A. No."
29 I should set out the text of the letter of 29 March because it is crucial to the case. It is addressed to Mrs Ryan at the Bondi Hotel and is signed by R C Radford, Managing Director, and John A Sutherland, Financial Director. The text is:
"We hereby confirm that we will transfer full title of goods the subject of Rental Agreement dated 1 April 1993 between C G Mal Pty Ltd and Sanyo Office Machines Pty Ltd at the termination of the rental period.
Transfer will be effected upon payment of all outstanding moneys owing to Sanyo Office Machines Pty Ltd at that time plus the sum of $1.00."
30 In so far as the defendant suggests that the letter was not received by Mrs Ryan until after the present case commenced and that she then reconstructed the whole of her evidence so as to rely on a letter which she had only seen perhaps after discovery, I must say that the balance of probabilities does not favour that view. One of the pieces of evidence that was relied on in support of that view by Mr Newlinds was that the original document was in the possession of the defendant and that the copy in the exhibit PX01 has on the bottom of it the signature of Mr McDowell, the manager of the hotel and a JP and a printed endorsement as if from a fax machine "Total P.05". There is no doubt that the document in the exhibit is a photocopy or facsimile copy of what is attached to an affidavit of Mr McDowell which was never read in these proceedings because the signature which appears to be Jan Horen JP of Katoomba who took that affidavit, appears on both documents. However, as Mr Carnovale for the plaintiff points out, a copy of that letter without the signatures at the foot was attached to the plaintiff's then solicitors' letter of 17 July 1998. That letter shows that it had been faxed from the Bondi Hotel on 12 June 1998. This is a time before the first affidavit of Mrs Ryan and it is a time before the letter was discovered in this litigation. It is clear as anything can be in this case, that an original or photocopy of the letter was in the possession of the Bondi Hotel in June 1998. There is just no explanation on the defendant's case as to how this could possibly be so. The simple explanation is that the letter was given to Mrs Ryan in April 1993 and kept on file. The major difficulty with this is how the original of the letter was found on the defendant's file when this litigation commenced. As to this, one can only speculate, one possibility being that the letter was executed in duplicate.
31 Apart from the fact that the theory put forward by the defendant is unsupported by the bulk of the evidence, the probabilities of the matter favour the plaintiff's version. The letter was addressed to the plaintiff at the Bondi Hotel whereas the formal material to deal with the contract was sent to the Metropole Hotel at Cremorne. Why would the letter be addressed to the Bondi Hotel unless it was going to be handed to Mrs Ryan or sent to her in the immediate future? Secondly, why would the letter be generated at all if by 29 March it was clear to everybody that the former hire purchase deal was dead and the parties were only talking about a leasing arrangement?
32 The defendant company was not a large company, the key executives spoke to each other regularly and were speaking about the present matter. Mr Sutherland and Mr Wilson had been debating as to the rental agreement and Mr Wilson had obtained pro forma rental agreements from other people in the industry from at least 3 March. It beggars belief that people in such a close knit community were still thinking of the hire purchase deal at the end of March. There was some suggestion in cross examination that the defendant keeps all sorts of rubbish on the file and so it is quite possible that a letter that was generated by mistake and never sent was put on the file instead of being put in the waste paper bin. Again, this seems to be unlikely. There is then the rather odd reference to the rental agreement dated 1 April 1993. On the face of it this refers to a rental agreement and this was the agreement which was currently being considered by the plaintiff. It is absurd, of course, to refer to an agreement dated 1 April 1993 in a letter dated 29 March 1993, but one possible explanation is that a typist mistook 1/4 on the agreement for 1 April.
33 Mr Newlinds submitted that Mrs Ryan's evidence was very unsatisfactory. She had admittedly made a series of obviously erroneous statements in an earlier affidavit for which her only explanation was that she was very sick at the time and not concentrating; an explanation I did not find particularly satisfactory. I accept this submission. Nonetheless, Mr Wilson's evidence was not impressive. He did not create a credible demeanour, though it must be said that he had not worked for the defendant for some four years and he was being asked about events which had happened about eight years before the trial. There was also the general flavour on the defendant's side that obviously these matters had been talked about by the key executive, but everyone thought it was somebody else who had actually done the calculations. Accordingly, the oral evidence on the part of the defendant was only marginally better than the oral evidence on the part of the plaintiff.
34 There are some Jones v Dunkel and other considerations to take into account.
35 As I have said, Mr Maloney was in control of the hotel. He did not give any evidence. Accordingly, I am entitled to assume that there is nothing that Mr Maloney could have said about the letter of 29 March which could assist the plaintiff. As he could very easily have said, if it be the case, that Mrs Ryan had shown the letter to him, or told him about it, or he had seen it on his files and he didn't do so, I must draw the inference. Mr McDowell appears to have been the manager at the relevant time. He did not give evidence. Again, he could have said that he had seen the letter of 29 March, but he has chosen not to give evidence.
