Supreme Court of WA|2009-07-27|Before: Beech J

R J BAKER NOMINEES PTY LTD -v- PARSONS MANAGEMENT GROUP PTY LTD [2009] WASC 206 (27 July 2009)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : R J BAKER NOMINEES PTY LTD -v- PARSONS MANAGEMENT GROUP PTY LTD [2009] WASC 206

BETWEEN : R J BAKER NOMINEES PTY LTD (ACN 008 852 168)

Contract - Offer and acceptance - Whether offer stipulated an exclusive mode of acceptance - Whether parties made a contract and, if so, on what terms - Turns on own facts

Restitution and unjust enrichment - Quantum meruit - Services provided at defendant's request - Whether services a benefit to defendant - Whether fact that work done on land owned by another meant that services requested by the defendant not proved to be of benefit to defendant - Whether services requested and accepted by defendant - Whether defendant obliged to pay reasonable remuneration - Quantification of reasonable remuneration

Plaintiff's claim for part payment by transfer of lots dismissed

ABB Power Generation Ltd v Chapple [2001] WASCA 412; (2001) 25 WAR 158

Alma Hill Constructions Pty Ltd v Onal [2007] VSC 86; (2007) 16 VR 190

Andrew Shelton & Co Pty Ltd v Alpha Healthcare Ltd [2002] VSC 248; (2002) 5 VR 577

Angelopoulos v Sabatino [1995] SASC 5230; (1995) 65 SASR 1

Australian Competition & Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 794; (2007) 160 FCR 321

Brenner v First Artists Management Pty Ltd [1993] VicRp 71; [1993] 2 VR 221

Ermogenous v Greek Orthodox Community of SA (Inc) [2002] HCA 8; (2002) 209 CLR 95

Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89

Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551

George Hudson Holdings Ltd v Rudder [1973] HCA 10; (1973) 128 CLR 387

Kriketos v Livschitz [2009] NSWCA 96

Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44

Latec Finance Pty Ltd v Knight [1969] 2 NSWR 79

Lighting By Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23; (2008) 35 WAR 520

Lumbers v W Cook Builders Pty Ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635

Mitchell v Schofield [2007] WASC 303

Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221

Robophone Facilities Ltd v Blank [1966] 3 All ER 128

Schellenberg v Tunnel Holdings Pty Ltd [2000] HCA 18; (2000) 200 CLR 121

The Bell Group Limited (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239

1 BEECH J: The plaintiff claims the alleged agreed price of work it performed for the defendant on a subdivision in late 2005 and 2006. The plaintiff's primary claim is that the defendant contracted to transfer two pieces of land to the plaintiff in partial satisfaction of the price of the work.

2 The plaintiff pleads that the parties made a contract in several alternative ways.

3 First, the plaintiff claims that an oral agreement was made in October 2005. In overview, the plaintiff claims that:

(a) it provided a quote on 17 August 2005 for it to perform certain work;

(c) the parties agreed that the defendant would transfer to the plaintiff two lots in the subdivision at a total price of $190,000 plus GST, in partial satisfaction of the price of the work.

4 Secondly, the plaintiff claims that an agreement between the parties, substantially to the same effect, is to be inferred from the communications and conduct of the parties from 31 October 2005 to December 2005.

5 Thirdly, the plaintiff claims that an oral agreement was reached on 18 January 2006, which was confirmed by letters in February 2006. The agreement is said to be substantially to the same effect, except that this agreement is alleged to include a term that the plaintiff perform certain further works for which it would be paid on a costs plus 10% basis.

6 In the alternative to all of these claims, the plaintiff's secondary claim is that it made an agreement to do the works for the agreed price (without a term for payment by transfer of lots in the subdivision).

7 Finally, in the alternative to the contract claims, the plaintiff says it is entitled to quantum meruit in the amounts in the quote of 17 August 2005 and on the basis discussed at the meeting of 18 January 2006.

8 There is no issue that the plaintiff did the work in question.

9 The defendant contends that at no time was any contract formed between the parties, and that any apparent agreement was uncertain or incomplete. The defendant also denies it is liable on the quantum meruit claim.

10 I begin by outlining some largely uncontroversial facts. I then turn to the main issues, which are:

(1) did the parties make a contract which included a term that the defendant would pay in part for the plaintiff's work by transferring two lots at a total price of $190,000 plus GST;

(2) did the parties make a contract for the plaintiff to do the works for the defendant at an agreed price; and

(3) if not, is the plaintiff entitled to recover a reasonable remuneration for its work on a 'quantum meruit' basis?

11 Most of the following facts are not controversial.

12 Chadway Holdings Pty Ltd was a company associated with the defendant, Parsons Management Group Pty Ltd (PMG). The sole director and shareholder of Chadway was Mr Kerry Parsons. He and his son, Mr Craig Parsons, were also the directors and shareholders of PMG.

13 In 2005 Chadway was proposing to subdivide land it owned at lot 74 Harold Street, Gosnells.

14 The plaintiff, R J Baker Nominees Pty Ltd (RJB Nominees), had previously done work for the Parsons group of companies and the parties had a good relationship. Mr Ronald Baker and his wife, Ms Nina Baker, are the directors of RJB Nominees.

15 On 4 March 2005 consulting civil engineers Dennis, Price & Miller (WA) Pty Ltd put out an invitation to tender to a number of contractors, one of which was RJB Nominees (exhibit A pages 1-12). The conditions of tender stated that the preparatory earthworks (the Forward Earthworks) would be done by other contractors.

