Whittle v Parnell Mogas Pty Ltd - [2006] SASC 129

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
WHITTLE & ANOR v PARNELL MOGAS P/L
[2006] SASC 129
Judgment of The Full Court
(The Honourable Justice Debelle, The Honourable Justice Vanstone and The Honourable Justice Layton)
9 May 2006
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - OFFER AND ACCEPTANCE - MATTERS NOT GIVING RISE TO BINDING CONTRACT - STATEMENTS OF INTENTION, NEGOTIATIONS AND INVITATIONS TO TREAT
ESTOPPEL - ESTOPPEL IN PAIS - EQUITABLE ESTOPPEL - PROMISSORY ESTOPPEL
Lengthy negotiations over lease of appellants' property - letter of offer from respondent stipulating conditions - whether conditions precedent to formation of contract - whether conditions waived or fulfilled - whether binding contract formed - whether conduct of respondent in negotiations unconscionably induced an assumption in the appellants upon which they relied to their detriment - whether respondent estopped from denying existence of binding contract.
Attorney-General (Hong Kong) v Humphreys Estate (Queen's Gardens) Ltd [1987] AC 114; Brian Gardner Motors Pty Ltd v Bembridge [2000] WASCA 400; Commonweatlh v Verwayen (1990) 170 CLR 394; Finance & Guarantee Co Ltd v FCT (1970) 44 ALJR 368; Fraser Henleins Pty Ltd v Cody (1945) 70 CLR 100; Guarnaccia v Rocla Concrete Pipes Ltd [1976] VR 302; Jones v Dunkel (1959) 101 CLR 298; Masters v Cameron (1954) 91 CLR 353; Meehan v Jones (1982) 149 CLR 571; Perri v Coolangatta (1982) 149 CLR 537; Pomeroy v Rural Hotels Pty Ltd (1973) 5 SASR 191; R v Bonython (1984) 38 SASR 45; Re Devala Provident Gold Mining Co Ltd (1883) 22 Ch D 593; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, considered.

WHITTLE & ANOR v PARNELL MOGAS P/L
[2006] SASC 129
Full Court: Debelle, Vanstone and Layton JJ

DEBELLE J. There are two issues in this appeal. The first is whether the parties formed a contract and, if so, what were the terms of that contract. The second is whether the defendant is estopped from denying the existence of a binding contract which required the defendant to take a lease of the plaintiffs’ service station complex at Port Augusta. If the plaintiffs succeed on either ground, it will be necessary to remit the action to the District Court for an assessment of the damages suffered by the plaintiffs.
The facts are set out in the reasons of Vanstone J. I will not repeat them or add to them except to the extent necessary for these reasons.
Was a Contract Formed?
For the reasons which follow, a contract was formed when the plaintiffs received the defendant’s letter dated 9 June 2000. The terms of the contract are contained in the defendant’s letters dated 16 May 2000 and 9 June 2000.
Mr Whittle was plainly making all of the arrangements on behalf of himself and his wife. He had the authority to bind both himself and his wife. The evidence also shows that Mr Hicks had authority to bind the defendant.
The letter dated…

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: [2006] SASC 129
Decision Date: 9 May 2006

CaseChat Overview and Summary

In the matter of Whittle v Parnell Mogas Pty Ltd, the appellants, Mr and Mrs Albert Whittle, pursued damages in relation to a lease dispute against the respondents, Parnell Mogas Pty Ltd. The Whittles argued that a binding contract had been formed or, alternatively, that the respondents were estopped from denying such a contract. The District Court dismissed the Whittles’ claim, a decision which they sought to overturn. The Court of Appeal held that the respondents were estopped from denying the existence of a binding contract.

The central legal issue in this case was whether a binding contract was formed between the Whittles and the respondents, and if not, whether the respondents were estopped from denying such a contract. The respondents argued that their offer was conditional and did not constitute a binding contract, while the Whittles contended that either a contract was formed or the respondents were estopped from denying one. The Court of Appeal needed to determine whether the negotiations between the parties gave rise to a binding contract and, if not, whether promissory estoppel applied.

The Court of Appeal found that the respondents’ offer contained conditions precedent that had not been fulfilled, and thus no binding contract was formed. However, the Court held that the respondents were estopped from denying the existence of a binding contract due to the Whittles' reliance on the respondents' conduct during negotiations. The Whittles had acted on the assumption that a lease would be granted, leading them to incur expenses and forgo other opportunities. The Court of Appeal held that it would be unconscionable for the respondents to deny the existence of a binding contract under these circumstances.

The Court of Appeal allowed the appeal, set aside the District Court's order, and remitted the matter for the assessment of damages. The Whittles were entitled to recover the losses they incurred due to the respondents' conduct in denying the existence of a binding contract.

