Cantarella Bros Pty Ltd v Andreasen

LEGISLATION CITED : Evidence Act 1995 (Cth) ss 55, 56, 97, 98, 100, 102 & 192(2)

Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Jacara Pty Ltd v Perpetual Trustees WA Ltd (2000) 106 FCR 51 Mann v Carnell (1999) 201 CLR 1 Pacific Carriers Ltd v PNB Paribas (2004) 78 ALJR 1045 Palmer v The Queen (1998) 193 CLR 1 R v Lockyer (1996) 89 A Crim R 457 CASES CITED : Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 Sovereign v Bevillesta [2000] NSWSC 251 Taylor v Johnson (1983) 151 CLR 422 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 79 ALJR 129 Zaknic Pty Ltd v Svelte Corporation Pty Ltd (1995) 61 FCR 171 Carter and Harland, Contract Law in Australia (4th ed, 2002) [110] Macquarie Dictionary (3rd ed revised, 2001) Shorter Oxford English Dictionary (5th ed, 2002)

Cantarella Bros Pty Limited (P) PARTIES : Maia Andreasen (D1) Juan Renshaw (D2)

J W J Stevenson SC and E C Muston (P) COUNSEL : D J Fagan SC (Ds)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2277/04 CANTARELLA BROS PTY LIMITED v MAIA ANDREASEN & ANOR JUDGMENT - Re Admissibility of Evidence 1 HIS HONOUR: This decision deals with the admissibility of certain evidence tendered in these proceedings. The evidence with which it deals is two paragraphs in an affidavit of Juan Renshaw and one paragraph in the affidavit of Maia Andreasen. The relevant paragraphs in Mr Renshaw's affidavit are as follows: "5 The only company that I approached in order to discuss the possibility of a new business relationship was Toby's Estate. I had an 'in' with that company as my former business partner was a close personal friend of its namesake - Toby. I recall that I telephoned Toby, made the connection and arranged for him to come to our cafe. However, when I told Toby that we wanted a coffee company who could install permanent umbrellas for us, he said words to the effect of ' Mate - I'm only a very small, boutique coffee roaster. I've only recently got printed sugars. I could give you a machine, but there is no way I could provide you with, or fund, permanent umbrellas .' Although Toby's Estate coffee was good quality coffee, I did not pursue Toby regarding the ins and outs of buying coffee from him because he could not offer us permanent umbrellas.

6 I recall that Maia arranged for a representative from Segafredo ('the Segafredo rep') to come to our cafe. The Segafredo rep was very keen to get us on board. He told us that Segafredo could arrange to have permanent umbrellas installed in our cafe but we would have to contribute some of the cost. We thought that we could negotiate a better deal than that with another coffee company, so we continued to look for a company who would be prepared to accept the whole cost of installing permanent umbrellas."

In Ms Andreasen's evidence, the relevant paragraph is as follows: "5 In early 2001, Juan and I knew that the Outdoor Eating Area had the potential to seat more than 50 people if permanent shelter was installed. We had suggested to Mocopan (our then supplier of coffee) that it finance the installation of permanent umbrellas in this area. Mocopan had displayed some interest in the idea but had not made any firm commitment." 2 These matters are tendered as going to the proof of which of two versions of contractual conversations between the plaintiff and the defendants is the more likely. The contractual term sought to be established by those conversations is a term of a contract for the supply of coffee. The term, and, indeed, it is alleged to be a fundamental term of that contract, is that the plaintiff coffee company supply the defendants with large umbrellas to cover the outdoor area of their coffee shop. At the relevant conversations, both Mr Renshaw and Ms Andreasen were present with representatives of the plaintiff. 3 Mr Renshaw deposed that in those conversations he said things such as: "Yeah, we'll get rid of these crappy old tables and buy a whole lot of new ones. We want to get enough tables and chairs to seat about 50 people, but there's no point buying anything until we get permanent umbrellas. Mocopan gave us a whole lot of market umbrellas to use out here but they were hopeless - they just got trashed in the wind. I've got a storeroom full of broken Mocopan umbrellas. We want those big umbrellas - the hard plastic ones."

Ms Andreasen says that she made statements such as: "That's great but with our position and our turnover any coffee company in town would fall over themselves to give us a machine. Anyway we're not that fussed about a machine because this Rancillio we've got is great. What we need is permanent umbrellas. We are only looking at companies that are prepared to make a serious investment in umbrellas." 4 The plaintiff's representatives, Mr Pasquariello and Mr Papaluca, both concede that the subject matter of umbrellas was raised in various conversations, but the flavour of their evidence concerning the way in which the subject is dealt with is conveyed by what Mr Papaluca said in his affidavit as follows "21 …… They (I can't remember who) said: "Great. Also, umbrella's [sic] might be nice for this outdoor area in the summer time. Do you think that would be a possibility?'

I said: 'Yes, that's a good idea for the summer, we'll look at it and discuss it further down the track.'

