Yasmine Taylor v Camille Roberts

Local Court of NSW|2018-05-15

Judgment

This is a claim involving two young people who intended to do what many young people do during university study breaks and before being burdened by work, financial and personal commitment. They intended to travel overseas together on a European holiday. Those plans went awry when Ms Roberts cancelled her travel arrangements not long before the proposed trip. As a consequence Ms Taylor also cancelled her trip. Both Ms Taylor and Ms Roberts incurred cancellation fees as a result. Regrettably, their friendship also suffered as a result of the cancellation, perhaps irretrievably. Ms Taylor now seeks to recover from Ms Roberts the financial costs she incurred as a result of the cancellation.
The question which is in dispute in these proceedings is the question of whether the agreement between Ms Taylor and Ms Roberts to travel overseas together gave rise to legally enforceable obligations. That question depends ultimately upon whether the parties entered into a binding contract.
For the reasons that follow, the Court is satisfied that while they entered into an agreement to travel overseas together, that agreement did not give rise to a contract. The case illustrates the fact that while every contract involves an agreement, not every agreement involves a contract.

Factual Background

Ms Taylor and Ms Roberts planned to travel together on a holiday to Europe. The planning took place over a number of months from August 2016 to May 2017. While both Ms Taylor and Ms Roberts have slightly differing recollections of what discussions took place over those months the essence of what transpired is largely consistent. The minor variances in the accounts provided do not go to the heart of resolving the dispute. The following is a brief summary of what occurred.
During the months of August and September 2016 Ms Taylor and Ms Roberts began discussing the possibility of travelling to Europe together. Ms Taylor had recently been to Europe with her boyfriend. During those discussions Ms Taylor indicated to Ms Roberts that the likely cost of the holiday would be approximately $10,000 plus spending money. The two discussed doing a tour of Croatia including a deck tour referred to as "Adriatic Sunsets". The proposed holiday would take place in June 2017.
Ms Roberts states that during these discussions she mentioned to Ms Taylor the possibility of inviting a friend named Sarah to travel to Europe. Ms Roberts agreed. Sarah expressed interest in travelling overseas and in turn invited another friend to travel overseas. The parties attended Flight Centre Tuggerah on 27 September 2016 with Sarah and Katey.
On that occasion Kelly Dodd, an employee of Flight Centre prepared an invoice for the cost of travel arrangements. It listed Ms Taylor, Ms Roberts, Katey and Sarah as the travellers. It listed the date of travel of 26 June 2017. The invoice includes bookings for one night accommodation in Croatia, a seven day cruise, a bus pass between Croatia and Spain and an 8 night Greek Island package ending on 1 August 2017. The total cost for the four travellers was $17,511.00. The invoice makes reference to cancellation and change fees.
Ms Roberts states that during discussions in October 2016 it was agreed that Sarah and Katey wanted different travel plans and would spend only part of the holiday with Ms Roberts and Ms Taylor. On 21 October 2016 Ms Dodd forwarded an email to the four travellers splitting the invoice in two given that Sarah and Katey had different travel arrangements.
The email from Ms Dodd confirmed the Greek package booking and requested a deposit of $200 per person.
In November 2016 Ms Taylor and Ms Roberts attended Flight Centre Tuggerah to discuss flights. On 7 December 2016 Ms Dodd emailed an updated invoice which included air travel arrangements. Both Ms Taylor were to depart Sydney on 26 June 2017 with Ms Roberts to return on 4 August 2017 and Ms Taylor to return on 18 August 2017.
In December 2016 Ms Roberts spoke to Ms Taylor seeking a loan of $1520 to be paid toward the holiday bookings. Ms Roberts paid that amount to Flight Centre on 14 December 2016 on behalf of Ms Taylor. Ms Taylor subsequently repaid this loan to Ms Roberts.
During the period of December and January 2017 Ms Taylor proposed to travel to London for a couple of days to visit family.
Ms Dodd sent an email on 2 February 2017 proposing that Ms Taylor and Ms Roberts book the same flight from Sydney to Croatia and then Ms Taylor continue on to London and Ms Roberts fly to Athens. On 3 February 2017 Ms Roberts responded indicating that she "decided to go with Yasmine to the UK, and find cheap hotel and stay in London, and then fly back home from London with Yasmine."
On 3 February 2017 Ms Dodds issued a further updated invoice indicating flight costs were $2,893.00 each.
On 22 March 2017 Ms Dodd sent an email to both Ms Taylor and Ms Roberts advising the final payment date of close of business on 19 May 2017. As at this date Ms Roberts had paid $3,520 to Flight Centre towards the holiday and Ms Taylor had paid $2,037. In response to this email Ms Taylor made a further payment of $4,380.
On 19 April 2017 Ms Taylor and Ms Roberts met with Ms Dodd at Flight Centre at Tuggerah. At this meeting discussions were held to settle the international and internal flights for the holiday. An email was sent by Ms Dodd on 20 April 2017 to both Ms Taylor and Ms Roberts quoting flight costs from Emirates and Croatian Airlines. The cost quoted for Ms Taylor was $3182 and the cost for Ms Roberts being $3086.
On 6 May 2017 Ms Roberts forwarded an email to Ms Dodd stating that she had a change in circumstance and needed to cancel her trip. On or about that same date, Ms Roberts informed Ms Taylor that she was not proceeding with the trip. An exchange of text messages between Ms Taylor and Ms Roberts followed: Ms Taylor: Cos if you pull out after the cut off I'm going to make you pay my fees lol. Ms Taylor: I got my dad to call up about refunding. We get close to nothing back. Ms Roberts: Even you Ms Taylor: I need to know by today if you're going or not seriously Ms Taylor: Talk to your parents about it whatever I need to know cos if you had this last week we would of got something back now we get nothing.
Ms Roberts proceeded with the cancellation of her trip. Ms Taylor shortly thereafter cancelled her trip. Some payments were recovered from Flight Centre, however, Ms Taylor was unable to recover the sum of $3,214.00 for cancellation fees. Ms Roberts incurred cancellation fees.
Ms Taylor now seeks to recover from Ms Roberts the amount lost in cancellation fees being $3,214.

