On the appeal: appeal dismissed with costs.
On the cross-appeal: cross-appeal dismissed, no order as to costs.
95 BRYSON J: I agree with the orders proposed by Young CJ in Eq, and except as now stated I agree with his Honour's reasons for disposition of the appeal. I will state my reasons for upholding the conclusion of the learned Trial Judge that the third respondent Richard Thomson Pty Ltd did not have a contractual obligation to the appellant Toll (FGCT) Pty Ltd (Finemores) in the terms of Condition 8 on the back of the Application for Credit. (This condition relates to indemnity to the carrier in respect of any demand or claim brought by and on behalf of the Customer's Associates related to the contract.) It was this conclusion which led his Honour to dismiss the First Cross-claim, brought by the appellant (Finemores) against the third respondent (Richard Thomson). To examine whether Condition 8 was part of the contractual relationship between Finemores and Richard Thomson is to examine what in fact were the terms of the contractual relationship reached between those two companies.
96 Counsel for Finemores placed reliance on the decision in L'Estrange v. F. Graucob Ltd [1934] 2 KB 349 in which Scrutton LJ said (402-403): "In Parker v. South Eastern Railway Co. 2CPD 416 Mellish LJ laid down in a few sentences the law which is applicable to this case. He there said (421): 'In an ordinary case, where an action is brought on a written agreement which is signed by the defendant, the agreement is proved by proving his signature, and, in the absence of fraud, it is wholly immaterial that he has not read the agreement and does not know its contents'." At 403 having set on one side ticket cases and other cases related to unsigned documents Scrutton LJ said: "When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation the party signing it is bound, and it is wholly immaterial whether he has read the material or not." This sentence must be understood from the earlier citation of Parker as directed to a document which is itself a written agreement on which an action may be brought. Maugham LJ the only other member of the Court of Appeal also referred (at 405) with entire approval to the passage from Parker v. South Eastern Railway Co. The facts in L'Estrange and their Lordships' observations show that their attention was directed to a written agreement which a party had signed and had been established to be the parties' agreement. There was no doubt in that case what the agreement was; the purchaser had signed the document headed "Sales Agreement", addressed to the vendor, and made a payment on account, and the vendor had responded by sending an order confirmation and delivering the machine. For such a case L'Estrange v. F. Graucob Ltd states an important principle which should not be departed from. When it has been objectively established that the terms of an agreement are contained in a document which the parties have signed there is no room for subjective examination of what a party understood their document to mean, or of any miscarriages in the mental processes that led him to sign it.
97 At the most general level, a document to which the parties signed their names at the time is inherently more likely to express their intentions than their later evidence about their pre-contract discussions, behaviour and states of mind. Courts decide whether parties intended to form a contract by considering what is objectively indicated by the parties' acts and conduct, including statements they made and documents they signed or dealt with. Courts do not act on what were subjectively the actual states of the parties' minds. This objective approach is deeply entrenched. It does not depend only on L'Estrange v. F. Graucob and does not appear to me to be reasonably open to debate. The objective theory of contract was discussed in Taylor v. Johnson (1982) 151 CLR 222 by Mason ACJ Murphy and Deane JJ at 428-429. In Wilson v. Anderson (2002) 76 ALJR 1306 at 1308-1309 para [8] Gleeson CJ stated the law of construction of written contracts in terms of this objective test, and referred to his Honour's judgment in Australian Broadcasting Corporation v. XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540.
98 The principle referred to in argument in this case as the principle in L'Estrange v. F. Graucob is a well-established principle for which there is much other authority, including authorities referred to by Sheller JA in Lief Investments Pty Ltd v. Conagra International Fertilizer Co. (Court of Appeal, 16 July 1998). In my understanding the Court of Appeal accepted and acted on the principle in that case. Sheller JA referred to Gordon v. McGregor (1909) 8 CLR 316 Isaacs J at 323-4 citing A & J Inglis v. John Buttery & Co. (1878) 3 App Cas 552 Lord Blackburn at 557. Sheller JA also referred to Maybury v. Atlantic Union Oil Co. Ltd (1953) 89 CLR 507 Dixon CJ Fullagar and Taylor JJ at 518: "Once an agreement is made in writing it is treated, unless the parties are shown otherwise to intend, as the full expression of their obligations." It also appears to me that the principle underlay the decision of the Court of Appeal in Air Great Lakes Pty Ltd v. KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309. Interaction between the written agreement and claims to modify it by reference to pre-contract behaviour is a well-trampled battle ground - see for example "Can Contract Trump Estoppel" Nick Seddon, (2003) 77 ALJ 126 - and the law does not need to extend the weaponry.
