Global Alliance Network Pty Ltd v Sensis Pty Ltd

Court of Appeal (NSW)|2007-06-22|Before: Mason P, Hodgson JA, Tobias JA

CITATION: Global Alliance Network Pty Ltd v Sensis Pty Ltd [2007] NSWCA 163 This decision has been amended. Please see the end of the judgment for a list of the amendments.

JUDGMENT OF: Mason P at 1; Hodgson JA at 2; Tobias JA at 18

DECISION: (a) Appeal allowed with respect to Orders 1, 2, 3 and 5 made by her Honour Judge S J Gibb on 29 September 2006 and dismissed with respect to Order 4; (b) The appellant to pay the respondent the sum of $20,513.90 such judgment to take effect as at 29 September 2006; (c) The appellant to pay the respondent's costs both in the District Court and on the appeal with respect to its cross-claim; (d) The respondent to pay the appellant's costs of the respondent's claim in the District Court and of the appeal with respect thereto but to have with respect to the latter a certificate under the Suitor's Fund Act 1951, if otherwise qualified; (e) Liberty to apply in the first instance to Tobias JA for any variation of orders (c) and (d) above strictly within 14 days of the date hereof if they are affected by any relevant Calderbank offer

CATCHWORDS: CONTRACTS - Oral variation of standard form contracts for advertising - Written contract defines silence as acceptance of provided advertising proofs - Oral agreement on condition precedent to wait for "go ahead" - No agreement as to nature of "go ahead" to be given - Whether the statement "will confirm others later" when accepting one set of advertising proofs constitutes "go ahead" for "other" sets of advertising proofs - Whether silence after advertising proofs received constitutes "go ahead" - EVIDENCE - Whether admissions in a defence to a cross-claim can operate as informal admissions once the defence is superseded without objection by the filing of an amended defence

LEGISLATION CITED: Uniform Civil Procedure Rules 2005

Buckmaster v Meiklejohn (1853) 155 ER 1506 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 CASES CITED: Jones v Dunkel (1959) 101 CLR 298 Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 Warren v Coombes (1979) 142 CLR 531

