National Engineering Pty Limited v Chilco Enterprises Pty Limited t/as Trojan Contracting

Court of Appeal (NSW)|2001-09-07|Before: Heydon JA, Hodgson JA, Windeyer J

CITATION : National Engineering Pty Limited v Chilco Enterprises Pty Limited t/as Trojan Contracting [2001] NSWCA 291 revised - 2/10/2001 FILE NUMBER(S) : CA 41044/99 HEARING DATE(S) : 30/08/01 JUDGMENT DATE : 7 September 2001

PARTIES : National Engineering Pty Limited v Chilco Enterprises Pty Limited t/as Trojan Contracting JUDGMENT OF : Heydon JA at 1; Hodgson JA at 2; Ipp AJA at 9

LOWER COURT JURISDICTION : Supreme Court LOWER COURT 2258/97 FILE NUMBER(S) : LOWER COURT Windeyer J JUDICIAL OFFICER :

COUNSEL : M S Willmott (Appellant) D J Cochrane (Respondent) SOLICITORS : Philip Boyce & Associates (Appellant) Larry Noble & Associates (Respondent) CATCHWORDS : CONTRACT - Construction of terms - Breach and anticipatory breach - whether party repudiated contract by indicating a firm intention of unwillingness to perform - whether term breached where no reasonable time given for performance - whether party committed anticipatory breach by being wholly and finally unable to perform - no breach or anticipatory breach established - appeal dismissed. PROCEDURE - splitting of issues - need to define parameters of hearing limited to liability - need to prove that useful purpose will be served by enquiry as to damages. D Triden Properties Limited v Capita Financial Group Limited (Unreported, Court of Appeal, 26 November 1993) ICT Pty Limited v Sea Containers Limited (1994) 30 NSWLR 640 Sellars v Adelaide Petroleum NL (1992-4) 179 CLR 332 D T R Nominees Pty Limited v Mona Homes Pty Limited (1978) 138 CLR 423 CASES CITED: Suttor v Gundowda Pty Limited (1950) 81 CLR 418 Louinder v Leis (1982) 149 CLR 509 Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited (1989) 166 CLR 623 Carr v J A Berriman Pty Ltd (1953) 89 CLR 327 Sunbird Plaza Pty Limited v Maloney (1988) 166 CLR 245 Universal Cargo Carrier Corporation v Citati [1957] 2 QB 401 DECISION : (1) Appeal dismissed (2) Appellant to pay the respondent's costs.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 41044/99 ED 2258/97 HEYDON JA HODGSON JA IPP AJA

Friday, 7 September 2001 NATIONAL ENGINEERING PTY LIMITED v CHILCO ENTERPRISES PTY LIMITED t/a TROJAN CONTRACTING Facts: The appellant and respondent entered into a contract for the hire of a crane to assist in the construction of the Olympic Stadium at Homebush. The crane was to be a Demag CC4800 or equivalent, which was a large and heavy machine.

After entering into the contract and paying a deposit the appellant formed the view that the respondent would not be able to meet its obligations under the contract and, on 25 March 1997, terminated the contract. The appellant then commenced action against the respondent claiming that it was entitled to terminate the contract on the basis of the respondent's breaches or anticipatory breaches of the contract.

It was argued by the appellant that the respondent had failed to give assurances that it was able to supply the crane as required and that it later became clear that the respondent would not be able to supply the crane or any equivalent, it was argued that by these actions the respondent repudiated and/or committed anticipatory breaches of the contract.

HELD Dismissing the appeal. (1) Per Ipp AJA, Heydon JA and Hodgson JA agreeing In relation to the alleged repudiation, the respondent's facsimile of 24 March 1997, containing an assertion that a CC2600 was an equivalent crane. The facsimile was merely a step in the further negotiations surrounding the supply of the crane and it did not indicate that the respondent was unwilling to perform the contract according to its terms. As a result there was no repudiation and the appellant's argument on this ground fails. DTR Nominees Pty Limited v Mona Homes Pty Limited (1978) 138 CLR 423 applied. (2) Per Ipp AJA, Heydon JA and Hodgson JA agreeing It was argued that the respondent breached an essential tem of the contract by failing to assure the appellant that the crane would be on the construction site by a certain date. The contract did not state a specific time by which any assurance had to be given and in circumstances where the contract is silent as to the time for performance the obligation to perform is not likely to be an essential term. As a result of this notice requiring performance within a reasonable time would be necessary before the appellant would be entitled to terminate the contract for a failure to perform. The evidence did not establish that the appellant had allowed a reasonable time for the provision of an assurance and as such the appellant was not entitled to terminate the contract, this ground of appeal therefore fails. DTR Nominees Pty Limited v Mona Homes Pty Limited (1978) 138 CLR 423; Louinder v Leis (1982) 149 CLR 509; Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited (1989) 166 CLR 623 applied. (3) Per Ipp AJA, Heydon JA and Hodgson JA agreeing In relation to anticipatory breach, it must be established that, at the time of termination the other party was wholly and finally disabled from preforming its contractual obligations. The appellant was therefore required to prove, as a matter of fact and not supposition, that the respondent had been totally disabled in its attempts to supply the crane. The evidence did not establish that the respondent was wholly and finally disabled from supplying the CC4800 crane or an equivalent. Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited (1989) 166 CLR 623 and Sunbird Plaza Pty Limited v Maloney (1988) 166 CLR 245 applied. (4) Per Hodgson JA, Heydon JA agreeing In cases where there is a division between the determination of liability and the assessment of damages, as was the case here, it is desirable to define clearly the parameters of any hearing limited to liability. In any such hearing that is conducted on the usual basis the person seeking a separate enquiry as to damages has the onus of proving that there will be a useful purpose to such an enquiry.

