Finucane, P.E. v. New South Wales Egg Corporation [1988] FCA 136

Federal Court of Australia|1988-04-22|Before: Lockhart J

the applicant had failed to mitigate his loss, either with respect to

s. 82 or with respect to the claim in contract. I£ the issue had been raised, I would not have found it established that the applicant's delay in commencing litigation, involving as it must both legal costs and uncertainty as to the outcome, amounted to a failure to mitigate such as to justify a reduction in damages. Nor do I find it established that the applicant's delay was such as to break the chain of causation between the conduct of the respondent in breach of s. 52 and the loss suffered by the applicant in the continued accrual of

In the event, I hold that I have no discretion to reduce the damages to be awarded to the applicant in respect of interest on the

Interest cannot be awarded under s. 51A of the Federal Court Act 1976 as that section did not commence until 22 November 1984, after the cause of action arose in this case. For reasons which I expressed in Milner v. Delita (supra) at pp. 577-580, interest under

s. 94 of the Supreme Court Act 1970 (NSW) is not available.

Mr. Finucane also claims loss of earnings for the period during which he was unemployed, from 12 November 1984 to i March 1985 i.e. 15 weeks 4 days at $374.00 per week net, a total of $5,823.71. Again these figures are not disputed as to quantum by the Corporation, but the Corporation denies the applicant's right to an award for lost earnings if he otherwise establishes damages. In my opinion Mr. Finucane is not entitled to include this loss of earnings in his claim for damages. To allow such a claim would be in essence granting hima

Judgment should be entered in favour of Mr. Finucane for the

sum of $112,771.27 as damages under s. 82 of the Act.

In paragraph 23A of the amended statement of claim Mr. Finucane pleads a breach of contract by the Corporation in these

"23A. (a) On or about 17th September, 1984 the Applicant agreed with the respondent to cart eggs for the Respondent on the terms and conditions contained in documents entitled 'Contract Carriers Appointment', 'Contract Carrier Undertaking' and Supplementary Deed.

(b) It was a term and condition of the said Agreement that the Respondent would not terminate the Agreement except in the case of breach by the Applicant of the Agreement, or upon the bankruptcy or insolvency of the applicant, or the Corporation ceasing to exist.

(c) In breach of the said term the Respondent terminated the said Agreement on 12th November, 1984, and thereafter failed to retain the services of the Applicant for the delivery of Eggs in New South Wales.

(d) By the conduct of the Respondent it impliedly refused to permit the Applicant to sell or

assign his rights under the said Agreement after 12th November, 1984, in breach of the

(e) By reason of the breaches referred to above the Applicant suffered loss and damage.

(a) The applicant lost the benefit of the Ninety thousand dollars ($90,000.00) paid by the Applicant to a third party, in consideration for the Applicant entering the said Agreement.

(b) Loss of income from 12th November, 1985 to lst March, 1985. [sic]"

In my opinion there was a contract between the Corporation and Mr. Finucane whereby he was engaged as a carrier by the Corporation to conduct the egg run formerly conducted by Mr. Mayoh. In my view, that contract arises from a combination of documents and conversations between the Corporation and its officers and Mr. Finucane. The contract between the Corporation and Mr. Finucane was partly oral, partly in writing and partly by conduct, and in the circumstances the Court "is entitled to look at and should look at all the evidence from start to finish in order to see what the bargain was

that was struck between the parties": J. Evans & Son (Portsmouth)

Ltd. v. Andrea Merzario Ltd. [1976] 1 W.L.R. 1078 per Roskill L.J. at

The Court may have regard to the intentions of the parties by drawing inferences from their words and their conduct in the making of the agreement, having regard also to the subject matter of the

agreement and the surrounding circumstances: Allien v. Carbone (1975)

312 C.L.R. 528 per Stephen, Mason, Murphy JJ. at 531-532. The Court will be prepared to place greater weight on the surrounding circumstances where the statements and actions of the parties have not been merged in a formal document exhaustively setting out the terms of

the bargain: Codelfa Construction Pty. Ltd. v. State Rail Authority of New South Wales (1982) 149 C.L.R. 337 per Mason J. at 352.