16 On 20 May 2005 the plaintiff provided quotation number 320 in the sum of $160,454 plus GST in respect of work associated with the road construction of lot 74 Harold Street, Gosnells. The scope of work in that quotation (the Original Scope of Work) matched the scope of work the subject of the invitation to tender. It comprised:

(a) road construction of approximately 1,100 square metres;

(b) construction and laying of concrete kerbing of approximately 370 linear metres;

17 Conditions of the quotation were evidently set out on the reverse side of the quote, but are not in evidence before me.

18 In late May or early June 2005 Mr Craig Parsons asked Mr Baker if RJB Nominees would be interested in taking two lots in the subdivision in part payment for the work to be done (exhibit C [14]). Mr Baker said to Mr Craig Parsons that RJB Nominees was willing to negotiate to receive two of the blocks in the subdivision in part payment for the work to be done by it (ts 45, 72).

19 By letter dated 8 June 2005 Mr Craig Parsons, on behalf of PMG, made a counter offer to RJB Nominees to the following effect:

(a) PMG would pay RJB Nominees $130,000 plus GST for the Original Scope of Work;

(b) payment by PMG for the Original Scope of Work would be effected by the transfer of two lots in the subdivision for a price of $190,000 for both lots;

(c) the difference between the $190,000 price, the $130,000 for the Original Scope of Work, and any further work performed by RJB Nominees with PMG's authority, would be paid to PMG by RJB Nominees;

(d) RJB Nominees would advise PMG which subdivided blocks it wished to have transferred to it.

20 RJB Nominees did not accept PMG's counter offer of 8 June 2005.

21 In about August 2005 PMG requested that RJB Nominees provide a quotation for the Original Scope of Work and for additional work for the subdivision. In response, RJB Nominees provided to PMG quotation number 320B (exhibit A page 31) (the Second Quotation) in the total sum of $193,254 plus GST. This quotation included:

(1) $160,454 plus GST (ie, the amount of RJB Nominees' quote of 20 May 2005) for the Original Scope of Work; and

(2) $32,800 plus GST for the additional work (the Additional Work) which comprised:

(b) demolishing and disposing of kerbing on Harold Street and reinstating a new kerb;

22 The quotation contains a note in the following terms:

NOTE: To accept this quotation and the conditions shown on reverse side, please sign where shown and return to [RJB Nominees].

23 Below that on the quotation was a place for the name, signature and date of the person signing on behalf of PMG.

24 RJB Nominees pleads that in about October 2005, Mr Baker on its behalf and Mr Craig Parsons on behalf of PMG orally agreed two things. PMG admits one of them and denies the other. What is admitted is that Mr Craig Parsons informed Mr Baker that PMG accepted the Second Quotation. What is denied is RJB Nominees' allegation that Mr Baker told Mr Craig Parsons that, subject to acceptance of the Second Quotation by PMG, RJB Nominees would accept in part payment for the work in the Second Quotation the transfer to it of lots 81 and 83 in the subdivision for the total price of $190,000 plus GST.

25 This is a major issue in the action. PMG says that no agreement was reached as to the acceptance of lots 81 and 83 for a consideration of $190,000. Further, PMG says that the Second Quotation could be accepted only in writing.

26 I will outline Mr Baker's evidence about this issue when I deal with that claim in the next section of these reasons.

27 On 27 October 2005 Sue Kinnear, on behalf of PMG, sent a facsimile to Mr Baker (exhibit A page 35). The text of the facsimile was:

Don't forget you promised [Mr Craig Parsons] that you would go out to Harold Street before the end of the week.

28 Prior to that date, Mr Craig Parsons had made various attempts to contact Mr Baker to ask him to start work (ts 49 - 50).

29 On 31 October 2005 Mr Craig Parsons wrote on behalf of PMG to Mr Baker. The letter was in the following terms:

RE: - LOT 74, HAROLD STREET, GOSNELLS

After numerous phone calls, with no success. You have disillusioned me to the point that I am writing this letter.

I waited for a extra 2 months for the quote, and now you can not give us an exact time when you will be on site and to when the work will be started and completed.

As per our previous written conversation we agreed to $190,000.00 plus GST and Stamp duty for the 2 blocks that you required, but since then the blocks have been valued at $220,000.00-$240,000.00 and we are waiting to work on the titles, but require the work to be done by yourself. It is our opinion that if the work does not start within the next 5 days then we feel strongly that there should be a new agreement made based on the above.

I await your reply, if have any queries please do not hesitate to contact me on PH: (08) 9455 3899. (original emphasis)

30 RJB Nominees relies on the third paragraph of this letter as an admission that the parties had, by then, agreed that two blocks would be transferred at an agreed price of $190,000. I will deal with that submission in the next section of these reasons.

31 On 24 October 2005 a real estate agent, L J Hooker, sent a facsimile to PMG's offices. It listed suggested marketing prices for 11 of the 13 lots in the subdivision. Two of the lots (described as Lot 1 and Lot 4) were described as 'contractor' with no suggested price stated. This is consistent with PMG contemplating by then that those two lots would be transferred to RJB Nominees. However, it does not assist in determining whether any binding and complete contract for transfer of the lots at a specific price had by then been concluded.

32 On 4 November 2005 Mr Craig Parsons wrote again on behalf of PMG to Mr Baker (exhibit A page 38). The letter was in the following terms.

As per our previous correspondence on the 31st October 05, I relayed that we (Parsons Management) had contacted you numerous times, with no still success. You relayed to me earlier this week that someone would be on site this week. We drove out to look today and no workers were on site and no work had been done.

This led me to write this letter.

This is not satisfactory. I have worked with you on many previous jobs and we have never had this problem and I thought our working relationship was good. If there is not substantial work done next week we will then value the 2 blocks at $240,000.00 plus GST and Stamp duty.

If this is not acceptable than we will have to look for an alternative contractor.