Cases cited: Triden Properties Limited v Capital Financial Group Limited (Unreported, Court of Appeal, 26 November 1993) ICT Pty Limited v Sea Containers Limited (1994) 30 NSWLR 640 Sellars v Adelaide Petroleum NL (1992-4) 179 CLR 332 DTR Nominees Pty Limited v Mona Homes Pty Limited (1978) 138 CLR 423 Suttor v Gundowda Pty Limited (1950) 81 CLR 418 Louinder v Leis (1982) 149 CLR 509 Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited (1989) 166 CLR 623 Sunbird Plaza Pty Limited v Maloney (1988) 166 CLR 245 Carr v J A Berriman Pty Limited (1953) 89 CLR 327 Universal Cargo Carrier v Citati [1957] 2 QB 401 ORDERS

The appeal is dismissed.
The appellant to pay the respondent's costs.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 41044/99 ED 2258/97 HEYDON JA HODGSON JA IPP AJA

Friday, 7 September 2001 NATIONAL ENGINEERING PTY LIMITED v CHILCO ENTERPRISES PTY LIMITED t/a TROJAN CONTRACTING

1 HEYDON JA: I agree with Ipp AJA. I also agree with the additional observations of Hodgson JA. 2 HODGSON JA: I agree with Ipp AJA. I wish to add a few comments concerning the division which occurred in this case between determination of liability and assessment of damages. 3 The orders appealed from were orders made following a hearing in which the issue was liability only, and Windeyer J made orders providing for the future determination of damages. It would seem therefore that strictly the appeal should have been by leave: see Triden Properties Limited v. Capita Financial Group Limited (Unreported, Court of Appeal, 26 November 1993). However, no point was taken about this, and this is not the subject of my comment. 4 The effect of the dismissal of the appeal is that the orders made by Windeyer J providing for determination of damages stand, and the process contemplated by those orders will go ahead. 5 Normally, an enquiry as to damages will not be ordered unless the Court is satisfied that it will serve a useful purpose; and this generally means that the Court needs to be satisfied that some substantial damages flowed from the relevant breach: see ICT Pty. Limited v. Sea Containers Limited (1994) 30 NSWLR 640 at 660. 6 In the present case, the respondent has the benefit of the forfeited deposit of $144,000.00, and so would not normally be entitled to an enquiry as to damages unless it showed a reasonable probability that the loss otherwise due to the respondent's breach of contract exceeded that sum. Entitlement to damages for breach of contract generally requires proof that the person claiming damages was entitled to relevant benefits from the party in breach, or would but for the breach have done, or at least been ready willing and able to do, what was necessary on its part to become so entitled: in the present case, that means actually supplying a crane in substantial performance of the contract. Although the appellant failed to prove that there was no possibility as at 23 March 1997 that the respondent would substantially perform its contract, the respondent did not prove on the balance of probabilities that, but for the appellant's breach, it would have done so or been ready willing and able to do so. At best, on the evidence before Windeyer J, the respondent showed that there was a chance that it may have been able to perform its contract, and that it was deprived of that chance: cf. Sellars v. Adelaide Petroleum NL (1992-4) 179 CLR 332. 7 If the normal procedure had been followed in this case, it would in my opinion have been necessary, before ordering an enquiry as to damages, for the Court to make a preliminary assessment of whether or not there was a reasonable probability that the value of that chance would exceed $144,000.00. Otherwise it seems to me that the Court would not be satisfied that an enquiry as to damages would serve a useful purpose. It is not clear why this did not happen in this case, but it seems that the procedure adopted in this case was acquiesced in by the appellant, and certainly no complaint about it was made on appeal. In those circumstances, the enquiry will presumably go ahead, unless the respondent chooses not to pursue it. It is unclear whether or not, on such enquiry, the respondent will be permitted to revisit in any way the question of the probability of its being able to supply a crane in substantial performance of its contract: this will I suppose depend upon the basis on which the original hearing was conducted. Presumably, in any event, any such enquiry will be at both parties' risk as to costs. 8 I mean by these comments to point out the desirability of clearly defining the parameters of a hearing limited to liability. At the very least, if such a hearing is to be conducted other than on the usual basis, namely that the person seeking an enquiry as to damages has an onus to prove that there will be a useful purpose to such an enquiry, there should in my opinion be an order made under Pt.31 clearly setting out what is the question for separate determination. 9 IPP AJA: The findings of breach and anticipatory breach of contract 10 In February 1997 the appellant and the respondent entered into an exchange of correspondence relating to the supply by the appellant to the respondent of a certain crane or its equivalent. Windeyer J held that this exchange resulted in a contract between the parties and this finding is not challenged on appeal. 11 The crane in question was to be used by the appellant in connection with the construction of the Olympic Stadium at Homebush. Multiplex Constructions Pty Limited was the head contractor in regard to the construction of the stadium and the appellant was a sub-contractor. 12 The crane stipulated by the contract was a Demag CC4800 or its equivalent. The Demag CC4800 was an 800 tonne lattice boom crawler crane, a large and heavy machine. Although there were numerous crane manufacturers throughout the world, only two, apart from Demag, produced a crane of these specifications. 13 After the contract had been entered into, the appellant paid the respondent $144,000 as a deposit. On 25 March 1997, however, the appellant asserted that the respondent was unable to meet its contractual obligations and terminated the contract. 14 The appellant commenced proceedings against the respondent by summons. Relevantly, as regards this appeal, the appellant claimed that the respondent had committed breaches or anticipatory breaches of the contract and, therefore, the appellant was entitled to terminate the contract and recover the deposit. The appellant claimed a declaration to that effect. 15 The respondent, on the other hand, contended that appellant's purported termination amounted to an unlawful repudiation of the contract which the respondent had accepted. The respondent cross-claimed for damages it had sustained in consequence of its acceptance of the repudiation. 16 Windeyer J held that the respondent had not committed a breach of the contract, anticipatory or otherwise. He held that the appellant had indeed repudiated the contract by its purported termination and made a declaration that the respondent was entitled to damages. The assessment of any damages to which the respondent was entitled was held over for further determination. 17 The appellant now contends that Windeyer J erred in finding that the respondent had not committed a breach or an anticipatory breach of the contract thereof. The respondent, on the other hand, supports his Honour's findings.

