Liebherr Export AG v Ellison Trading Limited
[2004] NZCA 109
•29 June 2004
IN THE COURT OF APPEAL OF NEW ZEALAND
CA174/03
BETWEENLIEBHERR EXPORT - AG
First AppellantANDLIEBHERR AUSTRALIA PTY LIMITED
Second Appellant
ANDELLISON TRADING LIMITED
Respondent
Hearing:20 May 2004
Coram:Glazebrook J
Chisholm J
Gendall JAppearances: J G Miles QC and L M M Riddiford for Appellants
A L Hassall QC for Respondent
Judgment:29 June 2004
JUDGMENT OF THE COURT DELIVERED BY GLAZEBROOK J
Introduction
[1] In 1977 Ellison Trading Ltd was granted the exclusive right to import and sell the Liebherr group’s machinery in New Zealand. This arrangement came to an end in 1993 as a result of reorganisation within the Liebherr group which saw Liebherr Australia take over responsibility for the New Zealand market. On 30 November 1993, Mr Ellison of Ellison Trading, Mr Michaelis of Liebherr Export and Mr Kloverkorn, the Managing Director of Liebherr Australia, met at an Auckland restaurant to discuss transitional arrangements. During dinner, the question of what was to happen to the large stock of spare parts held by Ellison Trading was discussed.
[2] Ellison Trading successfully contended in the High Court that this discussion resulted in a binding contract for the purchase of these spare parts by Liebherr Australia at a fair and reasonable price and that Liebherr Export had agreed to purchase the parts if Liebherr Australia failed to do so.
[3] Liebherr Export and Liebherr Australia say that this finding was not open to the Judge on the evidence, or was wrong. They contend that the Judge failed to take sufficient account of the surrounding circumstances and the relevant documentary evidence. They also contend that the alleged agreement was too uncertain to be enforced and that the Judge was incorrect to hold (as they contend he did) that the parties had later agreed on the price to be paid for the spare parts.
Background facts
[4] As indicated above, from 1977 until 1993, Ellison Trading had the exclusive right to import and sell in New Zealand heavy earth moving machinery manufactured by the Liebherr group. Liebherr Export was responsible for administering the dealership. In 1993 the marketing of the Liebherr machinery in New Zealand became the responsibility of Liebherr Australia, a member of the group which had operated in Australia since 1983.
[5] On 30 November 1993 at the beginning of the dinner meeting referred to above, Mr Kloverkorn made it clear that Ellison Trading would not have a continuing role in New Zealand as he had already taken steps to set up a New Zealand operation. Both Mr Michaelis and Mr Ellison were shocked as they had assumed that there would be an ongoing role for Ellison Trading in the New Zealand Liebherr operation.
[6] Talk, however, turned to transitional arrangements, and in particular the stock of spare Liebherr parts worth some $800,000 that were held by Ellison Trading. Ellison Trading had been required under the dealership agreement to carry sufficient spare parts to meet the needs of users of Liebherr machines in New Zealand but the Ellison Trading dealership agreement, unlike the more recent Liebherr agreements, made no provision for repurchase of those parts on termination.
[7] Mr Ellison’s evidence was that, at the dinner, Mr Michaelis initially said that Liebherr Export would buy the parts. Mr Michaelis had, however, then said that it made more sense for Liebherr Australia to take over the spare parts inventory as it had been built up to cover machines operating in New Zealand that would become the responsibility of Liebherr Australia. Mr Ellison said that Mr Kloverkorn had then, under pressure from Mr Michaelis, agreed to buy the parts, provided they were in their original good condition. It was agreed that a fair and reasonable price would be paid. Mr Ellison said that he was asked to prepare a list of the parts in stock and suggested prices and send it to Liebherr Australia.
[8] Mr Ellison’s evidence was that Mr Michaelis was so upset at Mr Kloverkorn’s decision to exclude Ellison Trading from the New Zealand market that he cancelled his plans to stay in Auckland with Mr Kloverkorn and travelled down that evening to Hamilton with Mr Ellison. Mr Ellison said that, on the trip down, Mr Michaelis told him that, if Liebherr Australia did not honour its agreement to buy the parts then, as he had initially indicated, Liebherr Export would. Mr Ellison, his wife and his son all said in evidence that Mr Michaelis had expressed satisfaction to each of them the next day that at least an agreement had been reached for the purchase of the spare parts.