36 Mr Newlinds also asked me to draw inferences from the fact that legal professional privilege was claimed of the documents held by Messrs Gye and Perkes who were acting for the plaintiff in a dispute with the defendant during 1994. The plaintiff claimed legal professional privilege of these documents. Mr Newlinds asked me to infer, again, that the letter of 29 March was not available at that time else the plaintiff would have waived the privilege and produced the letters that Gye and Perkes had. However, the law clearly is that courts are not to draw adverse inferences of the Jones v Dunkel type where a person claims legal professional privilege, as otherwise that privilege would be of little worth: Wentworth v Lloyd (1864) 10 HLC 589; 11 ER 1154; Giannarelli v Wraith (No 2) (1991) 171 CLR 592, 605; Standard Chartered Bank of Australia Ltd v Antico (1993) 36 NSWLR 87.
37 I also considered the fact that the rent under a straight out rental agreement and that under a hire purchase agreement were the same. This is not usually the case. However this was an exercise in exploring a blind avenue as the defendant's men did no recalculation but thought correctly, that the plaintiff would not baulk at $3,000 per month rental.
38 Putting these previous thoughts in order, it seems to me that despite the unsatisfactory nature of the oral evidence adduced on behalf of the plaintiff, the circumstances are such that it is more likely than not that the letter of 29 March 1993 was given to Mrs Ryan between 29 March and 7 April 1993.
39 The next question of fact that needs to be considered is whether Mr Maloney or Mrs Eaton ever saw the letter.
40 Mr Carnovale submits that this is quite irrelevant. He says that if a document comes into the hands of an officer of the company who is its agent to receive the letter and she becomes aware of its contents, it does not matter that another agent of the company has never seen the letter, but signs the contract on behalf of the company.
41 Mr Newlinds says that this proposition is not completely accurate. He says it depends on whether the person who signed the contract read the letter concerned, or whether the officer who received the letter had sufficient authority that her merely handing the contract to the signing officer for him or her to sign off would, in its very nature, show that the contract was in order to sign.
42 As Mr Newlinds points out, there is absolutely no evidence as to what Mr Maloney saw when he signed the contract. All we know from Mr Wilson is that Mrs Ryan went to another part of the Bondi Hotel and came back with the contract signed, and from Mrs Ryan that she filled out the documents "and arranged for my father and my sister to sign".
43 The evidence shows that Mrs Ryan did not at the relevant time hold an executive position with the company. She was her father's personal assistant and a conduit between her father and the managers for the passing on of instruction.
44 It must also be said that the onus was on the plaintiff to establish its case, and if it deliberately chose not to proffer evidence from Mr Maloney as to the circumstances in which he signed the document, then one does not make any inferences in the plaintiff's favour. Indeed, the Jones v Dunkel doctrine infers that there was nothing Mr Maloney could have said that would have benefited the plaintiff's case.
45 In my view, the mere fact that Mrs Ryan had the letter of 29 March and formed the view that she was signing a hire purchase agreement, does not go far enough in showing that the company had that knowledge when the company's contract was signed by Mr Maloney.
46 It must be borne in mind that to have a proprietary estoppel, it must be proved that A has so conducted itself either by encouragement or representations, that B believed that he, she or it will acquire some right or interest, and B has so acted to his, her or its detriment on that basis, that it would be unconscionable for A to assert his strict legal rights; see Pawlowski The Doctrine of Proprietary Estoppel (Sweet and Maxwell, London, 1996) p 1 and Snell on Equity 30th ed (Sweet and Maxwell, London, 2000) 39-12 et seq.
47 Accordingly, the plaintiff must prove both that there was at least encouragement to make an assumption and reliance on that encouragement when an act was done to the detriment of the plaintiff. It does not seem to me enough to show that officer A of the company received an encouragement if officer B of the company does an act to the company's detriment unless it can be shown that officer B was given the information by officer A. Of course, it would be sufficient if officer A expressly or impliedly certified to officer B that the contract was in order to be signed on behalf of the company and officer A was given the encouragement. However, unless there is some such connecting factor proved, it does not seem to me that the plaintiff can establish the elements of proprietary estoppel.
48 In the instant case, because there is a complete absence of what Mr Maloney knew when he signed the contract and Mrs Ryan was not in a key executive position within the company, the claim for proprietary estoppel must fail on the facts.