Contract

Ms Taylor has framed her claim in contract. It is trite to say that the law of contract requires there to be an offer, acceptance, consideration and an intention to create legal relations. There must also be certainty in the terms. These are matters that are to be assessed objectively, rather than by reference to the subjective views of the parties.
Ms Taylor states that the contract was formed by an oral conversation between herself and Ms Roberts. The written submissions on behalf of Ms Taylor rely on the following conversation deposed by Ms Roberts at paragraph 6 and 7 of her statement as taking place in early August 2016: "Ms Taylor: I really enjoyed going to Europe, however, I did not get the chance to travel to Croatia. I've heard it is a great place to visit, so would you be interested in going there with me next year? Ms Roberts: I would be interested in travelling to Croatia. Perhaps we could go to other locations in Europe as well while we are over there? Ms Taylor: Yes, I would be interested in doing that. We could go to the places I haven't seen."
The plaintiff states that the conversation constituted an offer by Ms Taylor for Ms Roberts to travel to Croatia together next year which Ms Roberts counter offered by suggesting travel to additional other locations in Europe to which Ms Taylor accepted.
There can be no doubt that the conversation was an agreement between Ms Taylor and Ms Roberts to travel to Croatia and some other European countries at some time the following year. However, for that agreement to give rise to an enforceable contractual obligation there must be valuable consideration, certainty of terms and an intention to create legal relations. The plaintiff has failed to establish those essential elements and accordingly, the claim by Ms Taylor fails.

Consideration

In order for an agreement to have contractual force there must be valuable consideration that moves from the promise: see Mason CJ and Wilson J Trident General Insurance Company v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 113; [1988] HCA 44. That is, Ms Taylor must show that in consideration of the promise that Ms Roberts made to travel to Europe with her, Ms Taylor provided some practical benefit to Ms Roberts in return. In this sense there must have been a quid pro quo to support the promise by Ms Roberts to travel to Europe with Ms Taylor. Ms Taylor submits that there was a mutual promise between the parties in that Ms Taylor promised to travel to Europe with Ms Roberts. That submission must be rejected for two reasons.
Firstly, the conversation deposed to by Ms Roberts (which is the only first-hand account of the oral agreement) does not contain any representation by Ms Taylor conferring a benefit upon Ms Roberts. By way of illustration, there is no statement by Ms Taylor to the effect that "if you travel to Europe with me I will do xyz in return".
Secondly, for there to be valid consideration there must be some practical benefit promised by Ms Taylor to the benefit of Ms Roberts. In this instance, the purported consideration is that Ms Taylor promised to accompany Ms Roberts. That purported consideration is illusory in the sense that the outcome of travelling together had already been secured by the promise given by Ms Roberts to travel with Ms Taylor. If Ms Roberts adheres to her promise then there remains no ascertainable obligation on the part of Ms Taylor that can be broken.