I await your reply, as soon as possible so that I can plan the development. (original emphasis)

33 By 4 November 2005 the Forward Earthworks had not been commenced by any other contractor, or by RJB Nominees.

34 On 8 November 2005 RJB Nominees engaged MiniQuip Earthmovers to perform work on the land by stripping grass from within the road reserves. Mr Baker said in evidence that this was to permit RJB Nominees to evaluate the extent of work required for the Forward Earthworks (ts 50).

35 On 17 November 2005 RJB Nominees engaged Assured Tree Services to cut down and mulch trees within the road reserve.

36 On 25 November 2005 PMG sent a facsimile to RJB Nominees (exhibit A page 41). In the facsimile Mr Craig Parsons asked when RJB Nominees would be back out at the Gosnells site, and when they could have a meeting down at the Fremantle Boat Park to go through the next-door site. The latter question related to work at a different site.

37 On 28 November 2005 RJB Nominees engaged a subcontractor to dig out tree stumps on the road reserve.

38 On 30 November 2005 RJB Nominees invoiced PMG in respect of the engagement of the three contractors (exhibit A page 43). The amount of the invoice including GST was $1,596.10. The subject matter of the invoice was described as 'pre-start forward works'.

39 On 8 December 2005 Mr Peter Golder, of Dennis, Price & Miller, PMG's consulting civil engineers, sent a facsimile to Mr Baker on behalf of PMG. By the facsimile Mr Golder requested that RJB Nominees install the power, Telstra, gas and water duct crossings for the future stage 3 of the subdivision in accordance with the plan provided to RJB Nominees by PMG.

40 In December 2005 RJB Nominees engaged Premium Corporation Pty Ltd as a subcontractor to perform drainage work, part of the Original Scope of Work. This was the first part of the Original Scope of Work commenced by RJB Nominees (ts 51).

41 On 5 December 2005 Mr John Rechichi of L J Hooker Thornlie, Chadway's real estate agent for the sale of the proposed lots in the subdivision, sent a facsimile to RJB Nominees requesting that it execute an authority for L J Hooker Thornlie to act as its agent to sell lots 84 and 81. Mr Baker says in his witness statement that he telephoned Mr Rechichi and told him that he could not commit to Mr Rechichi's firm until he had written confirmation of his arrangement with Mr Craig Parsons (exhibit C [33]). Words to this effect are handwritten on the facsimile. Underneath those handwritten notes Mr Baker wrote 'confirmed intended lots 83 and 81'.

42 Near the top of the facsimile, Mr Baker made a handwritten change to alter the reference to 'lot 84' to 'lot 83'. He dated that alteration 20 January 2006 and initialled it. Having taken those steps, I infer that he then sent the fax back to Mr Rechichi on or shortly after 20 January 2006.

43 RJB Nominees pleads that the facts stated in [29], [32] - [37] and [39] - [41] above support the conclusion that there was an implied agreement between the parties.

44 On 11 January 2006 Premium Corporation Pty Ltd, a subcontractor engaged by RJB Nominees, submitted a progress payment claim in the amount of $38,449.95 (exhibit A pages 50 - 51).

45 On 18 January 2006 Mr Baker and Mr Craig Parsons met at PMG's office on Mews Road, Fremantle. RJB Nominees pleads, and PMG denies, that the parties made an oral agreement at that meeting, subsequently confirmed by letters of 1 February 2006 and 15 February 2006. I will outline the evidence about the meeting on 18 January 2006 in the next section of these reasons.

46 On 18 January 2006 Sue, an employee of PMG, sent a facsimile to Mr Baker saying 'Thanks for coming to see us today' and asking for confirmation that the blocks RJB Nominees was taking were lots 81 and 83 because PMG needed to know for the valuer.

47 On 1 February 2006 Mr Craig Parsons on behalf of PMG wrote to Mr Baker. The letter was in the following terms.

As per our meeting on the 18th January 06, I thought that I would formalise the meeting in point form:-

- Ron J Baker & Co to take blocks 81 & 83.

- Parsons Management Group accept the first quote for $160,500.00

- Parsons Management Group accept the second quote for $32,800.00

- Parsons Management Group accept that Ron J Baker & Co will organise the forward works at cost plus 10% (invoices to be forwarded)

- Ron J Baker & Co to move 500-750mm of the POS, to be placed on the blocks.

- Ron J Baker & Co organise the power quote.

- Ron J Baker & Co and Parsons Management Group to make sure that the power contractor has all the appropriate insurance details.

- Ron [Baker] to liaise with Peter Golder, regarding the site / drainage.

The final point that was raised is that I believe that the 2 blocks are to be valued at $100,000.00.

I await your reply, to let me know the state of play, hope all is well.

48 Mr Baker accepted in cross-examination that the eight matters listed with dashes correctly recorded things agreed at the meeting of 18 January 2006 (ts 55).

49 Mr Craig Parsons wrote a further letter dated 15 February 2006 to RJB Nominees. The letter was sent on 16 February 2006 (exhibit A page 58), and was in the following terms:

Since our meeting on the 18th January 06, I can not see any work that has been done.

You relayed to me earlier this week that someone would be on site this week, I drove out to look today and no workers were on site and it looked like only a few loads of soil had been dropped [off] and no work had been done.

I have Real estate agents / partners complaining to me (Weekly), when the work will be completed.

Also as per my letter to you on the 1st February, 06, the work on the POS has not been done and I still have not received a power quote (as we require).

You have left me with no option that if the box out and sub grade of the road has not been done within seven (7) days [then] our agreement is voided.

I have contacted Peter Golder and he assures me that there are no reasons that you should be delaying this project.

I await your reply.