In the present circumstances, the creation of a contract is the legal consequence of the parties' conduct. The subjective intention of the Corporation and of Mr. Finucane is, at its highest, a

factor which may be taken into account in determining whether an

intention to enter a binding contract existed, and is not

determinative of that issue: Air Great Lakes Pty. Ltd. v. K.S. Easter

Pty. Ltd. (1985) 2 N.S.W.L.R. 309 per Mahoney J.A. at 330. The Corporation may at no stage have subjectively intended to make a contract with Mr. Finucane, and may have failed to recognise that its conduct might establish such a contract: neither fact will prevent the creation of such contract where the Court takes an objective

The terms of the contract arise from the three documents, being the Contract Carrier's Undertaking, the Deed of Indemnity and the Contract Carrier's Appointment to which I have already referred, and from the conversations between Mr. Finucane and officers of the Corporation to which I have also referred. As I have noted these conversations and documents are to be interpreted by reference to the circumstances in which the documents came into existence and in which the conversations occurred. The Corporation denies that the Contract Carrier's Appointment has any part in any contract between the Corporation and Mr. Finucane, but I reject that submission. I accept that the Corporation declined to sign the form of Contract Carrier's Appointment. However, the Corporation completed the relevant details relating to Mr. Finucane in both the Contract Carrier's Undertaking - and the Deed of Indemnity and presented each to Mr. Finucane for signature. Those two documents plainly became part of the contract

Although the Contract Carrier's Appointment was not signed by the Corporation and was not intended to be signed by it, a fact which

was communicated to Mr. Finucane in conversations, nevertheless the

Contract Carrier's Undertaking and the Deed of Indemnity depend for their operation upon the incorporation of the Contract Carrier's Appointment into the contract established between the Corporation and Mr. Finucane. The Deed of Indemnity is expressed in Recital A thereto to be supplementary to the Contract Carrier's Appointment and the Contract Carrier's Undertaking. Recital B states that the contract carrier has agreed to provide the guarantee, required by clause 15 of the Undertaking, in the sum of $3,000 for due performance by the carrier of the conditions in his contract of appointment and for due performance of the terms of his undertaking. Clause 1 of the Deed of Indemnity provides that the carrier shall comply with all the terms of his appointment as contract carrier and shall indemnify the Board against loss incurred by him by reason of any default in his performing and observing the agreements in the Contract Carrier's Appointment and Contract Carrier's Undertaking. Clause 2 of the Deed of Indemnity authorises the Board to deduct and retain a sum not exceeding $3,000 from the proceeds of sale of a run to which the Contract Carrier's Appointment relates in satisfaction of such a claim

In the Contract Carrier's Undertaking, although the date at which the appointment 1s to expire is left blank, reference is made to the standard form of Contract Carrier's Appointment which Mr. Finucane acknowledges that he has read by his signature of the Contract Carrier's Undertaking. Again, more than one reference is made to the Contract Carrier's Appointment, on the basis that the Appointment is part of the contract between Mr. Finucane and the Board (see for example clauses 5, 15 and 16(b)). The Contract Carrier's Appointment,

although not signed by the Corporation, was handed to Mr. Finucane by

it in circumstances where it was obviously intended to be part of the contract. It is true that the term of the appointment is blank in the Contract Carrier's Appointment as it is in the Contract Carrier's Undertaking so that the Court must look elsewhere to determine the term of the appointment. But a perusal of the terms of the Contract Carrier's Appointment itself makes it clear that the Appointment is to be read as forming part of the contract between the parties so far as

An important question is the term of the appointment by the Corporation of Mr. Finucane as carrier. As I said earlier, I find that the term of the appointment was in all the circumstances for an indefinite term terminable upon the happening of any of the events mentioned in clause 2 of the document of Contract Carrier's Appointment or upon reasonable notice by one party to the other provided such notice shall not be given by the Corporation to Mr. Finucane until the term of the appointment has subsisted until at least the commencement of the long term. As I observed in my reasons

for judgment in State Bank of New South Wales v. Commonwealth Savings

Bank of Australia (1985) 60 A.L.R. 73 at 101, the distinct tendency of reported cases this century has been to hold that contracts of a continuing or ongoing nature are terminable on reasonable notice. I there referred to many of the reported cases and I do not propose to

review those cases here. It is sufficient that I refer to what was

said by the Judicial Committee in Australian Blue Metal Limited v.

"It is true that it does not require very much to induce a court to read into an agreement of a commercial character, either by construction or by implication, a provision that the arrangements between the parties,

whatever they may be, shall be terminable only upon reasonable notice ... But a question of this sort depends entirely on the facts of the particular case."

