Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : WAVEMASTER INTERNATIONAL PTY LTD (In liq) -v- JR MARINE SYSTEMS PTE LTD [2009] WASC 203

Extension of time to appeal - Contract - Abandonment - Repudiation - Evidence of regular and uniform practice to prove a fact in issue - Turns on its own facts

Supreme Court (Court of Appeal) Rules 2005 (WA), pt 5 r 26

Avins v Garvey [2001] WASCA 415

Bell v Lever Bros Ltd [1931] UKHL 2; [1932] AC 161

Braidotti v Queensland City Properties Ltd [1991] HCA 91; (1991) 172 CLR 293

CGM Investments Pty Ltd v Chelliah [2003] FCA 79

Connor v Blacktown District Hospital (1971) 1 NSWLR 713

DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423

Elliott v The Queen [2007] HCA 51; (2007) 234 CLR 38

Equititrust Ltd v Franks [2009] NSWCA 128

Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420

Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115

Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623

Marminta Pty Ltd v French [2003] QCA 541

McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457

Mostert v Durban Roodepoort Deep Ltd [2004] WASCA 309

Shevill v Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620

Simonsen v Legge [2010] WASCA 238

Summers v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144

The Queen v Murphy (1985) 4 NSWLR 42

Uranium Equities Ltd v Fewster [2008] WASCA 33

Wallera Pty Ltd v CGM Investments Pty Ltd [2003] FCAFC 279

Wavemaster International Pty Ltd (In liq) v JR Marine Systems Pte Ltd [2009] WASC 203

3 This matter concerns a dispute between the respondent, a shipbuilding company now in liquidation (the shipbuilder), and the appellant (the customer) in relation to a written shipbuilding agreement entered into in September 2003 (the shipbuilding contract). In the court below, the shipbuilder sued the customer for breach of contract. Many issues were raised by the customer in the court below, including an alleged oral agreement, estoppel and rectification. On issues which, to any extent, depended upon credit, the primary judge disbelieved the customer's witnesses. The judge found in favour of the shipbuilder for breach of contract and awarded damages: Wavemaster International Pty Ltd (In liq) v JR Marine Systems Pte Ltd [2009] WASC 203 [161] - [197].

4 The customer seeks to appeal that decision. The notice of appeal was filed in excess of three months out of time, and the customer seeks an extension of time under pt 5 r 26 of the Supreme Court (Court of Appeal) Rules 2005 (WA).

The application for an extension of time to appeal

5 The relevant principles to be applied when a party seeks to extend the time for filing its notice of appeal were set out in Simonsen v Legge [2010] WASCA 238 [8] as follows:

(a) on the expiry of the time for appealing, the respondent has a vested right to retain the judgment unless the application for an extension of time is granted: Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458, 459;

(b) the grant of an extension of time under the rule is not automatic; the object of the rule permitting extensions of time is to ensure that the rules which fix time for the doing of acts do not become instruments of injustice; and the discretion to extend time is given for the sole purpose of enabling the court to do justice between the parties: Gallo v Dawson (459);

(c) nevertheless, the rules of court must, prima facie, be obeyed, and in order to justify a court in extending the time, there must be some

material upon which the court can exercise its discretion: Gallo v Dawson (459);

(d) there are, generally, at least four major factors to be considered, although they are not necessarily exhaustive in each case:

(i) the length of the delay;

(ii) the reasons for the delay;

(iii) the prospects of the applicant succeeding in the appeal; and

(iv) the extent of any prejudice to the respondent: Esther Investments Pty Ltd v Markalinga Pty Ltd (1989) 2 WAR 196, 198; In de Braekt v Powell [2007] WASCA 55 [11]; [2007] WASCA 55; (2007) 33 WAR 389;

(e) other factors may include whether the delay was intentional, or contumelious, or merely the result of a bona fide mistake or blunder, and whether the delay is that of the litigant or of its lawyers with which the litigant should not be saddled: City of Canning v Avon Capital Estates (Australia) Ltd [2009] WASCA 129 [33]

(f) the length and reasons for the delay must be addressed by the applicant and the cogency of the explanation increases as the period of the extension sought increases: Girando v Girando (1997) 18 WAR 450, 454;

(g) in relation to the third matter referred to in subpar (d) above, the time for appealing will not be extended unless the proposed appeal has some prospect of success; the converse of that proposition is not that time must be extended if an appeal has any prospect of success, but rather, the fact that an appeal has some prospect of success is a factor which is to be taken into account, together with all other relevant factors: City of Canning v Avon Capital Estates (Australia) Ltd [17]; and

(h) similarly, it is not the law that, whenever an applicant demonstrates an arguable case, or even a strongly arguable case, in the absence of significant prejudice suffered by the respondent, an extension of time should be granted: City of Canning v Avon Capital Estates (Australia) Ltd [16].

6 The customer in this case is a Singaporean company. The shipbuilder, after the elapse of the time to appeal, filed an application in the Singapore court to register the orders made by the primary judge, with a view to their enforcement in Singapore. The customer did not appeal the primary judge's decision until after it learned of the application by the shipbuilder filed in the Singapore court.