99 A clear statement was made in Hardwick Game Farm v. Suffolk Agricultural Poultry Producers' Association [1966] 1 WLR 287 by Diplock LJ at 339: - 340:
The task of ascertaining what the parties to a contract of any kind have agreed shall be their legal rights and liabilities to one another as a result of the contract is a familiar one in all systems of law. It is accomplished not by determining what each party actually thought those rights and liabilities would be, but by what each party by his words and conduct reasonably led the other party to believe were the acts which he was undertaking a legal obligation to perform. There are some rights and liabilities which arise by implication of law from the nature of the contract itself such as a contract of sale of goods or land, a contract of carriage or bailment, a contract of service or a contract of insurance. In offering to enter into a contract of a particular kind a party leads the other party reasonably to believe that he undertakes a legal obligation to perform all those acts which a person entering into a contract of that kind usually performs, unless his words or conduct are such as would make it reasonably clear to the other party that this is not so and also makes it clear which of those acts he does not intend to undertake to perform and which of them he intends to undertake to perform only in some other and specified manner.
In English law this general rule has become subject to a special rule that where parties have agreed to embody their contract in a written document they are presumed to have agreed to be bound by all the terms included in the written document and by no other terms except those which arise by implication of law from the nature of the contract itself; and this is so whether they have both read and understood the written document or not. Whatever the historical origin of this rule, which since 1677 may well have been influenced by the Statute of Frauds, its justification today is that it is so well established that any party to a contract by agreeing that its terms shall be embodied in a written document so conducts himself as to lead the other to believe that he intended the written document to set out all the rights and liabilities of each party towards the other which do not arise by implication of law from the nature of the contract itself.
This is the relevant distinction between contracts which the parties have agreed shall be embodied in a written document and other kinds of contracts. The ticket cases are examples of the former. The only question there is whether the party proffering the ticket has so conducted himself as to lead the other party reasonably to believe that the written term upon which he seeks to rely formed part of the terms upon which he was willing to contract. He may fail because he has not taken reasonable steps to draw the term to the attention of the other party. But if he has taken such reasonable steps it matters not that the other party has never read the term and would not have entered into the contract if he had read it. His acceptance of the ticket without demur as embodying the terms of the contract is conduct which would lead the other party reasonably to believe that he intends to contract upon its terms and not otherwise.
100 There have been many expressions of distaste or dissatisfaction with the principle in L'Estrange v. F. Graucob Ltd, one of them in the opening sentence of the judgment of Maugham LJ at 405 in that case, and many others in texts and academic writings, to some of which we were referred. There are grounds for dissatisfaction with this hard rule, but it is a practical necessity for the Court of Appeal to accept and not depart from the objective indication of a signed agreement in writing. If the courts listened to parties whose evidence swore away their written words and explained the workings of their minds they would not do justice to other parties who acted on the basis of what those who harboured misunderstandings had actually said and not on the unknowable intentions they had failed to express; and litigation would be endless. The principle in L'Estrange v. F. Graucob Ltd forms part of a skein of law which includes means by which its rigour can be relieved against, in the law relating to the defence of non est factum, in equitable relief available against unjust contracts, and in statutory regimes which confer powers on the Court to relieve against unjust contracts; these parts of the law are formed around and assume the existence of the principle.
101 In L'Estrange v. F. Graucob Ltd their Lordships did not address whether or not a document, signed or unsigned, was intended by the parties to be included in the agreement which they reached; that is a question of fact which must be decided before attempting to apply the principle. In deciding the question of fact, the fact that a party has signed a document which purports to be contractual or part of a contractual arrangement, even though evidence shows that he signed it in the course of negotiation before the point of achieving finality, is a powerful indication of intention to be bound by it at the later point of achieving finality; it is a powerful indication because of well-known cultural practices about the use of one's signature as a token of assent.
102 For a long time courts have used a test of reasonable notice when deciding whether conditions excluding or limiting liability have been incorporated in agreements. A test of reasonable notice was accepted in the High Court in Balmain New Ferry Co Ltd v. Robertson (1906) 4 CLR 379, Griffiths CJ at 386, by the House of Lords in Hood v. Anchor Line [1918] AC 837 at 844, 845 (Viscount Haldane) and has been applied in many later cases. The excluding clauses have been set out or referred to in many ways such as by a notice on a ferry wharf, by statements on the backs of railway tickets or steamer tickets, by conditions printed on the back of commercial documents of various kinds issued at various points in the transactions, and by references in such documents to conditions to be found at other places. The facts have been so various that reduction to categories is of little value. In Oceanic Sun Line Special Shipping Company v. Fay (1988) 165 CLR 197 at 228-229 Brennan J said:
If a passenger signs and thereby binds himself to the terms of a contract of carriage containing a clause exempting the carrier from liability for loss arising out of the carriage, it is immaterial that the passenger did not trouble to discover the contents of the contract. But where an exemption clause is contained in a ticket or other document intended by the carrier to contain the terms of carriage, yet the other party is not in fact aware when the contract is made that an exemption clause is intended to be a term of the contract, the carrier cannot rely on that clause unless, at the time of the contract, the carrier had done all that was reasonably necessary to bring the exemption clause to the passenger's notice: Hood v. Anchor Line (Henderson Brothers) Ltd . (1918) AC 837, at pp 842, 844; McCutcheon v. David Macbrayne Ltd. (1964) 1 WLR 125, at p 129; (1964) 1 All ER 430, at p 433; Thornton v. Shoe Lane Parking Ltd . (1971) 2 QB 163, per Lord Denning M.R. at pp 169-170, and per Megaw L.J. at pp 172-173. In differing circumstances, different steps may be needed to bring an exemption clause to a passenger's notice, especially if the clause is an unusual one.
