Mildura Office Equipment and Supplies Pty Ltd v Canon Finance Australia Ltd [2007] VSCA 112

Court of Appeal (Vic)|2007-06-01|Before: BUCHANAN and ASHLEY JJA, and KELLAM AJA

Unilateral contract - Whether respondent's statements made in the course of a dealers' conference constituted a contractual offer, subsequently accepted by appellant's procurement of finance business for the respondent - Whether statements too vague and uncertain - Which evidence of post-contractual conduct admissible to prove "existence of a contract" - Party bound by way case pleaded and conducted at trial and on appeal.

1 I agree with Kellam JA that the appeal should be dismissed.

4 I agree with Kellam JA that this appeal should be dismissed. That outcome is dictated by the particular, and confined, case which the appellant pleaded, conducted and argued below, and argued again on the hearing of the appeal. I add this: If, on the appeal, the appellant had sought to assert, or had embraced, a different legal analysis of the circumstances, it would likely have fallen foul of the approach to consideration of new points raised on appeal which was described in

Suttor v Gundowda Pty Ltd.[1] The course of evidence must surely have been different if, to take one possible analysis, the appellant had alleged that a separate contract came into existence between itself and Canon Finance on each occasion that it procured a client to finance an acquisition of pertinent goods via a lease to which the client and Canon Finance were the parties.

5 This is an appeal brought by the appellant, Mildura Office Equipment and Supplies Pty Ltd, against a decision of a judge of the Trial Division, who after trial dismissed a claim for breach of contract brought by the appellant against the respondent, Canon Finance Australia Limited (CFA), on the basis that the appellant had failed to prove the existence of any such contract.

Background facts

6 The appellant is a retailer of office equipment and supplies in the Mildura region. Between 1978 and early 2003 the appellant was authorised by Canon Australia Limited (Canon) to sell certain of its business products and in particular it was authorised to sell photocopiers in the area of northwest Victoria.

7 At all material times Canon sold its photocopiers by two methods. In the capital cities of Australia it did so through direct sales by its own staff or by agents. In rural areas, such as Mildura, it did so through authorised dealers, such as the appellant, who had the capacity to service the photocopiers in question. Those dealers were known as the Business Imaging Solutions Group (BISG) dealers.

8 CFA is a subsidiary of Canon. It is a finance provider. CFA provided finance to direct customers of Canon Australia and to customers of BISG dealers in relation to the acquisition of Canon business products by such customers. It did so by a range of methods including in particular, rental leasing and hire purchase, along

with other purchasing arrangements.

9 The most common method of financing the acquisition of business products by customers of Canon, or by customers of the BISG dealers, was by rental. This method required CFA to buy the equipment and lease it to the customer for a specified period, usually for 36 or 48 months.

10 Up until February 1998, the practice adopted by Canon Australia Limited was that nearing the end of the rental term, the BISG dealer was required to contact the customer to ascertain whether or not the customer wished to upgrade the photocopier, or to continue to rent it for a further term after the expiration of the rental term. If the customer did not wish to continue to rent the photocopier, the usual practice was for CFA to offer to the customer the opportunity to purchase the photocopier at 10% of its invoice price. If the customer did not wish either to continue to rent the photocopier, or to purchase it for 10% of the invoice price, the customer was required to return it to CFA, or to the BISG dealer, if the customer was a customer of such a dealer.

11 However, prior to 1998, when providing Canon photocopiers to its customers, the appellant rarely used the financing services offered by CFA. Indeed the managing director of the appellant, Mr Janssen gave evidence before her Honour, which evidence was not challenged by CFA, that prior to February 1998 he could "only recall having one dealing with CFA". He said that that was on an occasion when one of his customers asked specifically to enter into a rental arrangement for a Canon photocopier "through CFA". Prior to February 1998 it was the appellant's usual practice to purchase photocopiers from Canon at the wholesale price. Of course in doing so, the appellant had to provide the funds out of its own capital to purchase the photocopiers, or alternatively by its own financing arrangements. In the majority of cases, the appellant then entered into a rental agreement with the customer who would pay an agreed monthly rental for an agreed term. That agreed term was usually five years. At the expiration of the agreed term the appellant collected the photocopier, which it owned, from the customer. Typically, the appellant, would then refurbish the photocopier and either sell or re-rent it.