The terms of the contract and the arguments on appeal 18 Windeyer J found that the terms of the contract were contained in a letter of intent dated 3 February 1997 written by the appellant to the respondent, a letter dated 5 February 1997 in which the respondent confirmed to the appellant that the letter of intent was acceptable, and a purchase order of the same date issued by the appellant. Essentially, the terms of the contract were contained in the letter 3 February 1997, the relevant parts of which were as follows:

"Further to our discussions on site on 31/1/97 we wish to re-confirm and advise our intent to enter into a contract with [the respondent] for the hire of the Demag CC4800 Crawler Crane or equivalent as quoted in your fax dated 27.1.97. We confirm the agreed cost of $1,440,000.00 for hire of the crane for a period of 6 months commencing 14th July, 1997. We wish to confirm our understanding of issues discussed with you in regard to the crane hire: 1. Van Seumeren as the crane's owner will provide an unconditional guarantee of the crane's availability for the stated hire period. This guarantee is to take the form of a letter to both [the appellant] and Multiplex Constructions guaranteeing that the crane will meet all required commitments. When freight arrangements for the delivery of the crane have been finalised, Van Seumeren will provide regular updates of the progress of the delivery to ensure that the delivery date will be met. 2. … 3. … 4. [The respondent] and/or Van Seumeren will satisfy all requirements of Multiplex's Project Manager with regard to personnel on site. Such requirements will include but not be limited to EBA's and other site related issues". 19 The opening paragraph of the letter of 3 February 1997 has to be construed against the background of a meeting held on 29 January 1997 between Mr R Bradbury, who represented the respondent in its dealings with the appellant, representatives of Van Seumeren (Singapore) Pte Ltd (a company that traded worldwide as a hirer of cranes), and Mr Burns, who represented the appellant. At that meeting, the Van Seumeren representatives said that Van Seumeren could not guarantee that it could supply a Demag CC4800, but it had 10 cranes around the world, any of which were capable of doing the work required by the appellant and one of those would be made available. It seems from the evidence that the Van Seumeren representatives regarded the 10 other cranes as equivalent to the CC4800 (see, for example, black book 147). This discussion led to the contract being for the "hire of the Demag CC4800 crawler crane or equivalent". 20 Windeyer J held that, under the contract, the respondent was required to provide a crane supplied by Van Seumeren. This finding is supported by references in the letter of 3 February 1987 to "Van Seumeren as the crane's owner" and there is no challenge thereto. 21 Although there were several grounds of appeal, Mr Wilmott, counsel for the appellant, argued, in effect, only three. Firstly, he submitted that, by a facsimile sent on 24 March 1997, the respondent repudiated the contract. Secondly, he submitted that "the failure by the respondent to give an assurance within a reasonable time of 3 February 1997 that a specific crane would be delivered to the site on the nominated date (14 July 1997) was a breach of an essential term of the contract". Thirdly, he submitted that on 25 March 1997 (when the appellant purported to terminate the contract) it had become obvious that, by 14 July 1997, the respondent would not be able to deliver a Demag CC4800 crane, or its equivalent, as the contract required it to do. Hence, it was said, the respondent had committed an anticipatory breach that entitled the appellant to terminate the contract.