49 However, Mr Newlinds says that it must also fail because of clause 28 of the rental agreement which Mr Maloney signed. Clause 28 so far as is relevant, provides as follows:
"(1) …The terms and conditions of this Agreement contain all the terms of the contract between Sanyo and the Renter in respect of the Equipment, and all other terms, conditions, provisions, arrangements and stipulations, if any are of no force or effect.
(2) The Renter expressly acknowledges that no options, promise or representation, express or implied, written or oral, has been made by or on behalf of Sanyo to the Renter that the Equipment may be purchased from Sanyo by the Renter or any nominee of the Renter at any time during the term of the rental agreement or upon or after the expiration of the term."
50 Mr Newlinds says that in any event that provision would be a complete answer to the plaintiff's claim.
51 Mr Newlinds acknowledges that there could be cases where the lessor's representative made a statement such as "You see clause 28, don't worry we never rely on it" or some such utterance, but apart from such cases the clause is fully effective.
52 Mr Newlinds relies on a passage from the judgment of McLelland J in Johnson Matthey Ltd v A C Rochester Overseas Corp (1990) 23 NSWLR 190, 196, where the learned Judge said that "In general it may be said that except in the case of fraud, and subject to any statutory provision, an 'entire contract' clause will bind the parties in accordance with its terms, properly construed. Such a clause itself gives rise to an estoppel by convention which excludes any antecedent estoppel which might otherwise have had effect." That passage was followed by Miles CJ in the ACT Supreme Court in Skywest Aviation Pty Ltd v Commonwealth (1995) 126 FLR 61, 104 and by Bryson J in Australian Co-operative Foods Ltd v Norco Co-operative Ltd (1999) 46 NSWLR 267, 279.
53 In Whittet v State Bank of NSW (1991) 24 NSWLR 146, 153-4, Rolfe J clearly indicated that in his view McLelland J had overstated the position. His Honour noted that in the subsequent case of Bentham v ANZ Banking Group Ltd (26 June 1991, unreported) McLelland J seemed to retreat, at least partly from his view, and that it was inconsistent with the Privy Council's decision in Bank Negara Indonesia v Hoalim (1973) 3 PCC 27; [1973] 2 MLJ 3.
54 However, neither the Bank Negara case, nor Whittet's case, involve an "entire contract" clause. It may just be that generally McLelland J's proposition is too widely expressed with respect to the possibility of any pre-contract negotiation being the basis of a proprietary estoppel. I myself do not think it is, but that's another matter. His Honour's words are right in point, have been affirmed by judges of the highest calibre, and in my view I should follow them.
55 Accordingly, the defendant is entitled to succeed on the claim because of clause 28, particularly 28(2) of the rental agreement.
56 Accordingly, the plaintiff's claim must be dismissed.
57 Although, as I have noted earlier, there were other bases for the claim, the only one that was argued was proprietary estoppel. Alternative claims under the Trade Practices Act would run into virtually the same problems as arose under the proprietary estoppel claim.
58 The cross claim is for moneys due under the rental agreement.
59 As Mr Newlinds has submitted, there is no attack on the actual contract: there is a collateral attack on estoppel but once this fails, the contract remains on foot. Accordingly, at any stage the plaintiff had the option of either returning the goods or paying $3,000 per month. It did not do either. Accordingly the defendant is entitled to a verdict for the rental.
60 Mr Carnovale says that the defendant is only entitled to rent up to the date of the filing of the cross claim. I think this is technically correct. However, until the goods are returned or something else significant happens the defendant will be entitled to its rental. Ordinarily, in this sort of case, the Court permits the defendant to file a new action for the rent between the date of the cross claim and the date of the making of the orders when short minutes are brought in so that taking this point usually only means that the person taking the point has to pay the filing fee for the new suit and perhaps counsel's brief fee on appearing to obtain judgment in it. It is, of course, another matter if there was some substantial defence after December 1998.
61 It would seem that the defendant sold the hotel in 1999. However, strangely enough no-one seems to know where the goods are, or at least if they do, they are not telling the Court. Mrs Ryan gave some evidence that the goods were so faulty that they were useless and that by 1997 they had been abandoned, but it is hard to accept this in the light of evidence that the plaintiff was still paying the defendant's invoice for repair to the goods in 1997.
62 It may be that if the goods became life expired so that they were absolutely of no use, or if they were lost without fault to the plaintiff, or for some other cause, rent may cease. I am merely speculating as I have not looked deeply enough at the rental agreement. However, unless some such event is established, or unless the goods are returned, it is difficult to see why rent does not continue to accrue.
63 However, I will content myself with publishing these reasons and listing the matter on 2 July 2001 at 10 am for the purpose of short minutes being brought in. If this date is inconvenient to counsel, provided my Associate is given adequate notice, the day can be changed.
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