7 There is much that is irrelevant in the affidavits filed by the customer in support of its application to extend time to appeal. The relevant facts which emerge from the evidence, are:

(a) on 21 April 2009, the customer formally resolved to appoint Mr Arif, who was then a director of the customer, to instruct the customer's Australian solicitors in relation to the proceedings below, with such instructions to be conveyed by Mr Arif directly or through Mr Thanggaya of the customer's Singapore solicitors;

(d) in the period 21 May 2009 to 12 October 2009, the customer's Australian solicitors communicated with either Mr Arif, or Mr Thanggaya of the customer's Singapore solicitors;

(e) the judgment under appeal was delivered on 30 July 2009, and certain orders were made that day for the payment of sums by the customer to the shipbuilder;

(f) the customer's Australian solicitors wrote to the customer's Singapore solicitors on 30 July 2009 in relation to the judgment, and had further communications with them on 4 and 6 August 2009 in relation to the then forthcoming hearing for consequential orders for interest and costs - the shipbuilder was seeking indemnity costs;

(g) on 7 August 2009, there was a hearing at which orders for interest and costs were made - the shipbuilder failed in its application for indemnity costs, and the customer's Australian solicitors advised Mr Thanggaya of the outcome of the hearing that day;

(g) on 10 August 2009, the customer's Australian solicitors wrote to the customer's Singapore solicitors and provided a timeline for the filing of an appeal;

(h) on 13 August 2009, the customer's Australian solicitors wrote to the customer at its registered office informing it about the judgment, and the timeline for the filing of an appeal;

(i) on 20 August 2009, the customer's solicitors telephoned the customer's Singapore solicitors and 'pressed' them about filing a notice of appeal;

(j) on 20 August 2009, the customer's time to file an appeal lapsed;

(k) in late August 2009, Mr Thanggaya became unwell;

(l) on 2 October 2009, the primary judge's orders were registered in the Singapore court, and the order for registration was served on the customer on 12 October 2009;

(m) on 12 October 2009, Ms Anthony, one of the customer's two directors at the time, having learned of the registration of the primary judge's orders, telephoned the customer's Australian solicitors 'to enquire about the judgments';

(n) between 13 October and 12 November 2009, the customer instructed the customer's Australian solicitors to file an appeal and it put them in funds for that purpose;

(o) on 13 November 2009, the notice of appeal was filed.

8 The evidence referred to above, concerning the communications between the customer's Australian solicitors and Mr Arif and Mr Thanggaya, derives from a letter dated 19 November 2009, by the customer's solicitors, annexed to the second affidavit of Ms Anthony, a director of the customer.

9 These being the material facts, I turn to the three explanations which have at various times been proffered for the delay.

10 The first, contained in Ms Anthony's first affidavit, was to the effect that all communications between the customer's Australian solicitors and the customer in Singapore concerning the judgment went to a Ms Allene, a personal assistant within the customer's office, who, it was said, 'suddenly disappeared' on or about 30 August 2009. The suggestion was that Ms Allene had fraudulently taken away the record of these communications. That explanation was withdrawn when Ms Anthony said, in her second affidavit, that her earlier evidence that the communications were sent to Ms Allene, was a 'mistake'.

11 Secondly, it was suggested that the customer did not receive news of the judgment because communications were sent to Mr Thanggaya, and he went into a coma on 11 November 2009, and died on 11 February 2010. That explanation lacks cogency, given the chronology of events referred to above.

12 Thirdly, Ms Anthony's evidence is that there were only two directors of the customer in the relevant period (being Ms Anthony and a Mr Pandian), and that neither of them in fact knew of the judgment until after being served with the order for registration in Singapore. In my view, that explanation is the more promising of the three from the customer's point of view, but it still leaves some room for disquiet. Ms Anthony does not address the matter of the letter dated 13 August 2009, which, according to the customer's Australian solicitors, was sent to the customer's registered office, informing the customer of the judgment and the timeline for the appeal. Also, Ms Anthony does not seek to explain what authority, if any, Mr Arif continued to have to deal with the litigation even after he ceased to be a director. There is no affidavit from Mr Arif and there is no suggestion that he is unwell, or incapacitated, or left the company on bad terms. It appears to be implicit in the customer's Australian solicitors' letter of 19 November 2009 that Mr Arif's authority continued after 2 May 2009. Also, whilst Ms Anthony acknowledged having made a 'mistake' on a clearly important matter in her first affidavit, she does not provide an explanation as to how she could have made such an error in the first place.

13 Taking everything into account, including my assessment of the prospects of success to which I refer below, I am of the view that an extension of time should not be allowed in respect of grounds 2 and 3. On balance (just), I would grant leave to extend time in respect of the first ground.

14 I now turn to the background matters necessary to consider the prospects of success, and to my assessment of the merits of the grounds raised in the notice of appeal.