Orders

Orders of the court

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Background

Background to the litigation

In the District Court the plaintiffs, now the appellants, sought damages arising from a dispute over a lease. The plaintiffs claimed that they should succeed because a contract had been struck. In the alternative, they claimed that the defendant was estopped, by its conduct, from denying a contract. The trial judge dismissed the claim. The plaintiffs claim the judge’s findings were not open to him.Background The plaintiffs, Mr and Mrs Albert Whittle, leased premises located on Main North Road, Port Augusta, to Caltex (Australia) Pty Limited. The premises were operated by a sub-lessee, Mr David Robinson. At the end of 1999 that lease expired and Caltex remained in occupation on a monthly tenancy. By January 2000 Mr Whittle had formulated a plan to upgrade the site. Dates to be mentioned are in 2000. Mr Whittle wished to secure a long term lessee prior to embarking on such work. In April he met with Mr Robert Hicks of Parnell Mogas Pty Ltd, the defendant on appeal, both at Port Lincoln and at the premises. Then on 16 May, Parnell Mogas wrote to the plaintiffs offering to lease the premises upon certain conditions. How the conditions should be characterised was a matter of dispute at trial, and on appeal. Therefore, I set out the relevant sections of the letter: Dear [plaintiffs],I am writing to propose an offer from Parnell Mogas Pty Ltd to Lease the Service Station at Highway 1, Port Augusta, known as “Andy’s Truck Stop”.…The Parnell Mogas offer, which is conditional upon the termination of the existing monthly tenancy with Caltex, and Caltex not exercising its rights under clause 7 of the agreement of Lease, is as follows:…Improvements:Parnell Mogas will enter the lease subject to the following improvements being completed:1) The realignment of the eastern access, site drainage, and sealing of the forecourt and driveways.2) The toilets are upgraded to meet all regulations, including wheel chair access.3) The proposed integration of the newly installed office into the main building be completed to include additional restaurant seating for 20 people, and provide for approximately 60 square metre sales room, immediately adjacent to the console.…Underground Fuel Tanks:The existing underground fuel tanks are to be provided for the use of Parnell Mogas.…AT & MJ Whittle are to provide an environmental site assessment prior to the execution of the proposed lease.…I trust you will find this offer attractive.Yours faithfully,R G HicksMarketing Manager On 1 June Mr Whittle and Mr Hicks met again at Port Lincoln. Mr Whittle gave uncontested evidence that he informed Mr Hicks that the development would not proceed without a long term lease. By facsimile letter of 9 June, Mr Hicks informed the plaintiffs that the defendant accepted 1 August as the commencement date of the lease subject to the receipt of lease documentation and execution prior to 1 July. Mr Hicks also advised that while the defendant was eager to complete execution, that was dependent upon the termination of the existing agreement between the plaintiffs and Caltex. The tenancy was terminated, as required.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

DEBELLE J VANSTONE J LAYTON J

For these reasons, the defendant is estopped from denying the existence of a binding contract that it would take a lease of the plaintiffs’ service station complex at Port Augusta from 7 August 2000.Conclusion I would therefore allow the appeal. The order of the judge of the District Court should be set aside and in lieu thereof there should be judgment for the plaintiffs. The action should be remitted to the District Court for assessment of the damages incurred by the plaintiffs. Introduction In the District Court the plaintiffs, now the appellants, sought damages arising from a dispute over a lease. The plaintiffs claimed that they should succeed because a contract had been struck. In the alternative, they claimed that the defendant was estopped, by its conduct, from denying a contract. The trial judge dismissed the claim. The plaintiffs claim the judge’s findings were not open to him.Background The plaintiffs, Mr and Mrs Albert Whittle, leased premises located on Main North Road, Port Augusta, to Caltex (Australia) Pty Limited. The premises were operated by a sub-lessee, Mr David Robinson. At the end of 1999 that lease expired and Caltex remained in occupation on a monthly tenancy. By January 2000 Mr Whittle had formulated a plan to upgrade the site. Dates to be mentioned are in 2000. Mr Whittle wished to secure a long term lessee prior to embarking on such work. In April he met with Mr Robert Hicks of Parnell Mogas Pty Ltd, the defendant on appeal, both at Port Lincoln and at the premises. Then on 16 May, Parnell Mogas wrote to the plaintiffs offering to lease the premises upon certain conditions. How the conditions should be characterised was a matter of dispute at trial, and on appeal. Therefore, I set out the relevant sections of the letter: Dear [plaintiffs],I am writing to propose an offer from Parnell Mogas Pty Ltd to Lease the Service Station at Highway 1, Port Augusta, known as “Andy’s Truck Stop”.…The Parnell Mogas offer, which is conditional upon the termination of the existing monthly tenancy with Caltex, and Caltex not exercising its rights under clause 7 of the agreement of Lease, is as follows:…Improvements:Parnell Mogas will enter the lease subject to the following improvements being completed:1) The realignment of the eastern access, site drainage, and sealing of the forecourt and driveways.2) The toilets are upgraded to meet all regulations, including wheel chair access.3) The proposed integration of the newly installed office into the main building be completed to include additional restaurant seating for 20 people, and provide for approximately 60 square metre sales room, immediately adjacent to the console.…Underground Fuel Tanks:The existing underground fuel tanks are to be provided for the use of Parnell Mogas.…AT & MJ Whittle are to provide an environmental site assessment prior to the execution of the proposed lease.…I trust you will find this offer attractive.Yours faithfully,R G HicksMarketing Manager

Ratio Decidendi

Legal Principle Established

Established by: DEBELLE J, VANSTONE J, LAYTON J

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