103 In Liaweena (NSW) Pty Ltd v. McWilliams Wine Pty Ltd (Court of Appeal, 5 December 1990) Handley JA, in the course of discussing the effect of misrepresentation of the effect of the document in the course of negotiation, said "The underlying question is whether the appellant 'did what was reasonably sufficient to give the plaintiff notice of the condition.' See Parker v. The South Eastern Railway Co. (1877) 2 CPD 416 at 424. See also The Balmain New Ferry Company Ltd v. Robertson (1906) 4 CLR 379 at 386 and the Council of the City of Sydney v. West (1965) 114 CLR 481 at 485, 491." In Remath Investments No. 6 Pty Ltd v. Chanel (Australia) Pty Ltd (Court of Appeal 24 December 1992) the Court of Appeal referred to Liaweena v. McWilliams Wines and to the test there stated and reviewed the authorities relating to that test at some length. In the course of their review the Court of Appeal said "However it is a question of fact in each case whether a party relying on an exclusion clause has done what was reasonably sufficient to give the plaintiff notice of the clause." In the light of these decisions, to which the Trial Judge referred, his Honour took the correct approach by treating the question whether the conditions on the reverse of the application for credit had been incorporated in the parties' contract as a question of fact, and in addressing that question of fact by deciding whether Finemores did what was reasonably sufficient to give Richard Thomson notice of the conditions.
104 The same stage in the proof of facts has to be passed where an exempting clause, or any other clause is contained in a document which a party did sign as where it is contained in a document which a party did not sign. The party who alleges that the document is or is part of the contractual arrangement which the parties intended to make must prove that the document was intended by both parties to form part of their contractual arrangements. Depending on the circumstances, the fact that the document was signed would usually be of very great weight as evidence of the intention of the party who signed it, so great as to appear conclusive, especially in a commercial context.
105 The present facts are different from the facts in Liaweena and Remath in that the contested document was in fact signed on behalf of Richard Thomson. There is in my opinion no difference in legal principle between signed documents and documents which are not signed for decision whether in fact a document is incorporated into an agreement. There is a considerable forensic difference between signed and unsigned documents: the difference is in the force of the claim on the attention of a tribunal of fact of a signature on a document as an indication of the intention of the party signing the document to be bound by it. It is for this reason, and not because the boundary of any legal principal marks off signed documents from unsigned documents, that case law almost always addresses documents which have not been signed. Signature is usually a very strong indication for an intention to be bound, but does not exclude consideration of facts and circumstances which may show that it was not.
106 In Le Mans Grand Prix Circuits Pty Ltd v. Iliadis [1998] 4 VR 661 the Court of Appeal of Victoria divided on whether a document signed by the plaintiff which in its terms exempted the defendant from all legal liability to him was a contract between the parties. The issue was whether there was a contract between them at all, not whether the document was incorporated in a contract which otherwise existed. Tadgell JA with whom Winneke P agreed addressed L'Estrange v. F. Graucob Ltd and other case law and opinion on this subject on pp666-667. His Honour said of L'Estrange v. F. Graucob, at 666/20:
In that case, and in all others that I can find in which the principle for which it stands has been expressly or inferentially applied, there was an undoubted contract or the existence of a contract was not in issue: the question was whether the party signing the document containing terms was bound by them - whether they formed part of the contract … When the question is whether there is a contract between parties, the signature of one only of them to a document presented by the other cannot necessarily and by itself determine the question: one needs to know the circumstances in which the document was presented to the party who signed it.
107 In the dissent of Batt JA at 670 his Honour said, apparently referring to this passage:
But Tadgell JA is speaking of a document signed by only one party to a putative contract when he says that the signature cannot necessarily and by itself determine whether there is a contract between the parties: one needs to know the circumstances. I accept that, at least as a general proposition.