The events leading to the termination of the contract 22 On 10 March 1997, Van Seumeren told the appellant that the CC4800 crane would not be available and the availability of another crane was discussed. 23 On 13 March 1997 the appellant wrote to the respondent: "Following our meetings with yourselves and Van Seumeren of 10 March 1997 we must express our extreme concerns with the current state of arrangements regarding the hire of the crane. It now appears certain that it will not be possible for [the respondent] to supply a Demag CC4800 or equivalent crane as was nominated in our letter of intent … … We also notify you that our commencement date for beginning pre-assembly of arch units has now been postponed, as we are unable to confirm the required lifting positions. Pouring of foundations for sub-assembly framing was scheduled to commence today 13 March 1997. Delay to this work will cause double handling costs on site, etc. … We urgently require a response to our fax dated 11 February 1997 requiring submission of your EBA and employee lists for the project. You have previously advised that your EBA was in existence. However, at our meeting of the evening of 10 March 1997 you advised that the EBA had not been signed by the union. In the immediate absence of a signed EBA please fax a copy of the draft document so that we can make our own inquiries. The issue of the EBA and employee lists must be resolved urgently as it remains a major concern to our client … All information in this regard must be submitted within 14 days of this letter, as we are not prepared to allow this critical area of concern to remain unresolved. In summary, we believe it fair to say that following our visit from Van Seumeren this week and discussions, that the continuation of this contract of crane hire is in serious doubt. Following your most urgent response to these issues we will be considering our position. … " 24 On 19 March 1997 the respondent replied: "On 13/3/97 you have requested a copy of the EBA. I informed you that a copy of the EBA was available but at this stage had not been finalised by the CMFEU. I have all the necessary paper work in place and the CMFEU accountant will I believe sign of [sic - off] on the agreement today. I must point out at this time [sic] your letter of 13/3/97 that you required this information within 14 days of your letter". 25 On 20 March 1997 Van Seumeren wrote to the appellant:

"Unfortunately, we cannot provide an unconditional guarantee that our Demag CC4800 will be available to be on site on 14-07-97 at Homebush - Australia. We have no written contract with [the respondent], however, we do have a verbal contract with [the respondent] for providing a MDC-3500, 800 ton, truck mounted lattice boom crane at Homebush." 26 On 21 March 1997 the appellant wrote a letter to the respondent which commenced as follows:

"We refer to our discussions this afternoon involving [a Van Seumeren representative, Mr Bradbury, and two others including Mr Burns] regarding latest developments on the issue of the crane hire.

As we are all now aware and as confirmed by Van Seumeren it will not be possible for Van Seumeren to supply a Demag CC4800 crane or equivalent for the time period specified in the order.

Van Seumeren have now completed studies of alternative cranes based on our current information and have come to the following conclusions: · That the MDC-3500 crane is inadequate in lifting capacity for the project. · That the Demag CC2600 crane may be made available for the project … …

We therefore conclude that our original contract for the supply of a Demag CC4800 crane can not proceed as this crane can not be made available through Van Seumeren.

We are however prepared to offer the following set of terms and conditions in order to restructure the contract to suit the alternative crane."

The letter went on to set out, in effect, an offer to enter into a different agreement for the supply of a Demag CC2600 crane and concluded: "In the event of [the respondent] not accepting these conditions we will immediately take steps to enter into a direct hire agreement with Van Seumeren for the hire of the crane [that is, the CC2600]". 27 The respondent replied by an undated facsimile sent on 24 March 1997 in the following terms:

"We refer to your letter of the 21st March 1997 advising that [the appellant] does not wish to meet its obligations pursuant to the contract entered between our respective companies the terms of which are contained in our letter and quotation forwarded to your Mr Burns dated the 27th January 1997.

It appears from paragraph 4 of your letter that as result of negotiations between your company and Van Seumeren undertaken without consultation with [the respondent] that your company has increased the load capacity of the crane it seeks to hire.

The subject of our current contract is a crane for the purpose of lifting structural steel in 80 meter loads to a radius of 40 meters and a height of 50 meters as discussed with representatives of your company at Favello Faveo on or about the 17th December 1996. The type of crane required was confirmed in our letter of the 21st January as an 800 tonne Heavylift Crane. The letter of your Mr Burns of the 3rd of February 1997 confirms at dot point (3) the purpose for which the crane is required. At no time has it been a condition of the contract that a 'Demag CC4800' be the only model of crane supplied. The contract is for the supply of a crane of 'that type or its equivalent as quoted in our fax dated 27.1.97' (see your letter 3rd February 1997). Our facsimile transmission of 27th January 1997 specifies the supply of 800 tonne crane. [The respondent] remains able to meet all its obligations pursuant to the contract, that is, to supply an 800 tonne crane.