15 The shipbuilding contract included terms to the effect, that:

(a) the shipbuilder would 'design, build, trial, sell and deliver' the vessel to the customer for the basic purchase price, defined as the sum of $5,935,000 (subject to certain adjustments not presently relevant) (cl 2.1, annexure A);

(b) the property in the vessel would be that of the customer at all times, although the shipbuilder would have a charge on the vessel, and would not be required to deliver possession, pending payment of the amounts due under the contract (cl 5.1);

(c) the vessel would be built in accordance with the specifications and drawings (cl 3.1);

(d) the customer would pay a deposit, as a first progress payment, of 10% of the basic purchase price (ie, $593,500), immediately against delivery of an invoice therefor and a certified copy of the executed shipbuilding contract (cl 8.1A, annexure B);

(e) the customer would pay a further four progress payments, described as the second, third, fourth and fifth progress payments, at certain designated stages of completion against the delivery to the customer of an invoice, a photograph and an interim stage certificate issued by the shipbuilder and countersigned by a nominated Classification Society (cl 8.1A, annexure B);

(f) the customer would pay the final (10%) payment upon delivery of the vessel, upon delivery of an invoice and certain nominated documents (cl 8.1E, cl 8.1F, annexure B);

(g) the customer would be in default if, inter alia:

(i) it were in material breach of the contract (cl 9.1A);

(ii) it failed to pay the deposit, or any progress payment due and payable and which was not reasonably disputed, within three days after notice from the shipbuilder to the customer that the payment had not been made (cl 9.1B);

(h) where the customer is in default and remains in default after 14 days of receiving a notice from the shipbuilder requiring the default to be remedied, the shipbuilder may terminate the contract by notice in writing, in which case the contract would come to an end, save for the operation of cl 5 and cl 9 (cl 9.3A);

(i) the shipbuilder would be in default if it were in material breach of the contract and failed to remedy the breach within 28 days of receipt of a notice of the breach from the customer, and if the breach thereafter continued, the customer could terminate the contract in writing (cl 10.1A, cl 10.2A);

(j) all notices should be sent by post or facsimile transmission; time limits resulting from the giving or sending of notices commence from the date of receipt of the notice by the party affected by the time limit; notices sent by facsimile are deemed to have been received the next business day and letters sent by pre-paid registered airmail are deemed to have been received seven days after the day of posting (cl 22.2).

16 Relevantly, the judge found that the shipbuilder had dispatched the invoices for each of the first four progress payments, but that in relation to the second, third and fourth claims for progress payment, it had not supplied a certificate countersigned by the relevant Classification Society. Accordingly, his Honour found, the shipbuilder could not rely upon the second, third and fourth progress claims as creating any entitlement to payment under the shipbuilding contract. Nevertheless, his Honour found that a valid claim for payment had arisen in relation to the first progress payment, ie, the deposit (reasons [127] - [135], [143], [174]).

17 The judge also found that the shipbuilder's failure to press for payment of the deposit between October 2003 and November 2004 did not affect its accrued right to payment (reasons [175]).

18 His Honour also found that, on 25 November 2004, the shipbuilder (which was then in administration), by the solicitors for the administrator, wrote to the customer in Singapore. The letter referred to invoices for the deposit and for the second, third and fourth progress payments, and requested payment within three days of receipt of the letter, and gave notice that the shipbuilder may terminate the shipbuilding contract 14 days thereafter if payment were not made (reasons [179] - [180]).

19 By letter dated 3 December 2004, the customer's solicitors responded to the shipbuilder's solicitors by letter dated 25 November 2004 and said, 'As we have just been instructed, kindly hold your hands as we seek full instructions ... '.

20 By letter dated 6 December 2004, in response, the solicitors for the administrator of the shipbuilder said they agreed not to take any action until 20 December 2004.

21 By letter dated 20 December 2004, the customer's solicitors wrote to the shipbuilder's solicitors and stated:

We refer to your letter of 25 November 2004 to our clients and the contract between Wavemaster International Pty Ltd and JR Marine Systems Pte Ltd dated 2 October 2003.

Our client is of the view that the contract between Wavemaster International Pty Ltd ('Wavemaster') and JR Marine Systems Pte Ltd was terminated by Wavemaster's conduct on the basis that Wavemaster acted inconsistently with the terms of Contract by attempting to market the vessel to a third party without informing JR Marine of its actions.

In the circumstances, our clients' [sic] deny being indebted to Wavemaster, as claimed or at all. All our clients' [sic] rights are expressly reserved.

22 By letter dated 1 February 2005, the shipbuilder's solicitors responded:

We refer to your facsimile to us dated 20 December 2004.

As your client has failed to make payment as requested in our letter to it dated 25 November 2004 a copy of which we enclose, the Agreement has now terminated.

Please inform us whether you have instructions to accept service on behalf of your client.

23 The judge found that the letter from the customer's solicitors dated 20 December 2004 was repudiatory (reasons [184]).

24 His Honour also found that the letter from the shipbuilder's solicitors dated 1 February 2005 constituted an acceptance of the repudiation, thereby bringing about a termination of the shipbuilding contract (reasons [185] - [188]).

25 The judge also addressed the question of whether the shipbuilding contract had been abandoned. This was a matter which had not been pleaded by the customer, but, it appears, it arose to some limited extent in closing submissions by the defendant. The judge set out his understanding of the customer's contention that there was an abandonment, and dealt with it in these terms (reasons [117] - [118]):

What remains to be dealt with, essentially, are the defendant's further arguments, that the Shipbuilding Agreement was consensually abandoned, under another oral agreement perfected either as between Mr Abdullah and Mr Arif during 2004, or alternatively through failure by the plaintiff, whilst Mr Swaddle was general manager, to enforce the plaintiff's entitlements to its receipt of the instalments claimed as due from the defendant, prior to the plaintiff going into administration in November 2004.