12 In February 1998 Mr Janssen attended a conference of BISG dealers which took place in Christchurch, New Zealand. The conference was conducted by Canon as a "dealer incentive conference" and took place over a period of three days. The conference was organised by Canon as a reward to those BISG dealers who had "made budget".

13 At the end of the conference CFA made a presentation to the dealers. The accounting and administration manager of CFA, Mr Blancato gave evidence that he made the presentation as a "pep talk" to keep BISG dealers "up to date with CFA, finance products, the amount of business being financed; and [to] encourage the dealers to get customers to use CFA when financing the purchase of equipment".

14 The presentation included what the trial judge described as a "comical skit" in the form of a mock auction. Mr Blancato said that he and a Mr John Mortimer, a Canon Australia account manager, had engaged in the skit. In his witness statement, Mr Blancato described the skit in the following terms:

"My presentation began with information as to CFA's performance in the previous year. That was followed by the presentation of an award to the BISG dealer that had put the most deals through CFA the previous year. I then invited John Mortimer ... to address the audience. I cannot recall precisely what he said, but towards the end he commenced an auction or 'bidding war' with the audience for an ex-rental copier. This was pre-arranged as a role play or 'skit' to introduce a new campaign whereby certain machines would be offered to BISG dealers for $1.00 at the end of a CFA rental agreement. John pretended to offer an ex-rental copier to the audience by asking how much they would pay for it. I then stood up and said 'You can't do that!' and then John and someone else ... tied me up in a chair and we acted out a routine during which John, aided by the audience, negotiated a price at which I (representing CFA) would sell the ex-rental copier to the BISG dealer. Gradually, with audience members shouting out various prices, we negotiated a price at which I (representing CFA) would sell the ex-rental copier to the BISG dealer. Gradually, with audience members shouting out various prices, we negotiated a selling price of the ex-rental copier down to $1.00. At the conclusion of the skit, I was untied. I then told the audience in a very general way how the $1.00 campaign was to work. I said that it was to start immediately and was available to all Canon BISG Dealers. I said that it did not apply to all models and I identified those excluded - they were high-end black and white photocopiers and colour photocopiers. I said that it could only be utilised at the end of the rental term or when the customer no longer required the copier, whichever was the latter. I said that it only applied to copiers sold through Canon BISG dealers and not by Canon directly. I also said that the copier could not remain with the same customer, but that it had to be collected."

15 Mr Blancato gave evidence before her Honour. In the course of cross-examination, he agreed that he had used a Powerpoint presentation during the conduct of the skit. He said that he summarised the main points of the scheme orally at the end of the skit and held up a big dollar sign inscribed "Machines Back For $1.00". He agreed that the $1.00 offer was an incentive to dealers to send business to CFA.

16 Mr Janssen gave evidence before her Honour that upon returning from the conference he had decided to promote the use of CFA finance by customers of the appellant when they acquired Canon photocopiers. He gave evidence that there were advantages for the appellant in that the use of CFA finance meant that it would take over the financial obligations previously undertaken by the appellant when leasing photocopiers to its customers. He said that this would allow the appellant to work with less capital.

17 Following the conference CFA referred to the $1.00 offer in a number of its newsletters which were sent to dealers. Its newsletter dated April 1998 included the following notice:

"For Sale

Expired rental machines for dealers for $1.00.

Dealers are now able to purchase certain CFA rentals at the end of their term for $1.00.

The exceptions for this rule are:

Photocopier models - NP6085, NP8530, NP8580, NP9800, BJAIP, BJAISB, CLC700, CLC800.

Any machines where the rental contract has been signed up by Canon and not the dealer.

The machine cannot stay with the same customer. It must come back to the dealership for on sale to another party. There will be 100% audits by CFA to ensure this is adhered to."