PARTIES: Global Alliance Network Pty Ltd Sensis Pty Ltd

COUNSEL: A: M Luitingh R: J Turnbull

SOLICITORS: A: Swaab Attorneys, Sydney R: Holman Webb, Sydney

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40693/06 DC 4546/03

MASON P HODGSON JA TOBIAS JA

Friday 27 July 2007 GLOBAL ALLIANCE NETWORK PTY LTD v SENSIS PTY LTD Judgment 1 MASON P: I agree with Tobias JA. 2 HODGSON JA: The circumstances giving rise to this appeal, the issues it involves, and the submissions of the parties are set out in the judgment of Tobias JA. 3 On the question whether the primary judge erred in finding for the respondent on its claim, in my opinion this Court should not approach the matter entirely without regard to the primary judge's view. It is true that the question is in substance one of what inference should be drawn from basic facts that are largely undisputed on appeal; but even in such a case, I do not think the Court of Appeal should approach the matter entirely de novo, but should give respect and weight to the primary judge's view: Fox v. Percy [2003] HCA 22, 214 CLR 118 at [25]-[27], and Warren v. Coombes (1979) 142 CLR 531, at 551. 4 The primary judge found that each of the Sydney, Melbourne and Perth contracts was suspended pending the satisfaction of a certain condition, and relevantly that nothing would happen without Ms. Richardson's "go ahead". That certainly required a communication that, considered objectively, conveyed that the contracts were to go ahead, but I do not see a sound basis for departing from the primary judge's finding to the extent of requiring something more than this; so that if a requirement that the communication be unequivocal does require more, I would not depart from the primary judge's decision to find that there was such a requirement. 5 The question then is, did Ms. Richardson's facsimile of 19 August 2005, including the words "Will confirm others later", considered objectively, convey to Mr. Kondrat that the other contracts were to go ahead? 6 The primary judge's view was that these words conveyed that the others were to be published, and that all that was outstanding was the confirmation of their content; and thus that the words did amount to the required "go ahead", and the condition was thereby satisfied. 7 One possible difficulty with this approach is that it does not appear that Mr. Kondrat saw the matter in that way. His evidence was to the effect that he took the original agreement as meaning that publication was to go ahead unless Ms. Richardson cancelled before the deadlines. Consistently with this, his evidence, referred to by Tobias JA, that once proofs were returned and there were no final changes "then that's the go ahead", did not relate to the question whether the "Will confirm others later" facsimile conveyed that the contracts were to "go ahead", as that expression was used by the primary judge. That particular evidence by Mr. Kondrat related generally to a client's satisfaction with the form of the proofs. 8 Whatever Mr. Kundrat's subjective view was, the relevant issue is whether the facsimile, objectively considered, conveyed that the contracts were to go ahead, in the sense that they were to cease being subject to a suspensory condition. Since the facsimile was confirming the form of the Brisbane entry, the word "confirm" would reasonably be understood as referring to the same process in relation to the other entries, that is, finalising the form. And since the word "will" conveys that this confirmation is something that will happen, not may happen, in my opinion the words would reasonably be understood as conveying that the contracts themselves were to go ahead. At the very least, I am not satisfied that the primary judge was wrong to take that view. 9 I agree with Tobias JA that the subsequent non-response to the modified proofs sent out shortly afterwards could not of itself be the "go ahead" that removed the suspensory condition. However, it gives some slight support to the primary judge's conclusion, in that it could be expected that a reasonable person in the position of Ms. Richardson would then have contacted Mr. Kondrat, if she did not wish the contracts to go ahead; so that Ms. Richardson's failure to do so tends to confirm that she, as a reasonable person, must have understood that she had given the go ahead; and thus that this is how the communication would reasonably be understood. 10 For those reasons, I would dismiss the appeal on this aspect of the case. 11 On the question whether the primary judge erred in determining the appellant's cross-claim, I agree with Tobias JA that the superseded pleading no longer operated as a formal admission, and not having been tendered, could not operate as an informal admission. 12 However, in my opinion the letters of 27 May 2003 and 17 June 2003 do constitute admissions. It may be that the letter of 17 June 2003 could have been excluded as having been without prejudice; but once it was in evidence, it could be used as an admission, and the circumstance that it was in a without prejudice letter would go only to weight. 13 What those letters admit, in my opinion, is an overcharging of $18,582.54. The letter of 27 May 2003 asserts that this amount has been "credited", while the letter of 17 June 2003 asserts that "at least $16,951.44 has been credited" to the intervening telephone service provider Macquarie Corp Telecom. Those assertions are admissible as evidence of their truth: Evidence Act 1994 s.60. 14 In the absence of any other evidence from either side on this question, and having regard to Jones v. Dunkel (1959) 101 CLR 298, I would draw the inferences that there was overcharging of $18,582.54, that $16,951.44 was paid to Macquarie Corp Telecom, that the benefit of this was passed on to the appellant, and that the balance of $1,631.10 is still owing. Accordingly, I would award the appellant $1,631.10 on its cross-claim, with interest at District Court rates from 27 May 2003. 15 On the question of interest, should Tobias JA's view prevail, I would not deprive the respondent of all interest on $20,513.90. The circumstance of the offer and refusal of that amount would justify a lower rate of interest; but the appellant has still had the use of money to which it was not entitled, the respondent has been deprived of the use of money to which it was entitled, and inflation has continued. I would award interest at 5% per annum. 16 On costs below, because the respondent admitted $1,631.10 until the first day of the trial, I would order that each party pay its own costs of the cross-claim. On the costs of the appeal, the appeal has, on my view, largely failed, and I would order the appellant to pay 80% of the respondent's costs of the appeal. 17 I propose the following orders: 1. Appeal allowed in part. 2. Orders 4 and 5 below set aside. 3. Order that the appellant have a verdict and judgment on its cross-claim for $1,631.10 plus interest at District Court rates from 27 May 2003. 4. Order that the appellant pay the respondent's costs of the claim in the proceedings, and that each party pay its own costs of the cross-claim. 5. Appellant to pay 80% of the respondent's costs of the appeal. 18 TOBIAS JA: In 2002 and 2003 Pacific Access Pty Limited, now known as Sensis Pty Ltd (the respondent), was the publisher of the Yellow Pages telephone directory in Brisbane, Sydney, Melbourne and Perth. Serviced Office Specialists Pty Ltd, now Global Alliance Network Pty Ltd (the appellant) was, relevantly, a supplier of furnished office accommodation rented out to the public on either a long or short term basis in the metropolitan areas of those cities and had advertised in the Yellow Pages published by the respondent in each of those cities for some 15 years. The appellant was therefore a long-standing customer of the respondent. As such it was entitled to certain priorities over the respondent's new customers with respect to the positioning of its advertisements and the amount of space available to it for that purpose. In order to maintain those priorities it was necessary for the appellant to reserve advertising space by entering into contracts with the respondent for advertising in the Yellow Pages in the cities referred to in or about June of the year preceding publication. 19 The respondent alleged that on 25 June 2002 at a meeting between Ms Cynthia Richardson (a director of the appellant) and Mr George Kondrat (a media account manager of the respondent) separate advertising contracts were entered into by the appellant with respect to the 2003 Yellow Pages telephone directories for Brisbane, Sydney, Melbourne and Perth. The advertising cost for the Brisbane directory was $20,513.90; those for the Sydney, Melbourne and Perth directors were $31,904.40, $29,282 and $17,111.60 (all GST inclusive) respectively. 20 The respondent further alleged that advertising copy proposed for each of the four directories was agreed by Ms Richardson on behalf of the appellant and duly published in the 2003 edition of the Yellow Pages in each of the four cities. It therefore claimed from the appellant the total advertising cost of $98,811.92. The appellant admitted that it owed the respondent $20,513.90 being the cost payable under the Brisbane contract but denied that it was liable in respect of the publication of the advertisements in the Sydney, Melbourne and Perth 2003 directories.