I am also unable to accept the defendant's contentions upon these issues. The assessed unreliability of Mr Arif and Mr Abdullah's evidence at trial grounds this determination, only in part. Equally, there is again, an absence of any document which would support an abandonment by the plaintiff of its rights to performance of the Shipbuilding Agreement, as against the defendant. Any forbearance, or failure, by the plaintiff during 2004 to press the defendant for monies due as instalment payments under the Shipbuilding Agreement falls, in my view, substantially short of the defendant making good a case for the consensual abandonment of all the performance obligations arising under the Shipbuilding Agreement. Such an abandonment would presumably be on the basis of consideration (not pleaded, nor explained at trial) - but presumably contended to be the mutual promises of each party, one to the other, to give up their respective obligations of future performance under the Shipbuilding Agreement from that time in 2004. However, in my view, there is no basis in the evidence to conclude that the Shipbuilding Agreement was abandoned in its performance by either the plaintiff or the defendant, let alone by them mutually.

27 The first is, relevantly, to the effect that the judge erred in finding that an obligation had arisen to pay the deposit, when there was no sufficient evidence that the necessary invoice against which payment was to be made, had been sent.

28 The second is to the effect that the letter from the customer's solicitors, dated 20 December 2004, was not repudiatory.

29 The third ground is meandering and difficult to follow. As I understand it (and read in the light of the customer's submissions - although they too were in many respects lacking in clarity), in essence, it alleges that the judge erred in failing to infer that the shipbuilding contract had been abandoned by the parties, including in that regard, in erroneously holding that the abandonment of a contract may not be inferred by conduct.

30 The deposit was payable against delivery of an invoice and a certified copy of the executed the shipbuilding contract. There is no issue in the appeal as to the delivery of the latter. As to the former, the shipbuilder did not give direct evidence of the delivery of the invoice with respect to the deposit. It asked the judge, in effect, to infer delivery on the basis of what was purported to be evidence of 'practice' given by Mr Swaddle, the general manager of the shipbuilder at the time.

31 On this, the judge said (reasons [60], [64]):

Mr Swaddle gave some contentious evidence conveying his belief as to the plaintiff's likely despatch of invoices to the defendant at Singapore for Yard 207. This type of administrative work had, he said, been generally attended to by his subordinate, Mr Pip Mangano, who was the plaintiff's Project Manager at its Henderson premises, outside Fremantle. The four invoices of the plaintiff to the defendant concerned are respectively dated 8 October 2003 ... 15 October 2003 for Stage 2 ...; 28 October 2003 for Stage 3 ...; and for Stage 4, dated 5 March 2004 ....

...

Mr Swaddle was cross-examined about a likely despatch of the progress payment invoices by Mr Mangano, particularly for Stages 1, 2 and 3 (ts 140). Essentially, however, Mr Swaddle was not the person physically responsible for the actual despatch of those invoices, by facsimile or otherwise, and his evidence was directed towards his knowledge of the plaintiff's business practices in that respect, as well as his knowledge of Mr Mangano's practices, as regards reliable despatch of the plaintiff's invoices generally. It was Mr Swaddle's belief that Mr Mangano would have despatched the progress payment invoices to the defendant (ts 140). It is my assessment, on the balance of probabilities, that it was likely that all four invoices were properly prepared and sent by Mr Mangano to the defendant's nominated Singapore receipt address, pursuant to cl 22 and Annexure A of the Shipbuilding Agreement. This approach is supported by a decision concerning evidence as to reliable business practice (see Connor v Blacktown District Hospital [1971] 1 NSWLR 713 per Asprey JA at 721A - E, Mason JA at 722).

32 Evidence of a particular practice or habit will generally be admissible, there being a probability that the general course will be followed in the particular case: Elliott v The Queen [2007] HCA 51; (2007) 234 CLR 38, 47; Avins v Garvey [2001] WASCA 415 [5]; The Queen v Murphy (1985) 4 NSWLR 42, 62 - 63; Connor v Blacktown District Hospital (1971) 1 NSWLR 713, 721. See also Cross on Evidence [1130] - [1135]. However, in order to be probative, such evidence must not be so generalised so as to have no bearing on the situation in which the practice or habit is claimed to have been followed: The Queen v Murphy (63).

33 The passage in the case of Connor v Blacktown District Hospital, to which the judge referred in drawing the inference of dispatch of the invoices, is in the following terms:

In my opinion, the evidence as to the regular practice as to the cleaning of the servery floor was wrongly rejected by his Honour. To prove that an act has been done, it is admissible to prove any general course of business or office, whether public or private, according to which it would ordinarily have been done, there being a probability that the general course will be followed in the particular case (see Phipson, Law of Evidence, 10th ed., par. 297).

...

In my opinion, evidence of a relevant practice may be given by a person who, on a sufficient number of occasions and over a sufficient period, has regularly and uniformly performed acts, or has observed the regular and uniform performance of acts by others, under the same circumstances and upon the same occasions, so as to make it appear probable in the minds of reasonable men that, given the same circumstances and occasions, the like acts will again be performed. Such evidence, if accepted by the tribunal of fact, will enable it to draw the inference that such acts were performed by that person or those others, as the case may be, where the same occasion and circumstances for their performance have subsequently recurred at a point of time connected sufficiently closely with the continuity of acts related in the evidence.