It is stated at paragraph 3 of your letter of the 21st March 1997 that the MDC-3500 has inadequate lifting power. This crane satisfies all the requirements we were advised your company sought and complies with the description of the crane in our current contract. From paragraph 4 of your letter [the respondent] is only able to infer that as result of post contractual discussions between your company and Van Seumeren to which [the respondent] was not a party that the requirements of your company have altered.

After verbal consultation with our suppliers we believe we are able to offer the supply of a crane which will meet your additional requirements on the terms outlined in your letter on the basis of the following amendments;

Should [the appellant] not be prepared to accept the terms as outlined and remain unwilling to meet its obligations pursuant to its existing contract as set out in our quotation of the 27th January 1997 [the respondent] shall have no alternative but to seek unspecified damages for their losses against all relevant parties. As you are aware [the respondent] has invested significant resources in this project and anticipates to receive goodwill and publicity from its involvement with this project as outlined at page three of your letter of 21st March 1997. It is therefore anticipated that any damages sought including legal costs would be substantial.

We take this opportunity to address your previously expressed concerns regarding the E.B.A. with C.F.M.E.U. and are pleased to advise that in December 1996 our consultant Mr J. Owens of Compbased Training entered negotiations with the aforementioned union. Mr . Childs of the C.F.M.E.U. has now provided an assurance that the E.B.A. shall be finalised prior to the commencement of the project. This information has been confirmed by Mr J. Henderson of the C.F.M.E.U.

We appreciate that this is a high profile project and desire that all parties will work in the spirit of the contract for its successful completion.

In the interests of all parties concerned we request your response to our terms by 25th March 1997." 28 On 25 March 1997 the appellant wrote to the respondent: "It is the opinion of our company that [the respondent] is unable to meet its contractual obligations. Accordingly, we hereby terminate our agreement with [the respondent] effective immediately".

The ground of appeal that the respondent repudiated the contract by its facsimile of 24 March 1997 29 The appellant submitted that the respondent's responses contained in its facsimile sent on 24 March 1997, when read with the appellant's letter of 21 March 1997, indicated that it would not supply a Demag CC4800 crane but, rather, would supply a CC2600 crane. As held by Windeyer J, the CC2600 was not equivalent to the CC4800. Hence, it was submitted, the respondent, by the facsimile of 24 March 1997, repudiated a fundamental term of the contract 30 This argument was raised neither in the notice of appeal, nor in the appellant's written submissions. It was first raised during the course of argument on the appeal. There are a number of serious obstacles that stand in the way of it being raised now. 31 In the appellant's defence to the cross-claim, as initially pleaded, it alleged (as a ground entitling it to terminate the contract) that the respondent had stated that it would be unable to deliver a Demag CC4800 crane or an equivalent. In its amended defence, on which the matter went to trial, this allegation was omitted. The inference arises that the appellant thereby abandoned the point. 32 The question whether the facsimile of 24 March amounted to a repudiation depends on the meaning of the words written in the facsimile, as objectively construed. In my opinion, when regard is had to the factual matrix in which the facsimile was sent, and the document as a whole, it does not reflect a fixed and immovable intent to supply only a CC2600. 33 The respondent sent the facsimile of 24 March in reply to the appellant's proposal for a new contract concerning a CC2600. In the facsimile, the respondent adopted the posture that a CC2600 was apparently acceptable to the appellant and was an equivalent crane. Therefore, as it was able to provide such a crane, there was no need for a new contract. In my opinion, this attitude was merely intended as a step in the negotiations that the appellant had initiated. 34 As is apparent from the appellant's letter of 21 March, the appellant knew that the respondent believed that it was open to it, under the contract, to provide an MDC3500, and was thinking that it might do so (instead of providing a CC2600). This led the appellant to contend, in the letter of 24 March, that an MDC3500 was not equivalent to a CC4800 (and to assert, correctly, that the provision thereof would not be in accordance with the respondent's obligations under the contract). 35 The respondent, in its facsimile of 24 March disagreed and repeated that an MDC3500 was an equivalent crane, the implication being that it was able to supply such a crane, and might do so. In this regard, it is apparent from the Van Seumeren letter of 20 March 1997 that Van Seumeren contemplated supplying a MDC3500 and according to Mr Bradbury, the respondent had received a quotation from Van Seumeren for a MDC3500 (black book 172). 36 The implication concerning the possible provision of an MDC3500 supports the construction that in the facsimile of 24 March the respondent was not saying that it had irrevocably decided to provide a CC2600. Some weight must also be given to the last two paragraphs of the facsimile. These expressed a "desire that all parties will work in the spirit of the contract for its successful completion" and requested the appellant's "response" to the respondent's proposed "terms" by the next day. 37 In my opinion, in all the circumstances, the inference to be drawn from the facsimile is that the respondent had not finally decided what to do. It had set out its position in regard to a CC2600, but the possibility of providing an MDC3500 or even perhaps some other crane remained open. The respondent was awaiting the appellant's response. This was all in the context of the respondent urging that the contract be completed. 38 Windeyer J held that an MDC3500 and a CC2600 were not equivalent to a CC4800 crane, but that is immaterial to the view that I have formed, namely that the respondent's statements in the facsimile of 24 March were only manifestations of an attempt to negotiate a compromise by ascertaining whether the appellant would accept a CC2600 or an MDC3500, and not assertions that it had decided, irreversibly, to supply one or other of these cranes. 39 In my opinion, while the respondent was asserting a wrong view of the contract in the facsimile of 24 March, it does not appear from the document that the respondent was indicating a firm intention that it was unwilling to perform the contract according to its tenor: DTR Nominees Pty Limited v Mona Homes Pty Limited (1978) 138 CLR 423 at 432. 40 In any event, at the very least, the facsimile of 24 March was ambiguous. Hence, evidence as to the surrounding matrix of circumstances was admissible to construe it and, because of the allegations in the appellant's defence and the way the hearing was conducted, the need to adduce such evidence (whether by examination in chief or by cross-examination) could not have been appreciated by the respondent. The respondent was not alerted to the possible need for it to combat the argument that, by the facsimile of 24 March 1997, it had repudiated the contract. For that reason alone, the appellant is not entitled to raise this ground of appeal: Suttor v Gundowda Pty Limited (1950) 81 CLR 418 at 438-439.