50 On 16 February 2006 RJB Nominees wrote to PMG in response to Mr Craig Parsons' letter of 1 February 2006. The letter included the following:

I agree with all items mentioned in your letter of acceptance, save for the final point the figure we agreed was for $190,000 for both blocks. I am intending to commence roadwork's next week 22/2/06.

Please confirm your intention to standby the original agreement.

51 On 17 February 2006 Mr Kerry Parsons met with Mr Baker. They discussed the Gosnells subdivision: exhibit C [41]. Mr Kerry Parsons said that:

(a) lots 81 and 83 would not be transferred to RJB Nominees for $190,000;

(b) RJB Nominees had dragged its feet on the project;

52 Mr Baker said he was not interested in being paid cash. Mr Kerry Parsons told Mr Baker that he should think it over.

53 About 20 minutes after the meeting Mr Baker called Mr Kerry Parsons and said that he 'intended to stick to the original agreement': exhibit C [42].

54 On the same day Mr Kerry Parsons wrote to Mr Baker. The letter stated that the options under which PMG was prepared to accept RJB Nominees continuing the work were:

(2) 'We continue with the two-block payment' but it is based upon prices at completion less 10%, and net of GST and commission.

55 The letter stated that option 2 would give the plaintiff at least a $30,000 minimum windfall profit.

56 Mr Baker responded to the letter by facsimile dated 9 March 2006. The letter included the following.

With regard to your letter of 23 February 2006 and referring to our site meeting at Fremantle Boat Park on 17 February 2006 I acknowledge the points 1 and 2 made at our meeting (this action was necessary due to Ron J Baker & Co dragging their feet, according to you). I told you at the time that I preferred Option 3 which was to stick to the original agreement, which was cruisy, cruisy since I had to service other jobs to carry this work. You told me to go away and think on it over the weekend and that you would put it in writing. I rang you back within 20 minutes of that discussion when I reached my next site meeting at Tony Ale's at Jandakot to confirm my intention to stick to the original agreement. I also stated that I would assist with completing the forward works and helping where possible to redress the apparent deterioration of our standing in your eyes. I took a chance on committing myself to accept these two blocks as payment and can't help but wonder if we would have had this conversation if the price/valuation went the other way.

I know that you are a very honest, capable, ethical, decent business man. I have always looked up to you and admired you and I am supremely confident that you will do the right thing and stick to the original agreement.

57 In response, on 14 March 2006 an email was sent from Mr Craig Parsons' email address, under the name Kerry Parsons, to Mr Baker. The email stated that 'I would have adhered to the original agreement if you had'. It also said if the blocks had gone down in price he would have asked for compensation for PMG's losses because of RJB Nominees' late start.

58 On 23 March 2006 Mr Baker on behalf of RJB Nominees wrote to Mr Kerry Parsons of PMG. Mr Baker set out what he said was the history of the matter. He said that the term that the price was payable by purchase of lots 81 and 83 for $190,000 was first proposed in Mr Craig Parsons' letter of 8 June 2005, and reaffirmed in the letter of 31 October 2005 and implicitly the letter of 4 November 2005. The letter required PMG to comply with what Mr Baker said were the terms of the agreement.

59 Mr Kerry Parsons wrote a letter to RJB Nominees on 24 April 2006 (exhibit A page 95). The letter said that Mr Baker had said on a previous occasion that he would make an offer regarding the pricing of the blocks and any compromise he was prepared to make. The letter stated that the last sale of a lot in the subdivision was for $150,000. It proposed the blocks be transferred at a total price of $252,000, which Mr Parsons described as a fair compromise.

60 On 12 April 2006 RJB Nominees completed the Original Scope of Work and the Additional Work.

61 On 26 April 2006 Mr Baker wrote to Mr Kerry Parsons of PMG. The letter stated that RJB Nominees was in the process of finalising its account and requested that an offer and acceptance be made out in the name of RJB Nominees for an agreed price of $190,000 for both blocks.

62 Mr Kerry Parsons wrote in response on 28 April 2006 (exhibit A page 98). The letter stated that:

(a) there would not be any paperwork regarding the blocks for the price of $190,000 as 'there no longer exists any such agreement';

(b) 'there was an agreement early last year but as per your verbal response, if not all then a substantial part of the massive delays were caused by you, hence any agreement was negated by your negligence'; and

(c) because both blocks have increased in value substantially, the price increase would be applied to the blocks if RJB Nominees wished to proceed.

63 By 24 July 2006 RJB Nominees had completed all of the Forward Earthworks.

64 By 21 July 2006 the plan of subdivision, including lots 81 and 83, was in order for dealing at Landgate.

Did the parties make a contract which included a term that PMG would transfer two lots to RJB Nominees for a total price of $190,000?

66 RJB Nominees pleads three alternative agreements said to contain a term that PMG would transfer lots 81 and 83 to RJB Nominees for a total price of $190,000.

67 The alleged First Agreement pleaded is that in about October 2005 in discussions between Mr Baker and Mr Craig Parsons it was agreed that RJB Nominees would undertake the work the subject of the Second Quotation for a price of $193,254 plus GST ($212,579.40), in partial satisfaction of which RJB Nominees would accept the transfer of lots 81 and 83 for a total price of $190,000 plus GST (statement of claim pars 12 and 13).

68 The alleged Second Agreement is in terms substantially to the same effect. It is alleged (statement of claim par 27) that the Second Agreement was to be implied from the conduct pleaded in pars 16 - 26 of the statement of claim, being the facts and matters set out at [29], [32] - [37] and [39] - [41] of these reasons.