22 To the best of my recollection, the issue of the umbrellas was only mentioned as an 'afterthought', and at no stage did Juan or Maia say to [sic] at this time that they would only buy the coffee if we provided them with umbrella's [sic] for their outdoor area. Had they done so, I would have arranged for the supply of umbrella [sic] to be included in the contract in accordance with my usual practice." 5 The first argument put against the admissibility of the tendered passages set out in [1] is that they are evidence going only to credibility and are, therefore, prohibited by the credibility rule contained in s 102 of the Evidence Act 1995 (Cth) ("the EA"). However, they are tendered as tending to show that the version of the conversations that I have referred to was more likely to have been in the terms deposed to by the defendants than in the terms deposed to by the plaintiff's witnesses. It is plain that evidence is not precluded by s 102 if it is tendered and admissible for another purpose. There is tension between the two rules as was discussed by McHugh J in Palmer v The Queen (1998) 193 CLR 1 at 22 - 24. However, in my view it is clear that the credibility rule does not preclude the tender of this evidence for the other stated purpose. 6 The central criterion of admissibility in the EA is that evidence is admissible if relevant and not admissible if not relevant: s 56. Relevance receives a statutory definition in s 55(1). That subsection defines relevant evidence as being: "… evidence that, if it were accepted, would rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceed."

Whether this is wider than the common law concept of relevance may be an interesting question, but is not one to which I need attend. It is my duty to attend to and apply the criterion set out in s 55(1) of the EA. 7 Of the evidence tendered, it is my view that at least one portion meets that test. That is the portion of Mr Renshaw's evidence that recounts a conversation with Toby of Toby's Estate Coffee. That makes it plain that at a point of time close to that of the conversations the subject of this judgment, and with a view to entering into a contract for the supply of coffee as was finally entered into in some form between the plaintiff and the defendants, one of the defendants raised with Toby the desire for and importance of umbrellas being obtained, and that negotiations with Toby ceased when he indicated that he could not or would not supply umbrellas. That does seem to me a piece of evidence that would rationally affect the assessment of the probability of what was said by both defendants, who were partners running an existing coffee shop, when they, in each other's presence, dealt with the representatives of the plaintiff. It reflects on the question of which versions of the conversations concerning umbrellas were more probable. 8 In my view, other parts of the evidence tendered are precluded from admission because the accounts of dealings with other persons are in terms too vague and imprecise to be of any value in the assessment of what was said. Further, in so far as the evidence is evidence of subjective intent, it is, in my view, not admissible since the question of whether a contract was formed and in what terms depends on evidence of external manifestations rather than subjective intent: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352; Taylor v Johnson (1983) 151 CLR 422 at 429; and see generally Carter and Harland, Contract Law in Australia (4th ed, 2002) [110] and authority there cited. See also the recent decisions of the High Court in Pacific Carriers Ltd v PNB Paribas (2004) 78 ALJR 1045 at [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 79 ALJR 129 at [35], [36]. Evidence of the subjective intent with which a party deals is not admitted and I have rejected other such evidence in these proceedings. However, the portion of the tendered evidence that I have indicated in my view meets the test of relevance stipulated in s 55. 9 The next question is whether this evidence is tendency evidence within s 97 of the EA. If it were to be characterised in that way, that would not render it inadmissible, but would impose two additional limitations on its admission. Section 97(1) is as follows. "Evidence of the character, reputation or conduct of a person, or a tendency that a person has or had, is not admissible to prove that a person has or had a tendency (whether because of the person's character or otherwise) to act in a particular way, or to have a particular state of mind, if:

(a) the party adducing the evidence has not given reasonable notice in writing to each other party of the party's intention to adduce the evidence, or (b) the court thinks that the evidence would not, either by itself or having regard to other evidence adduced or to be adduced by the party seeking to adduce the evidence, have significant probative value." 10 In relation to the question of whether it is tendency evidence within the meaning of that section, I had reference particularly to the decision of the Full Court of the Federal Court of Australia in Jacara Pty Ltd v Perpetual Trustees WA Ltd (2000) 106 FCR 51. The judgment of the Court is the thorough and instructive judgment of Sackville J (with whom Whitlam and Mansfield JJ agreed). 11 In ascertaining the meaning of tendency within that section it is important to adhere to the words of the statute and not to be lured away by siren songs, even if they are sung by distinguished Judges. The reason for this is that the preexisting body of common law relating to this subject matter, commonly known as similar fact evidence, has, in my view, been swept away by the tendency and coincidence rules contained in ss 97 and 98 of the EA, just as the common law on privilege and its waiver has been replaced by the relevant sections of the EA: see Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 at 371; Mann v Carnell (1999) 201 CLR 1 at [23]; Sovereign v Bevillesta [2000] NSWSC 251 at [12], [13]; cf Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380. The second reason is the principle that judicial statements must not be allowed to supplant statutory language, a principle recognised by Sackville J in Jacara at [74]. 12 The difficulty that I have with the proposition that this is tendency evidence is that evidence of statements made by a person in one negotiation for a particular contract tendered as reflecting on what was said in the negotiations with another person for a contract would not, in ordinary language, lead one to say that the person who made the statements has a particular tendency, being a tendency to make such statements. In my view this is illustrated if one goes to dictionary definitions. The first definition of tendency in the Macquarie Dictionary (3rd ed revised, 2001) is: "Natural or prevailing disposition to move, proceed, or act in some direction or towards some point, end or result."