Contractual Uncertainty

For a contract to be binding and enforceable it must be sufficiently certain. As stated by the High Court in Thorby v Goldberg (1964)112 CLR 597; [1964] HCA 41: "It is a first principle of the law of contracts that there can be no binding and enforceable obligation unless the terms of the bargain, or at least its essential or critical terms, have been agreed upon. So, there is no concluded contract where an essential or critical term is expressly left to be settled by a future agreement of the parties. Again, there is no binding contract where the language used is so obscure and incapable of any precise or definite meaning that the court is unable to attribute to the parties any contractual intention."
In the oral conversation which Ms Roberts deposes at paragraph 6 of her statement it is clear that there is, as at August 2016, no agreement on the essential terms of the agreement including when during the following year the holiday would take place, what countries in addition to Croatia were to be visited, the length of the holiday and the budget for the holiday.
As at August 2016 the parties had nothing more than an in principle agreement which brings to mind the third class of cases referred to by the High Court in Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72. In that case the High Court acknowledged that there was a class of cases where the parties have agreed on certain terms, however, they do not intend to be legally bound because they either contemplate that there will be additional provisions to be incorporated into the agreement or that they wish to reserve to themselves the right to withdraw until those additional terms are resolved.
In the present case the plan to travel overseas was fluid and evolving throughout the period of August 2016 and April 2017. At the time of August 2016 the parties had only agreed to travel to Croatia and possibly some other unspecified European countries sometime in the following year. It was so vague and uncertain that it could not, at this time, be considered an enforceable agreement. During the course of oral submissions at the hearing the plaintiff suggested alternatively the agreement crystallised on 27 September 2016 at the conclusion of the first meeting with Ms Dodd at Flight Centre Tuggerah. Although some greater detail of the proposed travel plans had emerged it is clear that the parties had not settled with any precision their travel plans. Nor is there any evidence of a conversation between the parties at that time to suggest that they had formalised their agreement.
The plaintiff submits that it is relevant to have regard to the whole relationship including post contractual conduct by the parties. In Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61 Heydon JA referred to McHugh JA in Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR [97326] at 11,117-11,118 where it was stated: "Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties' subsequent conduct become sufficiently specific to give rise to legal rights and duties. In any dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed".
In the present case the relationship of Ms Taylor and Ms Roberts can hardly be describe as a "dynamic commercial relationship".
The comment by Heydon JA in Brambles is subject to the qualification that the essential elements of the contract must still be established. In Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601 at 619, Lloyd LJ explained: "It is sometimes said that the parties must agree on the essential terms and it is only matters of detail which can be left over. This may be misleading, since the word 'essential' in that context is ambiguous. If by 'essential' one means a term without which the contract cannot be enforced then the statement is true; the law cannot enforce an incomplete contract."
In the present case the difficulty for Ms Taylor is that at the relevant time of August and September 2016 the travel arrangements were so incomplete and uncertain that the agreement could not be enforced.