[9] Mr Michaelis, on the other hand, said that no agreement had been reached at the meeting. He acknowledged that he was surprised at Mr Kloverkorn’s decision to exclude Ellison Trading and disappointed that he had not been informed of it in advance. He also accepted that there had been a discussion about the spare parts but he said that Mr Kloverkorn went no further than saying that he would consider purchasing the spare parts. He said that neither he nor Mr Kloverkorn made any commitment then or subsequently with regard to the spare parts.
[10] Mr Kloverkorn said that he attended the dinner meeting at Mr Michaelis’ request. He agreed that Mr Ellison had raised the subject of the spare parts but said that the discussion was brief. His evidence was that he had told Mr Ellison that he would consider buying the parts but that he made no commitment. Price was not mentioned.
[11] A list of stock and suggested prices was prepared and sent by Mrs Ellison to Liebherr Australia’s office in New Zealand early in March 1994. Soon afterwards Mr Kloverkorn sent a memorandum to staff (including Mr Earl Mead at the Liebherr New Zealand office) saying that Liebherr Australia would consider the repurchase of the original Liebherr parts from Ellison Trading under certain conditions. These conditions became the basis of a proposal made in a letter written soon afterwards by Mr Kloverkorn to Ellison Trading. This proposal included requirements that the parts must be for machines still operating in New Zealand, that they must be factory new, complete, not damaged and that they must have been purchased from Liebherr. A number of items were excluded from the purchase, being wear and tear parts, hydraulic hoses, parts worth less than NZ$100 each and items older than three years. The purchase price suggested by Mr Kloverkorn was the cost to Ellison Trading less a 15% restocking charge.
[12] Mrs Ellison replied on 25 March 1994 saying that the price should be based on the 1993 Liebherr price list and that all Liebherr items in the Ellison Trading stock “must be included in repurchase”. She specifically mentioned that new Liebherr teeth cutting edges, Liebherr parts worth less than $100 and Liebherr hoses “must be included in repurchase”.
[13] There was further correspondence over the next two months and Mr Kloverkorn relaxed his position somewhat. He agreed on the 1993 list price and the inclusion of a number of the parts that he had originally excluded. The modified terms appear to have arisen after an instruction had been received from the Liebherr group offshore to be more generous. Liebherr Australia’s letter of 7 June 1994 stipulated that the transaction must be finalised before 7 July or the offer would become null and void. The deadline passed without a reply, apparently because of personal difficulties being experienced by the Ellison family. Despite requests, Mr Kloverkorn and the Liebherr group refused to resume negotiations. Eventually these proceedings were issued.
High Court judgment
[14] The hearing in the High Court was on liability only. As indicated, by his judgment of 15 August 2003, Rodney Hansen J found in favour of Ellison Trading. After setting out the evidence of the meeting on 30 November and subsequent events, the Judge said that he accepted the evidence of Mr Ellison as to what had happened at the dinner and that, where accounts of what happened afterwards differed, generally he preferred the evidence of the Ellison Trading witnesses. He said that Mr Ellison had impressed him as a truthful and careful witness with an invariably clear and detailed recollection of events. The Judge considered that this could well be a product of the importance of the events to Mr Ellison, given that the financial survival of Ellison Trading was at stake. The Judge said that the significance of the meeting to Messrs Michaelis and Kloverkorn was minor by comparison. In his view, their evidence of what took place was less a matter of independent recollection and more a matter of what they believed was likely to have occurred.
[15] The Judge also indicated that he had no doubt that the long and amicable business and personal relationship between Mr Michaelis and Mr Ellison had left Mr Michaelis with a strong sense of obligation to do the right thing. Mr Michaelis had been shocked by the unheralded announcement that Ellison Trading would have no future with the Liebherr group. The Judge also considered that Mr Michaelis would have recognised the crippling financial burden that would be imposed on Ellison Trading if the spare parts issue was not resolved. The Judge found that Mr Michaelis would have seen the purchase of the stock by Liebherr Australia as providing a fair and sensible solution and said that he believed that Mr Michaelis exerted considerable pressure on Mr Kloverkorn to come to terms.