The ground of appeal that the respondent committed a breach of an essential term of the contract 41 The appellant argued that the respondent failed within a reasonable time after 3 February 1997 to give an assurance that a crane as specified in the contract would be delivered to the site on 14 July 1997, as it was obliged to do under the contract. 42 The contract did not state a specific time by which the assurance had to be given. The general rule is that where a contract is silent as to the time for performance, so that a reasonable time is implied, the obligation to perform is not likely to be an essential term: DTR Nominees Pty Limited v Mona Homes Pty Limited (1978) 138 CLR 423 at 430-431; Louinder v Leis (1982) 149 CLR 509; Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited (1989) 166 CLR 623; Cheshire & Fifoot's Law of Contract, 7th Australian Edition, para 21.14. 43 Were the term relating to the furnishing of an assurance to be regarded as non-essential, notice requiring performance by a specified reasonable time would have had to be given before the appellant would have been entitled to terminate for failure to perform: Carr v J A Berriman Pty Ltd (1953) 89 CLR 327 at 348-349; Louinder v Leis; Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited. The appellant did not give the respondent such a notice. 44 The appellant contended that the term relating to the furnishing of an assurance was essential (despite the fact that the contract did not stipulate a specific date for performance). This argument was based on the submission that, to the knowledge of the appellant, the footings for the pre-assembly work for the crane were to be poured on 13 March 1997 and the appellant's timetable for the work under its contract with Multiplex was dependent on the respondent providing the assurance timeously. It is unnecessary to decide this issue although I have serious doubts as to the merits of the appellant's submission that the term was essential (it seems to me that the absence of a specified date as to performance is a powerful factor against the appellant's argument). 45 In its letter of 13 March 1997, the appellant informed the respondent that the pouring of the "sub-assembly framing" was scheduled to commence on 13 March 1997 but had been postponed as the appellant was unable to "confirm the required lifting positions". I shall assume in the appellant's favour that the sub-assembly framing was the intended platform for the crane, and that the work in that connection could not be done until the respondent had provided the necessary assurance that a particular crane, as specified by the contract, would be supplied. 46 Windeyer J held that the appellant had not established that a reasonable time for the provision of the assurance as to the supply of a crane had expired by the time that the appellant sought to terminate the contract. This finding is supported by the fact that neither in the letter of 13 March 1997 nor thereafter did the appellant require the respondent to supply the assurance by a specific date. There is, indeed, no evidence that, after the letter of 13 March 1997, the appellant called upon the respondent to provide such an assurance, at all. This suggests that the respondent's delay was not provoking any anxiety on the part of the appellant. Accordingly, the appellant's own conduct does not support the submission that a reasonable time had expired for the provision of the assurance. 47 Generally, the evidence did not, in my opinion establish that, on 25 March 1997, when the appellant attempted to terminate the contract, a reasonable time for the provision of an assurance had expired. In my view, Windeyer J has not been shown to be wrong in the finding he made in this regard. 48 Thus, even were it to be assumed that the provision of the contract relating to the furnishing of the assurance was an essential term, the appellant failed to establish that, on 25 March 1997, the respondent was in breach thereof. This ground of appeal therefore fails.

