Appeal Submissions
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd & Ors
[2004] HCATrans 328 (2 September 2004)
Last Updated: 2 September 2004
[2004] HCATrans 328
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S63 of 2004
BetweenTOLL (FGCT) PTY LIMITED (FORMERLY FINEMORES GCT PTY LIMITED)
Appellant
and
ALPHAPHARM PTY LIMITED
First Respondent
EBOS GROUP LIMITED
Second Respondent
RICHARD THOMSON PTY LIMITED
Third Respondent
GLEESON CJ
GUMMOW J
HAYNE J
CALLINAN J
HEYDON J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON THURSDAY, 2 SEPTEMBER 2004, AT 10.20 AM
Copyright in the High Court of Australia
__________________
MR S.J. GAGELER, SC: If the Court pleases, I appear with my learned friend,
MR A.S. BELL, for the appellant. (instructed by Clayton Utz)
MR S.T. WHITE: If the Court pleases, I appear with my learned friend,
MR E.G.H. COX, for the first respondent. (instructed by Withnell Hetherington)
MR J.E. GRIFFITHS, SC: If the Court pleases, I appear with my learned friend,
MR J.K. KIRK, for the second and third respondents. (instructed by Allens Arthur
Robinson)
GLEESON CJ: Yes, Mr Gageler.
MR GAGELER: Your Honours, there is one formality. May I, with your Honours’
leave, file in Court an amended notice of appeal in the form that your Honours
already have in volume 3 of the appeal book.
GLEESON CJ: Is that opposed?
MR GRIFFITHS: No.
GLEESON CJ: Yes, you have that leave.
MR GAGELER: Your Honours, the twofold error in the judgment of the Court of
Appeal appears most starkly in the reasons for judgment of Justice Bryson in
56 NSWLR 662 at 688 or, if your Honours are using the appeal books, at volume 3 at
page 568. It is paragraph 139 of his Honour’s judgment. There his Honour says this:
There was in my view a reasonable basis for the trial judge to find as
he did that condition 8 –
that is, the indemnity clause –
did not form part of the parties’ contract, on the basis that Finemores
did not do what was reasonably sufficient to give Richard Thomson
notice of the existence or content of the conditions. If on the same
body of evidence it had been for me to find the facts at first instance I
may well have made a different finding; to me the signature, by a
business executive acting in commerce, of a written document
containing a request that he read conditions of contract on the back of
the document or anywhere else, is an objectively strong token of his
acceptance of the conditions, whether or not he actually adverted to
what the conditions said, or even to their existence. It does not fall to
me to find the facts, but to consider whether the finding of the trial
judge was wrong.
Now, there is in that one paragraph, in our submission, a misapplication of the law of
contract and there is an abdication of the appellate function. The equivalent
passages in the reasons for judgment of the other two members of the court are
Justice Sheller at paragraph 2 and Justice Young at paragraphs 66 and 68.
Your Honours, the primary facts giving rise to the contract between Finemores and
Richard Thomson - - GUMMOW J: It seems to me, Mr Gageler, if I could just interrupt, one of the vices
may be in that paragraph 139 that we are really in the world of signatures to
documents and we are in the world of non est factum.
MR GAGELER: Non est factum or nothing.
GUMMOW J: Yes. We are in the world of Petelin v Cullen (1975) 132 CLR 355 and
Saunders v East Anglia Building Society.
MR GAGELER: Yes, I think we have cited that in our submissions.
GUMMOW J: Yes, exactly.
MR GAGELER: Your Honour is right.
GUMMOW J: Was that adverted to in the submissions to the Court of Appeal?
MR GAGELER: Petelin v Cullen was cited, your Honour.
GUMMOW J: I mean, ticket cases have nothing to do with it.
MR GAGELER: No. Well, that is our point. Absolutely nothing to do with it.
GUMMOW J: Because the law has always attached enormous significance to
signatures, whether it is to a deed inter partes, a deed poll or, as here, a simple
contract.
MR GAGELER: Yes, your Honour. That, in essence, is our submission on the
principal point. Can I take your Honours to the facts, and I will be fairly brief. If
your Honours can go to volume 2 of the appeal book at page 305 – I am here dealing
with the contract between Finemores and Richard Thomson. I will deal separately
with the agency point. Volume 2, page 305 - - GUMMOW J: Now, how did this arise? Who is suing whom for what? There was
some discussion of this at the special leave application, and I can see why, having
looked at the pleading.
MR GAGELER: Alphapharm, the purchaser of the goods from Ebos, and Ebos, the
owner of the goods by reason of a retention of title clause, sued Finemores, the
carrier, for the loss of the goods. So that is how it started, and there were crossclaims all over the place.
HAYNE J: And two of them get judgment?
MR GAGELER: Two of them get judgment. The owner of the goods at the time of the
loss, Ebos, and the purchaser who had accepted risk got judgment. That is really
neither here nor there.
GUMMOW J: That is what you say.
MR GAGELER: Mr Bell wants me to particularly draw your Honour
Justice Gummow’s attention to 56 NSWLR 662 at 670, paragraph 50, where his
submission referring to Petelin v Cullen is specifically noted.
GUMMOW J: Well, that is not really the point, is it?
MR GAGELER: Your Honours, the fax – volume 2, page 305 – the fax from Richard
Thomson to Finemores of 20 January 1999 requesting a quote, the last paragraph of
the fax states that the goods are “of high cost” and asks for advice as to “what
insurance cover will be” and “what security” will be provided.
GUMMOW J: But you are sued by Alphapharm and Ebos.
MR GAGELER: Yes.
GUMMOW J: You say that one or both of them is the owner of these goods, or has
sufficient title.
MR GAGELER: Yes.
GUMMOW J: You sued in negligence. It is said that Finemores is a bailee for reward,
is it not?
MR GAGELER: It is.
GUMMOW J: And there is a claim under the Trade Practices Act as well.
MR GAGELER: And the only one that was upheld by the trial judge as the basis for
judgment was the claim in bailment.
GUMMOW J: Now, how then do you set up, in answer to that claim, what is in this
document passing between Thomson and - - MR GAGELER: In two ways. I will come to the document in a moment, your Honour.
The document contains two relevant provisions. One is an exclusion clause, the
other is an indemnity clause and, at the very least, if there is liability to either Ebos,
the owner, or Alphpharm, the purchaser, with a sufficient interest to sue in bailment,
then we rely upon clause 8 of the contract between the carrier and Richard Thomson,
as between Finemores and Richard Thomson, to have an indemnity which was
claimed by cross-claim in the proceedings at first instance.
Separately, and in any event, the trial judge held that Richard Thomson contracted
as agent for Ebos, the owner of the goods, and there is an exclusion clause, clause
6, and we say that the exclusion clause would be applicable in respect of Ebos’
claim. We also have a separate point, the agency point. That is that properly
construed the arrangement between Richard Thomson and Alphapharm, the
purchaser, was one by which Alphapharm conferred actual authority as an agent on
Richard Thomson to contract on its behalf. So our primary position is that the
exclusion clause applies also in respect of the claim by Alphapharm. That is how it all
fits together.
GUMMOW J: There is no Himalaya clause point?
MR GAGELER: No, not – there is a Himalaya clause, but we do not seek to invoke
that other than through the mechanism of agency. Your Honours will see it in a
moment. That is page 305. The response to that fax your Honours will see at
page 335. It is dated 12 February 1999 from Finemores to Richard Thomson and it
comprises four pages. The second of those four pages, at page 336, is then a letter
dated 11 February, again, from Finemores to Richard Thomson. It is headed
“Quotation for Freight Rates”. It says in the first paragraph:
Further to our recent discussion regarding the transportation of your
products to various interstate locations, we are pleased to have the
opportunity of providing our quotation.
It says in the third paragraph:
Please note we are not common carriers and all cartage is subject to
the conditions as stated on the reverse side of our consignment note,
a copy of which is attached.
It is common ground that a copy of the consignment note was not attached.
GLEESON CJ: Was it common ground that the contents of the standard form of
consignment note were of a particular nature?
MR GAGELER: No.
GLEESON CJ: Well, that sentence refers to “our consignment note”.
MR GAGELER: Yes. The case was not fought on the basis that at the time of the
formation of the relevant contract the terms of the consignment note were known to
all parties. It then says:
We do not insure goods and our trading terms are strictly of 14 days
from the date of invoice.
Then in the penultimate paragraph it says:
We trust you will find our rates competitive and that you will avail
yourself of the service we provide. Following acceptance of our
quotation, it would be very much appreciated if you would complete
the Credit Application and sign the Freight Rate Schedule accepting
our Rates and Conditions and fax back to our office at your earliest
convenience.
The freight rate schedule then comprises the final two pages of the fax and it sets out
at page 337 a schedule of rates, generally expressed as a cost per pallet space or
other amount per pallet. At page 338 it contains a schedule of conditions which
your Honours will see are limited to the mechanics of packing, loading, booking and
dispatching pallets. There is then provision for signature at the bottom of the page
under the words “Freight Rate Schedule and Conditions accepted by”.
Now, if your Honours turn the page, to page 339, your Honours will see the second
page of the freight rate schedule as signed by Mr Philip Garden on behalf of Richard
Thomson, signed probably on 17 February, as noted by Justice Bryson at
paragraph 124. The application for credit that had been foreshadowed in the letter of
11 February is then at page 352 - - GUMMOW J: There is no finding as to the date of the signature at 339, is there?
MR GAGELER: No, and there was no evidence of that type. It is probably
17 February.
GUMMOW J: And the consignment note at 336 that the Chief Justice mentioned –
that was not attached?
MR GAGELER: It was not attached, no. Page 352 is the application for credit.
Your Honours will note that it bears at the top, the left hand corner, the Finemores
logo and ACN. It says in the top right hand corner, under the heading “Application for
Credit”:
This application for credit will be considered and if approved, granted
on the basis of the following information.
It then has spaces for the applicant’s details, which are filled in in handwriting with
information about Richard Thomson. Then towards the bottom, line 45, your Honours
will see - - GUMMOW J: This agency theory – who is getting the credit? The principal or the
agent?
MR GAGELER: Both, because both would be liable. There is nothing wrong - - GUMMOW J: All right. It is an odd sort of agency.
MR GAGELER: Well.....agency.
GUMMOW J: Agency brings about a relationship between the third party and the
principal.
MR GAGELER: It does not necessarily exclude the relationship of contract between
the agent and the third party.
GUMMOW J: All right.
MR GAGELER: Your Honours will see towards the bottom that it is signed by
Mr Garden on the line for customer signature, and that signature appears
immediately beneath printed words which say:
Trading terms: Nett 7 days (unless otherwise confirmed in writing).
Please read “Conditions of Contract” (Overleaf) prior to signing.
GUMMOW J: The invoices that were later issued – did they refer to 7 or 14?
MR GAGELER: They said 14, your Honour. An example is at page 355. As to the
circumstances of the signature at page 352 on the application for credit, Mr Garden,
who signed, said in his evidence in-chief, volume 1, page 235, that he simply could
not remember signing. But as found by the trial judge and recounted by
Justice Bryson in paragraph 131 and 136 of his judgment, the signature was
probably put on the document on 17 February in circumstances of “no great hurry” –
and they are the words of Justice Bryson.
GLEESON CJ: There is an issue with which you will have to deal arising out of
paragraph 143 of Justice Bryson’s judgment, relating to the date.
MR GAGELER: I will certainly address the date when I come to the characterisation
of the contract. Your Honours, if you then turn overleaf, we are at page 352 and we
are instructed:
Please read “Conditions of Contract” (Overleaf) prior to signing.
If you turn overleaf to page 353, what you see and what Mr Garden would have seen
if he had looked is a number of boilerplate conditions of carriage, providing,
consistently with the terms of the letter of 11 February, in clause 1 that:
The Carrier is not a common carrier –
and in clause 9 that it is:
the Customer’s responsibility to effect insurance –
but including, relevantly, for the rights of the parties to the present proceedings, in
clause 6 an exclusion of liability clause and in clause 8 an indemnity clause, each of
which is expressed to be applicable in respect of claims by both the customer and
the customer’s associates, which your Honours will see defined in clause 3(b). That
is the Himalaya clause.
Your Honours will note that clause 5 has a warranty on the part of the customer that
it is entering into the contract:
on its own account and as agent for the Customer’s Associates.
If it matters, and, in our submission, it does not, the overwhelming evidence before
the court, simply not adverted to by the trial judge or by the Court of Appeal, is to the
effect that these are stock, standard conditions of carriage in the refrigerated
transport industry. Your Honours have a lot of examples of other conditions of
carriage in the appeal books: volume 2, page 253 through to 258 – I simply ask
your Honours to note these without turning to them – and again at page 263 through
to page 271.
CALLINAN J: What does that evidence go to?
MR GAGELER: In our submission, one does not ever reach it, but your Honour will
have noted in the Court of Appeal references to the extraordinary or unreasonable
nature of these conditions. The fact is - - CALLINAN J: So that really you were meeting a contention on the other side, is that
it?
MR GAGELER: Exactly. I am simply mentioning it because it is the appropriate time
to mention it, if it needs to be said.
CALLINAN J: Perhaps the evidence that you were tendering to meet it, perhaps that
evidence should not have gone in anyway? “We did not do this, we are not bound by
it, because it is an unusual clause”, and you prove that it is a standard sort of a
clause.
MR GAGELER: Yes, it may have been relevant to damages on the Trade Practices
claim, your Honour.
GLEESON CJ: I am not sure it was completely overlooked, if you look at the first
sentence in paragraph 40, which, from one possible point of view, is a starting point
for the consideration of the facts.
MR GAGELER: Yes, possibly, your Honour. In this regard again, perhaps simply as
an additional reference to those that I have already given your Honours, you might
note the evidence in volume 1, page 57. This is the evidence of Mr Van Der Pluijm of
Alphapharm. At line 35, he notes that he later – this is in April – he later saw the
terms and conditions and he says, line 34:
It was actually the first time that I’d seen terms and conditions of a
freight company and I made some inquiries and that’s when people
actually said that it was normal, that they were normal standard terms
almost.
GUMMOW J: The reference is to appeal book 455. That is what he is talking about.
MR GAGELER: Yes, thank you, your Honour.
GUMMOW J: There is a letter at 455.
MR GAGELER: If it matters, can I also mention this, that the terms and conditions at
page 353 are, in substance, although certainly not precisely in form, the same as the
terms and conditions on the back of the consignment note that was not attached to
the original letter. Your Honour will see the consignment note, or an example of it,
volume 1, page 172A. If I can then complete the chronology, one finds at page 355 -HAYNE J: Just before you do that, at this point of events what, if any, contract had
been made between what parties do you think?