[16] With regard to Mr Kloverkorn’s evidence that he would never have agreed to buy goods he had not seen, which were of an unknown value and at an unknown price, the Judge remarked that he did not doubt that this was Mr Kloverkorn’s normal practice. He noted, however, that this was not a normal situation and Mr Kloverkorn had come under pressure to make a commitment. In addition, Mr Kloverkorn knew that the Ellison Trading stock had been built up specifically for the New Zealand market and that he would be substantially protected by conditions as to quality and price. The Judge concluded that he did not think that Mr Kloverkorn’s normal practice was a reliable guide to what had actually occurred.
[17] The Judge said that evidence of subsequent events was relied on by both sides. For Ellison Trading he had been pointed to the statements made by Mr Michaelis to members of the Ellison family to the effect that an agreement had been reached. The Judge considered that this was such a major issue for Ellison Trading that it would have been inconceivable that the Ellison family would have left it alone if Mr Ellison and Mr Michaelis had not come away from the meeting believing it to have been resolved.
[18] The Judge also relied on the evidence of Mr Earl Mead, who had been appointed by Mr Kloverkorn as the first manager of Liebherr New Zealand’s operations. Mr Mead testified that Mr Kloverkorn had told him agreement had been reached for Liebherr Australia to purchase Liebherr’s spare parts from Ellison Trading but that the terms of the agreement had not been disclosed to him. Mr Kloverkorn denied this but said that, at a meeting on 1 December 1993, he had mentioned to Mr Mead that Liebherr Australia would consider purchasing spare parts from Ellison Trading. The Judge preferred Mr Mead’s account of what had been said, on the basis of his being an independent witness and also on the basis that Mr Mead had been able to recall conversations with Mr Kloverkorn on other topics which Mr Kloverkorn could not recall but which he acknowledged could have taken place.
[19] The Judge also referred to a memorandum that was written by Mr Ellison at the conclusion of Mr Michaelis’ visit. This was a memorandum to Mr Michaelis outlining what Mr Ellison called “our major concerns regarding the transition period of the Liebherr dealership in New Zealand”. The fifth and final point was as follows:
Finally we request your strongest efforts in negotiating the sale of our existing Liebherr spare parts to Liebherr Australia as agreed by Mr Kloverkorn during our Auckland meeting.
[20] Each side had relied on these words as supporting its position. Ellison Trading had pointed to the reference to Mr Kloverkorn having agreed. The Liebherr companies argued that the words “negotiating the sale” were inconsistent with an agreement having been reached. The Judge held that the memorandum reflected Mr Ellison’s belief that Mr Kloverkorn had agreed to buy the parts but also his anxiety that Mr Michaelis’ support might be needed to bring the agreement to fruition. Relations between Ellison Trading and Liebherr Australia had been distant and, from the Ellisons’ point of view, strained during Mr Kloverkorn’s management of Liebherr Australia. The Judge considered that Mr Ellison would have known that Mr Kloverkorn was a reluctant purchaser who had no particular sense of obligation to Ellison Trading. In his view, it was understandable in those circumstances that Mr Ellison should face any negotiation to implement the agreement with apprehension.
[21] The Judge had also been referred to the terms of the correspondence which followed the meeting and, in particular, Mr Kloverkorn’s memorandum of March 1994 and the letter which followed in which Mr Kloverkorn described the terms suggested as an offer. The Judge noted that neither this letter, nor the correspondence that followed, ever referred to an agreement having been reached or to the terms which Ellison Trading maintained were agreed at the meeting. The Judge considered, however, that the terminology adopted by the parties in oral and written communications must be treated with caution and that it was not determinative, or even a reliable guide, to the resolution of legal issues.
[22] The Judge acknowledged that the correspondence continued to use the language of negotiation. He considered, however, that it plainly proceeded from the discussion which had occurred at the dinner meeting of 30 November and that, therefore, the omission to refer to the agreement was of no real significance. He said that there was nothing in the correspondence itself which pointed clearly to it being a negotiation which had begun afresh rather than being an attempt to implement the terms of an existing agreement. Later correspondence was, however, in his view, consistent with the latter as, after negotiations had broken down, correspondence from from Ellison Trading and their solicitors asserted the agreement that had allegedly been reached at the meeting.