The first definition in the Shorter Oxford English Dictionary (5th ed, 2002) is similarly: "The fact or quality of tending to something; a disposition, leaning, or inclination toward some purpose, object, result, etc."

It appears to me from these definitions that the word "tendency" imports a degree of generality. It seems to me a contorted and unnatural use of language to say that Mr Renshaw had a tendency in negotiating this contract to insist on the provision of umbrellas as a precondition of dealing. 13 This matter is, in my view, not determined by and is different from the factual situation in Jacara. It is, to my mind, a perfectly ordinary use of language to say that an agent who was dealing with leases in a large shopping centre had a tendency to make particular types of representations to a larger or wider number of persons who were considering taking leases in the shopping centre. As I have said, in my view, it does not come naturally to talk of a tendency to make particular statements about one particular subject matter in a negotiation for one particular contract. 14 In my view, the portion of the evidence that I have indicated is otherwise admissible is not tendency evidence within s 97 and is, therefore, admissible as being relevant, as I have determined, within the meaning of s 55. 15 However, if I am wrong and this piece of evidence is correctly in law to be characterised as tendency evidence, I should still admit the evidence. 16 There are two limitations imposed by s 97. The first is that the evidence must be thought by the Court to have significant probative value. The meaning of "significant probative value" in this provision in relation to civil proceedings is also discussed by Sackville J in Jacara at [73]. His Honour there quoted the words of Hunt CJ at CL in R v Lockyer (1996) 89 A Crim R 457 at 459 where his Honour said: "'Significant' probative value must mean something more than mere relevance but something less than a 'substantial' degree of relevance."

His Honour thought that this meant that evidence should be regarded as "important" or "of consequence" in establishing the fact at issue. Sackville J also quoted a formulation by Lehane J in Zaknic Pty Ltd v Svelte Corporation Pty Ltd (1995) 61 FCR 171 at 176 that tendency evidence to be admitted must be "clearly and strongly probative of the relevant fact in issue". If Lehane J's formulation poses a higher barrier than the formulation of Hunt CJ at CL, and I rather think it does, I should say that I prefer the formulation of Hunt CJ at CL. 17 It is also of significance that the section, unusually, turns on what the Court "thinks". I take it that this word is used in light of the fact that the Court is obviously making a preliminary decision at a time when, ex hypothesi, as the case is still in evidence, the facts are not found. 18 In my view, the formulation that evidence is of significant probative value indicates evidence that is somewhere between merely relevant and substantially relevant. The view that I have come to is that I have not been persuaded that I should think that the tendered evidence which is otherwise admissible does not either by itself, or having regard to other evidence adduced, have significant probative value, so that it does not fall foul of exception (b). 19 Turning to exception (a), so far as the lack of notice is concerned, it is conceded that there was no written notice within the meaning of s 97(1)(a), but I am asked to dispense with the need for that notice under the provisions of s 100 of the EA. In considering how I should exercise my discretion in this regard, I should say that I have taken into account the considerations prescribed by s 192(2) of the EA. Whilst I do not set out in detail my views about those matters, one central matter, it seems to me, is that, whilst a formal written notice may not have been given, it was made quite plain by these defendants, comparatively early in the course of the proceedings, by the service of the affidavits from which I have quoted, that they proposed to adduce precisely the evidence which has now been adduced. Taking all relevant matters into account, I have come to the view that, if it were necessary, I should dispense with the need for notice, so that exception (a) also would not preclude the receipt of this evidence, if it be correctly characterised as tendency evidence. 20 The result of the foregoing is as follows. In relation to the affidavit of Juan Renshaw, I admit the whole of paragraph 5 save for the last eight words "because he could not offer us permanent umbrellas". Those words are rejected as going to the mental processes or intent of a contracting party. In paragraph 6, I admit the first sentence but reject the balance of the paragraph. So far as the affidavit of Ms Andreasen is concerned, I reject paragraph 5 of her affidavit. It is partly an internal thought process so far as it purports to refer to communications with Mocopan. Otherwise the evidence is too vague as to the time at which and terms in which any such communications took place to permit its admission into evidence. Paragraph 5 of Ms Andreasen's affidavit is rejected. 21 It was yesterday indicated, to complete the situation as to the portion of Mr Renshaw's affidavit that is admitted, that the evidence was tendered on the basis that it should constitute proof of the communications said to have been made, but not of the truth of the matters stated in those communications. That limitation attaches to the use of the portion of Mr Renshaw's evidence that is now admitted.

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