MR GAGELER: No contract between any parties, but the event that I am about to
take your Honours to, in our submission, brought about the contract. The event is
one that needs to be inferred from the document your Honours will see at page 355.
What it is is an invoice issued by Finemores to Richard Thomson on 18 February for
the movement of goods from the airport to Finemores’ warehouse. This was the first
of the activities contemplated by the carriage arrangement and the significance of it -GUMMOW J: Well, they had to go through bond, did they?
MR GAGELER: They would have been in bond at the airport.
GUMMOW J: Yes.
MR GAGELER: Yes. The significance of it is that it shows that Finemores had
already, that is, on 18 February, allocated a customer number – your Honours will
see the customer number in the middle box – and Finemores was already engaged
in carriage as directed by Richard Thomson, both of which indicate that the
application for credit contained in the application for credit has been approved and
the contract was being treated as in force between the parties.
The formal letter notifying approval, your Honours will then see at page 365. It was
later sent by post on 24 February. We did not mean, in paragraph 18 of our
submissions, that anything turns on this letter. It refers, as your Honours will see in
the second paragraph, to the same customer number that had already been
allocated on 18 February.
GUMMOW J: It says “STRICTLY NETT (14) DAYS”.
MR GAGELER: “STRICTLY NETT (14) DAYS”, yes.
GUMMOW J: Is it inconsistent with the application - - MR GAGELER: No, it is not. because the application for credit says:
Trading terms: Nett 7 days (unless otherwise confirmed in writing).
And all of the writing said 14 days.
GUMMOW J: Thank you.
MR GAGELER: At page 362 your Honours will see Richard Thomson sending
confirmation of shipping details to Finemores in respect of a number of
consignments, including the first of the two ill-fated consignments. It is numbered 3
and it is to Queensland, 64 cartons. It was, in fact, sent on 25 February 1999, the
consignment note being at page 368. For that carriage Finemores invoiced Richard
Thomson at page 370 the grand total of $414.
The second of the two ill-fated consignments was then the subject of a separate
request for pickup and delivery. Your Honours will see that at page 407. That was a
request of 4 March. It was, in fact, sent on the same day, the consignment note being
at page 408, and there is no record of any invoice being sent in respect of that.
Your Honours, the legal characterisation of those facts, in our submission, comes
down to this. There is no real doubt that there came into existence between
Finemores and Richard Thomson a contract for the carriage of goods on credit and
there is, in our submission, no real doubt that that contract came into existence
before the first of the ill-fated shipments, that is, before 24 February, and properly on
18 February.
If forced into an analysis of offer and acceptance, we would put it in this way, that the
better view is that there was a contract created by the acceptance by Finemores on
18 February of an offer by Richard Thomson contained in the two documents signed
by Mr Garden on 17 February. But it really matters not if one takes the view taken by
the trial judge at page 502 of the appeal book, in a passage quoted by Justice Bryson
at paragraph 131 of his judgment, and that is that there was an offer by Finemores
which was accepted by Richard Thomson when it first arranged transport for the
goods from the airport. Either way, one gets to a concluded contract for carriage on
credit on 18 February.
Your Honours, the question then identified by the trial judge in that same passage at
page 502 and in the same passage quoted by Justice Bryson at paragraph 131 of his
judgment is not whether there was a contract or when it was concluded but whether
the conditions on the back of the application for credit became part of that contract. In
our submission, the answer is yes, and the reasons are very short and very orthodox.
The signing of the application for credit by Mr Garden was an act which, construed
objectively and reasonably from the point of view of Finemores, signified the assent
of Richard Thomson to the entirety of the document signed.
If authority for that proposition is needed, then it is unnecessary to go, in this Court,
past what was said by Chief Justice Latham in Wilton v Farnworth (1948)
76 CLR 646 at 649. We do not suggest that there are not numerous other passages.
This is simply the one we seize upon. It begins with the words at point 3:
Where a man signs a document knowing that it is a legal document –
and the same paragraph ends:
Any weakening of these principles would make chaos of every-day
business transactions.
Now, his Honour refers to Yerkey v Jones. He was referring to his own judgment in
Yerkey v Jones. May I read the sentence from that judgment to which he was
referring. His Honour there said:
The general rule is that if an adult person of ordinary understanding
executes a document he (or, in modern law, she) is bound by it
notwithstanding any misunderstanding by him (or by her) of its terms -GLEESON CJ: Now, you would have to elaborate the qualification expressed on
page 649, presumably nowadays by reference to legislation.
MR GAGELER: Of course, yes. His Honour was referring to equitable intervention.
He makes that very clear both in that paragraph and in the paragraph that precedes
it. One would now have to add the raft of legislative measures of the Trade Practices
Act and the Fair Trading Act.
GUMMOW J: Are you saying this is the position at law, there may equitable
intervention?
MR GAGELER: Yes, that is exactly right. Your Honours, if a theoretical justification is
needed for that stock-standard legal position, it is found in the passages in Williston
that we have set out in our submissions in reply. The point is, because a signature
naturally signifies consent, then according to the objective theory of contract it does
signify consent.
GUMMOW J: It does not have to be a contract.
MR GAGELER: It can be any document.
GUMMOW J: Exactly.
MR GAGELER: Absolutely.
GUMMOW J: And so-called contract lawyers can be a real pest.
MR GAGELER: Yes, it is any document.
GUMMOW J: As it was in Wilton v Farnworth. The poor old miner was giving away
his property, was he not?
MR GAGELER: Yes.
GUMMOW J: Likewise in Yerkey v Jones.
MR GAGELER: Yes. In Wilton v Farnworth, immediately after the paragraph that I
quoted, his Honour says:
But different considerations apply in the case of transactions which
are not business transactions.
That is why I am confining my submissions to contract. There may be a wider
principle, your Honour, I do not need to go - - GUMMOW J: But it might be an option conferred by deed poll.
MR GAGELER: I do not need to go into any wider principle, I can limit myself to
Williston and Corbin and any number of contract writers. Your Honours, our point is
that whatever exceptions – we do not admit of any exceptions, but whatever
exceptions there may be to the general proposition twice stated there by
Chief Justice Latham, they are not this case. We have here a standard arms-length
commercial contract and we have here a document that, on any view, is one
intended to affect the legal relations of the parties to that contract and which contains
terms that are - - GUMMOW J: Is the contract wholly in writing?
MR GAGELER: The contract is partly in writing and partly inferred from conduct.
GUMMOW J: Did anything turn on that?
MR GAGELER: No. Our learned friends seek to make something turn on that. We do
not understand anything to turn on that in point of legal principle. In our submission,
any analysis based on reasonable notice, that is, analysis drawn from the ticket
cases, drawn from the course of dealing cases, simply has nothing to do with this
case. We add as a footnote, if we needed to get to it, you needed to show
reasonable motives and it is given by the words on the form:
Please read “Conditions of Contract” (Overleaf) prior to signing.
Your Honours, can I mention four or five cases not in this Court and I will do it very
quickly. One of them is an American decision. It is the only American decision I want
to go to. It is Merit Music Service Inc v Sonneborn 225 A.2d 470 (1967). This is one
of the cases that we have referred to in our submissions and is footnoted in Williston.
At page 474, your Honours will see in the left-hand column a quotation from an
earlier case of Rossi v Douglas that states the general rule. The general rule is stated
in the fourth line of that quote:
one having the capacity to understand a written [contract] who reads
it, or, without reading it - - -
GLEESON CJ: Actually, it says “written document”.
MR GAGELER: Sorry, your Honour, yes, it does. I have got new glasses. That is the
general rule and we have quoted that in our submissions but - - GUMMOW J: It is also referred to with approval in Professor Farnsworth’s book on
contracts, 3rd edition, at paragraph 4.26.
MR GAGELER: Thank you. This case, your Honour?
GUMMOW J: Yes.
MR GAGELER: Thank you.
GUMMOW J: That is Merit Music. I think it is regarded as a fairly standard authority.
MR GAGELER: Yes, what we want to draw your Honours’ attention to was the
qualification that follows the statement of general principle. The qualification is then
set out right at the bottom of the page, another quotation from an earlier case in
Binder v Benson:
“A qualification of the rule is that an apparent manifestation of assent
will not operate to make a contract if the other party knows, or a
reasonable person should know, that the apparent acceptor does not
intend what his words or other acts ostensibly indicate.
In our submission, if there is an exception, then that is an appropriate statement of
the exception to the general rule deriving from the same root principle one looks at in
respect of the formation of a contract, in any event, to what one party by its acts
reasonably leads another party to understand.
GUMMOW J: How do you accommodate rectification in all this?
MR GAGELER: That is equitable intervention, your Honour. Your Honours, the
second of the cases I meant to go to very quickly was a recent decision of the
English Court of Appeal in Amiri Flight Authority v BAE Systems PLC [2003]
2 Lloyd’s Rep 767 at 772 in the judgment of Lord Mance with whom the other
members of the court agreed. At paragraph 14 your Honours will see a record of the
submissions that were made, or principles sought to be invoked in support of
submissions, concerning a commercial contract. Your Honours will see that Amiri
invoked:
secondly, upon the principle derived from the “ticket” cases that the
more extreme the exemption clause, the clearer the notice required
before it will be regarded as having been incorporated –
and cited in support of that - - GUMMOW J: Is this a case of a signed instrument?
MR GAGELER: Yes, signed commercial contract. This is the argument that was put
and your Honours will see a reference to Interfoto. There were some statements
made in Interfoto, which was not a signature case, that some counsel in the Court of
Appeal in England in the years since Interfoto have sought to rely upon from time to
time to say that an exclusion clause is not incorporated into a signed contract. What
your Honours will see is that submission is rejected and it is said at about point 3 on
the same page, next column:
It is unnecessary in this case to consider whether there may be
contracts in writing to which such reasoning would also apply –
this is a reference to Interfoto –
One could take the case of a car-owner entering a car-park and being
asked to sign a ticket handed to him by a car-parking attendant, or
that of the holiday-maker required to sign a long small-print document
in order to hire a family car at an airport, if, in either case, the relevant
document proved on close reading to contain a provision of an
extraneous or wholly unusual nature. It is possible that other
arguments could then also exist, e.g. that the nature or effect of the
document had been impliedly misrepresented.
16. Normally, in the absence of any misrepresentation, the signature
of a contractual document must operate as an incorporation and
acceptance of all its terms.
Now, the possibility of exceptions that are adverted to on that page, in our
submission, can be accommodated in two ways, either by - - GUMMOW J: It is not founded in any assertion of principle, is it?
MR GAGELER: No, not at all, but if there is a principle - - GUMMOW J: What if - - MR GAGELER: It is a rejection of the argument that our learned friends were
effectively making here, an acknowledgment that there may possibly be an
exception. All I am saying is if - - GLEESON CJ: There is another consideration that may be relevant. There is a
judgment of Lord Wilberforce in the case of Photo Production v Securicor, where he
points out that one of the consequences of all the ameliorative legislation that has
been enacted in recent years is that it frees the courts of the necessity to
compromise principle in order to produce a just result in some of these cases. He
says, in effect, you no longer have to stand on your head in order to achieve a just
result, because there is a legislation that does that for you.
MR GAGELER: Yes, I was not aware of that, your Honour, but we would adopt that
as part of our submissions. Your Honours, there are really just two other cases I
wanted to mention, and I only mention these because these are the only two
Australian cases of which we are aware in which there has been any variation from
the standard principle that if you sign a contractual document, you are bound by it.
One of them is the unreported decision of the Western Australian Supreme Court in
the case of Mouritz v Hegedus. That is the Full Court of the Supreme Court of
Western Australia. I do not want to take your Honours to any particular passage in it,
and you probably have a slightly different print from what I have anyway. I just
wanted to say this about it.
It was a consumer contract and it was signed in circumstances where the consumer
claimed not to have had an opportunity to understand the nature of the document
before it was signed. What happened was that the plaintiff turned up to the
defendant’s riding school, found 20 or 30 people milling around the table, and had to,
on the plaintiff’s evidence, “reach through the crowd” to sign some document before
being allowed to get on the horse. Now, Justice Owen, with whose judgment the
other members of the court agreed, employed an analysis that was drawn from the
ticket cases, but he concluded anyway that there was a contract between the parties.
It is not reported and we only mention it because it is one of the two Australian cases
that appears to show some deviation from principle.
The other is the judgment of the Court of Appeal of Victoria in Le Mans Grand Prix
Circuits Pty Ltd v Iliadis [1998] 4 VR 661. This is another consumer contract case,
your Honours, and another case in which a document was signed in circumstances
where the consumer claimed not to have an opportunity of understanding its nature
before signing it. What happened here was that the defendant conducted a go-cart
business. The plaintiff turned up, not as a paying member of the public, but as a
guest at a corporate function that was being conducted at the go-cart business – it
was something that was being organised by a local radio station. The plaintiff signed
the form that your Honours will see at page 669 of the judgment, in circumstances
where the plaintiff said, “Look, I was not given enough time to read this, it was all
rushed”.
Now, the majority held that despite the signature, the reality of consent was not
proved and there was no contract at all. That in itself is a long way from the present
case, but your Honours might note the concession that is recorded at page 667 in the
judgment, about line 22, where it is said that:
Counsel for the appellant was disposed to concede in his reply that
contractual documents containing an onerous exemptive provision
must be brought to the notice of the party against whom they are to be
enforced, and contended that in this case the provision in question
was so brought.
So the point really was not argued, it was conceded, and then it is said:
Assuming, without deciding, that the term on which the appellant
seeks to rely is onerous in the relevant sense, and that the concession
was well made –
Then the court proceeded, so the point was not in fact decided adversely to the
general principle that I seek to invoke. In any event, we ask your Honours to prefer
the dissenting judgment of Justice Batt. We have referred to that in our written
submissions and we draw your Honours’ attention in particular to what is said at the
bottom of page 673 over to the top of 674.
Now, your Honours, if we are correct that the conditions of contract on the reverse
side of the credit application formed part of the contract between Finemores and
Richard Thomson, then it follows that clause 6 provided Finemores with a complete
defence to the claim by Ebos, given that Richard Thomson, as held by the trial judge,
contracted as agent of Ebos. His Honour held that at page 500. In respect of the
claim by Alphapharm, it at the very least gives us by clause 8 a right to indemnity
from Richard Thomson and from Ebos, given that Richard Thomson contracted as
agent of Ebos.
GUMMOW J: The reference to Securicor is [1980] AC 827 and it is considered
favourably in this Court in Darlington 161 CLR 500 at 507 to 508.