69 The alleged Third Agreement is said to have been made orally at a meeting on 18 January 2006 between Mr Craig Parsons and Mr Baker, and confirmed by PMG's letter of 1 February 2006 and RJB Nominees' letter of 16 February 2006. The Third Agreement includes substantially the same terms as the First Agreement and Second Agreement, with an additional term that RJB Nominees would do further work, namely the Forward Earthworks, for which it was to be paid costs plus 10%.

70 That brings me to the evidence relating to these pleaded contracts.

71 The only witness called at the trial of the action was Mr Baker. PMG did not adduce any evidence.

72 RJB Nominees' submissions emphasised the absence of evidence from any witness on behalf of PMG.

73 The unexplained failure by a party to give evidence or to call a witness may, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted the party's case: Jones v Dunkel [1959] HCA 8; [1959] HCA 8; (1959) 101 CLR 298, 308, 312 and 320 - 321.

74 The failure to call a witness can allow evidence which might have been contradicted by such a witness to be more readily accepted. Further, where an inference is open from facts proved, the absence of the witness may be taken into account as a circumstance in favour of the drawing of the inference. However, the absence of a witness cannot be used to make up any deficiency of the evidence, that is it cannot be used to support an inference which is not otherwise sustained by the evidence. The absence of a witness cannot fill gaps in the evidence or convert conjecture and suspicion into the drawing of an inference: Jones v Dunkel (308, 312 and 320 -321); RPS v The Queen [2000] HCA 3; (2000) 199 CLR 620 [26]; Schellenberg v Tunnel Holdings Pty Ltd [2000] HCA 18; (2000) 200 CLR 121 [53]; The Bell Group Limited (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239 [1003] - [1004].

75 At the trial, RJB Nominees submitted that the failure of PMG to call witnesses to explain the apparent admissions in certain letters and emails written by Mr Craig Parsons and Mr Kerry Parsons sustained an inference that the parties had made one of the three alternative agreements pleaded by RJB Nominees and summarised above. For the reasons which follow, I do not accept that submission. In summary, that is essentially because RJB Nominees' case derives no assistance from the evidence of Mr Baker.

76 Mr Baker's witness statement (exhibit C) contained no direct evidence of any conversation between Mr Craig Parsons and him in which it was agreed that two lots would be transferred to RJB Nominees for a total price of $190,000. The only evidence of any relevant conversation following the Second Quotation of 17 August 2005, and prior to January 2006, was that contained in par 22 of the witness statement. That paragraph states, relevantly, as follows:

In about October 2005 Craig [Parsons] told me that PMG accepted RJB [Nominees'] quotation 320B. At about that time I told Craig that:

(a) I was prepared to agree to his proposal for payment by the transfer of 2 lots in the proposed subdivision rather than cash;

(b) I would take lots 81 and 83;

(c) I could not do the work until the forward earthworks had been completed.

77 It will be seen that there is no mention of any price for lots 81 and 83.

78 Paragraph 25 of Mr Baker's witness statement deals with Mr Craig Parsons' letter of 31 October 2005. In that context, Mr Baker said that as for Mr Craig Parsons' suggestion that there should be a variation in the price for lots 81 and 83, he did not regard that as an issue for discussion as 'there was already an agreement for RJB [Nominees] to undertake the work and the land to be valued at $190,000'. The quoted passage is not admissible or persuasive evidence of the existence of any agreement that the land be valued at $190,000. It is the mere assertion of a conclusion. Nowhere in the witness statement is there any evidence of the agreement, said to have been made 'already', that the land be valued at $190,000.

79 The position, from RJB Nominees' perspective, did not improve as a result of the viva voce evidence of Mr Baker.

80 Mr Baker was cross-examined about his response to PMG's letter of 8 June 2005. He said that RJB Nominees did not accept the proposal in the letter dated 8 June 2005 involving a reduction in the price of the work to $130,000. He said that he accepted a land value of $190,000, but never communicated to Mr Parsons that he accepted the land value at that figure (ts 44 - 45).

81 Mr Baker was asked whether he could recall being telephoned by Mr Craig Parsons after he had sent the Second Quotation and being asked to do the quoted work as soon as possible. Mr Baker said that he recalled such a conversation but did not know whether it had occurred shortly after the Second Quotation was sent, or some time later (ts 46). The following exchange then occurred.

[COUNSEL FOR PMG]: When you had that discussion that you have just mentioned on the date you can't remember, you did say to Craig Parsons that you were prepared to agree his proposal to take two lots in the subdivision rather than cash, didn't you?---Yes.

You said to him you would like to take lots 81 and 83 in the subdivision?---Yes, that's correct.

During the discussion at that time that I am just asking you about, you didn't reach agreement with Craig Parsons at that time or around that time that lots 81 and 83 would be valued at a total of $190,000, did you?---No, I did not (ts 47).

82 The first two answers in the passage just set out are, with two exceptions, consistent with par 22 of Mr Baker's witness statement. The first exception is that in his evidence in cross-examination Mr Baker could not say when after 17 August 2005 the conversation had occurred. The second exception is that in his evidence in cross-examination he agreed that the conversation about payment by transfer of the lots occurred at the same time and as part of the same conversation as Mr Craig Parsons' acceptance of the quotation. To the extent of these differences I prefer Mr Baker's evidence in cross-examination to the evidence in his witness statement.

83 The third answer in the passage just quoted makes explicit what might have been thought to be implicit in par 22 of the witness statement (given the absence of mention in that paragraph of any agreement valuing the lots at $190,000).

84 I infer that the conversation occurred before 27 October 2005. By then, Mr Craig Parsons was chasing Mr Baker to start the work the subject of the Second Quotation. I will say more about this later in these reasons.