18 Mr Janssen, however, gave evidence before her Honour that he could not recall having seen the April newsletter.

19 The CFA newsletter dated May 1998 recorded an interview with a dealer who stated the following:

"As a general rule we try and avoid external finance company. We use CFA for the following reasons:

- Good rates - easy upgrades - ability to buy expired CFA rentals for $1.00 - easy use of finance application and now flexible documents - convenient one stop shopping."

20 Mr Janssen gave evidence that the May newsletter encouraged him to "continue procuring customers to enter rental agreements with CFA".

21 The appellant's statement of claim asserted that following the New Zealand conference the appellant procured "on particular dates a number of its customers to enter into rental arrangements with" CFA in respect to certain Canon photocopiers. A schedule was annexed to the statement of claim. This schedule set out a list of photocopiers which the appellant asserted were the subject of finance arrangements made by its customers with CFA following the New Zealand conference. The defence filed on behalf of the CFA admitted that between March 1998 and February 2003 customers of the appellant entered into rental agreements with the CFA with respect to certain Canon photocopiers. The schedule annexed to the statement of claim asserted that the alleged agreement had been "performed on 46 separate occasions". As I understand the position the appellant asserted that on 46 separate occasions it arranged for its customers to acquire Canon photocopiers by use of the credit facilities which were offered by CFA, and that at the completion of the finance term the machines were picked up by the appellant and purchased notionally for $1.00 in accordance with the agreement which the appellant alleged existed at that time. The evidence before her Honour was that the $1.00 purchase price was notional in that CFA never required it to be paid.

22 The full details of what actually happened in the course of all the dealings between the appellant and CFA between the conference in New Zealand in February 1998 and its termination as a BISG dealer in February 2003, are not entirely clear to me, nor was evidence of these matters led before the trial judge in any detail. The reason for this is that it was agreed between the parties that the trial of the proceeding was to relate to the determination of any "liability" of CFA, in contract. For the purposes of the trial of the issues of liability, the parties agreed to lead evidence as to examples only. This course has much to commend itself in many cases. Unfortunately, the decision to proceed in this manner in this trial, tended to obscure what I consider was the true issue between the parties, which appears to me to be: Was there or was there not one agreement which covered all subsequent transactions, or was there an offer or a promise made at the conference in New Zealand which subsequently was varied from time to time, and which offer or subsequent offers or promises were accepted by the appellant on a number of separate occasions, thereby creating a number of separate agreements between the appellant and CFA?

23 In February 2002, Canon Australia gave notice to the appellant that its authorisation as a BISG dealership would expire in 12 months. Following that notice and in February 2003 Canon Australia terminated the BISG dealership held by the appellant and appointed a new BISG dealer for the Mildura area. Thereafter, CFA refused to permit the appellant to purchase machines which had been rented to customers of the appellant, and who the appellant claimed had been procured by it as customers of CFA, for the notional price of $1.00.

24 In September 2004 the appellant issued proceedings in the Commercial List of this Court. The statement of claim was amended on a number of occasions. In essence, the pleadings contended that shortly after 26 February 1998, the appellant and CFA agreed that in consideration of the appellant procuring its customers in the Mildura area to rent Canon photocopiers from CFA, CFA would sell to the appellant for $1.00 each, all Canon photocopiers (other than models NP6030 and NP6050) rented by such customers when the rental period expired or was terminated. The particulars pleaded were to the effect that the agreement was partly oral and partly to be implied. Insofar as it was oral, it was pleaded that the agreement was constituted by the speech made by John Mortimer and Charles Blancato on behalf of CFA at the conference held in Christchurch, New Zealand. It was pleaded that the acceptance by the appellant of the offer and the consideration for the agreement were to be inferred from the fact that shortly after 18 February 1998, the appellant procured customers to enter into rental arrangements with CFA and that CFA entered into such rental arrangements with the customers. Furthermore, it was pleaded that acceptance of the offer, and the consideration for the agreement, were to be inferred by the "part performance of the agreement". The so-called "part performance" was said to be a number of occasions whereby the appellant had introduced customers to CFA and had been permitted by CFA to take possession of the rented machines leased by such customers at the end of the rental term for the notional sum of $1.00.