MR GAGELER: Thank you, your Honour. We will look at those.
GLEESON CJ: Mr Gageler, I may have misunderstood something that I saw in one
of the written submissions, but is it common ground that there should not have been
judgment in favour of Ebos?
MR GAGELER: We think it to be common ground. That is the way we interpret our
learned friend’s written submissions.
GLEESON CJ: If that is so, what does it matter that Richard Thomson contracted as
agent for Ebos?
MR GAGELER: Legal purity only, your Honour. It does not matter practically for the
resolution of these proceedings. Either way, the judgment ought not have been
entered.
GLEESON CJ: Now, do you contend that Richard Thomson contracted as agent for
Alphapharm?
MR GAGELER: Yes, and I was moving to that submission now. If we are right in
that - - GUMMOW J: Why would that be? Richard Thomson was in the Ebos Group camp,
was it not, as the Australian subsidiary?
MR GAGELER: It could have been completely out of both camps - - GUMMOW J: And there was a sub-distributorship arrangement between the Ebos
people and Alphapharm.
MR GAGELER: Yes. Well, it is a question of fact, your Honour. It is not a special
leave point, but it is a point that arises on the facts.
GUMMOW J: It just seems commercially unlikely, that is all.
MR GAGELER: Well, your Honour has to look, I am afraid, at the detail of the
evidence and - - GUMMOW J: Yes, I have.
MR GAGELER: Well, I hope to take your Honour back to it.
GUMMOW J: All right.
MR GAGELER: But if we are right on this point, your Honour, the point is that we
also have a complete defence to the claim by Alphapharm based on clause 6, the
exclusion clause, and you do not need to get to the indemnity. We win either way. It
just depends on who we win against.
GUMMOW J: If you are right about clause 6, you do not have to get into the agency
question, do you?
MR GAGELER: No, I need to get into the agency – I am sorry, I will step back. If we
are right on the agency point, then Alphapharm’s claim against us fails, because of
clause 6, the exclusion clause. If we are wrong on the agency, then Alphapharm’s
claim against us is successful, but we in any event have our cross-claim based on
clause 8 against Richard Thomson.
GLEESON CJ: You need to succeed on your agency point because you have to get
Alphapharm bound by clause 6.
MR GAGELER: Exactly, yes.
GLEESON CJ: Which, in its terms, covers Alphapharm.
MR GAGELER: It does.
GLEESON CJ: But does not bind Alphapharm unless Alphapharm is your principal.
MR GAGELER: Unless Alphapharm is Richard Thomson’s principal, exactly.
GLEESON CJ: Yes, Richard Thomson’s principal.
MR GAGELER: Exactly. Your Honours, that turned on the question of actual
authority, the question being whether the relationship that existed in fact between
Alphapharm and Richard Thomson is properly characterised in law as one by which
Alphapharm gave, and Richard Thomson accepted, authority to put Alphapharm in a
direct contractual relationship with Finemores, the carrier. That is the question, and
one needs to look at the evidence to determine that question.
Now, we have referred in some detail to the evidence in paragraph 14 of our
submissions, but can I take your Honours to really the highlights. It will not take a
moment. If your Honours go to volume 1, page 175, your Honours are looking at the
second page of the statement of evidence in-chief of Mr Van Der Pluijm of
Alphapharm. What he says in paragraph 7 is:
On 15 February 1999 . . . I had a conversation with Mr Paul McGee of
Richard Thomson, who said to me words to the effect: –
“We are going to use Finemores to carry from the airport to
Finemores’ warehouse in Greenacre. We recommend that you use
Finemores for carriage from the warehouse to the purchasers, to
reduce handling. The Finemores’ warehouse is temperature controlled
and has procedures to maintain temperature. Medeva’s quality
assurance person, David Killick, has audited Finemores’ warehouse
and their procedures, and they seem capable, and their rates are
acceptable.”
There is then a second paragraph, which I will not read for the moment, but after that
Mr Van Der Pluijm says:
I said to Mr McGee words to the effect: –
“That is a good idea. I will accept that”.
He then says:
That arrangement with Richard Thomson was verbal. No written
agreement was entered into between Alphapharm and
Richard Thomson.
GUMMOW J: “Oral”, he means.
GLEESON CJ: “Verbal” might be appropriate.
MR GAGELER: I am sorry? I missed that.
GUMMOW J: He means “oral”. Unless they are verballing one other, as the
Chief Justice says.
MR GAGELER: Your Honour, I did not read the second paragraph - - GUMMOW J: I wonder who drafts these affidavits, really.
GLEESON CJ: “Now, I’ll tell the Court in my own words”.
MR GAGELER: I did not read the second paragraph because at page 228, line 45,
Mr McGee says, “Well, look, I don’t agree with the second paragraph. That related to
something else”. At page 189, Mr Van Der Pluijm returns to it, paragraph 3 at page - GUMMOW J: I am sorry?
MR GAGELER: Page 189.
GUMMOW J: Thank you.
MR GAGELER: Paragraph 3, he says:
With regard to paragraph 7 of my earlier Statement as commented
upon by Mr McGee . . . I accept that the second paragraph of the
conversation set out in paragraph 7 of my earlier Statement may
reflect the proposal in respect of Refrigerated Roadways rather than in
respect of Finemores.
GUMMOW J: That was an earlier proposal that did not come off?
MR GAGELER: Yes, that is right. So we take out the second paragraph and we are
left with the statement in the first paragraph:
We recommend that you use Finemores for carriage from the
warehouse to the purchasers, to reduce handling.
And we have Mr Van Der Pluijm of Alphapharm saying to Mr McGee of Finemores:
“That is a good idea. I will accept that”.
GUMMOW J: Who charged who and who paid whom?
MR GAGELER: Nobody paid, because - - GUMMOW J: Well, who invoiced whom?
MR GAGELER: I will show you. Your Honours will then see in the same statement of
Mr Van Der Pluijm at page 189, at page 190, the second page, he says in
paragraph 5:
With regard to paragraphs 12 and 13 of my earlier Statement –
that is pages 176 to 177 –
I relied upon the conversations set out with Mr Peter Rogers of
Finemores when I appropriated the goods to Finemores’ vehicles. If I
had not been given those assurances by Finemores I would not have
allowed Finemores to carry the goods.
The point is here he is asserting control, and similarly in paragraph 6 on the same
page - - HAYNE J: What was this man’s occupation?
MR GAGELER: Mr Van Der Pluijm?
HAYNE J: Yes. Queen’s Counsel, perhaps?
MR GAGELER: He may have been assisted in the preparation of his evidence - - HAYNE J: Good heavens, was he, Mr Gageler?
MR GAGELER: He was not my witness. This is the evidence of the other parties,
your Honour.
CALLINAN J: This is what you get with intensive case preparation and statements
prepared in advance and evidence not given orally in the orthodox way.
MR GAGELER: Yes, to give him credit, at page 174, he had a bachelor’s degree in
information technology and a master’s degree in business administration. He might
have done a business law course at one stage. Your Honours will like this as well,
page 190 at about line 25:
In respect of the two transportations the subject of this claim, I visited
Finemores’ premises where I labelled the product and then allocated it
for transport by Finemores to the locations identified on the labels. At
that point in time I regarded the goods as appropriated for
Alphapharm’s specific orders - - -
GLEESON CJ: All that is missing here is the evidence of an expert witness who says
that, having psychoanalysed the deponents, he concludes that the plaintiff has the
better case.
HAYNE J: Having measured the skid marks.
MR GAGELER: I wanted to rely on the next few words of the sentence:
and that I was entitled to control their handling and I inserted
Alphapharm’s own temperature monitors –
et cetera. The point is that what was being done here in fact and within the
contemplation of the person we say was the principal was an assertion of control
over the goods. Your Honours will see that very precise directions were given - - GUMMOW J: Is there cross-examination about this material?
MR GAGELER: There was a little. It is referred to in paragraph 14. I do not want to
get into the details of the detail, your Honour. But there were precise directions that
were given from Alphapharm to Richard Thomson in respect of each shipment.
Your Honours will see that at page 340 in respect of the first shipment and then
page 405 in respect of the second shipment. It was following those precise directions
from Alphapharm to Richard Thomson that one sees - - GUMMOW J: Alphapharm was buying them from the Thomson Group.
MR GAGELER: Yes. Alphapharm was buying them, but on-selling to its customers
located elsewhere and it was the shipment to the customers that was being
organised by Richard Thomson. If it matters, it was Alphapharm that complained
directly to Finemores after the first of the batch went back.
GUMMOW J: Yes. Where do we see that?
MR GAGELER: Volume 1, page 59, about line 40 through to line 50. Your Honours,
there are other passages set out in some length from the cross-examination in
paragraph 14 of our - - GUMMOW J: Who was Mr Rogers?
MR GAGELER: Mr Rogers was of Finemores, your Honour.
GLEESON CJ: Now, what do you say about the findings of the trial judge on
page 498, line 40?
MR GAGELER: Well, starting a little earlier, it is correct that there was no evidence
of any express appointment of Richard Thomson by Alphapharm as its agent, save
insofar as one can spell it out from the passages we have taken your Honours to. We
say that in the next sentence his Honour’s characterisation of the facts – and it is
simply characterisation of objective facts – is wrong.
HAYNE J: Why do the facts to which you have taken us lead to the inference or
require the conclusion that a contract of agency was formed? What is the essential
feature or features of those facts which leads to that conclusion?
MR GAGELER: The essential features are these, that Alphapharm as the purchaser
of the goods from Ebos is controlling or directing the delivery of those goods to
Alphapharm’s customers and it is doing that by entering into an arrangement with
Richard Thomson by which it authorises Richard Thomson to engage Finemores to
carry the goods, always expecting that the cost of the carriage by Richard Thomson
would be passed back to it. Those features, in our submission, ought be
characterised as giving rise to authority on the part of Richard Thomson to enter into
a contract of carriage with Finemores in which Alphapharm may be bound as the
owner of or a person having an interest in the goods.
HAYNE J: Can the significance to be attached to those facts that you have identified
be judged without regard to the arrangements between Alphapharm and Ebos
concerning sale?
MR GAGELER: Yes, because we were concerned with the arrangements as known
between these two parties. It would only be if those other arrangements, of course,
were within the contemplation of Alphapharm and Richard Thomson that one would
draw them into the characterisation of that relationship.
HAYNE J: Why? Would it not matter whether the goods were Alphapharm’s goods at
the time of the carriage concerned? Would that not be an important feature to
consider in determining the legal characterisation of the events you have described?
MR GAGELER: Only if that were something within the reasonable contemplation of
both Alphapharm and Richard Thomson. What we are concerned with is determining
whether what was done in fact between those two parties gave rise to an authority,
your Honour.
HAYNE J: If Alphapharm was dealing with its goods, as distinct from goods which it
later expected to own, may not the conclusion differ?
MR GAGELER: Yes, it may.
HAYNE J: Who owned the goods at the time of transport?
MR GAGELER: At the time of transport the goods were owned by Ebos but, as
your Honours have seen, they had been appropriated to a contract of sale to
Alphapharm and they were en route to Alphapharm’s customers in other
destinations. They were still owned by Ebos only for this reason, that there was
between Ebos and Alphapharm a retention of title clause.
HAYNE J: The retention of title clause.
MR GAGELER: But it was Mr Van Der Pluijm who saw himself as going and
appropriating the goods to the contract, and it was Mr Van Der Pluijm who said,
“Send them here or send them there”, and it was Mr Van Der Pluijm who said, after
being told by Mr Rogers that Finemores were good, “Go ahead and engage them”.
Your Honours, I should have drawn your Honours’ attention specifically to page 189,
the end of paragraph 3 of Mr Van Der Pluijm’s supplementary statement, where he
says:
My understanding was that Alphapharm would ultimately pay the cost
of transportation from Finemores’ storage facility in Greenacre to
Alphapharm’s customers.
HAYNE J: It does not tell us much, does it, that statement?
MR GAGELER: No.
HAYNE J: What do we know other than that conclusionary statement about the
arrangements for cost of carriage being passed on, as you put it?
MR GAGELER: Not much. It was very vague, and that can only be expected of
business people some years after the events. Perhaps one could criticise the form in
which the evidence was presented, but, your Honour, that is all we have.
HAYNE J: But we have no exchange of documents that would record any agreement
about at whose risk and at whose cost, as between Alphapharm, Ebos, Richard
Thomson.
MR GAGELER: Well, yes. As between Alphapharm and Ebos, there was the
agreement for sale which contained a retention of title clause and also provided for
risk to pass. So at the time – perhaps that is something I ought to invoke – at the time
at which the transportation occurred, title remained with Ebos, but risk had been
transferred to Alphapharm.
GLEESON CJ: Mr Gageler, I have not checked the pleadings, but I do not suppose
by any chance Alphapharm sued for breach of this contract?
MR GAGELER: Alphapharm sued us.
GLEESON CJ: Did Alphapharm sue Finemores for breach of this - - MR GAGELER: No, there was no cross-claim between those parties.
GLEESON CJ: But Alphapharm sued Finemores for damages?
MR GAGELER: I am sorry. I am getting - - GLEESON CJ: Was Alphapharm’s action against Finemores framed in contract? I
am just interested in the question of ratification.
MR GAGELER: I think the answer to that is no. It was framed in tort and in bailment.
GUMMOW J: Can you just find it?
MR GAGELER: Volume 1 at page 1 and following.
GUMMOW J: Page 1 to 50, actually.
MR GAGELER: Oh no, 1 to about 8, your Honour.
GUMMOW J: Which cross-claim is it?
MR GAGELER: It is the statement of claim. Paragraph 5 is - - GUMMOW J: Yes, well, the statement of claim, as you said earlier, was in bailment,
tort and the Trade Practices Act.
MR GAGELER: Bailment and tort, and I think there might have been a Trade
Practices claim as well.
GUMMOW J: Section 52, page 4, clause 8.
MR GAGELER: Paragraph 8, but the section 52 claim was rejected by the trial judge.
He said he did not need to get to the negligence claim. He decided it in bailment.
HEYDON J: Mr Gageler, on page 177, paragraph 16, Mr Van Der Pluijm says he
reached an agreement with Mr McGee that all Finemores’ costs would be billed by
Finemores to Thomson, and Thomson would pass on the cost to Alphapharm. Was
that evidence admitted?
MR GAGELER: That really goes to the same point where Mr McGee was somewhat
vague about whether or not that occurred. It really goes to the same – it was
admitted - - HEYDON J: Well, if it was admitted - - -
MR GAGELER: I am sorry, your Honour, was it admitted? Yes, it was admitted into
evidence.