21 Accordingly, on 30 September 2003 the respondent instituted proceedings by way of Statement of Liquidated Claim in the District Court of New South Wales claiming $98,811.92. By its Notice of Grounds of Defence dated 1 November 2004 the appellant admitted each of the four agreements dated 25 June 2002, but denied that it was liable to pay the advertising cost under each of those agreements other than in respect of the Brisbane agreement. With respect to the other three agreements the appellant pleaded that it did not authorise or direct the production and publication of its advertisements in the 2003 Sydney, Melbourne and Perth directories. It alleged in the alternative that in August 2002 it cancelled those agreements with the respondent's consent before the close of advertising for the respective directories. 22 On 30 November 2004 the appellant filed a cross-claim (the original cross-claim) against the respondent claiming the sum of $18,582.54 which it alleged in paras 2 and 3 to be unauthorised or incorrectly charged costs with respect to advertisements or listings published by the appellant in the 2002 White Pages directories for Sydney, Melbourne, Brisbane and Perth. The cross-claim further alleged in par 4 that by letter dated 27 May 2003 the appellant and respondent agreed that the respondent would set off the sum of $18,582.54 against amounts otherwise owed to it by the appellant.

The respondent's defence to the appellant's cross-claim 23 In its Notice of Grounds of Defence to Cross-claim dated 24 June 2005 (the original defence) the respondent denied each of the allegations contained therein but pleaded in par 5 "that it has paid the sum of $16,951.44 to Macquarie Corp Telecomms [sic], the [appellant's] telecommunications service provider and account provider, and admits the sum of $1,631.10 by way of set-off."

It further pleaded in par 6 that apart from the set-off of the sum of $1,631.10, the appellant was not entitled to the relief it sought. That defence was verified. 24 On 1 August 2006, being the first day of the trial before her Honour Judge S J Gibb, the appellant, without objection from the respondent, filed in court an Amended First Cross-claim (the amended cross-claim), which with respect to the claim for $18,582.54 pleaded the same allegations as in the original cross-claim. In response the respondent, without objection from the appellant, filed in court Notice of Grounds of Defence to Amended First Cross-claim (the amended defence). In doing so it repeated its denial of the allegations in paras 2 and 3 of the amended cross-claim of unauthorised publications and incorrectly charged listings. With respect to the allegations in par 4 of the amended cross-claim based on the letter of 27 May 2003, the respondent in par 4 of its amended defence denied the allegations and further pleaded "that the letter was sent to Service Office Specialists Pty Ltd and as to the terms of the letter the [respondent] relies on the letter as if it is specifically pleaded in full herein." 25 It is to be noted that in its Amended Defence to the amended cross-claim the respondent did not repeat the pleadings contained in paras 5 and 6 of its original defence to the original cross-claim which I have set out in [23] above. Accordingly, the extent to which those paragraphs may have contained an admission that the respondent owed to the appellant the sum of $18,582.54 (being $16,951.44 plus $1,631.10), which admission was denied by the respondent at the hearing both before the primary judge and on he appeal, that admission was purportedly withdrawn. 26 The proceedings were ultimately heard and determined on 29 September 2006 when the primary judge found in favour of the respondent and entered judgment in its favour in the sum of $98,811.90 plus interest in the sum of $26,679.21, a total judgment sum of $125,491.11. Her Honour dismissed the appellant's amended cross-claim and ordered the respondent to pay the appellant's costs of the claim and cross-claim. It is against those orders that the appellant appeals to this Court.