[23] The Judge concluded that much of the evidence of later conduct was equivocal but that much of it was strongly corroborative of Mr Ellison’s account of the meeting. None of it was critically inconsistent with what Mr Ellison had said. Further the Judge said that the parties’ subsequent conduct confirmed in his view that Mr Ellison’s account of the meeting was to be preferred.
[24] The Judge therefore found that, at the 30 November meeting, the three men had concluded a bargain which they intended to be binding and which contained agreement on essential terms. They had, in his view, agreed on the identity of the goods and the price to be paid. The Judge found that the goods had to meet two criteria. They had to have been bought from Liebherr and they had to be in the condition they were in when they were bought – in original or as new condition. The Judge recorded Mr Ellison’s evidence that the price to be paid for the goods was a “fair and reasonable” one. The Judge commented that, in the circumstances, it was not surprising that a formula of that nature had been adopted.
[25] The Judge found that the agreement had been breached by the unilateral termination of negotiations over implementation of the agreement by Liebherr Australia and a refusal of either Liebherr company subsequently to take any steps to give effect to it.
[26] The Judge then went on to deal with the argument that the agreement was not certain enough to be enforced. He noted that it was established that an agreement for sale at a fair valuation or a fair and reasonable price will not fail if there is an intention to reach a concluded bargain and the value or price can be determined, if necessary by arbitration or the court. He referred in this regard to the case of Money v Ven-Lu-Ree Ltd [1988] 2 NZLR 414 (CA), a case confirmed by the Privy Council in Money v Ven-Lu-Ree Ltd [1989] 3 NZLR 129. In this case, he held that there was sufficient certainty as to the terms of the contract.
Appellants’ submissions
[27] Mr Miles QC, for the appellants, submitted that no binding agreement was reached at the meeting on 30 November 1993 with Liebherr Australia because the documentary evidence and Mr Mead’s evidence is inconsistent with that finding. In addition, he submitted that the evidence of Mrs Ellison and Mr Ellison Junior as to what Mr Michaelis said to them after the dinner cannot be relied on to support an agreement with Liebherr Australia and that, standing back, the inherent uncommerciality of the alleged agreement militates against a finding that there was a binding agreement.
[28] Mr Miles also submitted that there was no evidence to support a finding that Liebherr Export bound itself to the performance of the agreement by Liebherr Australia. In any event, he submitted, the alleged agreement with Liebherr Australia was too uncertain to be enforced because “fair and reasonable” was too uncertain as a formula for price, there was no pricing formula or mechanism for agreeing price and the nature of the parts was too uncertain.
[29] Mr Miles also submitted that the Judge had found that the parties had, subsequent to the meeting of 30 November, reached an agreement as to the price for the purchase of the spare parts. Such an agreement had never been pleaded by Ellison Trading and there was no evidence that it had been reached. The Judge’s conclusion that it had, in Mr Miles’ submission, throws doubt over the whole of the Judge’s decision. This alone should be sufficient for the case to be sent back to another Judge for rehearing.
[30] In their written submissions, the appellants also submitted that the Judge made no finding as to the price that had been agreed. That was not pursued in the oral submissions. We are not surprised. The Judge recorded Mr Ellison’s evidence on that matter and said that he accepted Mr Ellison’s evidence as to what had transpired at the meeting.
Respondent’s submissions
[31] On behalf of Ellison Trading, Mr Hassall QC submitted that the Judge had made findings as to the credibility of various witnesses and it would only be in an exceptional case, where there was other controvertible evidence or where the findings of the Judge were patently improbable, that an appellate court would interfere. In this regard, the appellants, in his submission, rely on two factors: post contractual correspondence and the lack of commerciality.
[32] Mr Hassall submitted that the correspondence between the parties was entirely consistent with an agreement having been made as a result of Mr Michaelis’ urging and then Mr Kloverkorn subsequently attempting to resile from it. As regards the alleged lack of commercialty, Mr Hassall pointed to the fact that the spare parts were for New Zealand machines and Liebherr Australia was taking over the New Zealand market. There were also conditions in the agreement that would protect Liebherr Australia. Worn parts would be excluded by the condition that the parts had to be as new and, in the unlikely event that parts were obsolete but still in as new condition, the price would reflect that fact.
[33] Mr Hassall further submitted that there was evidence that Liebherr Export had agreed to guarantee the performance of Liebherr Australia and that the Judge’s finding in that regard was, therefore, open on the evidence.
