HIS HONOUR: In its Summons and accompanying Commercial List Statement, the plaintiff, Sydney Tools, seeks a decree for specific performance of a Trading Agreement to which it says it and the defendant, Bosch, are bound.
At various directions hearings, Sydney Tools (or the Buyer) urged on the Court an urgent final hearing on the footing that without delivery of the power tools it says it has ordered from Bosch (or the Company), its goodwill will be impaired, especially in light of the looming Christmas trade. I acceded to the submission, notwithstanding that it is near the end of the Court term, with the attendant pressures of having the case heard and delivering judgment swiftly.
Practice Note SC Eq 3, which pertains to the Commercial List and the Technology and Construction List, makes provision in para 50 for the Court to hear a matter using the "stop-watch" method of trial. This method allocates blocks of time to the various aspects of the case, and is aimed at achieving a more cost effective resolution of the real issues between the parties. The present case is an ideal candidate for such a hearing. The method of trial enabled the Court to try the case justly, cheaply and with the expedition that the commercial exigencies of the case warrant. [1] This included the delivery of judgment ex-tempore.
Counsel on both sides conducted the proceedings with commendable efficiency. I was provided with concise written submissions and had the benefit of oral argument.
Sydney Tools is a power tool retailer. It operates stores throughout Australia. Bosch is the Australian subsidiary of a global power tool manufacturer.
Since 2001, Sydney Tools and Bosch have had a trading relationship. Sydney Tools bought Bosch products and resold them in its stores.
Annually (until 2017), the parties would execute a document called Bosch Power Tools Oceania Trading Form (the Trading Agreement) which ran from January to December. The Trading Agreement states that it is to be read in conjunction with Bosch Terms of Delivery and Sale (the Terms) and an accompanying Power Tools Schedule. It provides that Bosch will supply products or services to the Buyer in accordance with the Trading Agreement and the Terms.
Two versions of the Terms are in evidence. One version has the date 1 June 2012; another has the date 28 November 2016. Nothing turns on this. They have the following provisions in common:
1.1 These Terms, in their present form or as varied in accordance with clause 1.6, together with:
…
(f) all accepted orders placed by a buyer with the Company for the Company's products or services (Buyer);
…
1.4 An order placed by the Buyer will only form part of the Contract when it has been received and accepted by the Company. Acceptance by the Company of any order issued by the Buyer may be in writing or by the Company delivering to the Buyer the products or services which are the subject of an order. However, any terms and conditions contained in any order or other document issued by the Buyer will not form part of the Contract unless they are expressly signed and accepted by the Company's authorised representative.
…
1.7 Supply of products or services by the Company does not create any obligation on the Company to supply the products or services to the Buyer on a continuing basis or at any time in the future. Further, except as otherwise agreed in writing, the Company reserves the right at any time and without notice to impose a limit on the amount of products the Buyer may purchase.
…
2.1 Except where an order is placed for products or services under a valid or binding Quotation under 1.3, or to the extent otherwise agreed, the company reserves the right, at any time prior to accepting an order, to vary with notice to the Buyer the price of the products or services.
The Power Tools Schedule has a section headed "Power Tool Terms" which regulates the Buyer reselling goods it purchases and offering for sale its own combination kits comprising the Company's goods. Clause 2.4 contains an acknowledgment that breach of these provisions entitles the Company in its absolute discretion to cease supply of any goods to the Buyer immediately, to determine that any further order will not accumulate to the Buyer's rebate target and / or terminate or suspend the contract immediately on notice.
In 2016, Bosch reviewed its existing trading relationships. The Trading Agreement current was to expire at the end of December 2016.
After the 2016 Trading Agreement expired at the end of 2016, Bosch offered Sydney Tools a Rollover Agreement for the period of January to February 2017, while it produced new Trading Agreement terms.
On 28 February 2017, Mr Garvin Campbell (Campbell), Bosch's Key Account Manager - Trade in the Power Tools Division, wrote to Mr Jason Bey (Bey), the proprietor of Sydney Tools:
As Sydney Tools would be aware, Robert Bosch Australia has been conducting a review of profitability within many sectors of the Bosch Business.
This has resulted in Trading Terms 2017 taking on a new structure.