25 The CFA by its pleading denied that statements made by its representatives at the conference constituted a contractual offer. It denied the existence of any implied terms and in the alternative it pleaded that any contract was conditional upon the appellant continuing to carry on business as an authorised BISG dealer of office equipment for Canon Australia.

26 Her Honour held that there was no "distinct promise ... in language which is perfectly unmistakable" and no "offer of a promise for an act" indicating "a relation of quid pro quo" necessary to establish a contract of the Carlill v Carbolic Smoke Ball Co[2] type. Furthermore she determined that post-contractual conduct and communications were not admissible in order to establish the existence of the contract. She determined that the conduct, newsletters and communications between the appellant and CFA after 1998 "could not be anything other than post contractual" in nature. The appellant having put its case solely in contract, the trial judge held that it had failed to establish the existence of an unilateral contract constituted by CFA's offer made at the conference in February 1998 and accepted by the appellant's procurement of its customers' entry into rental agreements with CFA.

27 It is clear both from the pleadings and from her Honour's judgment that the argument advanced before her on behalf of the appellant was that the conduct of the so-called skit in New Zealand was a contractual offer. The appellant contended that it accepted the offer in April 1998 by procuring a rental agreement between one of its customers and CFA, thereby concluding a "unilateral" contract. The appellant contended before her Honour that the evidence established that the parties agreed subsequently to successive additional terms of the contract, which expanded the types and brands of machines available for the $1.00 purchases. The appellant relied upon the fact that following the offer having been made in New Zealand, and until the termination of its dealership in February 2003, the appellant purchased various photocopiers from the CFA for $1.00 each at the conclusion of the rental term agreed between CFA and various of the appellants' customers who had been introduced to CFA by the appellant.

28 The appellant argued the case before her Honour on the basis that the refusal of the CFA to continue to sell the photocopiers to the appellant after the appellant's BISG dealership was terminated in February 2003 was the breach of "the contract".

29 Her Honour reviewed carefully the relevant authorities and the relevant legal principles. She examined carefully the authorities relevant to whether correspondence and conduct which post-dated "the alleged act of acceptance" in April 1998 was admissible, and concluded that it was not. She concluded that Mr Janssen's evidence was lacking in detail, inconsistent and imprecise and stated that she preferred the evidence of Mr Blancato. She stated, however, that even accepting the totality of Mr Janssen's evidence, it would not support his allegations "that the dealer's procurement of rental agreements with CFA, or any other act, was specified in the address (referring to the so-called skit in New Zealand) as consideration". In particular she relied upon the fact that "the alleged successive additional terms" were not a substitute for sufficient certainty as at "the date of the alleged acceptance". She found that there was no persuasive evidence that the alleged additional terms were agreed upon by the parties, rather than "unilaterally promulgated or imposed by the defendant". She said that they suggested "an evolving programme rather than 'new terms of a contract'." It is apparent that her conclusion that "the conduct, newsletters and communications after 1998 cannot be other than post contractual" is referrable to the manner in which the appellant put the case, that is, that there was one contract. Her Honour's conclusion puts that matter beyond doubt. She said:

"In my opinion the plaintiff has failed to establish the existence of a unilateral contract constituted by the defendant's offer made at the conference in February 1998 and accepted by the plaintiff's procurement of its customers' entry into rental agreements with the CFA."

30 However, in the hearing before us it became apparent that a serious problem had been created by the decision made by the parties to split the proceedings into one of so-called liability and one of so-called quantum. The proceeding before her Honour proceeded on the basis that if liability was established under "the contract" then there would be an examination of the individual transactions which were claimed by the appellant to have taken place in consequence of it procuring its customers entry into rental agreements with CFA. However, upon the hearing of the appeal a question arose as to whether or not the facts established that there was one unilateral contract as was considered on the evidence before her Honour, or rather, and in the alternative, whether or not the facts established that there was a series of such contracts. Unfortunately her Honour was constrained by the fact that the parties had agreed to call evidence of a limited number of transactions between the appellant, its customers and CFA only. All of the other transactions, of which there were many, were treated as being relevant to the issue of quantum. However, in my view, the evidence of those transactions was most relevant to the issue of whether or not the CFA had any liability under contract.