[34] On the question of uncertainty, Mr Hassall submitted that the identity of the goods was clear and, on the authorities, a price described in terms of being fair and reasonable qualified as being sufficiently certain. In addition, there were clear market indicators with regard to price. Mr Hassall also pointed to the Sale of Goods Act 1908 where similar wording is used and the fact that this wording was carried through to the Consumer Guarantees Act 1993.
[35] With regard to the alleged second agreement, Mr Hassall acknowledged that the Judge should have said that the price had been ultimately agreed in respect of some of the parts but submitted that this had no effect on the result of the case.
Finding as to second agreement
[36] We deal first with the alleged finding as to the second agreement regarding price. It is worth setting out in full the particular paragraphs from the judgment that are complained of:
[37] Mr Ellison said that the price to be paid for the goods was a fair and reasonable one. In the circumstances, it is not surprising that a formula of this nature should have been adopted. The only other possibility was a common pricing formula such as was ultimately agreed. It is understandable that the parties should not attempt to settle on such a formula when each was focussing on the issue for the first time. [Emphasis added]
[38] It is well established that an agreement for sale at a fair valuation or a fair and reasonable price will not fail if there is an intention to reach a concluded bargain and the value or price can be determined, if necessary, by arbitration or the Court: see, for example, Sudbrook Trading Estate Limited v Eggleton [1983] 1 AC 444 (HL), Money v Ven-Lu-Ree [1988] 2 NZLR 414 (CA) affirmed by the Privy Council on appeal in Money v Ven-Lu-Ree Limited [1989] 3 NZLR 129. It is sufficient that the parties have provided a workable formula or objective standard or a machinery such as arbitration which can be given effect by the Court if agreement is not reached or the designated machinery breaks down: Fletcher Challenge v Electricity Corporation (supra) at para 62. (It is to be noted that s 10(2) of the Sale of Goods Act 1908 provides that where, in a sale of goods, price is not agreed or determined by a course of dealing, the buyer must pay a reasonable price. Mr Hassall submitted this provision would apply if I did not find the express term relied on).
[39] In this case, the parties were in fact able to reach agreement on a fair and reasonable price. Implementation of the agreement foundered on the failure to agree on the goods to be bought. Mr Kloverkorn excluded certain categories because of age, possible obsolescence and the administrative cost of processing low value parts. I observe that it is arguable that all of these factors could have been reflected in the price of the goods. The parties chose to adopt a uniform pricing formula. They could just as well have chosen a differential pricing structure which recognised that some categories of goods were of lesser value. With the benefit of hindsight, such an approach might have enabled the impasse to be broken. It may still assist the parties to avoid a further hearing. [Emphasis added]
[37] In context, we consider that the Judge’s remarks that we have highlighted in paras [37] and [39] above were directed at the argument relating to lack of certainty in the contractual terms, which the Judge deals with in para [38]. The Judge pointed to the fact that there had been agreement as to the 1993 price list merely to rebut the argument that the price could not be objectively determined.
[38] In addition, the Judge specifically referred to the fact that there had been no agreement on the goods to be purchased and said that agreement on the goods would likely have been reached had a differential pricing structure been agreed. He clearly anticipated that such a differential pricing structure could yet be agreed and strongly suggested that, if it were not, it would likely be imposed at any hearing on quantum. This shows, in our view, that he did not intend to suggest that a uniform price had been agreed for all of the spare parts that were allegedly subject to the agreement.
Finding as to 30 November agreement
[39] Liebherr Export and Liebherr Australia are in this ground attempting to overturn the Judge’s findings of fact. As pointed out by Gault J in Nomoi Holdings Ltd & Anor v Elders Pastoral Holdings Ltd & Anor CA79/00, 17 July 2001 at paras [3]-[5], it is impossible to define with any precision all the circumstances in which it will be appropriate for an appellate court to review findings of fact. Gault J referred (at para [3]) to the “instructive judgment” of Kirby J in State Rail Authority of New South Wales v Earthline Construction Pty Ltd (In Liq) (1999) 160 ALR 588, 608 and what he called the “interesting comparison” that judgment presents with the separate judgment of Thomas J in Rae v International Insurance Brokers Ltd [1998] 3 NZLR 190, 198.