HEYDON J: That is a little better than page 189.
MR GAGELER: It certainly is. I think there was some evidence given by Mr McGee
that showed that from his point of view that may have related to the earlier possible
agreement, the same subject matter as the second paragraph at page 175. That is
why I did not seek to place any particular weight on it, your Honour. Unfortunately,
the precise nature of the relationship was somewhat vague, but what one does very
clearly see – and I have already mentioned the page numbers – is that the specific
shipments were being sent by Alphapharm giving precise directions to Richard
Thomson and then Richard Thomson executing those precise directions with further
directions to Finemores.
Your Honours, can I say something about the orders. Because of the number of
cross-claims, and there was a cross-appeal, the drafting of the orders which we
attempted yesterday became a somewhat complex exercise. We have prepared and
circulated to our friends two versions of the orders. They wish to have some time to
consider them. I can actually hand them up to your Honours now or - - GLEESON CJ: Thank you.
MR GAGELER: I do not think I want to go through the detail, but if I can simply say
this. There are two versions. The first version, which we have called Draft Order A,
would apply if we win on everything, that is, if we win on the contract point and we
win on the agency point, and Draft Order B on the second page would be if we win
on the contract point but lose on the agency point. We accept that there may be
some things our learned friends want to say about these orders. They are, I think,
seeking to do that in writing, and we have no objection to that.
GUMMOW J: How do the orders fit in with your reliance on – is it clause 8?
MR GAGELER: Clause 8, yes. Well, we only get to clause 8 if we lose on the agency
point.
GUMMOW J: Yes, that is right.
MR GAGELER: Yes, and that is Draft Order B. That is when it becomes very
complex.
GLEESON CJ: Does this allow for the disappearance of Ebos?
MR GAGELER: Yes. In Draft Order B, 3(c) deals with the disappearance of Ebos. If
your Honours please.
GLEESON CJ: Thank you, Mr Gageler. Yes, Dr Griffiths.
MR GRIFFITHS: Thank you, your Honours. With the leave of the Court, what I would
propose is that I, who represent the second and third respondents, will deal with the
contract matters, if I can describe it broadly that way. I do not wish to say anything on
the agency issue. That is a matter that Mr White will deal with in due course. Your
Honours, we have handed to the Court this morning a bundle of material which has
at its top a Dramatis Personae which might assist the Court in understanding who the
relevant players are. It is there, as I said, to assist the Court.
We then have the second document, which is extracts from transcripts before the trial
judge, which go to our notice of contention before this Court relating to
misrepresentation. In particular, the transcripts respond to our learned friend’s
objection to that notice of contention on the grounds that misrepresentation was not
pleaded in the trial.
We then have a copy of section 160 of the Evidence Act, which is relevant to the final
couple of paragraphs of Justice Bryson’s judgment, to which the Chief Justice
referred, and indirectly relates to the postal acceptance rule; extracts from Gattellaro
I will take the Court to in a moment; and an affidavit of Mr McDonald, which is
referred to in our written submissions but was not annexed to those submissions as
promised. We hand that to the Court now. It explains the reasons why Ebos was
joined as the second plaintiff.
The Court might also be assisted if I hand up a document in light of some of the
questions that have fallen from the Court, and, indeed, in light of some of the matters
that were raised at the special leave application about the complexity of the various
actions and cross-claims and the like. We have sought to reduce to a convenient
form a summary of the pleadings, who the parties are, what the issues raised were,
and the findings of both the trial judge and the Court of Appeal with reference to the
appeal books in these proceedings.
Your Honour, with those matters out of the way, can I just deal with a couple of
matters that Mr Gageler raised. The first concerns the trading terms. It is evident from
the material that the trading terms were in fact singularly unclear, and there are a
number of inconsistencies in the documentation as to what those credit terms were.
Mr Gageler took you to the 12 February fax, which is in volume 2 of the appeal book,
page 335, which has, of course, annexed to it the four documents that he has
referred to, including most relevantly the letter of 11 February. Your Honours see
that, in the third paragraph, reference is made to:
We do not insure goods and our trading terms are strictly 14 days
from the date of invoice.
That trading term is to be contrasted with that which appears on the application for
credit form, which is at page 352.8, where reference is made to the trading terms
being:
Nett 7 days (unless otherwise confirmed in writing).
If your Honours then go to an invoice, one of which appears at page 355 – and this is
an invoice issued by Finemores to Richard Thomson in respect of the freight of the
vaccines from the airport to Finemores’ storage area – your Honours see that it is
dated in the right-hand corner 18 February 1999. Mr Gageler indicated the customer
number in the middle column and the order date is said to be below that,
18 February 1999, and the trading terms, your Honours see, says “14 DAYS NET
FROM INVOICE DATE”.
Then if your Honours go to the letter from Finemores dated 24 February, which is at
page 365 – and this is the letter confirming to my client for the first time directly and
expressly that Finemores had accepted its creditworthiness – your Honours see in
the second paragraph that the terms are said to be “STRICTLY NETT (14) DAYS
from receipt of Invoice”, not, as your Honours saw from the invoice and also from the
letter of 11 February, 14 days from the date of invoice.
HAYNE J: What follows from that?
MR GRIFFITHS: Only a great deal of uncertainty, your Honour, and simply also to
indicate that - - HAYNE J: There may be hours of innocent amusement for counsel if there had been
a claim on the invoice, but does anything more than that follow?
MR GRIFFITHS: Yes, something more than that does follow from it, in our respectful
submission, and it is this. The invoice which was presented on 18 February, or at
least bears that date, which is at page 355, in our respectful submission, indicates
that there was a contract between Richard Thomson and Finemores as at that date
for the transportation of the product from the airport to Finemores’ storage area,
which contract, in our submission, is independent from and prior to Finemores’
acceptance of Richard Thomson’s creditworthiness which did not occur, to our
knowledge at least, until receipt of the letter of 24 February.
The point that I make is a matter which builds on those final few paragraphs of
Justice Bryson’s judgment to which the Chief Justice referred. In other words, in our
respectful submission, the position would appear to be that, notwithstanding that the
parties were contemplating as at, it would appear, 17 February, which appears to be
the date on which Mr Gardiner-Garden signed the application for credit, which is at
page 352 of the appeal book, that the acceptance of that creditworthiness did not
occur, at least as far as my client was concerned, until the letter of 24 February was
received. Prior to that date, plainly there was a contract but it was not a contract
which depended upon Finemores’ acceptance of Richard Thomson’s
creditworthiness.
What would appear to have happened is that the application for credit having been
finalised on 17 February, there was a delay of some days while, understandably, the
information that was supplied on the first page of that application was checked and
verified by Finemores. It was not – and, in fact, I can interpolate that the evidence
indicated that the handling or processing of the credit application was something
which occurred at the Melbourne office of Finemores, not in the Sydney office,
bearing in mind that Richard Thomson were based in Sydney. That evidence
your Honours will find at page 104 of volume 1 of the appeal book at about line 33 in
the cross-examination of Mr Cheney, who is the New South Wales transport
manager for Finemores, where he says:
Q. After receiving this signed document, you then sent on or after 17
February the signed application credit form together with the signed
conditions which are at page 41, do you recall those?
A. If that was signed at the time in Colin Clarke’s presence Mr Clarke
would have taken it back to Melbourne with him himself and had it
processed and sent back.
Q. So in any event after these documents were obtained by
Finemore’s they were sent to Melbourne one way or another?
A. Yes.
Q. And processed?
A. Yes.
So what would appear, in our respectful submission, to be the case is that pending
an acceptance of Richard Thomson’s credit worthiness, Finemores by their actions of
18 February in going out to the airport and collecting the first consignment and taking
it to their storage area, did so on a contract which did not include the credit
application or did not, more particularly, include any requirement that Finemores be
satisfied of Richard Thomson’s creditworthiness.
HAYNE J: Now, was that a cartage on credit?
MR GRIFFITHS: That is a cartage on credit, your Honour, as is evident - - HAYNE J: So the position is that there is a written application for credit, there is then
cartage on credit, why does one not infer from those facts that the application for
credit was accepted by the performance of the cartage on credit? True it is there is
later written confirmation of it. What was there that committed either side to giving
written confirmation or receiving it?
MR GRIFFITHS: In our respectful submission, there is nothing in the objective
circumstances which would indicate to the other party to the contract that, in fact, its
application for credit had been accepted.
HAYNE J: Save that the extension of credit - - -
MR GRIFFITHS: Save for the extension of credit and the inference, we would
respectfully submit, is equally open to be drawn that at least for the purposes of the
initial transport and storage of the first consignment Finemores were prepared to do
that without having taken the necessary steps to verify the creditworthiness and, of
course, the – I do not need to say any more than that.
Your Honours, there is one other point that I should also make simply by way of
clarification, and it relates to what Mr Gageler said about the consignment note.
Your Honours will recall that in the letter of 11 February, which is annexed to the fax
of 12 February – the letter is at page 336 – in paragraph 3, Mr Cheney states very
clearly that not only are Finemores:
not common carriers [but] all cartage is subject to the conditions as
stated on the revers side of our consignment note, a copy of which is
attached.
It is common ground that in fact such a consignment note was not attached, and it
was found that the consignment note did not form part of any relevant contract. My
learned friend did, however, indicate or suggest that the conditions on the
consignment note were the same or similar to the conditions which were on the
reverse side of the credit application. In our respectful submission, that is not correct,
and the relevance of that difference I will come back to in a moment.
If I could ask the Court to go to page 172A of volume 1 of the appeal book,
your Honours will find – in fact starting at page 172, if you would – a consignment
note dated 25 February 1999, issued to Richard Thomson in respect of the
Queensland consignment. Your Honours see at the bottom of that consignment note:
WE ARE NOT COMMON CARRIERS – PLEASE READ
CONDITIONS OF CONTRACT OVERLEAF TERMS: 7 DAYS NET –
The signature, your Honours, immediately above the words:
PLEASE READ CONDITIONS OF CONTRACT OVERLEAF –
which appears below the words:
WE HEREBY ACCEPT CONDITIONS OF CONTRACT ON
REVERSE –
is a signature not of any representative or agent of Richard Thomson; in fact, it is a
signature of a Finemores’ employee. That is part of the reason why it was never
established that this consignment note formed part of any contract.
In respect of my learned friend’s submission, if your Honours turn the page,
your Honours see 172A, a rather poor photocopy, some 23 conditions of cartage said
to be conditions of cartage of a company called Garden City Transport Pty Ltd, which
is the company which was acquired earlier in 1999 by Finemores. That fact is
established by Mr Cheney’s evidence, which your Honours do not need to go to, but
your Honours might wish to make a note of it. It is in volume 2 of the appeal book at
page 244, paragraph 3.
If your Honours go to clause 17 on the right-hand side of the conditions of cartage,
bearing in mind that these are the conditions of cartage which Mr Cheney plainly
intended by his letter of 11 February to be the conditions applying to the contract,
clause 17 is an indemnity provision but, in our respectful submission, it is strongly
arguable that it is an indemnity of a much narrower ambit than an indemnity provision
in clause 8 of the conditions which were on the back of the application for credit.
Your Honours see that the clause 17 indemnity is to the effect that:
The Consignor shall indemnify the Carrier against any duties, fines,
penalties, costs, charges or expenses whatsoever which the Carrier
may be called upon or obliged to pay to any person or authority in
respect of the goods howsoever such cost shall arise.
HAYNE J: What is the legal path that you are taking that makes the difference
relevant? It seems to me you begin from a document which you say was not part of
the contract, was never tendered to the other side, to a conclusion that I do not yet
understand. What is the conclusion you draw from the fact that there was another
term floating about never brought to anyone’s attention and not part of the contract?
MR GRIFFITHS: What we make of it is this, your Honour. It manifests a richer irony
in that it plainly was the intention of Finemores that the contractual relationship
between Finemores and Richard Thomson would be on these conditions of cartage
as reflected in the consignment note. Finemores, in effect, seek to benefit from their
own omission, in our respectful submission, by now calling in aid a much wider
indemnity clause in clause 8 of the application for credit than was plainly their own
subjective intention at the time that they issued their letter of offer on 11 February.
I do not put it any more highly than that, your Honours. I illustrate the point this way.
If, in fact, the consignment note had, as promised and as represented, been included
in the 11 February material, it would, in our respectful submission, be a far more
difficult case for Finemores to then call in aid the conditions of contract which
appeared on the back of the application for credit form because of the representation
that Mr Cheney made in his letter of 11 February as to what the conditions of cartage
would be.
GLEESON CJ: In relation to that suggestion of misrepresentation, is there any
evidence of inducement?
MR GRIFFITHS: There is no evidence of inducement, naturally, in respect of the
consignment note because, as Justice Hayne quite correctly points out, it was held
not to constitute part of the contract. The evidence on inducement is to be found in
the trial judge’s findings at page 503, volume 3, starting at the bottom of page 502
where, after making reference to the Liaweena Case, his Honour said, or found, that:
In this case I accept that Mr Garden did not realise that there were
conditions on the back of the Credit application, especially conditions
of a kind which so radically affected the contract. However, I do not
think that he was induced not to read them because of any
misrepresentation, however innocent. He did not give evidence that he
was so misled, because he could not remember the circumstances of
his signing the document.
Also relevant though in this context, in our respectful submission, is the trial judge’s
finding insofar as Mr McGee is concerned. As your Honours see from the Dramatis
Personae, Mr McGee is the general manager of Richard Thomson. Mr GardinerGarden is a subordinate officer. He was the operations manager, and it was Mr
McGee, your Honours will recall, who was the author of the 20 January letter that Mr
Gageler took the Court to, which asked Finemores to provide a quotation – that is the
letter at page 305 of appeal book 2 – and it is to Mr McGee that the 11 February
material from Finemores is addressed, as your Honours see at page 335 in the
covering facsimile dated 12 February.
Mr McGee gave evidence, which was accepted, that having received the bundle of
material, the four pages annexed to the 12 February letter, and in the absence of any
consignment note setting out conditions of cartage, he proceeded on the basis that
the conditions were those which appeared on page 338 of volume 2. Your Honours
see that the previous page contains a freight rate schedule said to be effective from
12 February and the following page contains a series of dot points which are in the
nature of terms or conditions, although none, of course, going to any issue of
exclusion of liability or - - GLEESON CJ: Well, it is put against you that these are all mechanical matters
relating to loading and dispatching.
MR GRIFFITHS: That is correct, your Honour, but immediately underneath them
appears a phrase:
Freight Rate Schedule and Conditions accepted by –
That was, of course, the document which was then signed and returned by
Mr Gardiner-Garden, as is evident from the signed copy which appears on page 339.