31 To demonstrate the problem created by the splitting of the proceeding, it is sufficient to examine the course of conduct, as far as it was the subject of evidence before her Honour, of both parties over the period of time between February 1998 and February 2003 when the appellant's dealership was terminated.

32 Dealing first with the presentation made in Christchurch, the evidence before her Honour and which she accepted, was that Mr Blancato stated to those present that BISG dealers would be able to purchase machines which had been financed through CFA for $1.00 each at the end of the rental period. He said that some models, "high end black and white and colour photocopiers" would be excluded as would photocopiers sold directly by Canon. The right could be used only at the end of the rental term or when the customer no longer required the photocopier, whichever occurred second. A copier could not remain with the same customer after being purchased for $1.00 by the dealer.

33 Mr Blancato gave evidence that he did not identify which models would be excluded and he gave evidence that conditions would apply, but he did not identify comprehensively those conditions. He also told those present that the "campaign" was to start immediately. A Powerpoint display, the details of which were not discovered nor produced at trial, was used in the course of the presentation.

34 As pointed out above, CFA in its April 1998 newsletter repeated what had been said in New Zealand but excluded specifically eight models from the "rule" that dealers were "now able to purchase certain CFA rentals at the end of their term for $1.00." That was followed up by further dealer newsletters published by CFA in May 1998, February 1999, May 2000 and March 2001 whereby statements were made by CFA that dealers were able to purchase ex-rental machines for $1.00.

35 In addition, Mr Penrose, who was the state supervisor of CFA throughout the relevant period, gave evidence "that at some stage during 1999 the plan by which Canon dealers could buy ex-rental machines for $1.00 was varied to include facsimile machines and non-copier electronic equipment". Mr Janssen's evidence, about which he was not challenged, was that this occurred in September or October of 1999 and that thereafter he secured Mildura Golf Club to enter into a rental arrangement with CFA for two photocopiers and a fax machine and that in February 2003 the appellant collected the equipment and retained possession of it.

36 Furthermore the General Manager of CFA, Mr Lagos, gave evidence that in the period after February 1998, CFA was informed by Canon of which models were excluded from the $1.00 buy back scheme and that CFA had upon being so informed notified dealers of which model machines were or were not available.

37 The evidence given before her Honour as to the alleged acceptance of the offer was that on 30 April 1998 Mr Janssen prepared an invoice in relation to a photocopier which he had sold to the Mildura Kode School under a rental finance arrangement with CFA. He gave evidence, which was unchallenged, that at the conclusion of the rental term he supplied a new photocopier to the school and took possession of the old photocopier. He gave evidence, which again was uncontradicted, that during March 1998 the appellant arranged for the Department of Natural Resources and Environment to enter into a rental agreement for a photocopier with CFA, which agreement was accepted by CFA. Likewise he gave evidence that in May 2002 at the end of the rental term, the appellant supplied a new photocopier to that customer and collected the old photocopier which the appellant retained. It is clear that, on numerous occasions prior to the termination of the BISG dealership with the appellant in February 2003, CFA complied with what Mr Lagos said in the course of his evidence was "a promise" made in New Zealand to BISG dealers that they were able to purchase certain models of photocopiers at the end of the rental term for the nominal sum of $1.00 each.

38 It was only after the termination of the dealership agreement between the appellant and CFA that CFA refused to comply with the arrangement which had been complied with previously on a number of occasions since the New Zealand conference. It was subsequent to that determination that CFA refused to make machines available for purchase by the appellant at the price of $1.00. However the appellant argued that it was entitled to retain machines provided to its customers in circumstances whereby it had arranged for such customers to use the financial services provided by CFA.

39 Accordingly, it might be said that the true dispute in issue in the case before her Honour should have been, but was not, whether or not the appellant had a right to make a claim in contract for the retention of a number of machines at the end of the relevant rental terms, notwithstanding the fact that the appellant was no longer a BISG dealer. Schedule 1 attached to the statement of claim asserted that numerous rental agreements were entered into by customers of the appellant with CFA at various dates between April 1998 and November 2002. However, the case was not pleaded or conducted before her Honour on the basis that each of those agreements was the subject of a separate agreement between the appellant and CFA.

