Lobster & Co Trading Pty Ltd v Nisbets Australia Pty Limited

The hearing in the Local Court on 25 October 2022

1. When the matter was called on for hearing on 20 October 2022, the Magistrate heard short argument from both Lobster and Nisbets as to whether leave should be granted to Lobster to file an ASC. Her Honour dismissed the motion and gave short ex tempore reasons as follows (FAA 143): "HER HONOUR: All right. Thank you very much. Of course, these decisions have to be made in relation to ss 56 and 57 of the Civil Procedure Act, having regard to the matters in 58. What has happened here, the Court did permit an amended statement of claim, but that deadline was missed. It was missed by nearly a month. Of course, that meant that the registry, it might have accepted it, but it ended up rescinding that acceptance. This was a matter, of course, as soon as the deadline was missed it required a motion to rely on that amended statement of claim. Looking at the s 58 matters, really there were opportunities under the Act and Rules, particularly under the Rules, to file an a motion to get the late amended claim in. That did not happen. There is nothing to suggest that it was a lack of expedition beyond the control of the party. I have to, under s 57 I must have regard to the just determination of the proceedings and the timely disposal of these and all other proceedings at an affordable cost to the parties. In addition, the efficient disposal of the Court's business and the efficient use of Court resources. I think those last two matters are not so much the issue today. It is the just determination of the proceedings. That is because I understand that the defence has prepared its evidence based on the original statement of claim. Further, the issue of cost is always important. This is quite, at this stage, a small claim. The real issue is one of fairness. It would be difficult to see how this matter could be adjourned to give an opportunity to rectify the evidence." TODAY, IN MY VIEW, I MUST DISMISS THIS MOTION.

Appeal Ground 2

1. Appeal ground 2 is that: "[t]he Court below failed to determine the proceeding on the evidence adduced and instead determined the proceeding unduly narrowly on the case as pleaded in the Statement of Claim".

Lobster's submissions

1. The rejection of the ASC did not preclude nor negate the Court's obligation to consider this relevant consideration in the correct construction of the contract for sale. It was a necessary element of determining the obligations of Nisbets as vendor of the chairs.
2. Ascertaining the legal meaning of reasonable time depends upon an assessment of the circumstances at the time the contract was entered into, and its limit is determined by reference to what is fair to the parties. The question whether a reasonable time for performance has elapsed takes into account any estimate given by the performing party of how long performance would take, whether that estimate has been exceeded and, if so, in what circumstances. The performing party is not entitled to justify its delay by relying upon the materialisation of a risk of which the contracting party was on notice and which that party was contractually obliged to bear: see BSO Network Inc v EMClarity Pty Ltd (No 2) [2021] QSC 192 [352] ('BSO Network').
3. This appeal is, of course, by way of rehearing: UCPR 50.16. The Court is obliged to conduct the task of weighing conflicting evidence and drawing its own inferences and conclusions. On this review, the Court would be satisfied that it was in the contemplation of both parties when the contract was entered into that delivery should be performed on or before 22 December 2021. The material conditions which actually prevailed, and that it endeavoured to discharge its obligations, although relevant to the legal determination of a reasonable time for the fulfilment of the contract, fell to Nisbets to prove. This aspect of Nisbets' case is negligible and constitutes a bare assertion with respect "COVID related supply chain issues" although there is no contemporaneous evidence at all supportive of this assertion. In any event, Nisbets' statement of delivery date of 22 December 2021 necessarily included any considerations of COVID related supply chain issues.
4. Importantly, Nisbets did not and could not justify why when in mid-February 2022, when the chairs came into its possession (FA 83), they were not delivered until 6 May 2023. The explanation on the evidence is clearly that it was using the delivery of the chairs to secure a release from the claims the subjects of the proceedings.
5. It is entirely plain that as at the date of delivery a reasonable time had elapsed, and the delay was "so unreasonable in its length as to involve a complete failure of performance in an essential provision of the contract.": Kennedy v Vercoe (1960) 105 CLR 521 at 527. It is uncontentious that at this date Lobster would have been entitled to an order for specific performance of the obligation to deliver the chairs, as Nisbets could not justify its renunciation of its obligation to deliver the chairs within a reasonable time frame upon them coming into its possession. Accordingly, Lobster was entitled to succeed in its claim.