34 Mr Swaddle's evidence-in-chief (exhibit 112A) was to the effect that:

(a) he had instructed the project manager, Mr Mangano, to dispatch the invoices relating to the deposit and the second, third and fourth progress payments (pars 22 - 23);

(b) the 'normal' procedure for progress payments was that Mr Mangano 'would prepare a letter ... attaching the documents required to be delivered for the particular stage the vessel had reached. These documents usually included the relevant invoice, a photograph of the vessel and an interim stage certificate' (pars 27 - 28);

(c) Mr Mangano would then give the letter to the receptionist who in turn 'would either' put it in an envelope and send it by normal post or send the letter by fax.

35 Mr Mangano was not called as a witness and there was no explanation for his absence. There was no evidence of records of posting or facsimile transmissions. Mr Swaddle said in cross-examination (ts 140):

Okay. Now, stages 1, 2, 3 - can you tell me something about them please? What can you remember about the invoices for stages 1, 2, 3?---Well, stage 1 would have been a deposit stage 2 was probably a percentage of the hull complete, and probably - laying the keel probably, and the next stage would have been the percentage of the hull complete.

You see, we have no record of them being received by JR Marine?---Okay. Well, I can't - - -

What do you say about that?---Well, I can't comment because, I mean, basically I wouldn't know whether they would or they hadn't. We sent them as far as - you know, [Mr Mangano] would have sent it out. Whether it actually arrived at JR Marine, I can't comment on that. I can't comment that it didn't either. (emphasis added)

36 In my view, the effect of Mr Swaddle's evidence is that he instructed Mr Mangano to send the invoices, that Mr Mangano's job was to prepare the invoices and requisite accompanying documents for the purpose of making progress payment claims, and that the receptionist's job was to post or fax the material prepared by Mr Mangano. Insofar as the language is couched in terms of what 'would' have been done, it is no more than evidence of speculation. In my view, it does not provide evidence of a regular practice, or of the regular or uniform performance of acts, so as to be capable of allowing an inference to be drawn that the invoices were sent.

37 Counsel for the shipbuilder nevertheless referred to three other pieces of evidence, with a view to supporting the primary judge's finding that the invoices had been sent. One was an answer, given by Mr Swaddle in the course of cross-examination, to the effect that he had heard from someone from the shipbuilder's parent company that the shipbuilder's financial controller was 'supposed to stop sending invoices' (ts 153). Counsel said that the statement to 'stop' sending invoices is evidence that some other invoices must have been sent. In my view, the evidence is second-hand hearsay, and has no probative force on the fundamental issue in the shipbuilder's case, which was always an issue on the pleadings, namely, proof of the delivery of the invoices to justify the claimed debt. The second matter referred to by counsel was the judge's finding that, although the customer had not discovered any invoices from the shipbuilder in its discovery, the customer had failed to make adequate efforts to locate documents (reasons [78(d) and (e)]). Whilst that point may have assisted in the drawing of an inference if there were otherwise some reliable evidence from which the inference might be drawn, it cannot, in my view, supplant the absence of such evidence. Thirdly, counsel for the shipbuilder referred to the evidence of Mr Abdullah, a director of the shipbuilder at the relevant time, who was called at the trial by the customer. The evidence was in connection with certain information that Mr Abdullah had provided to the Australian Taxation Office, to the effect that the shipbuilder was owed $4.747 million by the customer for shipbuilding in respect of the progress claims. Mr Abdullah, however, made the declaration as a director of the shipbuilder, and not as an agent for the customer. It is not an admission against interest and the evidence does not, in my view, assist the shipbuilder on the issue of whether it proved the dispatch of the invoices.

38 Accordingly, the first ground of appeal would, in my view, succeed.

39 That is not to say that there should be substituted a positive finding that the invoices were not sent. Success on the first ground merely means that the shipbuilder failed to prove that the invoices were sent. Accordingly, the shipbuilder had not established that there was a liquidated sum due to it in respect of the deposit by November 2004.

40 It is convenient to deal with the third ground next.

41 In oral argument in this appeal, counsel for the customer made submissions to the effect that abandonment was to be inferred from the following (appeal ts 25 - 37):

(a) the fact that after entering into the shipbuilding contract, the shipbuilder did not do any work on the building of the vessel;

(b) the shipbuilder did not have any oral or written communication with the customer about the vessel, or about the work the subject of the contract, after the contract had been entered into;

(c) the invoices had not been sent or, if sent, there was no follow-up.

42 A contract may be said to be abandoned where the court infers that the parties, by their conduct, have discharged their contract by further agreement: Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420, 432. The further agreement, being inferred from the parties' conduct, does not depend upon sequential offer and acceptance. Also, being an inferred agreement, it does not depend upon the subjective intention of the parties, but upon whether, objectively, their conduct manifests an intention to discharge the contract. See Summers v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144, 151 - 152; CGM Investments Pty Ltd v Chelliah [2003] FCA 79 [18] - [22]; (reversed on other grounds; Wallera Pty Ltd v CGM Investments Pty Ltd [2003] FCAFC 279); DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423, 434; Marminta Pty Ltd v French [2003] QCA 541 [21] - [22].

43 It is important to note that there was no plea of implied or inferred abandonment in the defence. In closing submissions at the trial, counsel for the customer nevertheless referred to par 13(b) of the defence as a 'walk away' agreement, which expression, he informed the court in this appeal, conveyed the notion that the shipbuilding contract had been abandoned.