As part of the new structure, effective 1 March 2017 Early Settlement Discount will no longer be available for goods purchased on or after this date.
Invoices will revert to Net 30 days(Payment is due 30 days after the end of month in which the invoice was received).
New Trading Term contracts will be forwarded to Sydney Tools on the 1st of March 2017 for review.
Additionally the Bosch Terms of Delivery & Sale have also been amended to include clauses on the use of Power Tools & combination kits.
A extract (sic) is attached for your convenience or the document in whole can be viewed by visiting www.bosch.com.au/terms.
I will be in touch to discuss the above topics once Trading Terms have been issued.
On 1 March 2017, Campbell emailed Bey an outline of 2016 Terms versus 2017 Terms, a January / February 2017 Rollover Contract (2016 Terms carried over for January / February 2017) and a March to December Trading Contract 2017.
By 13 March 2017, Sydney Tools had not returned the proffered March to December 2017 Trading Agreement. After several attempts to contact Bey, Campbell wrote to Bey asking for signed return. He wrote:
I have left a few messages over the last 2 weeks for contact in regards to the 2017 Trading Terms issued on 1st March.
Could you please advise a day & time suitable to discuss any queries Sydney Tools may have.
Otherwise could you please sign, date, scan & return documents to be loaded in Bosch system. (emphasis added)
Bey neglected to respond. This prompted Campbell to write the following to him on 28 March 2017:
As outlined in my email sent 1st March, Trading Terms were rolled over from 2016 to cover Jan / Feb 2017.
Rebates earnt (sic) for Jan / Feb 2017 have been finalised & payment of approx.. $125,000 incl GST will be issued to Sydney Tools in the next payment run after final approval.
As communicated, New Trading Terms have been written to commence from 1st March 2017 to 31st December 2017.
I am unable to lock these in place until I have a signed copy returned (these were in the 1st March email also).
Look forward to a contact at your earliest convenience to finalise 2017 Trading Terms. (emphasis added)
Two significant differences between previous arrangements and the proposed new ones were the removal of a 3% discount for prompt payment and long term incentive targets and rebates.
Finally, on 3 April 2017, there was a telephone conversation between the two men.
Afterwards, Bey wrote the following to Campbell and Mr David Gibson (Gibson), Bosch's General Manager, Power Tools:
Garvin - As discussed earlier, there is some (sic) points relating to the trade terms that I would like to discuss.
Below is a summary;
Based on the current market conditions, and the position of Bosch in the market, I feel the LTI targets are set too high and unachievable.
Accessories have been left off the Un-targeted and LTI rebate
Please let me know when you are available to work through these Trading Terms.
On 4 April 2017, Bey and Campbell had another conversation on the telephone. There is a dispute as to what was said.
Bey says he said "I don't know what is happening at Bosch at the moment. The terms are unfair and unreasonable, nevertheless I will sign the contract and return it."
Campbell disputes this. His version is that Bey told him that he would not accept the 2017 Trading Agreement in its proposed form, to which Campbell advised that the Terms would not be changed.
Bey maintains that on the following day, 5 April 2017, he signed the 2017 Trading Agreement and caused it to be sent to Bosch's office in Melbourne by Ms Rachel Attie (Attie), Sydney Tools' Marketing Manager. He says that he did not retain a copy of the signed Trading Agreement.
Campbell's evidence is that he did not receive the new Trading Agreement and that if he or anyone at Bosch had done so, it would have been put through the "work on" process whereby its rebate percentages and targets would have been entered into the accounting system so that any rebates could be automatically calculated. He says that he is not aware of Bosch having ever received a copy of the signed 2017 Trading Agreement. He never received any email scan of it. Furthermore, he says that it was not Bey's usual practice to send executed Trading Agreements to Bosch in the post, but instead Campbell or another Bosch representative would personally collect the executed document from Bey's office. Campbell was cross-examined and challenged. It was put to him that he did receive the signed version, which he denied.
Sydney Tools called Bey and Attie. Both were cross-examined. Attie says that on a date (unspecified) in April 2017, Bey handed her a document which he said was a signed copy of an agreement with Bosch and asked her to post it to Bosch's office in Melbourne that day. She says that she posted it to Bosch's address in Melbourne, which she found on an internal computer system, for the attention of Garvin Campbell, whom she had come to know from prior dealings, managed Sydney Tools' account at Bosch. She has no record of posting the document, but says she recalls it because it was outside of her usual duties. It was not sent by registered post.
