EFM Pty Ltd v New Zealand Steel

EFM Pty Ltd v New Zealand Steel - [1998] VSC 194 - VSC 1998 case summary — Zoe

[25]

The evidence shows that Allcock discussed the June 1997 draft with Howard, who dealt with it in his memorandum of 17 July 1997. In it, he expressed satisfaction with the progressing of the distribution contract; this was obviously a reference to Allcock's negotiations or discussions with Domingos and the draft supply agreement produced by him near the end of June 1997. Howard did, however, query in his memorandum, several aspects of the proposal and thought that some of the rates that were proposed by Domingos, were too high. Later, Allcock gave the memorandum to Domingos who, in turn, gave it to Carl to enable him to prepare contract documents which took into account Howard's views. As things turned out, however, Carl's next draft of early September 1997 (with which I will deal later), did not accommodate some of the concerns set out in Howard's memorandum. For example, whereas in his memorandum, Howard said that the interstate rates proposed by Domingos were too high, the rates proposed in the draft of early September 1997, were not reduced. Domingos contended that notwithstanding that his proposed rates were not reduced by early September 1997, there was compliance with what Howard wanted in his memorandum, because since 17 July 1997, the industry had experienced an increase in cartage rates, so that the rates mentioned in the Howard memorandum were out of date. In my view, the plaintiff's failure in its later drafts to accommodate all of Howard's views is, in any event, consistent with the plaintiff's case that it did not consider that Howard's approval had to be obtained before it could be awarded the Supply Agreement. The plaintiff's case was that it believed that Allcock was, for all practical purposes, the defendant; he had authority to enter into the agreement. Not only did he tell Domingos that it would be up to him whether the supply contract would be awarded to the plaintiff, but he also told him what the acceptable level of cartage rates would be, what form the draft contract would take and other like matters. He was the only person from the defendant with whom Domingos dealt.

[45]

"I arrived at the [hotel] at approximately 2.45 p.m. [He was then offered a drink.] Chas [Schembari] at the time was seated on my left and Mr. Domingos was standing directly behind me. I felt slightly nervous and apart from being concerned, I was curious as to what their next step was going to be. Chas then said: "Cunt, where's the contract?" I said: "What are you talking about?" Chas further said: "You must think we are stuffing around, if you don't get this bloody contract signed you won't be going home tonight". He was raising his voice and seemed very agitated. His palms were sweating and he was blowing into his right hand whilst ruffling his fingers. I believed he was trying to portray that he was someone I should be scared of. In his left hand at the time was a spent hand gun cartridge. I felt very intimidated, scared and very alone. Unlike the meeting on 2 September 1997, on this occasion the threats were directed to me rather than Bowtrans. At this meeting, Chas did much more talking than Mr. Domingos. I stayed with Chas and Mr. Domingos for another drink only because of the fact that they were placing me under duress and I was concerned about what might happen if I did not appear to be going along with what they were saying. I felt, because the Hotel was empty, this was not time to try and be a hero. Chas then told me that I had 45 minutes to get back to my office to send Bowtrans a fax cancelling their existing contract. He also said that he wanted confirmation once the fax was sent as the contract with them had to be signed by 5.00 p.m. on Friday, 5 September 1997, or else. I was in a state of utter confusion and felt that the best thing to do was to comply with what was being said and to get the hell out of the Hotel. I told them that I was leaving the Hotel and going to return to the office. I did not say what I was returning for but I needed to get back to sit down and to work out what was going on and if it was all true. I then left the Hotel on my own leaving both Mr. Domingos and Chas in the bar. I drove straight back to [the office]. Whilst in my vehicle, my mind was in turmoil and fear compounded by the fact that I could not believe that this was actually happening to me. After parking my vehicle in the car park provided, I endeavoured to regain my composure prior to entering our office. .... Upon arriving at the office I proceeded to my own cubicle and sat at my desk thankful that no-one had appeared to notice anything different. I was shuffling papers as a distraction when at about 4.30 pm I was advised that I had a telephone call. I duly answered the phone and the caller was Chas. He was straight to the point calling me names like 'prick' and 'cunt' and demanding the fax be send immediately as I had to return and sign over the Bowtrans contract by 5.00 pm that day, 5 September 1997. He said words to the effect that if it was not done, I would not make it home that evening. I had no doubt as to what he meant by this. My fear of the situation was starting to get the better of me. I replied that the fax would be on its way shortly. I very quickly hand wrote a fax addressed to Bowtrans advising them of our dissatisfaction with their recent performance. I sent this fax to the fax number of Evergreen as EFM did not have a fax. I did not send the fax to Bowtrans. As soon as I received confirmation from the fax machine that the fax had been transmitted and received at Evergreen, having stood at the machine and awaiting this, I returned to my office cubicle a few minutes later. The fax report sheet shows that the document was faxed twice to Evergreen. This occurred because there was no proof print out that came with the first fax. I therefore decided to send the fax again to be sure. On the second occasion there was a print out indicating that the fax had gone through. There were not any "difficulties that have arisen within your organisation during the last 24/48 hrs" as stated in the Bowtrans fax. I made this statement up to give Mr. Domingos and Chas the impression that NZS was terminating the Bowtrans contract. Even if there were problems with Bowtrans I did not consider that I had any authority to terminate its contract without Bob Howard's approval. Of course, I did not obtain his approval prior to sending the fax. I left the office shortly after sending the fax. My telephone records show that I telephoned Evergreen's offices at 5.31 pm. In the course of this telephone conversation Mr. Domingos insisted that I come around to Evergreen's offices to sign the contract. By way of excuse, I referred to the fact that I did not at the relevant time (and do not today) have a driving licence. I said to Mr. Domingos that I needed to drive home in the traffic because "you know my problem with a licence". I believe he said words to the effect that he wanted the contract signed on Monday."