1. The Defendant denies paragraphs 5, 6 and 7 of the Statement of Claim. The Defendant says that:-
   1. in or about September 2004, the Plaintiff's Abdullah orally notified the Defendant's Arif that the Plaintiff would offer to sell the Vessel to another party; and
   2. by reason of paragraph 13a above, the Agreement was rescinded; or alternatively, the Plaintiff had waived its right to enforce the Agreement; or in the further alternative, the Plaintiff is estopped from claiming any or such sum in the Statement of Claim.

45 The so-called 'walk away' agreement appears, from this plea, to be express, and oral, rather than inferred, although the primary judge appears to have understood that the customer was also alleging an inferred abandonment by reason of the shipbuilder not demanding payment from the customer (see [25] above). In that regard, his Honour seems to have been addressing the third of the three facts now alleged in this appeal from which, it is said, the inference of abandonment should be drawn.

46 With respect to the second basis upon which the judge considered the contention of abandonment, in my view, his Honour clearly understood that, as a matter of law, abandonment is found where the court infers that the parties, by their conduct, have abandoned their contract. The customer's contention in this appeal, that his Honour failed to understand that concept, is erroneous.

47 Furthermore, neither of the two alleged facts referred to in subpars (a) and (b) of [41] above were pleaded, and, as best I understood the customer's submissions as they finally emerged in oral argument, it is not said in this appeal (correctly, in my view) that the third point alone would be sufficient in this case to evince, objectively, an intention of an abandonment of the contract. Nor has the customer in this appeal shown that the trial was conducted on the basis that an issue for determination was abandonment arising from the first two alleged facts.

48 Counsel for the customer did, however, point to certain evidence which, he said, went to the first alleged fact, ie, the allegation that the shipbuilder had not undertaken any work on the vessel. He said that inferences could be drawn about that matter from the report on the value of the vessel which had been tendered by the shipbuilder in relation to its claim for damages, and to which the judge referred at reasons [146] - [160]. The judge referred to the report as disclosing that the vessel was only 45% complete at the time of termination. The customer invited this court to infer from this that work on the vessel had not progressed from the date of the entry into the shipbuilding contract to the date of alleged termination, and that the lack of progress signifies that the shipbuilder took no steps to perform the contract. It seems to me that, whilst that might arguably be an available inference, the assertion cannot be adequately tested. The report was not prepared with that issue in mind, and, as the issue was not contested at trial, potential explanations such as labour unrest, the difficulty of procuring parts, and the like, have not been explored.

49 In my view, the customer's pleading ought be amended if this court is asked to make a decision which turns on issues of fact now raised which were not pleaded below: Bell v Lever Bros Ltd [1931] UKHL 2; [1932] AC 161, 216. The discretion to amend will be exercised taking into account, inter alia, the principles referred to in Mostert v Durban Roodepoort Deep Ltd [2004] WASCA 309 [53] - [55], which were approved of and applied in Uranium Equities Ltd v Fewster [2008] WASCA 33 [240]:

First, where a point is not taken in the court below and evidence could have been given there which, by any possibility, could have prevented the point from succeeding, it cannot be taken afterwards: Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 at 438; Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 7 - 8; Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491 at 497; Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 645; Chilcotin Pty Ltd v Cenelage Pty Ltd [1999] NSWCA 11 at [14]; Goldspar Australia Pty Ltd v Council of the City of Sydney [2001] NSWCA 246 at [22]. Similarly, the point cannot afterwards be taken where, if the point had been raised, the respondent might have conducted the case differently at trial: Multicon Engineering at 645; Chilcotin at [14]; Goldspar Australia at [22].

The second principle is that generally parties must be bound by the course they adopted at the trial: Metwally v University of Wollongong (No 2) (1985) 59 ALJR 481 at 483; Multicon Engineering at 645; Chilcotin at [15]. At least in part this principle is founded on public policy considerations favouring the finality of litigation and it may be that the appellant will not be permitted to make a new case on appeal even if the point is unaffected by possible further evidence or the way the opposing party would have conducted the case at trial: Chilcotin at [15]. The principle may come into play not only when the course taken at the trial was deliberate, but also if the appellant's conduct at the trial was affected by inadvertence: Chilcotin at [15].

In Multicon Engineering Mason P, with whom Gleeson CJ and Priestley JA agreed, said at 645 that a party does not have a right to insist that a new point may be decided on appeal simply because all of the facts have been established beyond controversy or the point is one of construction or of law, even constitutional law. That is because it remains a question of whether the appellate court 'may find it expedient and in the interests of justice to entertain the point': Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491 at 497. Whether the appellant should be permitted to assert the error on appeal therefore requires attention to the conduct of the proceedings below.

50 In this appeal, counsel for the customer has made no application to amend the defence to incorporate a plea of abandonment and the three matters from which it is now said abandonment is to be inferred, so the need to address the contention of abandonment does not, strictly, arise. Had leave been sought, I would have refused leave, essentially for the reasons expressed in Equititrust Ltd v Franks [2009] NSWCA 128 [34]:

The point in question is not a question of law which could not have been met by additional evidence if raised at first instance: Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 at 438 ; [1950] HCA 35; Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 7; CGU Insurance Ltd v AMP Financial Planning Pty Ltd [2007] HCA 36; (2007) 235 CLR 1. Whilst there was some evidence before the court which was relevant to the question ... it can by no means be concluded that additional cross-examination might not have occurred, or evidence have been called, which may also have borne on the point. Further, the point required the determination by the primary judge of factual questions which, because they were not in issue, he did not resolve.