[40] He went on (in para [4]) to say that appeals to this Court are by way of rehearing and thus that the Court has the obligation to come to its own conclusion. He said that plainly appeals on questions of fact may be brought but this does not mean that an appeal is simply an opportunity for a second run at trial. Gault J then said (in para [5]) that the advantages enjoyed by trial judges, who see and hear witnesses, will be recognised and their findings of primary fact based on the assessment of the oral evidence given before them will normally be accepted, given the difficulty in making findings of fact and credibility from written transcripts of evidence. He accepted, however, that it may be demonstrated in particular circumstances that such a finding is wrong as where, for example, it is inconsistent with other incontrovertible evidence. Similarly, he noted that, where evidence is in written form or where the real issue is in the area of inferences from established facts, an appellate court has less need to defer to the views of the trial judge.
[41] In this case there was extensive oral evidence. The Judge’s conclusions were largely based on his findings as to the relative reliability of the various witnesses. The Judge gave cogent reasons, based on the situation of the witnesses and the surrounding circumstances, as to why he had taken the view he did of the oral evidence. Mr Miles QC submitted in this regard that Mr Ellison, because the matter was so important to him, may have convinced himself that there had been an agreement at the dinner and thus that the Judge’s assessment of Mr Ellison’s reliability may have been influenced by the confidence with which he expressed his view of what had occurred. Merely raising a possibility such as this is a long way from showing the Judge was wrong to take the view he did. We did not hear the evidence and we must take into account the advantage enjoyed by the Judge who did.
[42] The appellants also, however, claimed that the documentary evidence does not support the Judge’s finding that a binding agreement had been reached. Mr Miles submitted that, because the terms of any oral agreement are inherently uncertain, significant weight should be placed on the contemporary documentary evidence, especially given the large amount of time that had elapsed since the dinner. Mr Miles relied first on the file note which was handed to Mr Michaelis by Mr Ellison at the end of Mr Michaelis’ visit to Hamilton and submitted, as had been submitted before Rodney Hansen J, that this file note shows that there was to be a continuing negotiation in respect of the sale and that no agreement had been concluded at the dinner. Mr Miles also submitted that, despite ample opportunity, at no time in the subsequent correspondence did Ellison Trading record the terms of the alleged oral agreement in writing until it issued proceedings some six years after the dinner at which the agreement was allegedly reached. Mr Kloverkorn’s correspondence was also said to be clearly only consistent with a negotiation and not a concluded agreement.
[43] The Judge has clearly considered the appellants’ submissions with regard to the file note and rejected them. He considered that the file note, with its reference to Mr Kloverkorn having agreed to purchase the spare parts, supported Ellison Trading’s position that there had been an agreement. The Judge has also clearly considered the subsequent correspondence. Any negotiation in that correspondence, in the Judge’s view, was to set the fair and reasonable price that had been agreed at the dinner. Thus it was consistent with a negotiation for the implementation of an agreement that had already been reached.
[44] The view the Judge took of the file note and the subsequent correspondence was a view open to him. The appellants have not shown he was wrong in his conclusions. We also note that the documentary evidence that is particularly relied upon by the appellants was written some four months after the alleged agreement. In our view, the Judge was entitled to concentrate more on the evidence of what occurred straight after the meeting to test his findings as to the reliability of the witnesses. We also remark that, although the correspondence from Ellison Trading may not have specifically asserted that there was an existing agreement, it does use the language of compulsion. We refer to the letter quoted above from Mrs Ellison which says that items “must be included in repurchase”.
[45] Mr Miles also submitted that it was not possible to rely on the evidence of Mr Mead as supporting the fact of an agreement. Although Mr Mead had stated in his brief of evidence that Mr Kloverkorn had told him that an agreement had been reached, Mr Miles submitted that Mr Mead had conceded under cross examination that it was not an agreement to purchase all the spare parts and that the price had not been agreed to his knowledge.
[46] Mr Mead did say under cross examination that it was not an agreement to purchase all the spare parts but we note that Mr Ellison has never contended that it was. The agreement was to purchase only those parts purchased from Liebherr and in their original condition. In any event, Mr Mead’s evidence was that he had only been told of the fact of the agreement and not its terms. Any concessions Mr Mead made as to the contents of that agreement must be seen in that light and cannot diminish the value of his evidence that Mr Kloverkorn had told him that agreement had been reached. We consider, therefore, that the Judge was entitled to rely on Mr Mead’s evidence. He was also entitled to consider that evidence important, on the basis that Mr Mead was an independent witness and that it was a statement made by Mr Kloverkorn straight after the dinner meeting rather than some months later.