The findings of the primary judge 27 The issue before the primary judge which formed the primary basis of the appellant's denial on the appeal of its liability to the respondent in respect of the Sydney, Melbourne and Perth contracts, was its contention that although it signed contracts with respect to the publication of advertisements in the 2003 Yellow Pages Directory for those cities, at the same time the parties agreed that apart from the Brisbane contract, the other three were to be placed "on hold" pending a later "confirmation" that those contracts were to "go ahead", a confirmation that was not forthcoming. Accordingly, the appellant submitted that each of those contracts was subject to a condition precedent that respondent would not publish the respondent's entries and advertisements in the relevant directories unless and until the appellant expressly authorised the respondent so to do. 28 As I have indicated, there was no dispute that the three contracts were entered into on 25 June 2002. Each document as signed by each of Ms Richardson and Mr Kondrat contained a large number of printed conditions. But each was found by his Honour to contain an oral term or component which constituted a condition precedent to its performance by both parties. That term arose out of the following testimony, accepted by the primary judge, of Ms Richardson in par 15 of her affidavit sworn 15 November 2005 in which she deposed to the following: "During my conversation with Mr Kondrat at that meeting and before signing the documents, I said words to him to the following effect: 'I will sign these contracts. But I don't want you to do anything. I don't want to go ahead with these advertisements right now. I am not quite sure what is happening with my husband. He is really sick and I don't know what is going to happen. I can't make a decision at the moment. I will get back to you if I want to go ahead but don't do anything yet.' He then said words to me to the following effect: 'Sure. But the Brisbane book is closing soon. Do you want us to put those advertisements in?' I said: 'Okay. Put them in for Brisbane but do not put them in for the other cities, unless I confirm it.' He said: 'Okay. Let me know about the others later if you [want] us to go ahead with them. I will go ahead with Brisbane.' I said: 'Okay'. " 29 The primary judge found that Ms Richardson recalled that Mr Kondrat had expressly warned her that the "Brisbane book is closing soon". She was also conscious of the priority (or "seniority") that the appellant's advertisements enjoyed in its relevant section of the Yellow Pages directories by virtue of its contracting history with the respondent. One of the consequences of not advertising in the 2003 directories would have been to lay waste to that priority. 30 Her Honour also found that there was a "last listing date" being the last date upon which alterations of advertising copy would be accepted for the purpose of publication. That date varied and was sometimes extended as the discussion between the parties evolved with later dates being specified on the respective advertising proof sheets. Mr Kondrat gave evidence that if publication ran late and if it were possible to alter the advertising copy after the last listing date, this would be done regardless of the formal closure of the listing. That was the case with respect to the subject contracts. Her Honour thus found: "For the purposes of the relevant publications, the last listing dates were: 5 August 2002 in Brisbane; 9 August 2002 in Perth; 4 September 2002 in Melbourne; and 30 August 2002 in Sydney. …The date by which advertisements had to be returned for the Perth directory …was 21 August 2002. The extended return for Melbourne nominated on the Melbourne advertising proof sheets was 29 August 2002. Some of the Brisbane advertisements were returned with alterations on 19 August 2002, just within the extended date of 20 August 2002 - some weeks after the expiry of the official last listing date." 31 As to the respondent's system with respect to the confirmation of advertising copy, its practice was to provide the appellant with advertising proofs for correction after the contracts had been signed - there then being a relatively fixed time line in place and the last dates for the return of the documents being specified on the respective advertising proofs. 32 The advertising proof provided by the respondent to the appellant comprised a standard form sheet displaying a proof copy of the relevant advertisement and identifying the relevant telephone directory (eg Sydney, Melbourne, Perth or Brisbane). It contained a direction as to the manner of authorisation or variation. Relevantly, there were three columns. The first column was headed "PLEASE CHECK ALL DETAILS, INCLUDING" below which were six categories of details to be checked including the heading, spelling, technical and trade terms, and size of advertisement. The second column was headed "IF IT IS CORRECT" and provided that if the answer to the question so posed was in the affirmative, then the copy of the document was to be kept by the customer for its records. The third column was headed "IF THERE IS A CHANGE". Under that column was printed the following: " Print the corrections beside the advertisement Sign below and return by 21/08/02 to Locked Bag 21 Haymarket NSW 1240" 33 There was then a provision for the name of the customer, the authorised signature and the date. The proof was to be returned by the date nominated which was the last listing date only if correction was required. Otherwise, as her Honour found, the form advised that the client should retain the document for filing purposes and by inference it followed that after the nominated date it would be assumed that no changes were required. 34 According to her Honour, the form in its layout and content thus informed the customer to "speak now or forever hold your peace" in respect of the content of the advertisement to be placed in the publication. On the plain words of the advertising proof and contract, the client's signature was required only in respect of changes to the copy so that as her Honour held "silence served to confirm acceptance of the copy". 35 Ms Richardson deposed and her Honour accepted that in August 2002 she received a number of documents from the respondent known as advertising proofs that set out the proposed advertising for the appellant in the 2003 Yellow Pages. She deposed that Mr Kondrat had a practice of sending documents with "post-it" notes on them. On the copy forwarded by Mr Kondrat to Ms Richardson in August 2002 he had placed a post-it note upon the documents which stated: "Hi Cynthia All the amended proofs, except for the main Brisbane one, which I am chasing. Please indicate any amendments, authorise and fax back on 9281 9081. Cheers, George"