Although the observations in the cases are made in the context of confining the operation of a contract of a continuing or ongoing nature, they are of assistance with respect to the present question, namely, determining the period for which the appointment of Mr. Finucane was to subsist. As was observed in many of the cases

including Australian Blue Metal v. Hughes, the issue ultimately

The term of appointment of Mr. Finucane to which I have referred is not one that is too uncertain to be construed by the Court. Certainly officers of the Corporation made it clear to Mr. Finucane that no guarantee would be given at the interviews on 20 February, 31 July and 9 August that his appointment would necessarily continue "over the long term" and I am satisfied that he understood that. I am satisfied that what the parties must objectively be taken to have meant was that, although Mr. Finucane had nothing to fear in the short or middle term of his appointment, the Corporation could terminate the appointment thereafter in consequence of the proposed changes to the distribution system of the Corporation. It is of course a question of fact to determine what would be the "long term". Greater problems than these have confronted the courts from time to time and certainty of meaning has been achieved. Indeed the concept of the reasonable man which has loomed so'large in various branches of the law, while productive of difficulty in some cases, is not productive of uncertainty. So far as Mr. Finucane's appointment is

concerned, the period of the "long term" extended well beyond 12

November 1984, when he had been appointed as carrier by the

In my opinion the Corporation breached the terms of Mr. Finucane's engagement by terminating his appointment as it did on 12

November 1984 and 1s liable in damages to him for breach of contract.

The term and condition of the contract pleaded in paragraph 23A of the statement of claim is a different term from the one which I have found to have been established. I am satisfied that the term as pleaded was not in truth a term or condition of the contract for reasons which I have already given when dealing with the case alleged by Mr. Finucane under s. 52 of the Act. However, the question whether the term of appointment could be determined before it had subsisted until at least the commencement of the long term was the subject of evidence and argument and is involved in certain of the allegations in para. 20 of the statement of claim with respect to s. 52. As I do not propose to make any orders upon delivery of judgment but to stand the matter over for a short time so that the parties may bring in Short Minutes of Orders, I will give Mr. Finucane an opportunity to seek leave to further amend the statement of claim with respect to para.

23A to put this matter in order. What view I will then take of the

matter will depend upon the circumstances that then exist.

So far as damages for breach of contract are concerned, the measure of contractual damages is to award damages which are such as to put Mr. Finucane in the position which he would have been in if the contract had been performed by the Corporation according to its terms.

The damages to which Mr. Finucane is entitled in consequence of the

breach of contract are considerably less than the damages to which he is entitled for contravention of s. 52 of the Act, since the Corporation would have been entitled to terminate his appointment after the short and middle term of the appointment had passed. Little argument was addressed as to the question of the number of weeks or months or years that would have had to expire before the Corporation would have been entitled to terminate Mr. Finucane's appointment and there was little argument as to the quantum of damages under the

As I have found contravention of s. 52 to have been established and as damages assessed for that contravention would he higher, I do not propose at this stage to assess the damages under the breach of contract count. If when the parties have considered my reasons for judgment either of them wishes to reactivate this matter

Mr. Finucane succeeded in establishing only a limited number of alleged contraventions of s. 52. He also succeeded in establishing breach of contract on a point not specifically pleaded in the: Statement of Claim but nevertheless treated as if it were part of the case by the conduct of the parties. He is entitled to an order that his costs be paid by the Corporation with one exception. On the fourth day of the hearing when the evidence had concluded and addresses were well advanced counsel for Mr. Finucane sought leave to amend the statement of claim with respect to the alleged misleading

and deceptive conduct under s. 52 and to add what became para. 23A of

the statement of claim with respect to the alleged breach of contract. I granted leave to amend the statement of claim on terms that the further hearing of the matter be adjourned to a date to be fixed and on terms that Mr. Finucane must agree to such order for costs of and occasioned by the amendment and thrown away in consequence of the amendment as the Court made in due course. Those conditions were not opposed by counsel for Mr. Finucane. The leave to amend was given and the terms as to costs were imposed on 10 March 1988. The hearing resumed on the afternoon of 21 March and continued on 22 March. Mr. Finucane must pay the costs of the Corporation of both 21 and 22 March in any event. Accordingly the order for costs shall in due course be that the Corporation pay Mr. Finucane's costs of the proceeding except

the costs of 21 and 22 March. Mr. Finucane shall pay the

I shall stand the matter over to a date to be fixed for the purpose of then making declarations and orders. I direct Mr. Finucane

seventy (70) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Egg Industry Act 1983(NSW)

Trade Practices Act 1974(Cth)

Building Information Centre Limited (1978) 140 CLR 216 per Murphy J. at 234; Handley v. Snoid [1981] ATPR 40-219 per Ellicott J. at 42,984 -

At a glance

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Judgment (63 paragraphs)

Legislation Cited (4)

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