52 The second ground alleges that the letter from the customer's solicitors, dated 20 December 2004, was not repudiatory and (which is the same thing in this context) that the shipbuilder had failed to prove that it was repudiatory. It is important to notice the precise scope of this ground, and the way it is confined in the notice of appeal. Ground 2 says:

1. The learned trial judge erred in law in finding that the letter from M & A Law Corporation [dated 20 December 2004] was erroneous and unjustified and further finding that it amounted to an act of repudiation or renunciation: Judgment [121] - [122], [174], [181] - [184], [187]. He should have found in lieu that it merely pointed to an objectively true fact, namely that the Respondent attempted to market the vessel to a third party. The learned trial judge should have found that the Respondent had failed to discharge its onus of proof that the Appellant had repudiated the Shipbuilding Agreement, and therefore he should have dismissed the Respondent's claim. (emphasis added)

53 The confined scope of the ground was confirmed in the customer's written submissions in seeking an extension of time in which to appeal:

In the main, the appeal is on a short point about whether a letter amounted to a repudiation of the Agreement.

54 Accordingly, the suggestion by the customer's counsel which emerged in submissions under this ground to the effect that the customer did, or at least was entitled to, terminate as at 20 December 2004, because the shipbuilder was in breach of an alleged essential condition, namely, an alleged obligation to deliver the vessel by 1 March 2004, does not arise for determination under this ground.

55 Unequivocal words or conduct evincing an election to terminate the performance of a contract are required, although there is no requirement that the promisee used the word 'terminate': see Carter JW, Breach of Contract (2nd ed, 1991) (Carter) [1015] - [1016]. Repudiation of a contract is a serious matter, and is not to be lightly found or inferred: Shevill v Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620, 633.

56 The term 'repudiation' is used in different senses. First, it may refer to the renunciation of the contract, in the sense that the repudiating party's conduct evinces an unwillingness or inability to render substantial performance of the contract. The test is whether the conduct of that party is such as to convey to a reasonable person, in the situation of the other party, renunciation of the contract as a whole or of a fundamental obligation under it. Secondly, the term 'repudiation' may refer to any breach of contract which justifies the termination by the other party: Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115 [44]. It is the former sense which is relevant to the second ground of appeal.

57 With respect to repudiation in the former sense, in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623, 657 - 658, Deane and Dawson JJ said:

Lord Wright's oft-quoted admonition that 'repudiation of a contract is a serious matter, not to be lightly found or inferred' [Ross T Smyth & Co Ltd v T D Bailey, Son & Co [1940] 3 All ER 60 at 71] is, no doubt, a wise one. It should not, however, be allowed to cloud the fact that an allegation of repudiation of contract in a civil case does not involve an assertion that the alleged repudiator subjectively intended to repudiate his obligations. Thus, it is of little assistance in the present case to identify reasons why the lessor was unlikely to have subjectively desired to repudiate its agreement to grant a lease. An issue of repudiation turns upon objective acts and omissions and not upon uncommunicated intention. The question is what effect the lessor's conduct 'would be reasonably calculated to have upon a reasonable person' (per Lord Herschell LC, Carswell v Collard [(1893) 20 R(HL) 47 at 48]; Forslind v Bechely-Crundall [[1922] SC(HL) 173 at 190]). It suffices that, viewed objectively, the conduct of the relevant party has been such as to convey to a reasonable person, in the situation of the other party, repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it.

58 Termination for repudiation in either sense operates prospectively so that each party is released from all further performance of the contract, and rights accrued under the contract prior to termination remain enforceable (unless the contract otherwise provides): McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457, 476 - 477

59 In DRT Nominees v Mona Homes (431 - 432), Stephen, Mason and Jacobs JJ said:

The relevant question, therefore, is whether the events which we have recounted evidence an intention on the part of the appellant to repudiate or renounce the contract or more precisely whether such an intention is to be inferred from those events.

For the respondents it was submitted that such an intention should be inferred from the appellant's continued adherence to an incorrect interpretation of the contract. It was urged that the appellant, because it was acting on an erroneous view, was not willing to perform the contract according to its terms. No doubt there are cases in which a party, by insisting on an incorrect interpretation of a contract, evinces an intention that he will not perform the contract according to its terms. But there are other cases in which a party, though asserting a wrong view of a contract because he believes it to be correct, is willing to perform the contract according to its tenor. He may be willing to recognize his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event an intention to repudiate the contract could not be attributed to him. As Pearson LJ observed in Sweet & Maxwell Ltd v Universal News Services Ltd [[1964] 2 QB 699 at 734 ; [1964] 3 All ER 30 at 43]:

'In the last resort, if the parties cannot agree, the true construction will have to be determined by the court. A party should not too readily be found to have refused to perform the agreement by contentious observations in the course of discussions or arguments ... '

In this case the appellant acted on its view of the contract without realizing that the respondents were insisting upon a different view until such time as they purported to rescind. It was not a case in which any attempt was made to persuade the appellant of the error of its ways or indeed to give it any opportunity to reconsider its position in the light of an assertion of the correct interpretation. There is therefore no basis on which one can infer that the appellant was persisting in its interpretation willy nilly in the face of a clear enunciation of the true agreement.