Ms Richardson deposed that some of the advertising copy had incorrect information which she amended. 36 Ms Richardson also deposed that a short time later she received the Brisbane proofs accompanied by the following post-it note: "Hi Cynthia The Brisbane proof for your files. Please call if any urgent change required. (tel) 9202 1739 Cheers George" 37 Ms Richardson deposed to the fact that at the bottom of each of the advertising proofs was a place for her signature but that she did not sign any of the documents except for the Brisbane proof which she then returned by fax to Mr Kondrat on 19 August 2005 with the following message: "George, Just a few minor changes for this one. Sending it now as it's urgent. Will confirm others later . Thank you again for your help. Cynthia Richardson" (Emphasis added) 38 Ms Richardson then deposed that a "short time later" (that is, a short time after 19 August 2005) she received from Mr Kondrat a further bundle of proofs together with a further post-it note which contained the following message: "Hi Cynthia I've had the Brisbane advert amended and also made the same amendments for the other ones i.e. advising adding in high speed internet and secretarial support. I actually finish up on Friday 23rd and move to our Gosford office, so if there are any changes to Sydney and Melbourne, please fax through on 9281 9081. Cheers George" 39 An issue arose as to precisely when Ms Richardson received these corrected proofs. There were three corrected proofs, each dated 22 August 2002: one for Melbourne, one for Perth and one for Sydney. Under the heading "IF THERE IS A CHANGE", the Sydney and Melbourne proofs required any corrections to be returned by 29 August 2002. The Perth proof, which was not mentioned in Mr Kondrat's post-it note, did not contain the three columns that were printed on the Melbourne and Sydney proofs because the Perth Directory had by then already closed (either on 20 or 21 August). Where the headings for the three columns were in relation to the Melbourne and Sydney proofs, the Perth proof simply had the heading "FILE COPY PROOF - FOR YOUR FILES ONLY" under which was printed the following: "● This Directory has now closed. Changes from original copy are therefore unable to be accepted. ● This proof has been provided to allow you to have a proof for your files prior to directory delivery." 40 Mr Kondrat had no recollection of when the proofs dated 22 August 2002 were actually forwarded to Ms Richardson. He did not forward them himself but arranged for someone else to do so. On the other hand, as noted in [38] above, Ms Richardson in her affidavit of 15 November 2005 deposed that she received them a "short time later", that is, a short time after 19 August 2005. 41 The primary judge made no finding as to precisely when Ms Richardson received the amended proofs for Sydney and Melbourne. Nevertheless she found that Mr Kondrat's note made it manifest that he had read Ms Richardson's note of 19 August 2002 as giving him the "go ahead" such that he had acted to revise all his advertising proofs consistent with the changes she had required in respect of the Brisbane proofs. Her Honour concluded "that the appellant was being told clearly by the respondent that the latter understood that the 'go ahead' had sounded by words that would have no content or meaning absent that construction. Advertising copy was finalised, produced in final form and notice given of the need to communicate any changes, with a date nominated by reference to" Mr Kondrat's departure to Gosford. And yet Ms Richardson made no response. 42 The respondent was thus met with silence which her Honour determined "in contractual terms was consonant only with acquiescence and acceptance." In that context she determined that the appellant's continued silence "communicated eloquently that the [appellant] had given the 'go ahead' required under the condition precedent"

which she found therefore to be " discharged " so that each of the contracts had been released from " hold ". 43 The primary judge had previously determined that the deal that had been struck between Ms Richardson and Mr Kondrat on 25 June 2002 was that each of the Sydney, Melbourne and Perth contracts were "suspended" upon satisfaction of a certain condition, relevantly that nothing would happen without Ms Richardson's "go ahead". It was implicit, her Honour held, that the "go ahead" was required before any obligation accrued to the respondent or, I would add, the appellant. The difficulty that her Honour faced was that the rather casual nature of the "on hold" condition left no precise agreement as to the manner and form by which the appellant's "go ahead" would be communicated to the respondent. 44 The question that therefore arose for determination was whether as a matter of fact the appellant (i) had determined to "go ahead" and (ii) had communicated that "go ahead" to the respondent. Her Honour held that when Ms Richardson amended one of the three Brisbane advertisements and endorsed and returned as approved all the proofs for the Brisbane Yellow Pages, she did so under cover of a the note referred to in [37] above. Critically, the primary judge found that the "plain words of the note indicate that [Ms Richardson] would turn her attention to the content of the advertising copy later. That implicitly confirms the respective contracts and the issue of the 'go ahead'. …that which was conveyed was both the confirmation and the intention later to respond in respect of the other advertising proofs. In the context of the earlier agreement to hold pending confirmation, that statement on one simple reading conveys the 'go ahead' whilst reserving (as was permitted under the contract) the option to correct the other proofs in the same manner as she had corrected the Brisbane proofs." 45 Accordingly, her Honour found that objectively the proper construction of Ms Richardson's note was that (i) she had decided to "go ahead" and that (ii) she was giving the respondent the "go ahead" within the meaning of the condition precedent. She concluded that Ms Richardson would not have been considering the content of the advertisements, still less revising the content, unless she contemplated their publication which rested entirely upon the existence of the relevant contracts. According to the primary judge, Mr Kondrat's actions demonstrated that which was implicit in Ms Richardson's note to him: she had sounded the "go ahead" but she was not ready to sign-off on the detailed content of the individual advertisements themselves. 46 So far as the appellant's cross-claim was concerned, her Honour found first, that as Parke B of the court of Exchequer Chamber observed in Buckmaster v Meiklejohn (1853) 155 ER 1506 at 1507 in a passage approved by Mason CJ and Brennan J in their joint judgment in Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 85, "In point of law, pleadings are not admissions, but are merely the statement of the case, which the party wishes to raise for the opinion of the jury." 47 Second, even though the original defence was verified, to the extent there was any admission contained in paras 5 and 6 thereof, it had been withdrawn. 48 Third, and importantly, even if the original defence was superseded by the amended defence so that there was no longer any admission on the pleadings, it would have been open to the appellant to have tendered the original verified defence containing paras 5 and 6 as part of its evidence on the cross-claim but it failed to do so. 49 Fourth, there was nothing in the so-called admission that could be construed as an admission that any monies were currently owed or at any time had been owed by the respondent to the appellant. At its highest, par 5 admitted that some sums had been "paid" by the respondent to a third party and "admits" that some had not. However, her Honour considered that that was not an "admission" of the appellant's claim which was that there was an agreement in respect of monies owed by the respondent to the appellant of which there was neither admission nor evidence. 50 Fifth, her Honour referred to the letter dated 27 May 2003 the relevant part of which was in the following terms: "I have enclosed a spreadsheet which details any adjustments made to the accounts previously by Karin Tataroff [the respondent's Customer Solutions adviser] and the reasons why the adjustments have been made. The total adjustments credited were $18,582.24 (inc GST). If you have any questions concerning this spreadsheet, please do not hesitate to contact me." 51 Paragraph 4 of both the original amended cross-claim pleaded that the parties had agreed that the respondent would set off the sum referred to in the latter against amounts owing by the appellant to the respondent. The primary judge held that the letter merely asserted that "adjustments" had been made in the past and therefore did not constitute an admission that the amount referred to was presently owing by the respondent to the appellant. 52 The appellant relied upon two other letters. The first was a letter from the respondent's solicitors to the appellant's solicitors dated 16 December 2004 seeking further and better particulars. The letter was relevantly in the following terms: "Notwithstanding that we suspect that we will be obtaining instructions to admit the amount of the set-off claim, we now seek the following further and better particulars: 1. … 2. … 3. (a) Is it alleged that the Defendant accepted the plaintiff's offer of 27 May 2003? (b) If so, when was it accepted? 4. Does the Defendant accept $18,582.54 in full and final settlement of all the allegations arising out of the cause of action pleaded in the cross-claim?" 53 The appellant's solicitors responded to the request for particulars as follows: "3(a) Yes 3(b) Shortly after 27 May 2003."