40 At all times the case was conducted on the basis that "the offer" consisted of what was said and done at the conference in Christchurch in February 1998. Upon appeal, the appellant maintained that argument. It submits that her Honour was in error in concluding that "the presentation" in New Zealand was not sufficiently certain or legally enforceable. The appellant argues that her Honour was in error in concluding that evidence of post-contractual conduct and communications between the parties was not admissible to establish the existence of an agreement. The appellant submits that the evidence of Mr Blancato as to what was said in the course of the New Zealand presentation was sufficient to amount to a legally enforceable offer, the acceptance of which would create a unilateral contract. The case was argued before her Honour, and before us, on the basis that the subsequent conduct of the appellant in referring many of its customers to CFA was an acceptance of that offer.

41 The manner in which the appellant pleaded and conducted its case created a number of difficulties in respect to an appropriate legal analysis of the facts. The first was that it contended that there was one offer, which was accepted by the appellant when it first referred a customer to CFA finance following the presentation in New Zealand. The second was that the subsequent conduct of the parties was thereafter submitted to be "post contractual conduct". Of course, if the true situation was that the appellant entered into a series of contracts, much if not all of the difficulty of evaluating the so-called post contractual conduct would evaporate because the conduct concerned would be relevant to the issue of the creation of a number of separate contracts.

42 As stated above, her Honour concluded that "the presentation" lacked the requisite certainty, and that there was no "distinct promise ... in language which is perfectly unmistakeable" as required. It is true, on the evidence accepted by her Honour, that there were uncertainties about the offer made at the presentation. Mr Blancato, whose evidence she preferred to that of Mr Janssen, said that he did not identify which models would be excluded, and although he said that conditions would apply, he did not identify those conditions comprehensively.

43 However, much was otherwise clear and certain. CFA was offering to enable dealers who arranged for their customers to use CFA finance to acquire certain model photocopiers (the specific models being yet to be identified, but excluding "high end black and white photocopiers and colour photocopiers") the opportunity to purchase the machines from CFA at the end of the finance term. The offer was to apply to new contracts entered into by such customers from 28 February 2001. The ability to purchase the photocopier was to apply at the end of the rental period. Unless the customer chose to continue renting at the end of the period, photocopiers were not to remain with the same customers at the end of the term, but were to be collected by the dealer.

44 Her Honour considered the factual circumstances in the light of Mobil Oil Australia Ltd v Lyndal Nominees Pty Ltd v Ors.[3] In that case certain statements were made on behalf of Mobil to its high performing franchisees at a convention. Those statements were to the effect that if particular sales performance levels were reached, then the franchise would obtain benefits in relation to the extended tenure of service stations owned by Mobil and leased by the franchisees. Subsequently Mobil failed to extend the tenure of franchisees who had achieved the stipulated standards of performance. The franchisees brought proceedings against Mobil claiming, amongst other things, that the speech at the convention contained an offer which was accepted by them through their reaching the required sales level performance levels, thus creating a legally enforceable contract. The Full Court of the Federal Court concluded that the address at the convention could not be construed as a legally enforceable offer of a promise. It also concluded that the terms of various post-convention communications were not sufficiently certain to give rise to a contract. As submitted by the appellant, the present case can be distinguished from Mobil. In the Mobil case it was stated explicitly that the offer was "developmental" and that there was a "lot more work to be done". The court concluded in that case that the framework in which the statements were made was "tentative in nature".[4]

45 In my view, the offer made by CFA in the present case was far less tentative and complex in nature than that in Mobil. It was a simple proposal that was said by Mr Blancato to "start immediately". Such uncertainty as there was related to the machines which were to be excluded and the precise conditions of the operation of the scheme. However, in addition to her Honour's finding that it was obvious "from the lack of detail and comprehensive information in the five minute comedy skit, ... that various questions and contingencies would have to be addressed" she concluded further that there was no evidence before her that the statement made by Mr Blancato was offered by CFA as "consideration for the doing of an act" in order to establish a unilateral contract. Her Honour stated that the evidence of Mr Blancato that the $1.00 offer would apply only to photocopiers sold through Canon BISG dealers, and not by Canon directly was quite different from saying that the dealer "must procure customers to enter rental agreements with CFA as quid pro quo for the entitlement to purchase ex-rental machines for $1.00". Accordingly, she found that there was no distinct promise.

