agreements were subsequently signed by Mr Meacher of Britco on or about 13 May 2013 and returned to United 14 May 2014. No-one at United ever signed the new rental agreements after they were returned to United.
112 Mr Pemberton's evidence on this point was that he was undertaking this task as a means of getting the unpaid invoices paid.
113 There is no doubt that what was put in train was at least the commencement of the process of the creation of new rental agreements between United and Britco.
114 According to Mr Pemberton however, the process of the creation of the new rental agreements in the name of Britco did not follow the ordinary procedure of review and approval that was ordinarily required by United. Mr Pemberton said that he treated the request to have all invoices addressed to Britco instead of APB as an administrative process of changing the name to allow invoices to be issued in the name of Britco so that the 'customer' would pay. The reason for this, according to Mr Pemberton, was that he was simply approaching the matter as a change of name to satisfy a customer's requirement rather than intending to actually create 'new' long term rental agreements between the parties.
115 With respect to Mr Pemberton's evidence to the effect that his only intention in creating the new rental agreements was to ensure that the invoices were paid, I note that the High Court in its unanimous decision in Toll [40] said that '[i]t is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe'. Consequently, Mr Pemberton's actions need to be viewed objectively in the context of all of the relevant conduct between United and Britco.
116 So far as these events appear to be the commencement of the process by which new rental agreements were being created between United and Britco, Mr Maxwell's evidence was that Mr Pemberton was not authorised to modify the Original Rental Agreements and that all employees at United were instructed that any change to a long term rental agreement required approval from management, which in turn involved the financing company behind the equipment.
117 In cross-examination, Mr Maxwell said that staff at United were instructed that any changes to agreements were required to go before senior staff and that only he and Mr Craig Cutbush had authority to sign off on behalf of United (ts 81 and 83).
118 According to the evidence of Mr Maxwell, unlike the creation of long term rental agreements, a change of name for invoicing purposes did not require the same level of authority as a change to a long term rental agreement.
119 I note that the evidence of Mr Pemberton and the other United witnesses was that the usual process of approval of long term rental agreements, included:
• A member of the sales team attending the site at which the equipment is required, to assess the customer's needs and to identify the appropriate equipment to satisfy the customer's needs.
• The entering of information into a software program which automatically generates a quote for the customer. The information includes the identity of the customer, the identity of the equipment, the proposed equipment specification, the length of the hire period and the frequency of usage of the equipment.
• the proposed deal was then brought to the attention of United's National Finance Manager, Paul Bransby.
• Mr Barnsby would provide feedback to the salesperson regarding whether the deal could be done or not, based upon an assessment that included considering the customer's relevant credit history.
• A quote is then prepared and provided to the customer. If accepted, then the customer is requested to sign the 'order acceptance' section at the back of the quote which is returned to United.
• United then creates a document entitled 'Build Sheet', with various details regarding the 'build' of the subject equipment. This is then checked by the sales manager for accuracy and passed on to the National Finance Manager, Paul Bransby, for review of the financial arrangements for the purchase of the equipment. The Build Sheet is also checked by United's General Manager of Sales, Trent Osborne, in relation to the operational requirements of the equipment and the price being quoted.
• Following that process, and with the approval of United's General Manager of Sales, United's National Finance Manager, Mr Bransby would approach United's financier for final approval of the proposed purchase and long term rental agreement with the customer.
(1) The penalty interest rate is the interest rate expressed as a percentage fixed by the Attorney-General from time to time by notice published in the Government Gazette.
217 Since the defendant was obliged to pay the plaintiff the sum of $350,551.45 which fell due on 18 June 2014, any interest should be calculated on that amount by reference to the scales set out in the relevant Government Gazettes.
218 I will also hear from the parties in relation to the question of costs, noting that condition 6(b)(iii) of each of the Original Rental Agreements provides:
6. If the Renter breaches an essential term of this Agreement, or an Event of Default under clause 5 occurs, then such breach or default will constitute a repudiation by the Renter and:
b. if the Owner so elects, the Renter is obliged immediately to:
(iii) pay to the Owner all moneys then payable to the Owner under this Agreement, including all costs and expenses the Owner incurs in or arising out of the Renter's default (including and without limitation, any costs incurred for the preparation and service of any notice of default or notice of termination and any solicitors' fees on a solicitor-client basis); …
APPENDIX 'B'
APPENDIX 'C'
2
32
1