and declined to answer request 4. 54 By letter dated 17 June 2005 the respondent's solicitors wrote to the appellant's solicitors "without prejudice save as to the issue of costs" which, after referring to the appellant's cross-claim, stated: "We assert that at least $16,951.44 has been credited to your client. We are presently trying to match the balance. By way of submissions we attach a spreadsheet showing to which accounts the various sums were credited. As your client had an intervening telephone service provider, namely Macquarie Corp Telecom, all credits were passed to this entity who should have on-allowed them to your client in their bills. Our client is prepared to credit the balance of $1,631.10 to resolve the cross-claim issue now." 55 Finally, by letter dated 20 June 2005 the respondent's solicitors wrote to the appellant's solicitors stating: "The only matters in issue between the parties on the Cross-claim relates to a specific of number credits contained in a letter of 27 March 2003 and whether the specific credit claims have been paid." 56 The spreadsheet referred to in the letter of 17 June 2005 reveals that a total of $16,951.44 was credited to Levasta Pty Limited that, presumably, was trading as Macquarie Corp Telecoms. 57 The primary judge did not consider that any of this correspondence contained any relevant admission to support the appellant's cross-claim. In particular, it contained no admission of any present debt or liability of the respondent to the appellant. Accordingly, she found that there was no "agreement" between the parties that the respondent would "set off a sum" as alleged in the amended cross-claim. She therefore concluded in the following terms: "● there was no 'agreement' per se although there was a statement by the [respondent] that certain monies had been 'adjusted' or credited to a specified account; ● later correspondence noted difficulty in matching the respective balances in the crediting or payment, but did so expressly noting the context of the mediated legal relationships via the intervening third party service provider and thus negating any direct relationship between the cross-claim parties; and ● there is no evidence that any relevant monies were at any time paid (or overpaid) by the [appellant] to the [respondent] or that the [respondent] had any relevant liability to the [appellant]."