46 If one looks at the presentation in New Zealand in isolation it appears to me that her Honour was correct in saying that there was insufficient certainty in the offer by reason of both the lack of identification of the machines to which it would apply, and of the conditions under which the scheme would operate. However, I am less convinced that the words used by Mr Blancato cannot be regarded as a promise offered as consideration for the doing of an act. It appears to me to be clear that the effect of his presentation was that in consideration of the BISG dealers arranging for their customers to use the financial services of CFA, the dealers would be entitled, subject to certain conditions, to retain the machines the subject of such finance arrangements at the conclusion of the lease.

47 The question of whether the subsequent conduct of the parties could throw light on whether or not an agreement was in fact made was considered by her Honour. First, she concluded that such conduct was not admissible in order to prove the existence of a contract. In this regard she relied upon FAI Traders Insurance Company Ltd v Savoy Plaza Ltd.[5] In any event, she held that the subsequent conduct did not " ... supply the precision, level of detail and certainty requisite for a contract". She held that the conduct was "more consistent with a programme of incentives to dealers, which lacked fixed comprehensive rules of operation". For instance, she observed that the machines which were excluded from the scheme varied from time to time and that the eligible classes of machine expanded over time. Furthermore, she concluded that the evidence given by a CFA executive, Mr Lagos, that he regarded the speech made in New Zealand as "a promise" or "guarantee" was of no weight, even if it was admissible.

48 The appellant submits that her Honour was in error in concluding that post -contractual conduct and communications are not admissible to establish the existence of a contract. In Brambles Holdings Limited v Bathurst City Council[6] Heydon JA (as he then was) gave consideration to this question. He said that the relevant principles are that post contractual conduct is admissible on the question of whether a contract is formed, but not admissible on what a contract means.[7] It is clear in my mind that when her Honour said that such evidence cannot be used to prove the existence of a contract she was not referring to the formation of the contract. In any event, and on the basis that the case advanced before her was that there was one contract, she observed that the post-contractual conduct was lacking in the precision, detail or certainty required for any determination as to its meaning. In my view her Honour's conclusion in this regard accords with established authority.

49 The appellant submits further however, that her Honour was in error in "doubting the admissibility" of evidence given by Mr Lagos on behalf of CFA, that he made a "promise" and a "guarantee" that dealers could buy back machines for $1.00. Her Honour's finding was that this evidence was of no weight in the "construction of the legal nature of the parties' dealings". In this regard she was clearly correct. As Heydon JA said in Brambles Holdings:[8]

"... the construction of a contract is an objective question for the court, and the subjective beliefs of the parties are generally irrelevant in the absence of any argument that a decree of rectification should be ordered or an estoppel by convention found."

50 Her Honour gave consideration as to whether the decision of Ormiston J in Vroon BV v Fosters Brewing Group Limited[9] was of relevance to the circumstances before her. In that case his Honour examined circumstances whereby there is no direct evidence as to what was said between the parties, but where their conduct is consistent only with a hypothesis that an agreement was in fact made by them. He said:[10]

"An inference of this kind may be said to be drawn from circumstantial evidence as to the acts of the parties from which it may be concluded that there was an agreement, although it is impossible at the trial to ascertain what was said or what correspondence passed between the parties."

51 Her Honour concluded that that inference was not open in this case because it was not impossible at trial to ascertain what was said or what correspondence passed between the parties. That conclusion appears to me to be unassailable.

52 However, in Vroon, Ormiston J, having referred to authorities and commentary, stated that although analysis by way of offer and acceptance is to be treated as the primary mode of ascertaining agreement:[11]

" ... I am prepared to accept, without examining in detail all the cases in which it has been discussed ... that agreement and thus a contract can be extracted from circumstances where no acceptance of an offer can be established or inferred and where the most that can be said is that a manifestation of mutual assent must be implied from the circumstances. In the language of para 22(2) of the Second Re-Statement on Contracts: 'a manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined'."