Mr Gardiner-Garden completed that form, and completed the application for credit as
well, on Mr McGee’s instructions, on the basis that Mr McGee was satisfied with the
quotation that he received, as is reflected in that material annexed to the 12 February
facsimile. His Honour the trial judge accepted Mr McGee’s evidence at page 500 of
volume 3 of the appeal book, about line 44:
I accept Mr McGee’s evidence that he took those two documents to be
the freight rates and conditions referred to in Mr Cheney’s fax. It is
clear that the offer then being made by Finemores to Richard
Thompson did not include the conditions on the back of the
consignment note.
So to that extent – and it has been a rather lengthy response to the Chief Justice’s
question to me – certainly there is a difficult finding for us in terms of inducement
insofar as Mr Gardiner-Garden is concerned, because he simply had no recollection
of having signed a credit application, but Mr McGee was also an important player in
this. He was in fact Mr Gardiner-Garden’s superior officer, and Mr McGee’s evidence,
which was accepted, was that he understood that the conditions were the conditions
that were set out in that document that I just took the Court to.
GLEESON CJ: Was there any evidence about whether either Alphapharm or Richard
Thomson insured the goods?
MR GRIFFITHS: Yes, there is, your Honour, and there was insurance that was taken
out.
GLEESON CJ: So this is a fight between three insurance companies?
MR GRIFFITHS: Yes. I can indicate to the Court that if your Honour goes to the
material that I handed to the Court, the bundle of material and the affidavit of
Mr McDonald, your Honour sees in the letter, which is an annexure thereto, there is
an explanation given as to why the plaintiff is being joined as a co-plaintiff.
Your Honour sees in the third paragraph:
Our company [Alphapharm] has been indemnified in respect of the
losses by our transit insurer, Alpina Insurance Co of Switzerland.
Having indemnified our company, Alpina insurance is now entitled to
claim in the name of our company against Finemores, in an attempt to
recover the loss.
GLEESON CJ: Is it common ground that there should not have been judgment in
favour of Ebos?
MR GRIFFITHS: It was not necessary, but it was done by consent. There were
consent orders.
GLEESON CJ: I only ask the question because of the orders that we might have to
make.
MR GRIFFITHS: I wish to say no more, your Honour, than simply that what was done
was done by consent. It is difficult to understand why it was done, but that is what
happened. It was done by consent.
GLEESON CJ: Thank you.
MR GRIFFITHS: Your Honours, can I turn then, with those matters out of the way,
and address some more substantive issues. Naturally, what lies at the heart of this
case is the significance that one should attach in a commercial setting to the fact that
a document such as the credit application has been signed. Justice Gummow made
the observation correctly, with respect, that enormous significance is customarily
attached to the fact that a signature has been placed on a document, whether a
contractual document or otherwise. There is nothing, in our respectful submission, in
the decision either of the trial judge or of the Court of Appeal which derogates from
that basic proposition.
The court, particularly Justice Bryson, made quite plain that the rule in L’Estrange v
Graucob continues and that its authority ought not to be doubted. His Honour also
made clear in several paragraphs that considerable significance ought ordinarily, in
the normal case, be associated with the fact that a document has been signed. Your
Honours see, for example, paragraph 101 at page 549 of appeal book 3. His Honour
makes the point that there is a preliminary issue which arises before you get to
L’Estrange v Graucob which requires that the contract, or the terms of the contract,
be identified to establish whether, in fact, you do have a contract and what its terms
may be. His Honour says that that is a question of fact and:
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 - - GUMMOW J: Well, that is just not right, is it, when you say “powerful indication”?
MR GRIFFITHS: It is not right, your Honour - - GUMMOW J: It was not a powerful indication. You are in Petelin v Cullen territory,
are you not?
MR GRIFFITHS: Well, the case was not conducted as an non est factum case as - - GUMMOW J: Exactly.
MR GRIFFITHS: - - - but it has to be accepted that the approach that was taken by
the Court of Appeal, while not bearing the label or nomenclature of non est factum,
comes close to that doctrine but - - GUMMOW J: Well, does or does it not apply? We have to write a judgment. How
they were muddling around below, given the way the case has been run, is one
question.
MR GRIFFITHS: Yes. Well, can I answer your Honour’s question in two ways.
GUMMOW J: Can I just read this to you. This is what Lord Atkins said in a case
called Roe v Naylor [1917] 1 KB 712 at 716, which is a preliminary to L’Estrange. He
is discussing the sort of things you are discussing. He says:
If a party signs the document he is taken to have assented to the
terms contained in it.
Full stop.
MR GRIFFITHS: Yes, but, with respect - - GUMMOW J: Now, upon that there can be common law claims in duress, non est
factum - - MR GRIFFITHS: Misrepresentation, which we - - GUMMOW J: No, just a minute – and then there can be equitable intervention at a
later stage to set it aside, to avoid it or to reform it. That is the structure of the legal
system.
MR GRIFFITHS: Yes, but the L’Estrange v Graucob rule itself, of course - - GUMMOW J: It is not a rule.
MR GRIFFITHS: - - - or principle or decision itself recognises and accepts that
misrepresentation is an exception to the significance which would otherwise attach to
a signature.
HAYNE J: But do not all of those rules to which Justice Gummow has referred
proceed from the premise that signature binds. That is, is not the doctrine of non est
factum itself predicated upon the premise signatures bind – not signatures bind
sometimes, but signatures bind?
MR GRIFFITHS: Signatures bind and we can accept that as a starting point, but
there are exceptions to that rule or that principle. They include misrepresentation,
that being expressly acknowledged in L’Estrange v Graucob.
GUMMOW J: But that would be a ground for setting it aside, just as much as undue
influence would be.
GLEESON CJ: A signature itself is a representation.
MR GRIFFITHS: Yes, it is, your Honour, and that is the reason why so much
significance is attached to it, as indeed Justice Bryson readily accepted.
GLEESON CJ: Particularly a signature that follows a line that says “Please sign after
reading the conditions”.
MR GRIFFITHS: Yes, but the approach that was taken by the Court of Appeal, and
rightly in our respectful submission, is that the issue of the significance to be attached
to both those matters that the Chief Justice just put to me need to be assessed in the
context of the overall facts and circumstances of the relationships between the
parties, including - - HAYNE J: That tells us nothing until you know what you are assessing. Reference to
overall facts and circumstances is apposite only if you know what you are looking for.
Now, what is it you are looking for on your proposition, subject of assent?
MR GRIFFITHS: Yes. What you are looking for in our proposition is reference to the
facts and circumstances for the purposes of ascertaining whether or not reasonably
sufficient notice has been given of the conditions.
GUMMOW J: The policy of the law has been, if you sign it, if you have not taken the
trouble to read it and you are not under any disqualifying circumstance – illiteracy
and so on – you are bound by it. That has been the policy of the law, and the reasons
for it are obvious.
MR GRIFFITHS: That is the policy, we do not deny that. What we also respectfully
suggest though is that the Court of Appeal - - GUMMOW J: Now, if your client does not take the trouble to read it, why should the
law get fussed?
MR GRIFFITHS: Because the law would not be so harsh as to penalise someone
who has not read the document in the circumstances where the document is
presented for signature against a background of earlier indications being given in the
11 February letter that the conditions of cartage would be either, one, on the reverse
of the consignment note, or two, as the trial judge accepted here, in the absence of
that consignment note being produced, the conditions which appeared on the rate
schedule.
GLEESON CJ: How could Finemores know that your client had not read the
document?
MR GRIFFITHS: They could not have.
GLEESON CJ: Representations cut both ways in a situation like this.
MR GRIFFITHS: Yes, that is right, and we are not suggesting here anything other
than an innocent misrepresentation – an innocent misrepresentation which plainly
induced Mr Gardiner-Garden’s superior, at least, to form the view that the relevant
conditions were those in the freight schedule. That is one of the two documents that
Mr Gardiner-Garden then signs.
HAYNE J: But step one in this argument must be the assertion by one of the
contracting parties, “I did not read it”.
MR GRIFFITHS: Yes.
HAYNE J: Once you admit of that, you are heading down a path which deprives the
signature of significance and injects the subjective inquiry: did they know, should they
have known, might they have known? Why should the law set off on that path? In
what respect has it done so?
MR GRIFFITHS: Because, in our respectful submission, the requirement which was
applied by both the trial judge and by the Court of Appeal that there be reasonably
sufficient notice of the particular conditions is itself an approach which falls
comfortably within the objective theory of contract. The emphasis is on reasonably
sufficient notice, having regard to all the facts and circumstances, with a view to
establishing not necessarily, of course, what individual subjective intentions were, but
whether, at the end of the day, you had a consensus ad idem, looked at objectively.
Looked at objectively, the approach below was to the effect that a reasonable
observer who was aware of the background to the signing of the application for credit
would take the view that Mr McGee happened to take, which evidence was accepted,
namely, that the conditions were on that two-page document, not conditions that
were tucked away on the reverse of a document which was entitled “Application for
Credit”. So, in our respectful submission, the reasonably sufficient notice test which
was applied is itself an appropriate approach to take and falls within the objective
theory of contract.
HAYNE J: Again, if you go down that path, reasonably sufficient notice is simply a
statement of conclusion. I know that we have the word “reasonable” in there and it is
said that that provides the content, but I do not know what content that expression
has.
MR GRIFFITHS: It is a very - - HAYNE J: Because we have gone from the point where putting your name on the
paper matters to some further point. Now, what is the further point to which we have
gone? Reasonably sufficient notice. That is simply the assertion at the end of the
process, “Oh, these terms look hard. True it is they wrote above it in block capitals
‘Read the other side of this document’, but they did not notice that. I will not enforce
it”. That is philosopher king, that is not law.
MR GRIFFITHS: There are, of course, two separate steps in that process. If one
accepts as the predicate that it is appropriate to have a reasonable sufficient notice
test, it will necessarily then turn on individual facts and circumstances, whether or not
reasonably sufficient notice was given in the particular facts of the case.
GUMMOW J: I just want to put to you that that reasonable notice theory does not
apply in the realm of signatures absent some added equitable or duress or other
question.
GLEESON CJ: What is the reasonably sufficient notice test a test of?
MR GRIFFITHS: It is a test which is designed to establish what are the terms and
conditions of the contractual relationship.
GLEESON CJ: So that would apply to a single document signed?
MR GRIFFITHS: In theory it would, although, if one is just dealing with a single
document absent some other feature, the test of reasonable sufficiency is in almost
every case involving a single document likely to be one which is net. What
complicates this matter was that we do not have a single document. We have a
series of communications and a series of meetings between the parties resulting in a
conclusion being reached by Mr McGee that the conditions were those which were
contained in the freight rate schedule.
GLEESON CJ: There is no suggestion in this case, is there, that the document that
was signed was not intended to create legal relations?
MR GRIFFITHS: No, there is not, your Honour.
GLEESON CJ: The only question is: what was the nature and extent of the legal
relations?
MR GRIFFITHS: What was the nature and extent of it, that is correct, your Honour. It
would appear to be plain from the face of the document that it was intended to create
legal relations, at least insofar as such a relationship was implicit, in credit being
provided by the transport company to Richard Thomson.
HAYNE J: “Reasonably sufficient notice” appears at times to be used as a
synonymous expression for whether it is fair to enforce the stipulation that it is sought
to enforce. You are in very perilous waters if that is the test. If it is not the test, what
is, other than the mantra which you have to fall back to, Dr Griffiths? I understand
you have a mantra, but what is its content?
MR GRIFFITHS: Your Honour has not heard the word “fair”, I hope, fall from my lips.
HAYNE J: Yet.
MR GRIFFITHS: I hope not to use that word.
HAYNE J: But reasonably sufficient notice apparently is applied having regard to the
content of the stipulations in question, is it not?
MR GRIFFITHS: Having regard to the content of - - HAYNE J: Content of the stipulations to which it is sought to bind the party.
MR GRIFFITHS: That is correct.
CALLINAN J: Mr Griffiths, although you have not mentioned the word “fair”,
Mr Gageler emphasised the very low price that was charged for the cartage.
MR GRIFFITHS: Yes, but, of course, your Honour, that is neither here nor there. If
your Honour accepts that the contract - - CALLINAN J: Do not worry about it.
MR GRIFFITHS: That is just a storage area. Where the negligence occurred,
your Honour, for the first consignment at least, was en route to Queensland.
CALLINAN J: It was only $400 or something, was it not? I think it was $110 to send
it to Brisbane, was it not? It does not matter, but it was not much, Mr Griffith. It was
not much.
MR GRIFFITHS: Yes, and no doubt it might be assumed as well that Finemores
would have some policy of insurance too that may well be available - - CALLINAN J: Well, no, because they say emphatically in the first document to you
they are not common carriers. It is a pretty clear indication of what their position is.
MR GRIFFITHS: Yes, although there was, as your Honour may be aware, evidence
from both Mr McGee, as I recall, and also Mr Gardiner-Garden – certainly from
Mr McGee, at least, who was the primary officer, that he did not understand what
“common carrier” meant.
CALLINAN J: Well, a lot of contracting people do not understand what the terms
mean.
GUMMOW J: Quite a few law students these days would not know what a common
carrier was. Now, in a paper reproduced in the book edited by Justice Finn called
Essays on Contract by a distinguished author, Mr Gageler, at page 12 - - MR GRIFFITHS: Yes, he mentions fairness, as I recall, does he not, your Honour?
GUMMOW J: Well, there is a reference to Justice Jacobs in the airline case,
MacRobertson Miller Airline Services v Commissioner of State Taxation (1974)
133 CLR 125. It is said Justice Jacobs suggested that if a unreasonable condition is
included in conditions which are not likely to be read, then there may be no
acceptance by conduct or implied consent of the offer containing a condition.
However, that was a ticket case. There is no signature in MacRobertson Miller, is
there?
MR GRIFFITHS: Yes.
GUMMOW J: So insofar as you seek to build on that, and I think you do, you have
the signature problem, which is why I said what I said.
MR GRIFFITHS: Yes, your Honour, I accept that.
GLEESON CJ: You could give a practical example, could you not? The ultimate
question is, would a reasonable person in the position of Finemores think, from your
client’s signature, that your client was assenting to what was in the document? You
might get a different answer to that question if Finemores included in their terms and
conditions for your client to sign an undertaking that if Finemores carried your client’s
goods, your clients would every year declare a special dividend equal to 30 per cent
of their profits in favour of Finemores. It may be then that a reasonable person in the
position of Finemores would not necessarily understand signature as indicating
assent to that condition. That is a way consistent with theory, is it not, of dealing with
the problem that Justice Jacobs raised?