The ground of appeal relating to anticipatory breach 49 Repudiation of a contract may be regarded as an anticipatory breach entitling the innocent party to terminate the contract: Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited per Brennan J at 641-644; Sunbird Plaza Pty Limited v Maloney (1988) 166 CLR 245 per Mason CJ at 262, per Gaudron J at 278-279. In addition, a party may terminate a contract for anticipatory breach where, at the point of termination, "the other party was wholly and finally disabled from performing its contractual obligations when the time for performance, so far as it is of the essence, should arrive" per Gaudron J (at 280) in Sunbird Plaza Pty Limited v Maloney (see also Mason CJ at 262). As her Honour went on to remark: "That total disability must be proved 'in fact and not in supposition'. - per Devlin J in Universal Cargo Carrier Corporation v Citati [1957] 2 QB 401 at 450". 50 For the appellant to succeed in establishing an anticipatory breach entitling it to terminate the contract, it therefore had to prove that, as at 25 March 1997 (the termination date), the respondent was wholly and finally disabled from supplying a crane as stipulated by the contract. 51 Windeyer J held that:

"There was certainly a possibility that at the date of the purported termination [the respondent] would have been able to prevail upon Van Seumeren to provide an equivalent crane …".

Hence, his Honour found against the appellant on this issue. 52 His Honour was correct, with respect, in adopting this approach. The onus was on the appellant to prove on a balance of probabilities, in fact and not in supposition, that, as at 25 March 1997, there was no possibility of Van Seumeren providing a crane as stipulated by the contract. It was only in that event that it could be found that the respondent, as at 25 March 1997, was wholly and finally disabled from performing the obligation in question. Once it was found that there was a possibility that Van Seumeren would supply such a crane, the appellant had failed to discharge the onus upon it. 53 The appellant challenged the finding made by Windeyer J. The merits of the appellant's argument on this issue depends on the identification of the evidence relating to the prospects of Van Seumeren supplying a crane as required by the contract and an assessment of that evidence. 54 It is to be emphasised that, under the contract, the crane had to be supplied by Van Seumeren. Mr Cochrane, counsel for the respondent, drew attention to evidence that various CC4800 cranes were in existence in various parts of the world. These might have been available for hire at the time. But they were not Van Seumeren cranes and, for one of them to be delivered in accordance with the respondent's contractual obligations, it would first have to be acquired by Van Seumeren. There was no evidence that Van Seumeren would have been prepared to acquire one of these cranes (or that the owners would have been willing to dispose of them) and the proposition that the respondent could have satisfied its obligations to the appellant from this source is fanciful. Mr Cochrane, understandably, did not persist with this submission. 55 Mr Cochrane also drew attention to two CC4800 cranes that were in Port Hedland at the time. But one was being used by BHP and was not available and substantial customs duty payable on the other would have made it far too expensive to utilise. 56 Mr Cochrane referred to the evidence that, at the meeting on 31 January 1997, Van Seumeren had said that it had 10 cranes that could do the job. He submitted that this was evidence that there were cranes equivalent to a CC4800 that could have been supplied. This was evidence the appellant needed to rebut. 57 Mr Cochrane referred to a letter dated 27 March 1997 from Van Seumeren to the respondent which read:

"We refer to our discussions and correspondence in relation to the request by [the respondent] for Van Seumeren Singapore (or potentially Van Seumeren (Australia) Pty Ltd) to supply a crane at the Olympic Stadium site in Homebush, New South Wales to satisfy the terms of an agreement between [the respondent] and [the appellant].

We have now received a copy of a letter sent by [the appellant] to [the respondent] stating that [the appellant] has terminated its contract with [the respondent].

Van Seumeren was keen to supply to [the respondent] the crane on the terms requested. However, as the agreement between [the appellant] and [the respondent] has been terminated, any agreement between Van Seumeren and [the respondent] for supply of the crane must also be regarded as terminated.

[The appellant] has now approached us directly to supply them with the crane they require. We believe that since Van Seumeren's contract with [the respondent] has been terminated, we are free to contract with [the appellant] to supply it with the required crane.