Nisbets' submissions

1. It essentially says that the Local Court erred in determining the case as pleaded in the Statement of Claim. It is perhaps trite to submit that the Local Court was correct to decide the proceeding on the case as pleaded in the statement of claim. to find otherwise would be contrary to well settled procedural fairness principles that the pleadings define the case and departure from a pleaded case is impermissible. A court cannot be in error by not going beyond a pleaded case and straying into arguments that were not raised, were not contended for, and not argued at a hearing.
2. However, again this is a misstatement of the case as pleaded and decided before the Local Court, and requires leave to seek in full, because the issues relating to "reasonable time for delivery", "representations", and "legitimate expectations of honest commercial people" were not pleaded in the statement of claim, not argued in the hearing in the Local Court, were only sought to be raised in the (rejected) ASC.
3. On the case run in the Local Court and as pleaded, in order to show breach as pleaded in the statement of claim, it had to be shown that there was a term of the Agreement that the chairs would be delivered by "22 December 2021" as defined as the "Delivery Date". Contrary to Lobster's submissions at [16], [22]-[23] this was the case that was run in the Local Court, after the ASC was rejected.
4. The fact that this was the case run and decided in the Local Court is patently clear from the transcript. Lobster's counsel stated in answer to the Magistrate's question as follows: "HER HONOUR: Based on the original motion [statement of claim], what are the issues in this matter?... KLOOSTER: Based on the sealed statement of claim the three issues are, (1), whether my friend can incorporate the terms and conditions, (2), whether my client can prove that there was a term that the chairs be delivered by 22 December, and (3), whether there's been a breach, (4), whether loss has been established. I'm not sure if (1) is an issue. Is (1) an issue? ELKS: Well, I think that we can even simplify it if my friend agrees. On the original pleading that's now the pleading in question, was it an express term of the agreement that the defendant deliver to the plaintiff the steel chairs by 22 December 2021, if so, was there a breach? If there was a breach, do the terms and - well, also whether the terms and conditions were validly incorporated. Then if my plaintiff gets to it, the question of loss. Do you agree? KLOOSTER: I don't think there's any dispute that if there is a term that the chairs need to be delivered by 22 December, they weren't delivered. It's really whether that term is there. ELKS: I agree with that. HER HONOUR: Is an express term? KLOOSTER: It's pleaded as an express term. HER HONOUR: Okay. Right. ELKS: I think that's really the crux of the debate, unless my friend succeeds on that point and it goes to a question of terms and conditions and then loss [Nisbets emphasis]."
5. Accordingly, the case as pleaded in the statement of claim, and as put in the hearing by Lobster's counsel, was that: was there an express term of the agreement that the Defendant deliver the chairs by 22 December 2021? It was accepted that if the term is not found to be in there, then Lobster would fail. The Local Court found that such an express term was not in the agreement as properly construed, and as such Lobster failed in its case.

Resolution

1. The Magistrate was entitled (and correct) to come to the conclusion she did. I understand that the defence has prepared its evidence based on the original statement of claim. The main reasons her Honour gave for refusing to file the ASC is that Nisbets had prepared its evidence based on the original statement of claim and second the issue of costs is also important, and it is a small claim. The real issue is one of fairness. It would be difficult to see how this matter could be adjourned to give an opportunity to rectify the evidence.
2. As I said earlier, the Appeal Ground 2 does not satisfy the test for the grant of leave to appeal, particularly when the decision of the Magistrate was correct.

The hearing before the Magistrate

1. The statement of claim relevantly pleaded: 5. On or about 24 November 2021 the plaintiff and defendant entered into an agreement whereby the defendant agreed to supply the plaintiff with 100 (one hundred) Bolero Grey Pavement Style Steel Chairs (Steel Chairs) in consideration for payment in the amount of $11,194.00 (the Agreement). 6. It was a term of the Agreement that the defendant deliver to the plaintiff the Steel Chairs by 22 December 2021 (Delivery Date). … 9. In breach of the Agreement, the defendant failed to supply the Steel Chairs to the plaintiff by the Delivery Date (Breach).
2. The contract for sale comprised two documents: Nisbets' pro-forma tax invoice and the Sales Acknowledgement Receipt. These two documents are reproduced below:
3. The first document is the pro forma invoice is A1 p 76. It is relevantly extracted below and dated 24 November 2021 (noting that the chairs were not paid for until 6 December 2021 sometime after):
5. Under Header Comments it states, "express dispatch".
6. The second document is the sales acknowledgement document: The Magistrate then reviewed the sales acknowledgment document A1 at p 79.
8. The sales acknowledgement document stated under header comments "express dispatch" and at the bottom of the form it states "we are currently out of stock of this product. The expected dispatch date is 22 December 2021.
9. Her Honour was not satisfied that, by its Sales Acknowledgement dated 9 December 2021, Nisbets had by the notation "The expected despatch date is: 22/12/2021" made a representation that the chairs would be delivered by 22 December 2021, dismissed the Statement of Claim. The Court below interpreted those words to mean "We hope to be able to despatch these chairs on 22 December" and therefore there was no promise that the chairs would be delivered by that date. This is in the context of the Local Court's holding that chairs were held to have been delivered on 3 February 2022.