MR GRIFFITHS: Yes. Can I say two things in respect of that. Another example to the
same effect is given in paragraph 51 of our outline of written submissions from
Lord Justice Bramwell’s judgment in Parker v South Eastern Railways, where it was
suggested that if there was a condition on leaving some luggage at a cloakroom that
the person would forfeit £1000 if the goods were not removed in 48 hours.
Lord Justice Bramwell said:
“I think there is an implied understanding that there is no condition
unreasonable to the knowledge of the party tendering the document
and not insisting on it to being read – no condition not relevant to the
matter in hand”.
But, in effect, in our respectful submission, that is precisely what weighed so heavily
with Justice Bryson in his ultimate conclusion that reasonably sufficient notice had
not been given of the indemnity clause in the circumstances here. If your Honours
could go to paragraph 138 of Justice Bryson’s judgment at page 567, your Honours
see at the bottom of the page an important discussion where his Honour says:
The conditions, particularly Condition 8 are in no way what one would
reasonably expect or suppose would be found incorporated in an
Application for Credit.
So in a sense there is a parallel being drawn in the particular circumstances here to
the sort of example that the Chief Justice gave me about dividends but also
Lord Justice Bramwell’s example. His Honour then goes on to say:
A request for a condition like Condition 8 was not extraneous to the
proposed transaction or the dealings overall; it is not at all surprising,
in relation of the nature of the goods and their susceptibility to
damage, that such a condition should be sought.
So his Honour was not suggesting that the indemnity clause was an unduly onerous
clause in the context of a transportation and storage contract, and this particular
contract especially, but what influenced his Honour appears in the next sentence:
However any reasonable person would be astonished to find that he
was asked, as a condition of being given 14 days’ credit, to indemnify
his supplier from claims arising out of the transaction; unless it was
pointed out to him he would never think it might be there.
All the more so – may I just say this very quickly – in circumstances where the trial
judge had accepted that the conditions for the transport and storage were those that
were set out in the signed freight rate schedule.
GUMMOW J: Yes, but it did say, and you rely on it, conditions of credit. You would
expect a person in this executive’s position not to sign any document about credit
without looking at conditions on the back, would you not?
MR GRIFFITHS: Your Honour, when your Honour puts it that way it may be difficult
to resist that as a general proposition because one would not want to encourage - - GUMMOW J: Credit is a red light area, is it not, for any executive?
HAYNE J: You never know what interest they are going to charge you on overdue
invoices.
MR GRIFFITHS: And you are not told that in the application for credit either. In fact,
the application for credit - - GUMMOW J: That is not the point. The question is you would read it when you are
talking about reasonableness, certainly before you signed it.
MR GRIFFITHS: We cannot shy away from the fact, your Honour, that there was a
degree of carelessness in what Mr Gardiner-Garden did. Indeed, he himself accepted
that when it was put to him.
GUMMOW J: Yes, but the question then is – it is bedrock policy of the law – what
does the law say about that, as to who ultimately bears the consequences?
MR GRIFFITHS: The law, we would say, would view that conduct not critically or
harshly in the particular circumstances of this case. I am only going to repeat myself
by saying the particular circumstances of this case were that a position had been
reached and accepted by the trial judge as an entirely appropriate position that the
conditions of the cartage contract were those that were set out in the earlier material.
There was no suggestion in the 11 February letter that there were going to be further
conditions on that contract imposed at some later time depending upon whether or
not the application for credit was accepted.
GLEESON CJ: That is why I had wondered whether the trial judge really looked at
this as a misrepresentation case. Although he in the last paragraphs of his judgment
applies what you called the reasonably sufficient notice test, there is a strong flavour
in some of the things that Judge Hogan said that he thought that the conditions about
loading and dispatch that appear on the earlier document were represented to your
clients as being the only conditions that would govern the contract.
MR GRIFFITHS: That is correct, your Honour, and it is in that context that the, from
my clients’ viewpoint, favourable finding was made at page 500, in respect at least of
Mr McGee’s evidence.
GLEESON CJ: There does seem to be a flavour of the same kind of idea in what
Justice Bryson says in paragraph 138 that you read to us.
MR GRIFFITHS: Yes, we accept that, your Honour.
GLEESON CJ: Can I ask you this as a practical matter of administration of this
contract. What was the alternative to credit? If there had been no credit, how would
the contract have worked?
MR GRIFFITHS: Presumably payment on the production of a consignment note or
an invoice, money in advance.
GLEESON CJ: Cash money?
MR GRIFFITHS: Cheque or whatever, but paid in advance.
GLEESON CJ: Why would you take a cheque if you were not prepared to - - MR GRIFFITHS: I beg your pardon, your Honour, yes. Mr Kirk says a credit card.
HAYNE J: Or cash on delivery.
MR GRIFFITHS: Or cash on delivery. Your Honours, I do not know that there is
anything further usefully that I can say about reasonable sufficient notice. There are a
few things that I should say about misrepresentation.
HAYNE J: Where do we find the allegation of misrepresentation reflected in the
pleadings? At some point can you point me there – maybe not immediately, but at
some point.
MR GRIFFITHS: I wish I could point your Honour immediately to a pleading of
misrepresentation at first instance. Sadly I cannot because it was not pleaded at first
instance.
HAYNE J: Why not QED?
MR GRIFFITHS: For this reason, your Honour - - GUMMOW J: Just about everything else was pleaded over 50 pages.
HAYNE J: Provocation in homicide was not, but everything else.
MR GRIFFITHS: For this reason. This Court’s - - GUMMOW J: But if you are pleading misrepresentation, it is going to be a highly
evidentiary matter, is it not, not the least for inducement?
MR GRIFFITHS: Well, we raised it in the notice of contention, your Honour, in the
Court of Appeal and it was not necessary for the court to deal with it, and we have
repeated it in the notice of contention in these proceedings here.
GUMMOW J: What was the section 52 claim?
MR GRIFFITHS: The section 52 claim is set out – if your Honour has that little – I will
take you to the original document probably is best.
GUMMOW J: But did you make a section 52 claim?
MR GRIFFITHS: Yes, we did, your Honour. It is page 43. It was raised in two crossclaims, including one filed for the second respondent, which is the fifth cross-claim
starting at page 41. Your Honour sees that it is set out there in paragraph 7.
GLEESON CJ: According to the trial judge, the representation that was the subject of
the section 52 claim was a representation about the temperature at which these
goods were being kept.
MR GRIFFITHS: Yes, that is correct, your Honour. Indeed, Mr Kirk corrects me. I
was too hasty in agreeing with your Honour. That finding is in respect of a section 52
claim brought by the appellant. If your Honours have handy the schedule that I
handed up as an aide memoire - - GUMMOW J: Well, I am looking at page 43, Dr Griffiths, paragraph 7.2. That is your
pleading?
MR GRIFFITHS: That is correct, 7.1 and 7.2 and 7.3. So it is put there as a section
52 claim, not directly as a misrepresentation claim, although misrepresentation is
plainly an element of that pleading, albeit under the umbrella of section 52.
GLEESON CJ: On page 493 of the appeal book the trial judge says that the plaintiffs’
cause of action under section 52 of the Trade Practices Act related to a
representation by Finemores as to the temperature at which the goods would be
stored.
MR GRIFFITHS: That was in respect of another Trade Practices Act claim.
GLEESON CJ: I thought you just told me that that was in respect of a claim by
Finemores.
MR GRIFFITHS: Yes, I apologise, your Honour. I misled your Honour. If your Honour
goes to - - GUMMOW J: That is at page 4, is it not, that 52 case?
HAYNE J: Page 6, paragraph 18, is it?
MR GRIFFITHS: Yes, that is correct, your Honour, and that is in the schedule. The
section 52 claim which appears on the first page in the fourth dot point which is in the
statement of claim, the primary statement of claim.
GUMMOW J: Yes, paragraph 8.
MR GRIFFITHS: Indeed, and then there is another section 52 claim made separately
in the third cross-claim which your Honours see summarised in the schedule at
page 4, the fourth dot point which is a reference to page 31 of the appeal book, and
then there are further section 52 claims made as well in other cross-claims as
reflected on page 5 and also page 6 and 7 and, indeed, 8.
GLEESON CJ: Is the representation on which you rely in your notice of contention in
this Court a representation in writing?
MR GRIFFITHS: The representation is set out at page 599 of the appeal book. We
no longer press 1(b), but the misrepresentation is not further particularised other than
by reference to it being - - GLEESON CJ: I am asking for particulars of it. Was it express or implied, oral or in
writing – you know the way? In particular, is it on page 336 of the appeal book?
MR GRIFFITHS: Indeed it is, in the third paragraph, your Honour.
GLEESON CJ: Well, if the representation on which you rely is contained in the
document on page 336, what do you say about the second last paragraph of the
document?
MR GRIFFITHS: I may have been too hasty. When I say on page 336, the
misrepresentation operates in respect of both the third paragraph, but because in the
events that occurred the consignment note was not attached, then an associated
misrepresentation was to the effect that the conditions which would govern the
contract would be those that are set out in the freight rate schedule. So there are two
elements to the misrepresentation.
HAYNE J: At some point you are going to have to point me to where that case was
ever pleaded, other than in the Court of Appeal and here.
MR GRIFFITHS: Can I take your Honour - - HAYNE J: You may wish to do that after lunch.
MR GRIFFITHS: Can I deal with it, if I could quickly now, if it would assist. In the
material that we have handed up are extracts from the transcript of argument before
the trial judge. In our respectful submission, the misrepresentation point was plainly
argued and responded to by the appellant without any pleading point having been
taken.
HAYNE J: Where do I find that in the document that you - - MR GRIFFITHS: If your Honour has the transcript, the number is page 125 and the
references your Honours will find in footnote 131 of our written submissions. The
material I have handed to your Honours is the material there identified in that
footnote. The particularly relevant passages are to be found at page 125 of the
transcript, where Mr Kidd, acting then for my clients, said in response to his Honour’s
question:
HIS HONOUR: You say that therefore they didn’t bring it sufficiently to
the customers attention.
KIDD: That’s right. In fact not only do they not bring it sufficiently to
our attention but they positively led us down a different road, they
positively told us - HIS HONOUR: Had positively told you before hand by the letter at 38,
39 and 40 –
That is a reference to the 12 February fax and the 11 February accompanying
material –
KIDD: That’s right, that these are the conditions, there’s no basis for
us to even think that anything on the reverse of the application for
credit form might be relevant to the conditions for the transport
contract, because Finemores, in their letter of 11 February clearly tell
us what the conditions are.
Then at page 132, I think, is the next key submission. Starting at about the letter G,
after a reference is made to the ticket cases, Mr Kidd says:
No, but it has similarities to our case because we were told, before
this document was given to us to sign, we were told that the conditions
were somewhere else. So, in effect, this document that we’re asked to
sign is handed to us as some other document, no explanation as to
that it might be relevant to the carriage contract. We’d previously been
told that the conditions related to the carriage contract are contained
somewhere else. If Finemores wanted to say well in fact they’re
contained in this document, then we say these principles apply and
they have to act reasonably to bring that to our attention. If they’re
deciding now to changes the places or the documents which will form
part of the contract then they have to tell us so, they can’t simply land
a document under our face and say sign it, when they’ve previously
told us that the conditions of the transport contract are to be found
over here . . . our attention is taken away from this credit application.
The same point is made on page 133 between the letters Q and U:
We’ve been misled by 11 February letter to believing that the
conditions of contract are those attached to the letter.
Then at page 144H, Mr Brender then appearing for Finemores, directly responds to
questions of:
misleading conduct and the submissions of Mr Kidd on that subject,
the evidence was that Mr McGee . . . looked at the rate schedule,
determined that the rates were acceptable, gave the quote to
Mr Garden . . . There was no suggestion of any reliance on any
misleading conduct. No suggestion that all the contractual
arrangements had been made and he was just delegating logistics.
Then he goes on to make submissions about Mr Garden’s failure to have any
recollection of signing the application. Then further on the next page, your Honours,
page 145, Mr Brender actually makes reference to:
there’s cases about non est factum or cases about actual misleading
conduct, misrepresentations that of course – that are being relied on
in this case, there’s no evidence that Mr Garden relied on any
misunderstanding or misrepresentation conveyed by that letter –
and then I think that is an interjection probably from Mr Kidd:
It’s in the statement that was given by McGee.
There is a clear reference to the misrepresentation and of the inducement on the part
of Mr McGee to believe that conditions were those in the freight rate schedule.
CALLINAN J: Mr Griffiths, is it relevant to the inducement point that the respondents
did not rely upon the “Parlow Card” which is referred to in the letter of 11 February
but, in fact, inserted their own temperature recorder?
MR GRIFFITHS: I would not have thought so.
CALLINAN J: They did, did they not, the respondents? I think Mr Van Der Pluijm put
a temperature recorder on the pallet or in the cartons with each consignment.
MR GRIFFITHS: Yes. I will check that out over the luncheon adjournment if I could,
your Honour, but my understanding was that there was also reliance upon the
representations that Finemores had given that they had their own systems to ensure
that this sensitive vaccine would be stored at the appropriate levels.
CALLINAN J: Assuming a representation of the kind which you have mentioned,
why would not the effect of that been spent by the time of the signing of the
application for credit? The application for credit makes specific reference to
conditions, conditions overleaf.
MR GRIFFITHS: The reason why it is not spent ties in with what I have said before
about the way in which the Court of Appeal and also the trial judge assessed or
reviewed those words on the application for credit, that they had to be looked at in
their circumstances. The misrepresentation continued to operate because the
position had been reached as at or around 17 February that the conditions were in
the freight rate schedule. The application for credit was unrelated to those conditions.
It was something separate and distinct.
CALLINAN J: Except, as the Chief Justice pointed out, it is expressly referred to in
the fax dated 11 February but sent the day after.
MR GRIFFITHS: The 11 February fax refers in very polite terms to the credit
application being completed and faxed back to Finemores’ office. There was no
evidence, your Honour, that the credit application form was provided at this time and
the evidence is very unclear as to when it was provided. There was nothing in this
letter of 11 February to suggest to anyone at all that the application for credit would
contain conditions of contract. It simply was not even enclosed in the material; it
came much later. The chronology of events is important because it came in, it would
appear, after Mr McGee had formed the view that the conditions of contract were
those set out in the freight rate schedule.
