The promissory estoppel claim
142 When determining whether there is a serious question to be tried, a court must have regard to all of the evidence before it, including such evidence as bears upon the availability and strength of any defences: Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729.
143 Telstra submitted that Mr Fleiter's letter of 12 September 2003 could not be reconciled with his evidence before me concerning Mr Pretty's alleged assurance. I must say that, on its face, that submission seems compelling. However, as indicated above, Crazy John's invited me to accept Mr Fleiter's explanation that when he wrote the letter he was conscious of Mr Willis' request to him to avoid "slotting" Mr Pretty. It was for that reason, Mr Fleiter claimed, that in his letter he did not set out accurately, or in full, what Mr Pretty had actually said.
144 Both sides addressed me at length, and in extraordinary detail, as to whose evidence should be preferred. Each side made some telling points. In the end, both sides acknowledged that this issue would have to be resolved, to some degree, by a process of inference.
145 At one point during the course of argument I indicated to the parties that I considered that this aspect of the proceeding was going nowhere. It was simply not possible, in my view, to make any sensible finding as to whether Mr Fleiter's version of events was to be preferred to that of Mr Willis. Neither witness had been cross-examined. A number of other persons who had been present at the meeting had not given evidence. Yet I was being asked on incomplete and unsatisfactory material to make definitive findings as to credibility.
146 In the end, all that can be said is that Mr Fleiter has maintained, in [62] of his affidavit, that at the 18 December 2002 meeting, Mr Pretty gave an assurance that the cap would not be enforced. Whatever difficulties there may ultimately be in accepting Mr Fleiter's account, there is nothing in the evidence before me that demonstrates incontrovertibly that it is false.
147 I am conscious of the competing contentions of the parties. I note in particular Crazy John's submission that Mr Fleiter must be telling the truth. Why else would Crazy John's enter into an agreement on less favourable terms than had previously existed unless the representation alleged was made?
148 However, I note also Telstra's response to that submission. Telstra says that, viewed in its entirety, the 2003 Agreement was, in fact, no less favourable than its predecessor. For one thing, it gave Crazy John's an extra two years' business as a Telstra dealer. For another, the evidence showed that Crazy John's profits under the 2003 Agreement were substantially greater than those under the 2002 Agreement.
149 Unwilling to leave any stone unturned, Crazy John's replies that any increase in its profits under the 2003 Agreement resulted from its own expansion of its business. It says that its increased profits had nothing to do with any "more favourable" terms under the current dealership agreement.
150 The debate before me was intense, and at times, a little heated. However, I remain of the view, as expressed to the parties, that on this interlocutory application, the factual disputes between them really lead nowhere.
151 In the end, I have little more than the affidavits of Mr Fleiter and Mr Willis to go on. These affidavits were prepared some two and a half years after the meeting in question. They involve details of a discussion of which no contemporaneous records were made, apart from a whiteboard printout which both sides claimed, with some justification, supported their case.
152 The rest is inference, to be drawn from discussions, meetings and correspondence that took place long after the critical meeting. I have no evidence from Mr Ilhan, or Mr Pretty. I do not have the benefit of having seen any witness cross-examined.
153 The task of resolving credibility issues is difficult enough when a court has the advantage of seeing and hearing witnesses give their evidence. It becomes all that much more difficult when the court is able to do little more than place two affidavits side by side, and compare them, particularly when each of them has carefully drawn, and no doubt gone over by lawyers with a fine tooth comb.
154 As previously indicated, Telstra submitted that Mr Fleiter's evidence defied credulity and did not give rise to a serious question to be tried. I am unable to accept that submission. Nor can I accept Telstra's further submission that Mr Willis' account of what occurred at the meeting is so plainly plausible that it must be preferred. I cannot properly make a judgment of that kind on the evidence as it stands.
155 It follows that I am not persuaded by Telstra's submission, at this interlocutory stage, that Mr Pretty could not have given an assurance that the cap would not be enforced.