53 In Vroon, Ormiston J referred to the New Zealand case of Meates v Attorney-General[12] where Cooke J said:

"I would not treat the difficulties in analysing the dealings into a strict classification of offer and acceptance as necessarily decisive in this field, although any difficulty on that head is a factor telling against a contract. The acid test in the case like the present is whether, viewed as a whole and objectively from the point of view of reasonable persons on both sides, the dealings show a concluded bargain."

54 Her Honour concluded that the evidence of the parties' conduct and communications after the conference did not establish that the parties were acting on the basis that a contract existed.

55 It should be observed that her Honour noted that the appellant in its argument before her did not contend that considerations of the type considered by Ormiston J in Vroon were relevant to the present case. No doubt that was because the appellant at all times contended that it had entered into one unilateral contract. For my part, I am far from convinced that analysed properly, the circumstances in the case now before us could not be seen as a case where the conduct of the parties viewed in the light of the surrounding circumstances shows that there was a tacit agreement from time to time and that their conduct was capable of proving all the essential elements of a series of express contracts. True it is that there was some uncertainty as to what machines were to be excluded at the time that the offer was first announced in New Zealand. However, that deficiency was resolved by the CFA dealer newsletter dated April 1998 which referred specifically to the models which were as at that time excluded from the offer. It is, of course, the fact that in his evidence Mr Janssen stated that he did not recall reading that newsletter prior to the process of discovery in the court proceeding. True it is, as the trial judge observed, that there were changes as to which machines would qualify throughout the period following the conference. True it is also, that the Canon finance manual which was before her Honour and dated 23 February 2001 did not state specifically that the opportunity for the dealer to purchase machines from CFA applied only to rental agreements entered into by customers of the dealer with CFA. That said, however, it appears to me that had an examination of the state of communications between the appellant and CFA been conducted at the time of entry into each individual contract, and had consideration been given to the fact that in consequence thereof the appellant had arranged for customers to use CFA finance and furthermore that at the completion of a significant number of contracts between the customers of the appellant and CFA, the appellant had been permitted to purchase the machine the subject of the lease for the notional sum of $1.00, the inference might well be capable of being drawn that there was an agreement at the time that the appellant procured such customers to use CFA finance.

56 However, that is not the way in which the appellant put its case. Not only was the appellant's case pleaded as a unilateral contract consisting of one offer, being the presentation at the 1998 Christchurch conference, but written submissions before her Honour at the conclusion of the evidence persisted with such a submission. At all times the case which the respondent had to meet was the case of the appellant that there was a single offer made at the New Zealand conference, and that the acceptance of that offer was constituted by the alleged "part performance" by the procuration of customers for CFA by the appellant. In all the circumstances it appears to me to be clear that the manner in which the case was put was such that there was no evidence of any clear unequivocal promise to dealers made at the conference by CFA so as to constitute a unilateral offer capable of acceptance by performance. Taking into account that is the manner in which the case was pleaded and conducted before her Honour, my view is that her Honour was correct in reaching the conclusions that she did.

57 As is clear from the above, the appellant at all times pleaded and conducted its case on the basis that it had entered into a unilateral contract with CFA. Furthermore, upon the appeal, and when an alternative possible view of the legal consequences which might flow from the facts was suggested by the Court, counsel did not seek to adopt or argue that alternative. Of course there would have been difficulties in his seeking to do so. First, it is apparent that by reason of the splitting of the case, at least some of the factual material which might have been relevant to an examination of whether or not there was a series of separate contracts rather than one unilateral contract was not before the trial judge. Furthermore I am cognisant of the problems which would have faced the appellant had it sought to conduct its appeal on a basis different from that conducted before her Honour. In this regard I refer to Suttor v Gundowda Pty Ltd[13] and University of Wollongong and Ors v Metwally (No.2)[14] where it was held that it would be in exceptional circumstances only that a party would be permitted to raise new arguments on appeal.

At a glance

Court

Decision date

Before

Source

Judgment (22 paragraphs)

Parties

Cases Cited (4)