85 The conversation the subject of par 22 and of Mr Baker's evidence at ts 46 - 47 is the conversation that underpins the alleged First Agreement. The effect of the evidence, both in the witness statement and in cross-examination, is that during the conversation there was no agreement about the price of the lots. That evidence is reinforced by Mr Baker's evidence that he never communicated to Mr Parsons that he accepted the land value of $190,000.

86 Thus Mr Baker's evidence on the point is directly inconsistent with RJB Nominees' case that the alleged First Agreement was made during this conversation.

87 In cross-examination Mr Baker was asked about his letter of 16 February 2006. In that letter he stated that 'the figure we agreed was for $190,000 for both blocks'. Mr Baker was asked to what agreement he was referring and when the agreement had been made. Mr Baker said that the agreement was made in July or August 2005, and that he had agreed with the price of $190,000 when it was first put to him in the letter of 8 June 2005 (ts 57 - 58).

88 If and insofar as that evidence is intended to suggest that there was a discussion between Mr Baker and Mr Craig Parsons between 8 June 2005 and 17 August 2005, in which it was agreed that payment for any work to be done by RJB Nominees would be made by the transfer of two lots to be valued at $190,000, I do not accept it. Mr Baker's witness statement does not contain any evidence of an agreement as to the value of the lots during this period. Nor was any such agreement or discussion during this period pleaded in the statement of claim. An agreement or discussion to that effect is also inconsistent with Mr Baker's evidence that he never communicated his acceptance of the figure of $190,000 for the land value (ts 44 - 45).

89 It may be that the evidence of Mr Baker to which I have just referred is not intended to suggest that any discussion occurred after PMG's letter of 8 June 2005. At the conclusion of his evidence in cross-examination, Mr Baker said that the term that lots 81 and 83 would be transferred for a price of $190,000 was 'a part of the agreement from day one, from when [Mr Craig Parsons] first made the offer' (ts 66). Asked when that term became part of the agreement and in what manner, Mr Baker referred only to the letter of 8 June 2005 (ts 67). Mr Baker agreed that RJB Nominees' case is that as a result of the letter of 8 June 2005 it became a term of the agreement, and of every agreement thereafter discussed, that RJB Nominees would be paid with two blocks at an agreed value of $190,000 (ts 67).

90 Of course, Mr Baker's subjective understanding of the effect of the letter of 8 June 2005 has no significance in the process of determining whether the parties made a contract and if so, on what terms. Whether a contract has been formed, and the terms of any contractual arrangement, are to be determined objectively: Ermogenous v Greek Orthodox Community of SA (Inc) [2002] HCA 8; (2002) 209 CLR 95 [25]. Thus I mention this evidence not for its contractual significance, but because it may explain Mr Baker's evidently genuinely held understanding that the parties had 'agreed' a transfer of two lots for a total price of $190,000.

91 Mr Baker referred to the 'original agreement' in his witness statement [42], his evidence (ts 53 and 56), and in correspondence (including his letter of 9 March 2006). Mr Baker's references to the 'original agreement' are generalised and conclusionary in nature. Given his specific evidence on the topic of his discussions with Mr Craig Parsons in 2005, Mr Baker's assertions as to the 'original agreement' do not sustain a finding that any agreement as to the figure of $190,000 was reached during 2005.

92 I turn to the evidence about the meeting of 18 January 2006. At one point in the course of his cross-examination (ts 53), Mr Baker said that the price of $190,000 for the blocks was agreed during the meeting of 18 January 2006. I do not accept that evidence. It is inconsistent with the substance of Mr Baker's evidence given in his witness statement and in cross-examination. Both in his witness statement [37] - [38], and in cross-examination (ts 56), Mr Baker's evidence was that the price for the lots was not discussed at all, let alone agreed, at the meeting of 18 January 2006.

93 RJB Nominees submit that notwithstanding that Mr Baker's evidence on the topic was 'problematic' (ts 102), the unexplained admissions in PMG's letters or emails of 31 October 2005, 15 February 2006, 14 March 2006 and 28 April 2006 sustained a finding that the parties had entered into the alleged First Agreement. RJB Nominees pointed to references, in that correspondence, to the parties having 'agreed' or to the existence of an 'agreement'. In the context of determining whether communications between parties amount in law to a binding contract, care is to be taken in determining the weight given to the use by the parties of words such as 'agreement'. In a passage cited in many cases, Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551, 14,552, Gleeson CJ said as follows:

In a case such as the present, there are two, sometimes related, questions which require to be considered. The first is whether the parties to the putative contract intended to make a concluded agreement.

The second is whether they succeeded in doing so...

As the decision in the Australian Broadcasting Corp case illustrates, the fact that parties to negotiations have agreed upon the major matter under discussion, confidently believing that the remaining matters to be decided will be sorted out later between them or their lawyers, without any difficulty, can sometimes create a misleading appearance of consensus. Such parties may well believe that they have a 'deal' or a 'bargain', and speak and act accordingly, whilst at the same time knowing and intending that further and more detailed agreement is necessary. For that reason, conduct such as shaking hands, or using the language of agreement, can be ambiguous. The resolution of the ambiguity may require more detailed factual and legal analysis.

94 In considering the alleged admissions, I take into account that PMG did not call any evidence.

95 The letter of 31 October 2005 from Mr Craig Parsons states that in 'our previous written conversation we agreed to $190,000 plus GST and stamp duty' for the two blocks. The notion of a written conversation is unusual and ambiguous. I take it to be a reference to written communication. Elsewhere it may involve a reference to the letter of 8 June 2005 standing alone. In the letter 'we' is used to refer to PMG, rather than to both parties. To say that 'we agreed' to something may mean no more than that by the letter of 8 June 2005 PMG had said that it was willing to proceed on that basis. On the evidence, that seems the most likely reading of what is said in the letter of 31 October 2005.