Your Honours, in terms of the misrepresentation point and pleading point, could we
remind the Court of the Court’s recent decision in Gattellaro v Westpac (2004)
78 ALJR 394 at paragraph [45]. Copies of relevant extracts from the Court’s decision
have been handed up in that bundle of material. If your Honours could see
paragraph [45] in particular, where the Chief Justice and Justices McHugh, Hayne
and Heydon said that:
The failure of the Gattellaros to plead the facts necessary to make
good the Marston contention was not necessarily fatal to any intention
they had of relying on it. It was open to the parties by their conduct of
the trial to consent to a widening or narrowing of the issues defined by
the pleadings. Demonstration to an appellate court of how a trial was
conducted depends on proof by affidavit, or on an admission, or on
clear evidence in the transcript or in some other part of the record of
the proceedings, or on an inference from the record.
In our respectful submission, the transcript extracts which I have taken your Honours
to indicate that the matter was on the table and that no pleading objection was taken
to it.
GLEESON CJ: This representation, was it fraudulent or innocent?
MR GRIFFITHS: Innocent.
GUMMOW J: It would lead to rescission, would it not, which was never sought? You
sought an order under 87A of the Trade Practices Act, but you never sought
rescission?
MR GRIFFITHS: Yes. To the extent that the misrepresentation, your Honour, is a
part of L’Estrange v Graucob - - GUMMOW J: That is it. That is the point, in a way. Looking at your notice of
contention, it seems to be raised as some sort of answer to reliance on L’Estrange v
Graucob.
MR GRIFFITHS: Yes, that is right, your Honour. That is the manner in which it is
raised.
GUMMOW J: Yes, but if you never get to that, it does not get into the equation.
MR GRIFFITHS: If you do not get to it?
GUMMOW J: No.
MR GRIFFITHS: Would that be a convenient time, your Honour?
GLEESON CJ: Yes, we will adjourn until 2.15 pm.
AT 12.48 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.16 PM:
GLEESON CJ: Yes, Dr Griffiths.
MR GRIFFITHS: Your Honours, can I just make, if I could, four points by way of
closing. The first is in response to Justice Callinan’s remarks concerning the Parlow
Card and the logging device that was installed by Alphapharm. It is evident from
page 179 of volume 1 and pages 403 to 404 of volume 2 that both devices were
used, both the Parlow and also the Alphapharm device.
The second point we wished to make was in connection with our misrepresentation
case, to make a reference to the unreported decision of the New South Wales Court
of Appeal in Liaweena, to which my learned friend made reference, and, in particular,
to Justice Handley’s judgment and to pages 9 and 10 of the Lexis version of that
judgment.
Admittedly, as Justice Bryson himself recognised, Liaweena and Remath were cases
dealing with unsigned documents. Having said that, we do, however, draw the
Court’s attention to the Court of Appeal’s willingness, in the circumstances of that
case, to allow the misrepresentation which was established to prevent a notice which
purported to incorporate new conditions from having that effect. It is the similar
proposition that we advance here.
The third matter we wish to draw to the Court’s attention relates to the last few
paragraphs of Justice Bryson’s judgment and his discussion of the postal acceptance
rule and the non-receipt of the letter of 24 February confirming acceptance of Richard
Thomson’s creditworthiness. That letter, your Honours will remember, is at volume 2,
page 365. The discussion of that letter and its receipt appears in paragraphs 140 and
onwards at page 568 of volume 3. For reasons that are given in paragraph 141,
Justice Bryson says the postal acceptance rule does not apply by reference to the
decision of Chief Justice Sir Owen Dixon and Justice Fullagar in the Tallerman Case.
In paragraph 142 his Honour applied a presumption that the letter having been
posted on 24 February, he said it probably would have been delivered on
26 February. That is at paragraph 142.
His Honour’s attention was not drawn to section 160 of the Evidence Act, copies of
which are included in the material that was circulated to the Court this morning. In our
respectful submission, that presumption under that provision would apply to produce
an effect that the 24 February letter would be presumed to have been received on
the fourth working day after it had been posted which, by my calculations, would be
Tuesday, 2 March, the 24th having been a Wednesday, and the first consignment
was damaged prior to 2 March, some time between the goods being dispatched from
Sydney on 26 February and prior to their delivery to the Queensland Health
Department on Monday, 1 March.
Your Honours, the final matter I wish to raise was simply to seek an opportunity for
my clients to have one week to comment on the proposed draft orders.
GLEESON CJ: Yes. Just before you sit down, you may have dealt with this already,
but what is your answer to Mr Gageler’s argument that the contract was in force on
18 February, because on that day Finemores transported goods in accordance with
the request including the credit request?
MR GRIFFITHS: We say that a contract was in force on that day, namely, though,
simply a contract for the transport and storage of the products to Finemores’
warehouse in Sydney. A later contract became operational in respect of the
subsequent handling of the product, which contract would have been influenced by –
such later contract having come into operation after receipt of notification of the
acceptance of our creditworthiness, which would have been after 2 March.
GLEESON CJ: But if you are wrong on your argument about the contract, then
Finemores on 18 February began to act in accordance with the terms of credit that
had been requested by Richard Thomson, did they not? And that would then form the
basis of all future dealings.
MR GRIFFITHS: The invoices for 18 February are to be found at page 355 of
volume 2. They indicate a preparedness to grant credit for a period of 14 days net
from the invoice date. As I put to the Court before, an inference is available to be
drawn that in the circumstances where the credit application was apparently signed
on or about 17 February, which is the date that it bears, it would have taken longer
than one day, one would assume, to have done the necessary credit checks, bearing
in mind the material or information that is contained in the application form. There
were three referees, names of a bank, names of the company’s accountants.
GLEESON CJ: I might have misunderstood something, and perhaps there is
evidence on this, but I rather got the impression that an application for credit is like
an application to become a customer. You would not make an application for credit
every time you used the services of Finemores. It would be like opening an account
with Finemores.
MR GRIFFITHS: Yes.
GLEESON CJ: Making a successful application for credit would result in you being
given a customer number, would it not?
MR GRIFFITHS: That is certainly the way that my learned friend has put it and that is
the way that it is put in terms of the letter of 24 February not received because of
section 160 or presumed not to have been received until 2 March, but there is no
evidence which would suggest or establish that Richard Thomson knew that the
allocation of a customer number necessarily meant that its creditworthiness had been
established. This was the first time, according to the evidence, that Richard Thomson
had actually done business with Finemores.
GLEESON CJ: Am I right in my general understanding of the nature of an application
for credit? It is an application to become a customer of Finemores, who could
presumably place orders over the telephone and does not have to turn up with the
cash in hand every time and so forth.
MR GRIFFITHS: There is no evidence, your Honour, that that was the understanding
of Richard Thomson in this case, nor, in our respectful submission, would it
necessarily be deduced by anyone that the mere fact that there is a customer
number which appears on an invoice, which is the case in respect of the invoice at
page 355, that that conveyed to the customer that their creditworthiness had been
accepted.
GLEESON CJ: But you would not make an application for credit every time you
ordered $250 worth of transportation services, would you?
MR GRIFFITHS: One would not have thought so, no. Perhaps I am only repeating
myself. I am simply saying that the communication to Richard Thomson of
Finemores’ acceptance of their creditworthiness did not occur until receipt of 24
February 1999. In our respectful submission, you would not - - GUMMOW J: When was the invoice of the 18th received?
MR GRIFFITHS: It would appear to be on that day, your Honour, and then there is a
series of invoices. The next page, 356, you see invoice again ordered on the 18th - - GUMMOW J: It indicates credit though, does it not?
MR GRIFFITHS: It does indicate that there is credit being given on the basis of 14
days net from the invoice date, that is correct.
GLEESON CJ: Justice Hayne draws my attention to what appears on page 365 of
the appeal book, which welcomes Richard Thomson as an account customer.
MR GRIFFITHS: Yes, that is correct.
GLEESON CJ: That also is part of the answer to the surprise evinced by
Justice Bryson, is it not, about what you would and would not expect to find in an
application for credit form? The role of an application for credit was not to allow them
time to pay $300; it was to allow them to become an account customer who
presumably, until further notice, could order services from Finemores without any
further arrangements about credit.
MR GRIFFITHS: Yes.
HAYNE J: They are a carrier; they are not a bank.
MR GRIFFITHS: Yes, and your Honour also sees in the letter at page 365, the letter,
as I say, presumed to have been received on about 2 March, that the trading terms
are “STRICTLY NETT (14) DAYS from receipt of Invoice” to be contrasted with the
invoice bearing the date of the 18th which talks about date of invoice – “FROM
INVOICE DATE” at page 355. If the Court pleases.
GLEESON CJ: Thank you. Yes, Mr White.
MR GRIFFITHS: Mr Kirk just reminds me – I thought I may have already said this but
in case I did not I should say it now – there is no direct evidence of when the invoices
were actually received.
GLEESON CJ: Thank you. Yes, Mr White.
MR WHITE: May it please the Court, I wish to address the Court in relation to the
question of agency and I have nothing to add in relation to the matters that
Dr Griffiths has been addressing the Court in relation to. Your Honours, as we
understand it, the appellant seeks to overturn the finding of fact made by the trial
judge in relation to this issue at appeal book page 498, line 35 through to page 499,
line 15 which were findings confirmed in the Court of Appeal at appeal book
page 541, line 50 and, as I think has been conceded by my friend, unless the
appellant succeeds in relation to that issue, the first respondent succeeds no matter
what the outcome may be in relation to the other aspects this appeal presents.
In support of its submission, as we understand it, the appellant relies on a
conversation between Mr Van Der Pluijm, on behalf of Alphapharm, and Mr McGee,
on behalf of Richard Thomson, on 15 February 1999, namely, two days before the
credit application was signed by Mr Gardiner. If I can take your Honours again briefly
to that conversation in appeal book volume 1, page 175. My friend took you to
paragraph 7, which contains the conversation in question. As we understand it, it is
that conversation in which it is said there was a conferral of authority by Alphapharm
to Richard Thomson to contract on its behalf when entering into the contract with
Finemores.
Your Honours will see that there is the first paragraph there where, in effect, the
parties agree that they would choose the same carrier “to reduce handling”. I think it
is now conceded that the second portion of that conversation did not take place,
because, following Mr McGee’s denial of it, Mr Van Der Pluijm retracted or recanted
the second paragraph of that - - GUMMOW J: He was extensively examined about it, was he not?
MR WHITE: He was.
GUMMOW J: About page 67?
MR WHITE: Yes, and he conceded that he was mistaken in relation to that aspect of
the conversation. That also deals with Justice Heydon’s observation of paragraph 16
of the same affidavit at page 177 of the appeal book, where Mr Van Der Pluijm
asserted an agreement of the kind that he appeared to have retracted in his
supplementary affidavit. Again, he was cross-examined in relation to that portion of
his affidavit at page 71 of the appeal book, in which, at lines 30 to 40, in effect he
said that it was in truth “maybe” his understanding of the conversation that he had
with Mr McGee. In those circumstances, we would submit that one could not place
any reliance on his observation in paragraph 16 of his affidavit at page 177.
GLEESON CJ: Can I take you back to 175?
MR WHITE: Yes, your Honour.
GLEESON CJ: I just want to understand what is said there. This is Richard Thomson
saying to Alphapharm, in the second sentence:
“We recommend that you use Finemores for carriage from the
warehouse to the purchasers” –
Now, these goods were damaged either in the warehouse or in transit from the
warehouse to the purchasers, is that right?
MR WHITE: They were damaged in transit, and, in respect of a second consignment,
after they had been appropriated from the general stock.
GLEESON CJ: Well, the journey from the warehouse to the purchasers is referred to
in this conversation as Alphapharm using Finemores for carriage.
MR WHITE: Yes.
GLEESON CJ: How did Alphapharm engage Finemores’ services for carriage from
the warehouse to the purchasers other than through Richard Thomson?
MR WHITE: Mr Van Der Pluijm attended the premises of Finemores at the time that
the goods were extracted from general stock, at which time he placed the relevant
temperature recorders and dispatch notes on the batches for delivery – in other
words, handed back to Finemores as bailee for the purpose of delivery to
Alphapharm’s customers.
GLEESON CJ: But did that involve Alphapharm using Finemores’ services?
MR WHITE: Yes, in the sense that - - GLEESON CJ: Pursuant to what contract?
MR WHITE: There was no contract. There was a bailment as found by his Honour.
There was no contract between Alphapharm and Finemores.
GLEESON CJ: Was there a use by Alphapharm of the services of Finemores?
MR WHITE: Yes, in the sense that it appointed Finemores to transport the goods
from the warehouse to Alphapharm’s customers.
GLEESON CJ: So Alphapharm engaged the services of Finemores?
MR WHITE: Yes.
GLEESON CJ: Without a contract?
MR WHITE: Correct.
GLEESON CJ: I can understand you saying without a written contract, but does not
the engagement of somebody’s services amount to a contract?
MR WHITE: Well, that may be so - - GLEESON CJ: Well, we better understand this.
MR WHITE: Yes, quite. The trial judge found that there was no contract and that it
was a relationship of bailment between Alphapharm and Finemores in the sense that
Alphapharm gave back to Finemores after expropriation of the stock from general
stock for the purpose of delivery.
GLEESON CJ: Did Finemores promise Alphapharm that Finemores would deliver
goods to persons nominated by Alphapharm?
MR WHITE: I do not think there is any evidence, your Honour, of that matter.
GLEESON CJ: Well, is that to be inferred from the conduct of the parties?
MR WHITE: It may well be inferred that Alphapharm in giving back to Finemores the
goods for the purpose of delivery may give rise to that inference but - - CALLINAN J: How would find Finemores otherwise know the consignee?
MR WHITE: Alphapharm provided Richard Thomson with the details of delivery and
Richard Thomson passed on the information to Finemores.
GLEESON CJ: It was for the benefit of Alphapharm, not for the benefit of
Richard Thomson, that these goods were being transported from the warehouse to
the purchasers, was it not?
MR WHITE: Correct, after, of course, 17 February. This took place after the credit
application form had been entered into, of course.
GLEESON CJ: Let me ask you this: suppose there had been delay in delivery of the
goods, would Alphapharm have sued Finemores?
MR WHITE: If it was a breach of the bailment, then - - GLEESON CJ: What about a contract of transportation?
MR WHITE: Well, your Honour, the trial judge found that the parties had not given
consideration to the terms of any such contract or, indeed, a contract at all between
Alphapharm and Finemores.
GUMMOW J: Is there anything in Mr Cheney’s evidence about this?
MR WHITE: Mr Cheney’s evidence, your Honour, is elliptical. There is some very
brief evidence in relation to it at - - GUMMOW J: He is the Finemores’ man, is he not?