60 Those observations may be contrasted with the obiter observations of Mason CJ, Brennan and Dawson JJ in Braidotti v Queensland City Properties Ltd [1991] HCA 91; (1991) 172 CLR 293. There, the purchasers of a property terminated a contract for repudiation after the vendor itself purportedly rescinded it on the basis of an erroneous perception that a particular statutory provision (s 71 of the Property Law Act 1974 (Qld)) did not apply to the contract. An argument was raised by the vendor that its purported rescission, based on an erroneous view of the relevant statutory provision, ought not be regarded as signifying a repudiation. Their Honours said that as the point had not been raised below, it would not be appropriate to determine it, and rescinded the grant of special leave insofar as it related to that point. Their Honours, in a passage in which they referred to DTR Nominees v Mona Homes, nevertheless, continued (303 - 304):

Moreover, in our view, the argument has little to commend it. The vendors rescinded the contract and sought a declaration that it had been validly rescinded. By their actions they signalled their unqualified intention not to proceed with the contract. On the view which we take of s 71 they were mistaken in their interpretation of the statutory definition. By reasons of that mistake they appear to have refused unequivocally to perform the contract according to its terms. The case is to be distinguished from cases such as DTR Nominees Pty Ltd v Mona Homes Pty Ltd where a party acts on a mistaken but bona fide interpretation of a contract in circumstances in which it is proper to infer that the party, though maintaining that his or her interpretation of the contract is correct, will perform the contract according to its terms, if the interpretation is shown to be incorrect.

61 In this case, the evidence concerning the extrinsic circumstances providing the context within which the customer's solicitors' letter of 20 December 2004 was written, was scant at trial. The position is more attenuated if, as I have found, there was no evidence to the effect that the invoices for the progress payments had been sent.

62 What is left, by way of extrinsic circumstances, are the following matters:

(a) the shipbuilding contract was entered into in September 2003;

(b) the contract had not been abandoned by November 2004;

(c) there had been attempts by the shipbuilder to market the vessel, which attempts were not repudiatory;

(d) on 25 November 2004, the shipbuilder's solicitors wrote to the customer, demanding payment by reference to the four invoices - although the shipbuilder has not established that the invoices were sent and that there was any accrued liability in debt at that time;

(e) on 3 December 2004, the customer's solicitors said, in effect, that they were seeking instructions in relation to the demand for payment;

(f) following the letter of 20 December 2004 from the customer's solicitors, the shipbuilder's solicitors responded by letter dated 1 February 2005, which letter, the judge found, constituted acceptance of the repudiation.

63 In relation to the last-mentioned matter, there is no ground of appeal to the effect that the shipbuilder's solicitors' letter dated 1 February 2005 could not properly be characterised as constituting an acceptance of the alleged repudiation (assuming repudiation were found), or that the judge erred in that regard.

64 Also, it is not contended, by this ground, that the customer's solicitors' letter dated 20 December 2004 itself constituted a valid termination of the shipbuilding contract on the basis that it ought be characterised as an acceptance of a repudiation by the shipbuilder in relation to its marketing attempts. Indeed, as I understand it, counsel for the customer in the appeal did not contend that an attempt to market the vessel would itself be repudiatory, even if the shipbuilder had not established that a debt had been accrued by November 2004 (appeal ts 13, 16) The second ground of appeal simply focuses upon the proper inference to be drawn from the language in the letter which refers to the shipbuilder's attempts to market the vessel.

65 The contention in ground 2 is that the reference in the letter of 20 December 2004 to the topic of marketing did no more than 'merely' point to an objectively true fact, and that it was not repudiatory of the shipbuilding contract as a whole, or of any fundamental obligation under it.

66 I am unable to accept the contention raised by the second ground of appeal. It seems to me that the letter of 20 December 2004 is doing more than simply pointing to an objective fact in its reference to the shipbuilder having attempted to market the vessel to a third party. The letter, in the second paragraph, by the use of the words 'on the basis that', connects the statement that the customer considers that the contract has been 'terminated', with the contention that the shipbuilder was in breach of the shipbuilding contract by taking such action. It is more than simply pointing out an objective fact.

67 Further, the last paragraph of the letter not only denies the indebtedness which had been asserted by the shipbuilder in its solicitors' letter, but denied any indebtedness under the contract 'at all'. These words connote, in my view, a resistance to any liability, past or future. The reference to the reservation of rights adds an air of finality, conveying that, in effect, no further correspondence would be entered into.

68 In my view, the effect of the letter is reasonably calculated to convey to a reasonable person in the shipbuilder's position that the customer is disavowing the shipbuilding contract as a whole. It is not proper to infer that the letter was merely pointing out an objective fact or even (although the point was not raised this way in this ground) that the customer would perform the contract according to its terms if it was shown to be in error as to the contractual effect of the shipbuilder having attempted to market the vessel.

69 I would grant leave to extend the time to appeal in respect of ground 1, but not otherwise, and I would uphold ground 1.

70 The parties should be given the opportunity to provide submissions in relation to the effect (if any) on the final orders made by the primary judge in consequence of upholding ground 1.