Did the primary judge err in finding for the respondent on its claim? 58 The appellant challenged the following finding of the primary judge. First, that by her note of 19 August 2002 in which she returned the proofs for the Brisbane Yellow Pages duly amended with the remark "Will confirm others later" Ms Richardson had given the "go ahead" to Mr Kondrat with respect to the Sydney, Melbourne and Perth publications. Second, that Mr Kondrat so understood that note to give him the "go ahead" as he then forwarded to Ms Richardson the proofs for Sydney and Melbourne amended in accordance with Ms Richardson's changes to the Brisbane proofs and requesting any further changes to the Sydney and Melbourne proofs before he moved to the Gosford Office on 23 August. Third, that by her non-response to Mr Kondrat's note, Ms Richardson had, by her silence, acquiesced and accepted that the Sydney, Melbourne and Perth contracts were on foot in that the condition precedent to their performance had been satisfied. 59 In essence, the appellant submits that the condition precedent arising out of the conversation between Ms Richardson and Mr Kondrat on 25 June 2002 was that the Sydney, Melbourne and Perth contracts were not to proceed unless and until Ms Richardson confirmed that they were to "go ahead". Mr Kondrat had specifically said with respect to those three directories "Let me know about the others later if you [want] us to go ahead with them." 60 The requirement that those contracts were on hold pending Ms Richardson advising Mr Kondrat that they were to "go ahead" would only be fulfilled by some positive or specific communication that would convey objectively to a reasonable person in Mr Kondrat's position that Ms Richardson had not only approved the content of the advertising proofs for Sydney, Melbourne and Perth but also was giving the "go ahead" to their publication. 61 Accordingly, the appellant submitted that when Ms Richardson on 19 August 2002 returned the Brisbane proofs to Mr Kondrat with minor changes accepting that they were now "urgent", when the note indicated that she "will confirm others later" she was conveying no more than that she would confirm the content of the Melbourne, Sydney and Perth proofs later which was independent of her giving the "go ahead" to their publication. Alternatively, she was conveying that she would confirm the content of the proofs later, if and when she decided to give the "go ahead" to their publication. 62 Finally, it was submitted that as the requirement accepted by Mr Kondrat was there would be no publication unless Ms Richardson gave the "go ahead" for Sydney, Melbourne and Perth, that condition could not be satisfied by mere silence on her part on her receipt of the proofs for Sydney and Melbourne, the Perth directory having already closed. Such silence could not constitute the positive act contemplated by the requirement for the "go ahead" in respect of those cities which the condition precedent mandated. There was also nothing inconsistent, so it was submitted, in the 19 August note referring only to the content of the advertising copy being confirmed later without giving the or carrying with it an implied "go ahead" to actually publish. 63 The respondent submitted that Ms Richardson's approval of the advertising copy by her non-response to Mr Kondrat's note referred to in [38] carried with it, in its context and being aware of the fast approaching closure dates, the giving of the "go ahead" to publish. At the very least it was open to her Honour to come to that conclusion so that her finding to that effect should not be disturbed. 64 In my opinion the appellant's submissions should be accepted for the following reasons. First, although the matter is finely balanced, in my opinion the condition precedent, in the context in which it was agreed, namely, the inability of Ms Richardson to make a decision with respect to publication in Sydney, Melbourne and Perth given her husband's illness and her perceived uncertainty with respect to the appellant's activities as a consequence of that illness, should be construed as an agreement between the parties that Mr Kondrat was not to proceed with publication in 2003 Sydney, Melbourne and Perth directories unless and until Ms Richardson had positively and unequivocally given him the "go ahead". 65 Second, and independently of any communicated decision to proceed with the publication of the advertisements, it was necessary because of the closing dates after which no changes from the original advertising copy could be accepted, for any such changes to be made irrespective of Mr Kondrat receiving the "go ahead" to proceed with publication. 66 Third, Ms Richardson's note of 19 August 2002 related solely to changes to the advertising copy. Mr Kondrat had forwarded to her proofs not only for the Brisbane Yellow Pages but also those for Sydney, Melbourne and Perth. Because she had agreed to proceed with the publication in Brisbane and as its closing date was imminent, she made minor changes to Brisbane and returned it to Mr Kondrat "as it is urgent". It is in that context that the emphasised words "Will confirm others later" needed to be objectively considered. In my view they would convey to a reasonable person in Mr Kondrat's position that Ms Richardson would confirm whether she wished to make any changes to the advertising copy for Sydney, Melbourne and Perth "later" if and when she determined to give him the "go ahead" to publish the copy so confirmed. 67 Fourth, although her Honour found that the expression "Will confirm others later" in Ms Richardson's note of 19 August 2002 indicated that she would turn her attention to the content of the advertising copy later but nevertheless implicitly confirmed that the contracts were to "go ahead", Mr Kondrat in his evidence (Black 56 B-C) had said that once the proofs were returned and there were no final changes "then that's the go ahead". However, the proofs for Sydney, Melbourne and Perth were never returned to Mr Kondrat. 68 Fifth, although the form containing the proof provided that it was only if changes were proposed that the form was to be returned and that if there were no changes the document was to be retained as the client's file copy, that is not apparently the way it was understood from a practical point of view by Mr Kondrat. Accordingly, her Honour's finding that Ms Richardson's non-response to Mr Kondrat's undated note informing her that he was finishing up on 23 August and moving to the Gosford office so if there were any changes to Sydney and Melbourne she was to fax them through to him, constituted confirmation that she had given the "go ahead" to publication could not stand given Mr Kondrat's evidence to which I have referred. 69 Sixth, as I have concluded in [64], the agreement between the parties found by her Honour as giving rise to the condition precedent required on Ms Richardson's part a positive act constituting a "go ahead" which was never given. Objectively speaking it was not open therefore to her Honour to find that Ms Richardson's statement in her 19 August note that she "Will confirm others later" and which related to any changes she might wish to make to the advertising copy, carried with it or otherwise constituted such a "go ahead". 70 An implied "go ahead" was insufficient to satisfy a condition that required an unequivocal positive act of confirmation. It thus follows that her Honour was in error in finding that the condition precedent was satisfied and, as a consequence thereof, in entering judgment in favour of the respondent. As in my opinion the condition precedent was not satisfied, the respondent was not authorised to proceed with the publication of the advertisements in the Sydney, Melbourne and Perth 2003 Yellow Pages so that the appellant is not obliged to pay for those advertisements under the contracts with respect to those three cities.