108 Their Honours' differing conclusions appear to me, with respect, to flow from differing evaluations of the evidence and in particular of the significance of the document's being in contractual form and signed. It seems from the passage from the judgment in the County Court set out at 664 that there had not been findings on that subject, so that the Court of Appeal made its own findings. Both judgments include references (Tadgell JA at 666-667, Batt JA at 673) to academic and other criticism of the rule in L'Estrange v. F. Graucob. It is, with respect, valuable that this material was reviewed, but finally what Le Mans Grand Prix Circuits v. Iliadis shows, in my view, is that the questions whether there is a contract between the parties, and whether the supposed contract is one document or more, or incorporates a document, fall to be decided before L'Estrange v. F. Graucob can be applied, and the fact that a document in a contractual form has been signed by a party is a powerful indication favouring a finding that it was intended to be contractual, but not necessarily conclusive. Well-considered and powerful arguments supporting each of two outcomes were given.
109 In Mauritz v. Hegedus [1999] WAS CA 1061 the Full Court of the Supreme Court of Western Australia, when dealing with a disclaimer which was in fact signed by the plaintiff, treated the question whether the plaintiff was bound by the document as turning on whether the defendant gave reasonable notice to the plaintiff of the existence of terms in the document. The Full Court found, on the facts of that case, that the actions taken by the defendant in requiring the plaintiff to sign the disclaimer before performance of the agreement amounted to reasonable notice; but the Full Court did not regard the decision as concluded by the fact that the plaintiff had signed the disclaimer.
110 On behalf of the appellant it was contended that Mauritz v. Hegedus should either not be followed in this Court or should otherwise be distinguished, and it was submitted that there was no authority for the approach taken by the Full Court, or for requiring reasonable notice to be given of unusual or onerous terms even in the case of a contract which has been signed. It was submitted that the approach taken by Owen J was inconsistent with what was said to be a clear distinction drawn by Brennan J in Oceanic Sun Line in the passage which I have set out. I do not regard the approach made in Mauritz as inconsistent with the observations of Brennan J, notwithstanding the clear terms of the first sentence in the passage from Oceanic Sun Line which I have set out. The question whether a document, signed or unsigned, is or is part of a contract is anterior to the proposition stated by Brennan J in the first sentence. In my respectful view, on the unusual facts before them, the Full Court's approach to the question of incorporation of the disclaimer was not erroneous. Their conclusion that the disclaimer had contractual force would, I suppose, accord with the usual outcome where tribunals of fact address signed documents contractual in form; but the issue of fact is an issue which must be decided.
111 When a contract is formed by a series of communications and by behaviour of parties in relation to those communications, it is a question of fact what parts of those communications were intended by the parties to be terms of their contract. Where an agreement has been completely reduced to writing and signed by all parties the exercise is extremely simple; where the Court has the task of examining a series of communications and acts, some of which are on paper and signed but some of which are acts of parties dealing with the written material, the identification of the parties' intentions about which parts of their acts and communications were to be contractual conditions may not be simple at all. A finding of fact about what the parties' intentions were with respect to one document in the series, or to something written in that document, is not dictated by the terms of the document, or by the fact that a party signed it. The fact that a particular document in the series was signed is an important indication favouring a finding that the parties signing it intended to be bound by it; but does not preclude paying regard to what the document says, how the parties treated it, and the facts and events which led to it being signed; and a whole view of the evidence may lead to a finding that the parties did not intend that the document and any promises or obligations in it should be part of their contract. It is for the tribunal of fact to consider the whole body of material and come to a finding about the parties' intentions.
112 In the present case the finding of the Trial Judge was, in substance, that the parties did not intend that the conditions on the back of the Application for Credit should be terms of their contract. The Trial Judge addressed the question whether what the defendant did was reasonably sufficient to give the plaintiff notice of the condition as if this question related to an obligation, and an obligation which applies both to the existence and also to the content of the condition; in doing this his Honour used language drawn from the decisions to which he referred. To my mind the true exercise can be masked by language which speaks in terms of an obligation of a party to give notice of the existence or content of a condition. There is no legal obligation. What is necessary is proof that what was reasonably sufficient was done. If it was not done the condition is not included. In a system where contractual intentions are judged objectively, doing what was reasonably sufficient is enough. In a subjective system it would not be enough: it would be necessary to prove that the other party actually knew.
113 Of first importance for understanding the relevant facts and the communications between the parties is the perishable nature of the goods. The Trial Judge dealt with this, appropriately in the first sentence of the judgment: (Red 50)
Medeva Pharma … is a pharmaceutical manufacturer in the United Kingdom. It there produces an influenza vaccine name as Fluvirin. Fluvirin is extremely sensitive to temperature. It must be kept at all times within the temperature change of +2°C to +8°C, including when being stored or transported.