On 22 May 2017, Gibson attended a meeting with Bey and his brother, Mr Elvis Bey (Elvis) at Sydney Tools' office. Upon his arrival, Gibson gave Bey and Elvis a letter which read:
The power tool market is continuing to rapidly evolve and change and we must also. Over the past twelve months, we have been working on many transformational projects both globally and locally to ensure our future success. Our competitive position depends on profitability and the need to accelerate our position is evident. Due to this, we have identified a number of trading accounts where either turnover, profit, serviceability or a combination of these factors is no longer sustainable and due to this, a decision has been made to consolidate our distribution.
For this reason, we have made the difficult decision that we are no longer able to operate your account.
We at Bosch sincerely thank you for your history selling our products. Your account will be placed on hold and we will work closely with you to finalise all outstanding account topics.
It is to be observed that this letter makes no reference to terminating any current Trading Agreement.
What was said at the meeting is in dispute. Bey asserts (which Gibson does not accept) that Gibson conceded that since his arrival at Bosch he had reduced Sydney Tools' business by design. It is not necessary to resolve this controversy. An oddity is that on 30 May 2017 (eight days after the meeting), Bey created an email recording the conversation which he sent to Elvis, but not to Gibson.
Bosch did not supply Sydney Tools after 22 May 2017.
On 7 August 2017 (nearly three months after their meeting) Bey emailed Gibson asserting that withdrawal of supply was a breach of their longstanding agreement.
On 10 August 2017, Sydney Tools' solicitors wrote to Gibson in connection with "the purported unlawful termination of the trading relationship" between Bosch and Sydney Tools. The letter recorded that the solicitors had been provided with detailed instructions in relation to its trading history with Bosch as well as with communications and other documents passing between Bosch and Sydney Tools. It set this history out. Bosch responded on 18 August 2017 under the signature of its General Counsel and Sydney Tools' solicitors replied on 30 August 2017.
In neither of their letters did Sydney Tools' solicitors assert execution and return of the 2017 Trading Agreement.
Nearly two months after this, on 4 October 2017, Sydney Tools sued out of this Court a Summons and Commercial List Statement seeking "Specific performance of the Trading Agreement" and a declaration that there is to be implied into the Trading Agreement a term that reasonable notice be given prior to termination upon the expiry of the Contract Term (March 2017 to the end of December 2017). The implied term contention was abandoned at the hearing.
On 13 November 2017, that is some five weeks after the proceedings were initiated, Sydney Tools placed an order on Bosch for products with a total price of $1,053,779.10 exclusive of GST required for delivery to Sydney Tools' stores. This occurred after a directions hearing in which I drew to the attention of Sydney Tools that there were difficulties with the general relief sought and with determining what the controversy was that was to be quelled by the proceedings, given that there were no products which Sydney Tools was asserting had to be supplied.
Gibson gave affidavit evidence that some of the products in Sydney Tools' order are obsolete, some are not yet available for sale in Australia and others are exclusive to other customers.
Sydney Tools' case has a number of insuperable hurdles.
Sydney Tools has not proved on the balance of probabilities that the parties entered into the Trading Agreement.
There is no objective material which establishes that the Trading Agreement was signed by Sydney Tools and delivered to Bosch. There is only the say so of Bey and Attie.
I do not accept the evidence of Bey or Attie on this topic. There is no evidence of the parties having communicated through the post (in this email era) previously. Bey's affidavit evidence does not explain the anomaly of posting as opposed to emailing as was specifically requested by Campbell or Bosch collecting it, as had happened in the past. Bey did scan and return to Bosch by email the equivalent agreement for 2016. He was unable to offer a rational explanation why he did not do it this time.
No copy of this important document was kept by Sydney Tools. The posting was not registered. Attie kept no record of the posting. Her posting it was not her usual duty. There was no follow up to confirm receipt. Sydney Tools committed to writing its objections to the proffered new Trading Agreement, but did not record its apparent oral acceptance prior to its alleged written one.