96 In any event, I am not persuaded that any admission by PMG contained in the letter of 31 October 2005 supports the oral agreement pleaded in pars 12 and 13 of the statement of claim.

97 The letter of 15 February 2006 includes a statement that if certain things did not occur then 'our agreement is voided'. In the context of what had by then occurred between the parties, I consider that the reference to 'our agreement' is intended to refer to what had been agreed at the meeting on 18 January 2006. A number of matters had been agreed on that day, as listed in the dot points in the letter of 1 February 2006. What the parties had agreed on 18 January 2006 about the transfer of the lots was incomplete; it did not include agreement on the essential topic of price. Consequently, no agreement which amounted to a contract to transfer the lots was made on 18 January 2006.

98 The email of 14 March 2006 was evidently written and sent by Mr Kerry Parsons. He had not been a party to any of the negotiations during 2005. The language of the email of 14 March 2006 reflects what is said in the last two paragraphs of Mr Baker's facsimile of 9 March 2006: see [56]. I do not consider that this email amounts to an admission of the First Agreement pleaded in pars 12 and 13 of the statement of claim.

99 Finally, RJB Nominees relies on Mr Kerry Parsons' letter of 28 April 2006. That letter states that 'there was an agreement early last year'. Again, Mr Kerry Parsons was not a party to the negotiations. Moreover, the agreement is said to have been 'early' 2005. This would seem to be a reference to the letter of 8 June 2005. Again, the reference to an agreement would seem to reflect a willingness on the part of PMG to transfer the land at the price of $190,000, rather than an expression of mutual consent by both parties.

100 To the extent that any of these letters might constitute an admission of the alleged First Agreement, the value of any such admission must be weighed with the direct evidence of Mr Baker.

101 For these reasons, I am not persuaded that PMG has, by any of the letters and emails relied upon by RJB Nominees, admitted the making of the alleged First Agreement.

102 For the reasons given, and in light of the findings I have made, I am not satisfied that the alleged First Agreement was made. The only support for that agreement in Mr Baker's evidence is in conclusionary assertions. His evidence at ts 44 - 45 and 47, which I accept, supports the conclusion that the alleged First Agreement was not made.

103 Counsel for RJB Nominees accepted, rightly in my opinion, that there was no evidence to support the alleged Third Agreement.

104 The Second Agreement is said to be implied. The principles about when an agreement may be implied or inferred, in the absence of an identifiable offer and acceptance, were outlined in Lighting By Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23; (2008) 35 WAR 520 [21] - [23], [90] and [204] - [205]. See also Kriketos v Livschitz [2009] NSWCA 96 [111] - [120]. The question is whether the conduct of the parties viewed in the light of the surrounding circumstances shows a tacit understanding or agreement. The parties' conduct must be capable of proving all the essential elements of an express contract.

105 Conduct may amount to an acceptance of an offer. In order for that to be so, not 'only must the conduct point to the existence of a contract but it must point to the existence of the contract in the terms alleged in the proceedings': Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44 [9].

106 I have identified earlier in these reasons [43] matters from which RJB Nominees says the alleged Second Agreement is to be implied. In my opinion, those matters do not support a conclusion that the parties impliedly made the Second Agreement. There is nothing in the matters relied upon by RJB Nominees about the price at which any lots would be transferred to RJB Nominees. Consequently, the facts and matters relied on by RJB Nominees provide no basis to imply an agreement containing a term to the effect that PMG would partly pay RJB Nominees for its work by transfer of two lots to it for a price of $190,000 plus GST.

107 For these reasons, RJB Nominees' primary claim, that it made an agreement under which it was to be partly paid by the transfer of two lots for a total price of $190,000 plus GST, fails.

108 I turn to RJB Nominees' secondary contract claim for the price of the work it did.

Did the parties contract for RJB Nominees to do the work for an agreed price?

109 RJB Nominees pleads three alternative contracts by which it is said that the parties contracted for RJB Nominees to do work for an agreed price. These alleged contracts mirror the three alternatives outlined in the previous section of these reasons, but without reference to transfer of the lots in part payment for the work done. RJB Nominees pleads an oral agreement made in or about October 2005 (pars 12.1 and 13A); an implied agreement in November or December 2005 (par 27A); and an oral agreement made on 18 January 2006 (par 30A).

110 The effect of the first two of these agreements is said to be that RJB Nominees would carry out the Original Scope of Work and the Additional Work for $193,254 plus GST. The third of these agreements is to the same effect, with an additional term that RJB Nominees would carry out the Forward Earthworks and be paid cost plus 10%.

111 I have set out [76] and [81] Mr Baker's evidence as to the conversation he says he had with Mr Craig Parsons at some time between 17 August 2005 and 31 October 2005. See exhibit C [22] and ts 46 - 47. That evidence was not challenged in cross-examination.

112 RJB Nominees submits that notwithstanding that evidence I should find that the conversation during which the Second Quotation was accepted occurred at the meeting on 18 January 2006. PMG submits that a quotation can only be accepted once, and points out that one of the matters recorded in the letter of 1 February 2006 as having occurred at the meeting of 18 January 2006, and accepted by Mr Baker as having occurred, was the acceptance of RJB Nominees' Second Quotation.

113 I do not accept that submission. I accept the evidence of Mr Baker that at some time after 17 August 2005 Mr Craig Parsons told him to go ahead, to do the work and to do it urgently. I find that the conversation occurred before 27 October 2005.

114 That finding is supported by the fact that on 31 October 2005 and on 4 November 2005 PMG demanded that RJB Nominees get on with doing the work the subject of the Second Quotation.