Appeal Ground 3

1. Ground 3 is that the Court below erred in failing to find that it was a term of the contract for sale and/or there was a representation made upon which Lobster relied as to a reasonable time for delivery of the chairs purchased constituted as close to or as soon after 22 December 2021 arose out of all the circumstances of the case and the legitimate expectations of honest commercial people in all the circumstances".

The law

1. It is common ground that the task of identifying the meaning of those documents comprising the contract involved identifying the intention of the parties on an objective basis by reference to the text, construed in light of its context and purpose: Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640 at [35]; Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited [2015] HCA 37; 256 CLR 104 at [46]-[51] and [108]-[109]; Victoria v Tatts Group Ltd [2016] HCA 5; (2016) 90 ALJR 392 at [51]-[75]; Simic v New South Wales Land and Housing Corporation [2016] HCA 47; 260 CLR 85 at [18] and [78]. Evidence of the subjective intentions of the parties was not relevant. The start and end point for construction of these documents was the language chosen by Nisbets to record the sale, to which the Court was required to give effect unless to do so would give the contract an absurd operation. It is not legitimate to use as an aid in the construction of the contract for sale anything which the parties said or did after it was made: Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 at [35].
2. It is well established that where no time for performance of any contractual obligation is specified, the law would imply a term that performance must be effected within a reasonable time: Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd (2019) 101 NSWLR 679; [2019] NSWCA 185 at [99]-[109] ('Donau'); Canning v Temby [1905] HCA 45; 3 CLR 419 at 424; Reid v Moreland Timber Co Pty Ltd [1946] HCA 48; 73 CLR 1 at 13.
3. Section 32 of the Sale of Goods Act 1923 (NSW) also provides that if the contract does not fix a time for sending, the seller is bound to send them within a reasonable time.
4. The construction of the contract necessarily required consideration of what was a reasonable time in the circumstances that existed at the time of the Contract. Those facts included the time represented by Nisbets as to the time for delivery. The time for ascertaining the legal meaning of "reasonable time" is the time of contracting: Donau at [109].
5. Lobster submitted that the Court below engaged in none of this analysis above and it should have.
6. Ascertaining the legal meaning of reasonable time depends upon an assessment of the circumstances at the time the contract was entered into, and its limit is determined by reference to what is fair to the parties. The question whether a reasonable time for performance has elapsed takes into account any estimate given by the performing party of how long performance would take, whether that estimate has been exceeded and, if so, in what circumstances. The performing party is not entitled to justify its delay by relying upon the materialisation of a risk of which the contracting party was on notice and which that party was contractually obliged to bear: see BSO Network Inc v EMClarity Pty Ltd (No 2) [2021] QSC 192 [352].
7. As at the date of delivery a reasonable time had elapsed, and the delay was "so unreasonable in its length as to involve a complete failure of performance in an essential provision of the contract.": Kennedy v Vercoe (1960) 105 CLR 521 at 527. Accordingly, Lobster was entitled to succeed in its claim.

Lobster's submissions

1. At the hearing of matter below, the issue squarely before the Court below was whether, in all the circumstances, Nisbets had breached an obligation to deliver the chairs the subject of the contract for sale in breach of the contract. This was so regardless of the proposed amendment to the statement of claim.
2. The proceedings below were conducted on the basis that the contract for sale comprised two documents: Nisbets' pro-forma tax invoice and the Sales Acknowledgement Receipt: see FAA 151.
3. The pro-forma invoice stipulated that the sale was subject to Nisbets' terms and conditions. The Court below accepted, correctly, Lobster's unchallenged evidence that Nisbets' Terms and Conditions were not available on Nisbets' website at the time of purchase and thereby were not incorporated.
4. Further, it is well established that where no time for performance of any contractual obligation is specified, the law would imply a term that performance must be effected within a reasonable time: Donau at [99]-[109]; Canning v Temby [1905] HCA 45; 3 CLR 419 at 424; Reid v Moreland Timber Co Pty Ltd [1946] HCA 48; 73 CLR 1 at 13.
5. Section 32 of the Sale of Goods Act 1923 (NSW) also provides that if the contract does not fixe a time for sending, the seller is bound to send them within a reasonable time.
6. The construction of the contract necessarily required consideration of what was a reasonable time in the circumstances that existed at the time of the Contract. Those facts included the time represented by Nisbets' as to the time for delivery. The time for ascertaining the legal meaning of "reasonable time" is the time of contracting: Donau at [109]. The Court below engaged in none of this analysis. It should have.