156 That, however, is not the end of the matter. As Bullock makes clear, the fact that there is a serious question to be tried does not mean that interlocutory relief should be granted. Before turning to questions of irreparable harm and balance of convenience, a view must be formed, as to the strength of any serious question to be tried. The stronger an applicant's case appears to be, the less onerous will be the applicant's task in relation to these other questions.
157 In assessing the strength of Crazy John's factual case regarding promissory estoppel, I am conscious of Mr Fleiter's background as a commercial lawyer, and his experience in business. This makes it difficult for me to accept, at face value, his evidence that Crazy John's entered into an arrangement of this magnitude, involving as it did payments of many millions of dollars, over several years, based upon nothing more than an assurance during the course of a discussion with a complete stranger, that a "cap", which was to be included in a formal agreement, would not be enforced.
158 I accept that Mr Woodward's evidence provides some support for Mr Fleiter's belief that such an assurance was given. However, Mr Woodward's statement that within days of the meeting he warned Mr Fleiter not to enter into any agreement involving a cap without getting a written confirmation of the assurance, and Mr Fleiter's reply that he would take a risk "as a commercial matter" hardly assists Crazy John's in its promissory estoppel claim, at least in relation to reliance.
159 To be fair, there are also difficulties with the evidence of Mr Willis and Mr Lockwood. These matters were fully canvassed on behalf of Crazy John's, and I have taken them into account.
160 In summary, although I am persuaded that Crazy John's claim in promissory estoppel raises a serious question to be tried, at least at a factual level, it seems to me, on the limited material before this Court, that its case is not particularly strong.
161 I turn now to the issue whether the claim in promissory estoppel gives rise to a serious question to be tried, or whether as Telstra contends, it is foredoomed, as a matter of law, to fail. This has nothing to do with the strength, or otherwise, of the evidence in support of Crazy John's case. The legal issues raised are complex. Nonetheless, the context in which the debate before me is being conducted must be borne in mind. The only issue to be determined, on this interlocutory application, is whether this claim is sufficiently arguable, as a matter of law, to enable Crazy John's to ground its application for interlocutory relief upon it.
162 Seen in that context, I am unable to accept Telstra's submission that the promissory estoppel claim is necessarily foredoomed to fail. The very fact that the legal elements of the claim, as formulated, are grounded upon the judgment of McHugh JA in State Rail (whether dissenting or not), is in my view, sufficient justification for concluding that the claim is tenable.
163 I am equally unable to accept Telstra's submission that the promissory estoppel claim must fail, as a matter of law, because Crazy John's cannot conceivably demonstrate any reliance upon Mr Pretty's alleged assurance. It is true, as Telstra submitted, that Mr Woodward's evidence, however helpful it may be to Crazy John's on the issue of whether that assurance was given, does little to assist its case on reliance. On one view of his evidence, Mr Woodward seems to be saying that Mr Fleiter told him that he did not regard Mr Pretty as having made a statement that in any way affected Telstra's legal rights. Indeed, on Crazy John's own case, Mr Pretty's reference to needing the cap "for internal purposes" (and the suggestion implicit in that statement that he was deceiving his superiors at Telstra by including the cap in the agreement, though he had no intention of enforcing it) is the very opposite of an assurance that Telstra would not enforce its legal rights. This makes Crazy John's case on reliance somewhat tenuous, at best.
164 However, Telstra's preferred interpretation of Mr Woodward's evidence is not the only view that can be taken of what he had to say. It must be remembered that Mr Fleiter and Mr Woodward were discussing the risk that Telstra might actually seek to enforce the cap when Mr Fleiter observed that this was a risk that Crazy John's might have to take. As Crazy John's submitted, almost every case of promissory estoppel arises in such a context. There is always a risk that a promisor will seek to resile from a promise. A common-sense recognition of that fact is not, of itself, inconsistent with reliance upon that promise.
165 In short, I am not persuaded that any of Telstra's so-called "knock out" points, whether based on matters of fact, or matters of law, establish that Crazy John's claim in promissory estoppel must fail, and therefore does not give rise to a serious question to be tried.