115 Moreover, it is supported by RJB Nominees' admission in its defence that in October 2005 Mr Craig Parsons verbally informed Mr Baker that PMG accepted the Second Quotation. I accept, as PMG submits, that the court is not bound to act on admissions made by the parties and that the court can (and perhaps should) decline to act on an admission when there is reason to doubt its correctness or reason to question the correctness of the facts admitted or agreed: Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492 [148] - [160]; Australian Competition & Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 794; (2007) 160 FCR 321 [42] - [49]. In this case, I do not consider that there is reason to doubt the correctness of PMG's admission or the fact agreed. The admission is consistent with the evidence of the only witness on the point. The admission is also supported by the objective probabilities, given the undisputed evidence that by the end of October 2005 Mr Craig Parsons was complaining that RJB Nominees had not commenced doing the work the subject of the Second Quotation.

116 PMG puts two further submissions as to why any apparent acceptance by Mr Craig Parsons of the Second Quotation during the conversation I have referred to does not give rise to a binding contract that RJB Nominees would do the work for the price set out in the Second Quotation.

117 First, PMG submits that any acceptance of the quotation must be seen in the context of the discussion as a whole. The conversation contemplated that RJB Nominees would do the work and would be paid by the transfer of lots in the subdivision. That much may be accepted. PMG submits that any agreement for RJB Nominees to do the work at the quoted price cannot be divorced from the agreement that the price would be partly paid by transfer of lots.

118 The question is whether the parties intended (in an objective sense) that payment by the transfer of lots was an essential feature of any binding agreement for RJB Nominees to do the work at the price in the Second Quotation. At the time of the conversation, the parties had not reached agreement as to the price for the transfer of the lots. By definition, it was not inevitable that they would agree on the price. This invites attention to whether the parties intended that if no agreement as to the price of the lots was reached there would be no binding agreement to pay the quoted price of the work in the Second Quotation.

119 In this context it is relevant that Mr Craig Parsons had said PMG wanted the work done immediately. Thus the parties' communications contemplated that RJB Nominees would do the work immediately and without waiting for agreement to be reached on the price for transfer of the two lots.

120 In my opinion, the more likely intention on the part of the parties is that the subsequent reaching of an agreement as to the price for a transfer of the lots was not essential to the creation of an obligation on the part of PMG to pay the price in the Second Quotation in return for RJB Nominees doing the work in that quotation.

(a) an oral acceptance of the Second Quotation was legally ineffective to create a contract;

To accept this quotation and the conditions shown on reverse side, please sign where shown and return to Ron J Baker & Co;

(c) thus, the offer stipulated a mode of acceptance, namely by signature and return of the quotation, with the consequence that a purported acceptance by any other method is invalid and does not result in the formation of a contract.

122 In support of its submission PMG relied upon Latec Finance Pty Ltd v Knight [1969] 2 NSWR 79, 81 and Robophone Facilities Ltd v Blank [1966] 3 All ER 128, 131 - 132. In my opinion, the focus of these cases was on a different question. They were not concerned with whether a particular mode of acceptance had been specified as the exclusive mode, but rather whether the offer in question had dispensed with the requirement of communication of acceptance. In Latec Finance, a clause in the offer provided that the offer:

shall not be binding upon [the offeree] until the memorandum of acceptance endorsed hereon shall have been signed by [the offeree]...

123 The offeree signed the offer but did not communicate its acceptance. The question was whether the clause dispensed with the requirement of communication of acceptance. The New South Wales Court of Appeal held that it did not, stating that one would need clear language before a contract would be construed as dispensing with the requirement of communication.

124 PMG also relies on the decision of Simmonds J in Mitchell v Schofield [2007] WASC 303. That case concerned a contract for sale of land. Contracts for sale of land give rise to special considerations, as his Honour explained [142]. The terms of the offer provided strong support for a construction that the offer could be accepted only by signature. The term 'Contract Date' was defined to mean the date on which the last party to sign the contract signs it [25]. Clause 2 of the contract conditions stated that 'acceptance of [the] offer shall be sufficiently communicated to the Buyer if verbal or written notification shall be given by the Seller or Seller's agent to the Buyer that the acceptance has been signed by the Seller' [131].

125 The question in this case is whether the offeror has specified a particular mode of acceptance as being the exclusive mode. That is a question of construction of the offer; see, for example, George Hudson Holdings Ltd v Rudder [1973] HCA 10; (1973) 128 CLR 387. Consequently, consideration of the result of cases involving other clauses in different contracts will be of limited assistance.

126 I note the discussion in Cheshire & Fifoot's Law of Contract (9th ed, 2008) [3.42]. The tenor of that discussion is that in the absence of mandatory language, courts will generally be slow to construe a mode of acceptance mentioned in the offer as being the exclusive method of acceptance.

127 The provision on the Second Quotation identified a permissible mode of acceptance. The language of that provision is not mandatory. The provision is not expressed in terms that the offer may be accepted only by signing and returning the quote.

128 Viewed from the perspective of the offeror (in an objective sense), I am not persuaded that the content, subject matter and context of the offer would have required acceptance only by signature and return of it.

129 I am not persuaded that on a proper construction of the Second Quotation it could be accepted only by signing and returning it.

130 For these reasons, I find that RJB Nominees has established the agreement pleaded in par 13A of its statement of claim.

131 Consequently, there is no need to consider whether the parties made the implied agreement pleaded in par 27A of the statement of claim. That agreement is substantially to the same effect as the agreement I have already found.

ABB Power Generation Ltd v Chapple

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (381 paragraphs)

R J BAKER NOMINEES PTY LTD -v- PARSONS MANAGEMENT GROUP PTY LTD [2009] WASC 206 (27 July 2009)

Parties

Legislation Cited (2)

Cases Cited (16)