Intention to Create Legal Relations

The law of contract deals with enforceable legal obligations. In Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8 at [24] the High Court explained how the intention to create legal relations is a necessary precondition to give rise to contractual obligations and the proper approach for determining its existence: "It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty. To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet 'the circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts'. Because the inquiry about this last aspect may take account of the subject-matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances, not only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so. Because the search for the 'intention to create contractual relations' requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word 'intention' is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said and done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties".
The High Court rejected the view that there was any presumption against there being an intention to create legal relations in domestic and social settings. However, the surrounding context including the relationship of the parties and the setting will be relevant when assessing whether parties did intend to create legal relations.
In Ashton v Pratt [2015] NSWCA 12, Meagher JA at [4] states the question of the intention of the parties to create legal relations: "Turns on whether in the circumstances, by what they said and did, they objectively conveyed such an intention in the sense that reasonable persons in their position would have understood that to have been intended".
In Sharp v Anderson (1994) 6 BPR 13,801 at 13,809 Santow J considered the following factors relevant to whether a statement of testamentary intention gave rise to enforceable contractual obligation: 1. The number of people to whom the statement was made 2. Whether the statement was in writing 3. Whether there was substantial consideration offered for the promise 4. The number of times the statement was made 5. The context, formal or informal, in which the promise was made 6. The nature of the relationship between the parties 7. The certainty of the term.
In support of the argument that the parties did intend to create legal relations submissions on behalf of Ms Taylor refer to the gravity of the detriment caused by a breach of the promise. The authors of Cheshire and Fifoot Law of Contract (Lexis Nexis, 11th ed, 2017) have stated on this point: "In cases such as Wakeling v Ripley (1951) 51 SR (NSW) 183, the gravity of the detriment to the promise, in the event of the promisor breaking his or her promise, may be relevant to the question of intention to enter into legal relations. In short, detrimental reliance by the promise goes to the issue of intention rather than consideration. This approach is more readily adopted in Australia (See for another example Todd v Nicol, [1957] SASR 72 at 79)".
Ms Taylor submits in this case, the detriment was significant as she would suffer financial losses for cancelling the trip. However, in Wakeling v Ripley the Court was dealing with circumstances where the plaintiff left secure employment in England to move to Australia in reliance on the testator's promise, consequences so serious that Street CJ considered it obvious that the plaintiff would not have done so except in anticipation of a definite agreement. Similarly, in Todd v Nicol the Court was dealing with circumstances where the defendant had invited the plaintiffs (the sister and niece of defendant's deceased husband) to move from England and live with her in Australia. The plaintiffs took up the offer and gave up tenancy of their house in England, sold their furniture and possessions and moved to Australia. Mayo J considered that the agreement was binding.
The gravity of the loss said to be suffered by Ms Taylor is far less substantial that the detriment identified in either of those cases. She had a choice to continue with her travel plans. While it was not her preferred option the Court does not accept the submission that this option was not open to her. She had travelled overseas earlier that year with her boyfriend. Part of her travel to England and France would be without Ms Roberts. Part of her travel would have been with Sarah and Katey.
Furthermore, as was noted by Brereton J in Ashton v Pratt (No 2) [2012] NSWSC 3 at [33], the detriment suffered in reliance of a promise made in cases such as these involving a domestic or personal situation may equally be attributable to trust and honour between friends and family members as opposed to evidencing an intention to create legally binding relations.
In my view there are a number of factors relevant to concluding that there was no intention to create legal relations.
Firstly, the language used by Ms Taylor at the formation of the agreement did not convey an obligation. While this, of itself is not determinative, Meagher JA in Ashton v Pratt noted: "At no stage in the conversation was anything said by either party that conveyed to the other that what was being promised was to be legally enforceable."
If the agreement to travel to Europe together was intended to give rise to legal obligations the Court would have expected Ms Taylor to have used language that conveyed that obligation. The Court would have expected Ms Taylor to put the offer in words to the following effect: "I want to travel to Europe but I will only be able to go if you travel with me. If you cancel your plans I will have to cancel mine."
The language used did not convey that obligation.
Secondly, while subsequent conduct or communications may be taken into account when considering whether a binding agreement has been reached (see Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 6) in my view the post agreement conduct does not support the existence of a binding contract. Ms Taylor was prepared to make changes to her travel arrangements without first seeking the concurrence of Ms Roberts. Ms Taylor's response in text messages does not make reference to a broken promise made, it raises missing the cut of date for cancellations and seeks compensation.
Thirdly, the conversations between Ms Taylor and Ms Roberts that gave rise to the agreement were casual, informal and in a setting between friends. The object of the agreement was for pleasure and recreation. The terms were uncertain. The detriment was neither apparent nor significant. The agreement was prompted by personal desire to spend time to together and to share the experience of travel rather than any commercial or tangible benefit.
The agreement was personal rather than contractual. Ms Taylor and Ms Roberts failed to have a frank and honest discussion up front regarding what both could reasonably afford, to explore the cost before committing to overseas travel and to make clear their expectations and obligations so that each had an understanding of what was achievable. The agreement was made with youthful impulsiveness and exuberance. Both contributed to the dilemma that they find themselves. It was not an agreement where there was any intention to create legal relations.
The plaintiff's claim fails. The Court will enter a verdict in favour of the defendant. The plaintiff is to pay the defendant's costs of $602.00 within 28 days. Assessor Olischlager Local Court of New South Wales

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: 22 October 2018

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