Furthermore, I accept Campbell's evidence that Bosch never received it (I interpolate that I also prefer his evidence of what occurred during the 4 April 2017 telephone conversation). To the extent that s 160(1) of the Evidence Act 1995 (NSW) [2] would presume (if I had otherwise found that the article had been posted) that it was received, that presumption has been rebutted in this case by the adducing of evidence sufficient to raise doubt about it. There was thus no effective acceptance.
Similarly, there is no room for application in this case of the so called "postal rule" [3] because formation of a contract by the posting of an acceptance is only justified if the offeror contemplated and intended that the offer might be accepted by that act: Wardle v Agricultural and Rural Finance Pty Ltd [2012] NSWCA 107 at 135.
There is nothing in this case which discloses such contemplation or intention. Campbell called for scanning and emailing. Previously, there was actual collection. There has never been posting of acceptance. The fact that the Trading Agreement contemplates communication of matters pertinent to it in writing to a postal address does not translate into a contemplation that entry into the agreement itself can happen by Sydney Tools posting acceptance irrespective of whether Bosch receives it.
This is sufficient to dispose of these proceedings. However, I will deal with the further hurdles to Sydney Tools' success.
The Trading Agreement, read with the Terms, contains no positive obligation on Bosch to supply absent a specific acceptance of an order placed. To the contrary, the Trading Agreement specifically reserves to Bosch the right, at its option, to accept or decline an order. Additionally, Bosch has unfettered discretion with respect to price. Unless there is an agreement as to price, through acceptance, there can be no valid contract for sale: Stocks & Holdings (Constructors) Pty Limited v Arrowsmith (1964) 112 CLR 646 at 650.
The Trading Agreement regulates the relationship of the parties, including giving quotations and accepting orders. It does not oblige Bosch to supply every time Sydney Tools simply places an order.
Sydney Tools puts that the provisions of the Power Tools Schedule indicate an obligation to supply irrespective of acceptance of an order by Bosch. I reject this submission.
The components of the Trading Agreement are to be read and construed so that they act congruently. Preference is given to a construction supplying a congruent operation to the various components of the whole of an instrument: Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522 at 529.
To read the Power Tools Schedule as Sydney Tools suggests would be incongruent with the other express terms of the parties' agreement which reserve to Bosch, as one might expect, the right to refuse an order.
The form of relief which the plaintiff claims is of no utility. Sydney Tools claims, simpliciter, specific performance of the Trading Agreement, without specifying what it is that Bosch is to do. There are no accepted orders for specific tools for specific prices. This led Sydney Tools, at the hearing, to seek to claim relief (under the guise of the prayer for "further or other orders") in the form of a simple declaration that the Trading Agreement is on foot, an order that Bosch give Sydney Tools specified rebates on earlier supplies and orders that Bosch supply in accordance with the 13 November 2017 order.
I do not consider that a declaration would be of utility and I do not consider that the expanded orders for delivery are in the present contest. For some time, Bosch has held the latter position. Bosch will still maintain that orders must be accepted. And Sydney Tools accepts that Bosch need not supply obsolete or unobtainable products. There is evidence that the order includes obsolete or unobtainable products.
Moreover, these proceedings were commenced in October 2017, but the orders which Sydney Tools asserts Bosch must fulfil were only placed in November 2017. No cause of action for that delivery (or failure to deliver) was in existence at the time these proceedings commenced: Baldry v Jackson [1976] 2 NSWLR 415 at 419.
I record that Bosch appropriately abandoned a submission that specific performance should be refused because damages is an adequate remedy, in that Sydney Tools could obtain the products in question from Bunnings Warehouse, Mitre 10 or some other retailer. It is not necessary for me to consider whether, if Sydney Tools was otherwise entitled to succeed, an order for specific performance would be appropriate.
The proceedings are dismissed. I will hear the parties on costs should this be necessary. The exhibits are to be returned.
His Honour ordered the plaintiff to pay the defendant's costs.
[3]
Endnotes
Section 56(1) of the Civil Procedure Act 2005 (NSW) provides: "The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings."
"It is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that a postal article sent by prepaid post addressed to a person at a specified address in Australia or in an external Territory was received at that address on the fourth working day after having been posted."
This so called rule is to the effect that acceptance of an offer takes place by posting it.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 07 December 2017