If you disagree with this view, please inform us (with your reasons) by close of business Tuesday, 1st April 1997." 58 It is not clear whether the crane that Van Seumeren was "keen to supply" (to use the words of the letter of 27 March) was a CC4800 or its equivalent, or a CC2600 or an MDC3500. The letter is ambiguous and it is difficult to come to a reliable view as to what Van Seumeren intended. Although, at the commencement of the trial, the letter was tendered as an exhibit to an affidavit by Mr Bradbury, no person was asked about its contents, save in the re-examination of Mr Bradbury. Thus, the appellant asked Mr Burns no questions about it in his evidence in chief and the respondent did not cross-examine him in regard thereto. Although the letter, in effect, was referred to by Mr Bradbury in his evidence in chief, he was not cross-examined about it. No representative of Van Seumeren was called to testify. 59 In all the circumstances (that is, the omission of both parties to deal adequately with the letter in the questioning of the relevant witnesses) and in the light of the onus on the appellant, I would regard the letter as raising a question as to the unwillingness of Van Seumeren to provide a crane in accordance with the contract. 60 Mr Cochrane referred to a "safe work method statement" dated 20 February 1997 which recorded that a CC4800 crane would be on site when the appellant carried out the work it had contracted to perform at Homebush. Mr Burns sent the safe work method statement to Multiplex on 13 March 1997 and thereby represented that as at that date the appellant believed that a CC4800 crane would be forthcoming. In cross-examination Mr Burns said, in effect, that the reference to a CC4800 crane was a mistake. Mr Burns was regarded as a credible witness and there is no reason to disbelieve this explanation. At the date in question he was unlikely to have known about the availability of cranes. I do not think that the work method statement is a helpful document on this issue. 61 There was no other evidence relied on by the respondent as to the existence of a CC4800 crane that was potentially available to it through Van Seumeren, and as to the potential availability from the same source of equivalent cranes. 62 In light of the onus on the appellant, however, it was not sufficient for the appellant to point to the paucity of evidence as to available CC4800 or equivalent cranes. It was for the appellant to prove affirmatively that the respondent was wholly and finally disabled from performing its contractual obligations. 63 Mr Willmott sought to do this by relying, largely, on the letter of 20 March 1997 from Van Seumeren to the appellant in which it asserted that it could not "provide an unconditional guarantee that our Demag CC4800 will be available to be on site on 14-07-97" and in which it stated that it had a verbal contract with the respondent for providing an MDC-3500 for the work at Homebush. 64 Coupled with this piece of evidence is the fact that the respondent tacitly accepted in its facsimile of 24 March 1997 that it would not be possible for Van Seumeren to supply a CC4800 crane for the time period specified in the contract. 65 Mr Wilmott submitted, further, that the facsimile of 24 March 1997 should be construed as meaning that the respondent was intending only to supply a CC2600. I have come to a different conclusion on this issue when considering the repudiation ground and have expressed the view that the facsimile does not have that meaning. In my opinion, the facsimile of 24 March casts no reliable light on the likelihood of Van Seumeren supplying an "equivalent" crane by 14 July 1997. At the very least, as I have noted, the facsimile is ambiguous. 66 I return therefore to the Van Seumeren letter of 20 March 1997. Importantly, the letter does not contain a refusal by Van Seumeren to supply a CC4800 crane; rather, it is a refusal to provide an unconditional guarantee to supply a CC4800. 67 Secondly, the letter makes no reference to Van Seumeren's willingness or ability to supply an equivalent crane. Nevertheless, in this regard, the reference to the "verbal contract" with the respondent to provide an MDC3500 crane is ambiguous. Did Van Seumeren thereby intend to convey merely that it was able to supply an MDC3500 or did it mean that the only other suitable crane that it had available was an MDC3500? This is not at all clear. 68 The reference to a "verbal contract" may also be significant as, if there was a binding contract between the respondent and Van Seumeren to supply an MDC3500, it would be strong evidence that the respondent only intended to provide an MDC 3500 (on the basis that it believed - wrongly, as Windeyer J held - that it was an equivalent crane). 69 Van Seumeren, in its letter of 27 March 1997 to the respondent, stated that, as the contract between the appellant and the respondent had been terminated, "any agreement between Van Seumeren and [the respondent] for supply of the crane must also be regarded as terminated." This phraseology is not suggestive of a firm belief on the part of Van Seumeren that there was any binding contract between it and the respondent. 70 When Mr Bradbury was cross-examined, he testified, in effect, that he intended, once a formal agreement was entered into between the appellant and the respondent, to give Van Seumeren a formal order for the crane to be supplied by it. It was then put to him by counsel for the appellant that he did not "formalise" his order to Van Seumeren and he accepted that he had not done so (black book 168). 71 Later, in cross-examination, it was put to Mr Bradbury that he had no firm promise from Van Seumeren relating to a CC2600 crane and he replied that the respondent had received a "quotation" for a CC2600 (black book 170). In re-examination, as I have previously mentioned, he said that he had received a tender offer from Van Seumeren to supply a CC2600 (black book 172). 72 On the basis of the evidence to which I have referred, I am not persuaded that there was an agreement between Van Seumeren and the respondent concerning the supply either of an MDC3500 or a CC2600 crane. 73 Returning to the letter of 20 March 1997, in the circumstances I do not think that any inference can be drawn from it as to Van Seumeren's willingness (and ability) or otherwise to supply an equivalent crane to the respondent. 74 In all the circumstances, in my opinion, the Van Seumeren letter and the other evidence on which the appellant relied does not establish - as a matter of fact and not supposition - that, as at 25 March, the respondent was wholly and finally disabled from obtaining a CC4800 crane or its equivalent. I am not persuaded Windeyer J was incorrect when he found that there was a possibility that at 25 March the respondent would have been able to prevail upon Van Seumeren to provide an equivalent crane. 75 I agree, further, with Windeyer J that once such a possibility existed, there was a possibility that Van Seumeren would give the respondent within a reasonable time the requisite guarantee concerning the provision of such a crane.

Conclusion 76 I would dismiss the appeal and order the appellant to pay the respondent's costs.

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At a glance

Court

Decision date

Before

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Judgment (46 paragraphs)

Parties

Cases Cited (7)