Nisbets' submissions

1. With respect to Ground 3 (as properly characterised in light of the case run in the Local Court), Lobster needs to show that the Local Court erred in not finding that there was a term guaranteeing delivery of the chairs by 22 December 2021, i.e. the "Delivery Date" as pleaded in paragraph 6 of the statement of claim.
2. The Magistrate dealt with the issue of contractual construction at page 14 onwards of the transcript (page 151 (A1)). Her Honour closely reviewed the three documents that Lobster asked her to consider in forming the Agreement, namely (i) the pro forma invoice document; (ii) the sales acknowledgement document; and (iii) the email of 19 January 2022.
3. The Magistrate stated: "What is relied on by the plaintiffs are the words 'Express Dispatch' that appear on the pro forma invoice document". The Magistrate said: "what do these words mean…in the context of the transaction?", noting that she could not see any "other date attached to them". Her Honour found that in the context, they "appear to be as a result of a request by Lobster for the chairs as quickly as possible". Her Honour further found that "there is nothing else on the pro forma invoice document of relevance to this issue as to this being an express term". This reasoning discloses no error.

The pro forma Invoice and the Sales Acknowledgment

1. This document stated expected dispatch date, not delivery date, i.e. likely dispatch from China. The Sales Acknowledgement also used the phrase "expected dispatch date" - on any view, this is far from guaranteed. The Magistrate found, after asking herself "what do these words mean?", that "it is clear that the defendant company did not have these chairs within its control at this date. It was reliant on someone else or some other way of obtaining these chairs…In my view, the words mean, 'We hope to be able to dispatch these chairs on 22 December". In my review, this reasoning discloses no error.
2. Further, it is noted that the "sales acknowledgement document" included as the "shipping address", "Collection Campbelltown WH", i.e. for Lobster to collect from the warehouse. This is relevant for Lobster's new and erroneous contention that delivery was withheld by Nisbets once the chairs were available for collection from that warehouse in Campbelltown.
3. The Magistrate noted that the email dated 19 January 2022 is "more of the same" and simply says "They're going to be delivered later than expected. Please see the revised delivery date. We're trying to sort this out". The email referred to the "original date" of 22 December 2021 and then a "revised date" of 3 February 2022. Her Honour then concluded: "In my view, nothing about that document adds anything to the previous language or alters the previous language, which is a language of, "We'll try to get these to you as quickly as possible and we hope to do that by 22 December 2022, and we expect to do that by 22 December". Then again more of the same in relation to the 3 February date. Of course, the chairs were delivered a week or so later. Today I must find that there is nothing about these documents that indicate that there was a promise to deliver the chairs on those dates [i.e. either 22 December 2021 or 3 February 2022]. It was a hoped-for delivery date."
4. Nisbets submitted that the Local Court's reasoning above was entirely correct, and discloses no error. 22 December 2021 was, at most, a "hoped-for" date of dispatch of a set of chairs ordered for delivery from China during a global pandemic. Nothing more than that. Ground 3 should be dismissed.

Resolution

1. The relevant document stated expected dispatch date, not delivery date, i.e. likely dispatch from China. Further, the document used the word "expected" - on any view, this is far from guaranteed. The Magistrate found, after asking herself "what do these words mean?", that "it is clear that the defendant company did not have these chairs within its control at this date. It was reliant on someone else or some other way of obtaining these chairs…In my view, the words mean, 'We hope to be able to dispatch these chairs on 22 December". This reasoning discloses no error.
2. Further, the "sales acknowledgement document" included as the "shipping address", "Collection Campbelltown WH", i.e. for Lobster to collect from the warehouse.
3. The Magistrate determined there is nothing about these documents that indicate that there was a promise to deliver the chairs on those dates [i.e. either 22 December 2021 or 3 February 2022]. It was a hoped-for delivery date."
4. The thrust of Lobster's submissions is to equate the words "express dispatch" and the expected dispatch dated 22 December 2021 as a "time is of the essence" clause. They do not.
5. The Magistrate was entitled to make the decision she did. Appeal Ground 3 fails.
6. I might add that the law firm acting for the plaintiff in the Local Court and this Court has not bathed itself in glory by not adhering to timetables, seeking to amend on the first day of the hearing in the Local Court and in this Court, over what on any view concerns a very modest sum of $5,413.60.

Costs

1. Costs normally follow the event. The appellant is to pay the respondent's costs.

THE COURT ORDERS THAT: 1. Leave to file a further amended summons is refused. 2. Leave to appeal in relation to Appeal Ground 2 is refused. 3. Appeal Ground 3 has failed. 4. The decision of Magistrate Greenwood dated 20 October 2022 is affirmed. 5. The Amended Summons dated 24 March 2023 is dismissed. 6. The appellant is to pay the respondent's costs.

Amendments 03 October 2023 - Costs order amendment. 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. Decision last updated: 03 October 2023