Did the primary judge err in determining the appellant's cross-claim? 71 The appellant challenged the primary judge's finding that the respondent's amended defence to the amended cross-claim superseded its original defence with the consequence that any admission contained in the latter was thereby withdrawn. It was submitted that although the High Court had held in Laws at 84-86 that an unverified pleading is incapable of containing an admission, in the present case the original defence was verified so that it was, so it was contended, capable of containing an admission. In any event, reliance was placed upon r 12.6(2) of the Uniform Civil Procedure Rules 2005 which provides that a party may not withdraw any admission except with the consent of the other party or by leave of the court. 72 The difficulty facing the appellant is that the amended defence was filed in court without objection with the result that either the appellant implicitly consented to its filing and, therefore, to the withdrawal of the admission contained in paras 5 and 6 (if such they be) or her Honour implicitly granted leave to the admission being withdrawn when she accepted the amended defence as being filed in court. 73 However, in my opinion there is a more fundamental answer to the appellant's submissions. In my view paras 5 and 6 of the original defence do not contain any admission that any sum was owed by the respondent to the appellant except for $1,631.10. The assertion that the respondent had paid the sum of $16,951.44 to Macquarie Corp Telecoms, the appellant's telecommunications service and account provider, did not in my view constitute an admission that that amount was currently owed by the respondent to the appellant. 74 Furthermore, par 4 of the original defence denied par 4 of the original cross-claim which pleaded an agreement contained in the letter of 27 May 2003. Accordingly, whether or not that letter constituted the agreement pleaded was in issue. When one reads paras 4, 5 and 6 of the original defence together, any admission contained in those paragraphs is limited to a sum of $1,631.10. 75 The position is a fortiori in the amended defence, which also denied the allegations contained in par 4 of the amended cross-claim which were in identical terms to par 4 of the original cross-claim. 76 Finally, the question arises as to whether the letter of 27 May 2003 contains an agreement by the respondent to set off the sum of $18,582.54 against amounts owing to it by the appellant. I have already set out the relevant terms of that letter at [50] above. In my view, properly construed, it does not contain the agreement alleged. It certainly refers to adjustments having been made to the appellant's account, stating that those adjustments amounting to $18,582.54 (incl GST) had been credited to the appellant's account. As such, on its face it not only contains no admission that that amount was currently owing but also does not constitute an agreement to set off that amount against amounts currently owing to the respondent by the appellant. 77 Finally, accepting that there has been a waiver of the "without prejudice" letter of 17 June 2005 given that it was admitted into evidence without objection, it also asserted that the respondent had already credited $16,951.54 to the appellant in that it was passed on to the appellant's telephone service provider. In other words the letter asserted that that amount had been paid for or on behalf of the appellant. As such, it constituted a denial that that amount was still owed and was available for set off against amounts currently owing by the appellant to the respondent. 78 The letter of 17 June 2005 stated in its penultimate paragraph "Our client is prepared to credit the balance of $1,631.10 to resolve the cross-claim issue now." 79 This statement does not in my opinion amount to any form of admission of the agreement alleged in par 4 of the amended cross-claim. Nor does it constitute an admission that the amount of $1,631.10 was currently owed by the respondent to the appellant. It indicated a basis upon which the respondent was prepared to compromise the appellant's cross-claim, a compromise which was apparently rejected. Given the denial on the pleadings of the agreement alleged in par 4 of the amended cross-claim, the onus lay upon the appellant to establish the agreement pleaded. It did not do so, from which it follows that the primary judge was correct to dismiss the cross-claim.

Conclusion 80 In my opinion the appellant has succeeded on its challenge to the primary judge's order entering judgment for the respondent in the sum of $125,491.11 but has failed in its challenge to her Honour's dismissal of its cross-claim. The effect of this conclusion is that the appellant is entitled to have that judgment set aside. However, the appellant has at all times admitted liability to pay the respondent the sum of $20,513.90 being the cost of the Brisbane contract and there should, therefore, be a substituted judgment in favour of the respondent for that amount. However, in my view that sum should not carry interest as, according to the primary judge, Ms Richardson explained that, as a director, she had offered to pay that amount to the respondent but that payment had been refused unless the amounts owing with respect to all four contracts were duly paid. Her Honour noted that that evidence was not challenged. In these circumstances, the amount in question should not carry pre-judgment interest. 81 It further follows that the respondent should pay the appellant's costs both in the District Court and on appeal with respect to the respondent's claim whereas the appellant should pay the respondent's costs both in the District Court and on appeal with respect to the appellant's cross-claim. These costs should be set off against each other. 82 Accordingly, I would propose the following orders:

(a) Appeal allowed with respect to Orders 1, 2, 3 and 5 made by her Honour Judge S J Gibb on 29 September 2006 and dismissed with respect to Order 4.

(b) The appellant to pay the respondent the sum of $20,513.90 such judgment to take effect as at 29 September 2006.

(c) The appellant to pay the respondent's costs both in the District Court and on the appeal with respect to its cross-claim.

(d) The respondent to pay the appellant's costs of the respondent's claim in the District Court and of the appeal with respect thereto but to have with respect to the latter a certificate under the Suitor's Fund Act 1951, if otherwise qualified.

(e) Liberty to apply in the first instance to Tobias JA for any variation of orders (c) and (d) above strictly within 14 days of the date hereof if they are affected by any relevant Calderbank offer. **********

08/10/2007 - Correction to the solicitors for the Respondent - Paragraph(s) Coversheet

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

At a glance

Court

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Before

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Judgment (29 paragraphs)

Parties

Cases Cited (5)

Cited By (4)