Skyrise Consultants Pty Ltd v Metroland Funds Management Ltd

Judgment 1BEAZLEY JA : I will ask Macfarlan JA to give the first judgment. 2MACFARLAN JA : This is an appeal from a decision of Windeyer AJ given in proceedings brought by the respondents (together, "Metroland") for recovery of a $300,000 deposit that they paid to the first appellant ("Skyrise"). 3The deposit was paid pursuant to the terms of a letter from Metroland dated 26 March 2009 signed by Mr Frank Shien and Mr Yong Zhang on behalf of Metroland and Mr Vincent Pang, the second appellant, on behalf of Skyrise. 4The letter recorded Skyrise's agreement to provide advisory services in relation to a development that Metroland proposed to undertake in Quay Street, Haymarket, Sydney. It provided that Metroland would pay "a good faith deposit" of $300,000 to Skyrise but Skyrise would not commence work until Metroland gave it a written notice directing it to do so and that Skyrise would repay the deposit, inter alia, if Metroland did not give such a notice within the 12 months following the date of the letter. Mr Pang guaranteed Skyrise's repayment of the deposit. 5The proceedings came on for hearing before Windeyer AJ sitting in the Equity Division of the Court. The sole issue between the parties was whether an oral agreement that the appellants alleged was made between Mr Pang on behalf of the appellants and Mr Shien on behalf of Metroland immediately before Mr Pang and Mr Shien signed the letter on 26 March 2009 entitled Skyrise to withhold repayment of the deposit, notwithstanding that Metroland did not give a notice in the 12 months after the agreement requesting Skyrise to commence work. 6The primary judge described the evidence that Skyrise led as to the alleged oral agreement as follows: "6 The evidence of Mr Pang is that when he went to the meeting at Mr Shien's Pyrmont office on 26 March 2009, Mr Shien gave him a document, which is the Letter. Mr Pang recalled reviewing it, but before he started doing so he said Mr Shien said to him words to the effect: 'It is just a formality. It's only Mr Zhang who wants it', and that Mr Shien then said: 'Please start the work ASAP', to which Mr Pang said: 'Ok, Ok, let's start work'. Mr Pang said he then signed the Letter. The Letter was signed on behalf of the plaintiffs by Mr Shien and Mr Zhang, and by Mr Pang for Skyrise and in addition for himself as guarantor. There is no doubt the Letter is a contractual document." (Judgment) 7The appellants made it clear both at first instance and on appeal that they did not contend that the oral agreement of which Mr Pang gave evidence was made after Mr Pang and Mr Shien signed the letter. They accepted that it was made before that occurred, although only a matter of moments before. 8At first instance the appellants contended that the oral agreement had varied the agreement recorded in the letter, even though the former, if made at all, was made prior to the letter being signed by Mr Pang and Mr Shien and therefore prior to the contract contained in the letter being concluded. 9The primary judge expressed his conclusions in relation to the appellants' case as follows: "9 It is necessary to point out the boundaries of this dispute. The claim is that the contract between the parties was contained in the Letter of 26 March 2009. The defence is that the contract which did not exist at the time was varied. There is no claim there was no contract. There is no claim of a collateral contract and, in fact, there could not be, as it would contradict the written contract. There is no defence of estoppel by representation. There is no claim for rectification of the written contract. There is no claim for estoppel by enticement or encouragement. There is no cross-claim by way of quantum meruit for work done or any real evidence of that work. There is no defence of set-off relying on any such cross-claim. 10 I have come to the conclusion that it is impossible to accept the defendants' claim of variation. It is possible to vary a contract after it comes into existence and it is possible to vary it by a subsequent oral agreement. It does not seem to me to be logically possible to vary a contract before it comes into existence; neither I think is it possible to say that there was an oral contract which contradicts the written contract yet somehow the two agreements must stand together. In other words, it seems to me to be clear that it is the terms of the written document which must prevail as the oral agreement claim cannot stand with the written document. Support for this is, I think, given by the acceptance by Mr Pang that the writing was security for the deposit if the notice to commence work was not given and for the return of the deposit in those circumstances. 11 It follows that while I do not think that the parol evidence rule is really relevant to this matter, in that it is possible to have a contract which is partly written and partly oral, that is not possible where the basic terms of those documents are contradictory and it, therefore, seems to me to be clear that the written document comprised the full agreement. Mr Pang read the Letter. He knew its terms. He did not ask for any alteration." (Judgment) 10The primary judge said that in light of these conclusions he did not need to determine whether the alleged oral agreement was made but said that if it had been necessary for him to determine that question, he would have accepted the evidence of Mr Shien that the conversation to which Mr Pang deposed did not occur (Judgment [12]). 11On appeal the appellants contended that Mr Pang's evidence of an oral agreement should be accepted in preference to Mr Shien's denial of it and that the conversation gave rise to an oral agreement that varied the written agreement contained in the letter. Alternatively, they submitted that the overall contract between the parties was one that was partly oral and partly in writing. They conceded that the terms of the alleged conversation contradicted the terms of the letter in relevant respects. 12In my view the appeal should be dismissed with costs. Even if it be assumed that the conversation occurred in accordance with Mr Pang's evidence, it did not give rise to any defence available to the appellants. As the primary judge pointed out it is not logically possible to vary a contract before it comes into existence. If the oral agreement was made, it was varied by the subsequently made written agreement, not the reverse. 13If a prior oral agreement is consistent with the terms of a later written agreement, the proper conclusion may be that the agreement is partly oral and partly in writing. One issue to be addressed in that context is whether the written terms were intended to be an exhaustive statement of the parties' rights (see State Rail Authority (NSW) v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170 at 191 - 2). If they were, the parol evidence rule will preclude the conclusion that the contract is partly oral and partly in writing. 14Moreover where, as here, the terms of the prior oral arrangement contradict the terms of the written arrangement the conclusion that the contract is partly oral and partly in writing will not be available. As was said in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471 at 484 in relation to the facts there under consideration: "In another case it may leave open the possibility that the contract is partly oral and partly in writing. But that cannot be so here. The oral limited recourse terms alleged by the respondents contradict the terms of the written loan agreement. If there was an earlier, oral, consensus, it was discharged and the parties' agreement recorded in the writing they executed. It is the written loan agreement which governed the relationship between Rural Finance and each respondent." (citations omitted) 15The appellants did not contend that the oral agreement constituted a collateral contract. Such a contention would plainly not have been successful as a collateral contract may not contradict the terms of the main contract (see Hoyt's Pty Ltd v Spencer [1919] HCA 64; 27 CLR 133 and Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; 160 CLR 1). 16In light of my conclusion that the appellants would not be entitled to succeed even if the proper conclusion were that the alleged oral agreement was in fact made, the appellants' challenge to the primary judge's expressed preference for the evidence of Mr Shien, and therefore for the view that the oral agreement was not made, does not arise. 17I propose that the appeal be dismissed with costs. 18BEAZLEY JA: I agree. 19MEAGHER JA: I also agree with Macfarlan JA. 20BEAZLEY JA: The orders of the Court are that the appeal be dismissed with costs.