[78]

I have already dealt with the credibility of Schembari. As to Carl, the defendant's principal attack on him was based on his refusal to acknowledge that he used Howard's memorandum to Allcock of 20 June 1996, as a basis for preparing the draft supply agreement. It will be recalled that this memorandum and a copy supply agreement were provided to Domingos so that the draft which was to be produced by Carl, had regard to the copy agreement. It is true, as Mr. Collinson has pointed out, that the words used in the Howard memorandum "governed by and constrained by" are reproduced in the 7 May 1997 draft supply agreement. Carl said that he probably took the words from his precedent books and not from Howard's memorandum. On the face of it, Mr. Collinson's point is compelling, but there is no reason to suppose that Carl could not have found those words elsewhere. But even if he did copy them from the Howard memorandum, in my view, it means no more than in the circumstances, he had forgotten or is just mistaken about that point. Generally, I have found Carl to be a credible witness. His demeanour in the witness box was consistent with a person who addressed each question and answered it to the best of his ability. This is notwithstanding that he gave his evidence in a matter-of-fact manner. The defendant also sought to discredit him by cross-examining him to show that while he was working for the defendant, he carried out consultancy work for La-Trans which was in conflict with his duties to the defendant. In my view, although he was, in effect, reprimanded by Alexander Benbow (Benbow), the company secretary and finance manager of the defendant, for doing this work for La-Trans, it is not clear on the evidence, whether he was, after the reprimand, prohibited from carrying out further QA consultancy work for La-Trans. Carl said that he believed that he was permitted to do such work for La-Trans and was only precluded from doing non-QA work for that company. In my view, it is probably unlikely that Carl would have continued with the QA consultancy work at La-Trans if he thought he was precluded from doing so. Benbow could have discovered that he was doing this work and if that had occurred, it would have caused him problems with the defendant. It should be said that the QA consultancy work carried out by Carl for La-Trans was, according to the evidence, mainly carried out at that company's premises at weekends.

[89]

As I have already mentioned, if one were to look solely at those documents, the position relating to Allcock's authority is somewhat equivocal. But in determining whether Allcock had the authority of the company to commit it to supply agreements, one has to have regard to how such contracts were in fact secured and the role that Allcock played in attaining them. I have already mentioned that it was not until 1996, that the defendant standardised its procedure in relation to supply contracts and required them to be in writing in accordance with QA requirements. Prior to that, such contracts were generally entered into by way of verbal arrangements. The evidence establishes that it was Allcock who secured all relevant supply contracts before and after 1996. It was he who came to the verbal arrangements with freight forwarders prior to 1996, and with La-Trans in particular, and it was also Allcock who signed all the relevant written agreements after that date. Thus, for example, the 1996 La-Trans contract was signed by Allcock on behalf of the defendant. After La-Trans was taken over by Hewat, it was Allcock who negotiated and agreed with him for the provision of freight services for the defendant during the period April 1997 to August 1997. He did this without any relevant reference to Howard. Similarly, the Bowtrans contract was signed on behalf of the defendant by Allcock in late August 1997 (and back-dated to 1 June 1997). At some stage after Hewat took over La-Trans, the freight services that were provided by that company, continued to be made available by Hewat, first through La-Trans, but a little later, through Bowtrans Metro. When the abovementioned contract was executed, the freight company was Bowtrans Transport Pty. Ltd. Although Howard did have some involvement in relation to the contract that was ultimately executed, he was, on his own evidence, unaware that there were two Bowtrans companies that were involved in the provision of freight services to the defendant.

At a glance

Court

Decision date

Before

Source

Judgment (109 paragraphs)

EFM Pty Ltd v New Zealand Steel (Australia) Pty Ltd [1998] VSC 194 (17 December 1998)

Parties