[47] Mr Miles also submitted that the Judge should not have relied on the evidence of the Ellisons that Mr Michaelis had expressed his satisfaction that agreement had been reached for the purchase of the spare parts. It was submitted that this cannot be used as evidence that there had been an agreement reached with Liebherr Australia. This is true but the evidence does go to Mr Michaelis’ understanding of what had happened at the dinner. It was available to throw doubt on his later evidence that no agreement had been reached and it is also part of the surrounding circumstances that could bear on the reliability of Mr Ellison’s evidence. We do not consider that the Judge used this evidence improperly.
[48] The next matter that was raised on behalf of the appellants was the alleged inherent uncommerciality of the agreement. We consider that the Judge had this clearly in mind when he noted that there was in fact little risk for Liebherr Australia in the agreement. He considered that Liebherr Australia was protected because the parts had to be Liebherr parts and in as new condition and because any matters such as obsolescence could be dealt with in the price that was to be paid. In our view, this was a conclusion to which the Judge was entitled to come. The Judge also noted the unusual circumstances of the case. He considered that Mr Michaelis felt a moral obligation to Ellison Trading with regard to spare parts and noted the pressure Mr Kloverkorn was put under. In our view, it was open to the Judge in these circumstances to conclude that the transaction could not necessarily be judged as an ordinary commercial transaction.
[49] Finally, on the question of whether Liebherr Export had entered into the type of guarantee arrangement that Mr Ellison said that they had, we accept Mr Hassall’s submission that there was evidence that this was so and that the Judge was entitled to accept this evidence.
[50] In our view, all the appellants have shown is that the Judge could possibly have come to another conclusion, had he taken another view of the evidence. They have not shown that the Judge should have come to a different view of the evidence. In other words, they have not shown that the conclusion reached by the Judge was wrong.
[51] Nor have they shown that the Judge failed to consider all of the relevant evidence. If there had been a significant piece of evidence pointing to a conclusion opposite to that reached by the Judge that had not been considered by him, it may have been appropriate for the case to be referred back. This would have been the case, however, only if that evidence had been significant enough to have raised serious doubts as to the correctness of his decision. There is nothing of that kind here. The Judge dealt in his judgment with all of the evidence the appellants have put forward as supporting their appeal.
Alleged lack of certainty
[52] We now deal with the issue of alleged lack of certainty of the contractual terms. In our view, there is nothing uncertain in the terms of the agreement found by the Judge insofar as they relate either to the identity of the parts or to price. The goods had to have been bought from Liebherr and had to be in their original condition. This is clearly, in our view, sufficient to identify the goods to be purchased. The price was to be a fair and reasonable one. In our view, this requires the price to be objectively reasonable. As this is the case, a court can step in to fix the price if the parties are not able to do so. The term “reasonable price” is used in s10(2) of the Sale of Goods Act and s11(1) of the Consumer Guarantees Act. Parliament must, therefore, have considered that the courts were capable of assessing such a price. The lack of any contractual provision as to how the fair and reasonable price is to be arrived at can be seen as merely a defect in the machinery which the courts can remedy - see the discussion of Money v Ven-Lu-Ree Ltd at para 3.7.9 of Burrows, Finn & Todd Law of Contract in New Zealand (2ed, 2002).
[53] Mr Miles, for the appellants, also submitted, however, that, even if usually the setting of a price as fair and reasonable would give sufficient certainty, in this case it did not because there is no independent market. We do not accept this submission. As Mr Hassall pointed out, there are market indicators available for a court. For a start, there is the initial price list, which would indicate the value of the parts at the time of the publication, there are the prices actually paid by Ellison Trading and there are the prices that customers had pay for parts.
Result and costs
[54] For reasons given above, the appeal is dismissed.
[55] There is an award of $6,000 costs in favour of Ellison Trading, plus reasonable disbursements (including travel and accommodation of counsel) to be set by the Registrar if necessary.
Solicitors:
Buddle Findlay, Auckland for Appellants
Jon Webb, Hamilton for Respondent
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