MR WHITE: Yes. No, I do not believe there is any evidence from Mr Cheney in
relation to this issue. I was thinking of the evidence of Mr McGee, who was asked a
couple of questions in relation to it, and, in particular, in relation to a conversation he
had with Mr Van Der Pluijm - - GUMMOW J: What about page 90, line 15?
MR WHITE: Yes.
GUMMOW J: Then they eventually got it sorted out, did they not, at page 92 line 40?
“Alphapharm was not a customer to Finemore’s at that time” et cetera.
MR WHITE: Yes.
GUMMOW J: Is that not the explanation of the document at 455?
MR WHITE: Yes, it is. In other words, it was a recognition within Finemores that
there was no contract between it and Alphapharm, and to put their relationship on a
proper footing - - GUMMOW J: Well, at least no written contract.
MR WHITE: No written contract. As I say, the trial judge characterised it as a
relationship based in bailment.
GUMMOW J: Then eventually someone at Finemores put their hand up and said,
“We’ve got to regularise this”.
MR WHITE: Correct, and there is a conversation in which Mr Cheney told Mr Van
Der Pluijm that they were not proposing to do any further work for them unless there
was an account in place of the kind that they had with Richard Thomson.
GLEESON CJ: These goods had been imported by Richard Thomson and sold to
Alphapharm, is that right?
MR WHITE: The goods had been imported by Ebos - - GLEESON CJ: By the Richard Thomson Group.
MR WHITE: Yes.
GLEESON CJ: And sold to Alphapharm.
MR WHITE: Correct. Sorry, 300,000 of the 350,000 had been sold to Alphapharm.
50,000 were for the benefit of Richard Thomson.
GLEESON CJ: We are not concerned with those, are we?
MR WHITE: Only to the extent that it may be some of the correspondence is
explicable on the basis that Richard Thomson was concerned with carriage of its own
product to its customer base.
GLEESON CJ: Let us concentrate attention on the 300,000 then. There was a
question about when risk passed as between the vendor and the purchaser, but the
transportation with which this case is concerned was the transportation of goods that
had been sold to and bought by Alphapharm from Finemores’ warehouse to
Alphapharm’s customers. Is that right?
MR WHITE: Correct.
GLEESON CJ: And the case against you is that that transportation was being done
pursuant to a contract with Finemores made by Richard Thomson as agent for
Alphapharm.
MR WHITE: Correct.
GLEESON CJ: What interest did Richard Thomson as a principal have in the
transportation by Finemores of Alphapharm’s goods to Alphapharm’s customers?
MR WHITE: We submit that the evidence did not establish an intention by either
Alphapharm, or Richard Thomson for that matter, that a contract on behalf of
Alphapharm with Finemores for that purpose - - GLEESON CJ: So on your case, what was going on was that, having sold goods to
Alphapharm which were to be delivered to Alphapharm in Sydney, Richard Thomson
then contracted as principal for the delivery of Alphapharm’s goods to Alphapharm’s
customers on the basis that it would be reimbursed by Alphapharm?
MR WHITE: No. What we say is that Richard Thomson contracted with Finemores on
behalf of Ebos, the owner of the goods, for the removal of the goods from the wharf
and storage at the warehouse. Thereafter Richard Thomson had no other
involvement in any relationship that Finemores may have with Alphapharm other
than, as the trial judge found, to pass on the details to Finemores of the time as to
when batches needed to be expropriated from general stock.
GLEESON CJ: We are trying to identify the parties to the contract of transportation
that governed the movement of these goods from Finemores’ warehouse to
Alphapharm’s customers, right?
MR WHITE: Yes.
GLEESON CJ: Those goods no longer belonged to either Richard Thomson or to
Ebos.
MR WHITE: Ebos remained the legal owner of the goods until paid, which did not
occur until some time after the destruction of the goods.
GLEESON CJ: So Ebos still had an interest in the goods?
MR WHITE: Yes.
GLEESON CJ: But your case is, is it not, that the contract of transportation pursuant
to which Finemores moved the goods from their warehouse to Alphapharm’s
customers was a contract between Richard Thomson and Finemores?
MR WHITE: No.
GUMMOW J: Why not?
MR WHITE: Because Richard Thomson was never asked by Alphapharm, nor did it
assume any obligation to contract on its behalf in relation to that matter.
GLEESON CJ: There was a contract of transportation pursuant to which those goods
were transported, was there not?
MR WHITE: The trial judge found no. The trial judge found that there was no contract
between Alphapharm and Finemores.
GLEESON CJ: That was not my question. The goods were transported. Was
somebody entitled to be paid for them? Would somebody be entitled to be paid the
cost of transportation?
MR WHITE: Indeed.
GLEESON CJ: Would that have been a claim on a contract or a claim on a quantum
meruit?
MR WHITE: Quantum meruit, on one view.
GLEESON CJ: So the goods were transported without there being any contract
governing their transportation?
MR WHITE: That is what the trial judge found, and one assumes that it follows if
there was any entitlement to payment, it was on a quantum meruit basis. What
occurred was in relation to the outward bound invoices which were served on
Richard Thomson for payment, they were returned unpaid and Finemores took the
matter no further, neither pressing for payment in respect of them against Richard
Thomson nor Alphapharm, and they remain unpaid.
GLEESON CJ: Is that what the Court of Appeal also found?
MR WHITE: I do not think the Court of Appeal – I will have to check - - GLEESON CJ: I mean, if that is right, why on earth would anybody be worried about
the reasonable notice point or the indemnity or anything? There just was no contract.
MR WHITE: There may well have been a contract between Richard Thomson and
Finemores.
GLEESON CJ: That is what I am asking you about. My question is was there a
contract of transportation relating to the movement of the goods from the warehouse
to Alphapharm’s customers? I am not asking you yet who are the parties to the
contract. I just want to know whether the goods were transported pursuant to a
contract.
MR WHITE: We would submit no, your Honour.
GLEESON CJ: Then the Court of Appeal devoted a lot of time to a question that just
did not arise.
MR WHITE: The matter that was being considered by the Court of Appeal, as we
understand it, was that in relation to the inbound transport of the goods to the
warehouse and storage at the warehouse was the subject of a contract between
Richard Thomson and Finemores. The Court of Appeal seems to have accepted the
trial judge’s finding that in respect of the outward-bound movement of the goods
there was no contract in place between Alphapharm and Finemores, and that it was
a bailment relationship after the goods were extracted from general stock by
Alphapharm and placed back into the possession of Finemores for delivery to its
customers. Sorry, your Honour, that is as I understand the reasoning of the trial
judge, and the Court of Appeal seems to have accepted it.
GUMMOW J: How does it fit in with the pleading? How does it fit in with the action as
it was framed? You were suing?
MR WHITE: We were suing based on breach of bailment.
GUMMOW J: The breach being what?
MR WHITE: The destruction of the goods in the possession of the bailee without
reasonable excuse.
GUMMOW J: Yes, but while they were at the warehouse or thereafter? By reason of
what had happened to them in the warehouse or by reason of their subsequent
carriage?
MR WHITE: Well, in relation to the first consignment, by reason of the destruction
during transit; in relation to the second, after they had been expropriated from stock
but while still at the warehouse, after the temperature loggers had been installed by
Alphapharm and a dominion had been asserted over them.
GUMMOW J: So that is why there was all that evidence about the temperature log.
MR WHITE: That is correct.
GUMMOW J: That was relating to the second shipment.
MR WHITE: That was in relation to the second shipment where the temperature - - GUMMOW J: Or the second batch.
MR WHITE: The second consignment.
GUMMOW J: Yes. As to the first batch, the first - - MR WHITE: In relation to the first batch, in transit, for some reason unexplained by
the defendant, the temperature dropped in the truck such that the goods were
destroyed and were rejected by the - - GUMMOW J: The temperature graph evidence does not go to the truck.
MR WHITE: I think it went to both, your Honour, because the temperature logger was
both in the goods in the truck and in the goods outside the freezer door in the
warehouse.
GUMMOW J: I see. I had not understood that. So in relation to the damage that
occurred during the transport, how was that action framed?
MR WHITE: That was in bailment as well, your Honour. That Alphapharm and Ebos,
both of whom had a sufficient interest in the goods, sued Finemores as bailee for the
destruction of those goods. In either case were in the possession of Finemores at the
time of the destruction.
GLEESON CJ: Who was paying Finemores for keeping the goods in their
warehouse?
MR WHITE: Ebos.
CALLINAN J: There were separate charges for the storage of the goods and for the
transport? There was a separate rate for each of those?
MR WHITE: Yes, and Ebos paid - - CALLINAN J: So there was a distinction made between, if I can put it this way, mere
bailment and transportation?
MR WHITE: In relation to the charges?
CALLINAN J: Yes.
MR WHITE: Yes.
CALLINAN J: And therefore two contracts.
MR WHITE: The case was not run in relation to contract.
CALLINAN J: They were bailments for reward, were they not?
MR WHITE: Presumably.
CALLINAN J: Well, if they are bailments for reward, they are contracts, are they not?
MR WHITE: Yes, but it was not the contract that was being asserted against us by
Richard Thomson.
GUMMOW J: That may be a good point, but that is not what we are asking at the
moment. He sues as bailee for reward. Page 2, paragraph 3:
the first consignment was delivered into the possession of the
Defendant at Warehouse 6, Roberts Road, Greenacre . . . and the
Defendant was thereafter a bailee for reward –
and then the second consignment, again, top of page 5. It is elliptical as to whether
the damage was whilst being stored or carried, but as it turned out it was subsequent
carriage.
MR WHITE: Correct.
GLEESON CJ: How can you have a bailment for reward without a contract?
MR WHITE: I accept the difficulty of that proposition, but the submission we put is
that even if there was a contract in respect of a bailment for reward, it was not the
contract that Richard Thomson seeks to enforce upon us by reason of some agency
relationship between Alphapharm and Richard Thomson.
HAYNE J: So how is the contract constituted?
MR WHITE: To the extent that there was a contract constituted, presumably it was in
circumstances in which at the time Alphapharm placed the goods back into the
possession of Finemores for the outward deliveries, there was an understanding or a
presumption or an implied term that they would be paid a reasonable cost for those
services.
HAYNE J: But did Alphapharm have any dealings with Finemore other than the
person who went to the warehouse to identify stock and attach consignment papers
to the stock?
MR WHITE: No.
HAYNE J: Does it not follow that unless the contract was wholly to be implied from
conduct, the contract was constituted by communications, oral or written, from
someone most immediately employed by Thomson?
MR WHITE: That may be so, your Honour.
HAYNE J: If that is the position, does it not follow then that the contentions that you
are making appear ultimately to come to contentions that, yes, Thomson was acting
as Alphapharm’s agent?
MR WHITE: No, because what Finemores has to point to, with respect, is some
evidence that when Richard Thomson entered into the contract it alleges binds us
there was some express or implied conferral of authority.
GUMMOW J: Well, part of the problem arises – I do not mean to be pedantic about
it, but Alphapharm and Ebos were not suing in the same interest.
MR WHITE: That is correct.
GUMMOW J: Yet they suing plaintiffs, plural, with the one set of allegations. That is
just embarrassing. It should never have been allowed to go ahead.
HAYNE J: They both get judgment.
GUMMOW J: There are two quite distinct interests – two quite distinct contracts
probably.
MR WHITE: Yes, your Honour.
CALLINAN J: It seems to me one was a contract between Ebos and Thomson
probably is its agent to get the goods off the plane and out of bond and so on and out
to the warehouse, look after them. The second one was, what happened thereafter
when the goods became Alphapharm’s. That was not formalised until a later date in
April, but there was something in the meantime of a contractual nature and that is
what you were suing on as a bailee for reward.
MR WHITE: Yes.
GUMMOW J: And it is all wrapped up in this wretched pleading.
MR WHITE: Your Honour, I have to play the deck as I am given it and - - GUMMOW J: I know you do, but I do not want to give any encouragement to a
repetition of this sort of thing in the New South Wales legal profession.
MR WHITE: But, your Honour, the conversation on 15 February and what occurred, if
anything, before 17 February could not have constituted, with respect, a conferral of
authority by Alphapharm to Richard Thomson to bind Alphapharm to those terms.
CALLINAN J: Could I just ask you about these facts and make sure I have them
right. Ebos sells to Alphapharm, is that right, the vaccine?
MR WHITE: Yes.
CALLINAN J: Under a sub-distribution agreement, is that correct?
MR WHITE: Correct.
CALLINAN J: And Richard Thomson is a wholly-owned subsidiary of Ebos, is that
right?
MR WHITE: Yes, correct.
CALLINAN J: But it is a term of the sub-distribution agreement between Alphapharm
and Ebos that Alphapharm will store the goods under certain conditions, and it is
important for the other party because of the arrangements with respect to property
passing, it still has an interest in the property, the vendor; is that not right?
MR WHITE: Certainly the vendor has an interest and continues to keep having a
interest in the goods, yes.
CALLINAN J: And that is why the vendor has a term in the sub-distribution
agreement – I think that is the right agreement, is it not?
MR WHITE: Yes.
CALLINAN J: That the goods will be kept stored, in effect, within the required
temperature range, is that not right?
MR WHITE: Well, your Honour, I have to refresh my memory as to what the
distribution agreement at page 272 said in that respect.
CALLINAN J: I think it refers, does it not, to appropriate cold chain requirements? I
take the chain to be the bailment, the storage and the transport – throughout the
chain of handling, in effect, until the property passes to the ultimate purchaser and
Ebos loses all property in the goods. The point of that being that both Ebos and
Alphapharm have an interest in whatever arrangements are made either by Richard
Thomson or anybody else at all with respect to – they have an interest, and one of
them has a contractual obligation, with respect to the arrangements for the storage
and the cartage of the goods right until the end of the chain. It seems to me that that
is very important to the question of authority and agency, because if they both have
that interest and it is an obligation of one of them, it seems likely to me that Thomson
is, in fact, the agent of one or both of them in making the arrangements to satisfy the
appropriate cold chain requirements.
MR WHITE: There is no issue, your Honour, that Richard Thomson was the agent of
Ebos when entering into a contractual relationship with Finemores.
CALLINAN J: Also Alphapharm, because Alphapharm has a contractual obligation,
which it must satisfy, with respect to the storage and transport of the goods.
GUMMOW J: It is clause 5.3 at page 276, I think. It was important for the Ebos
people because the manufacturer, Medeva, in the United Kingdom, did not want it
getting around that there were crook consignments of Fluvirin going out to the
various health authorities in Australia.
MR WHITE: Certainly that is correct, your Honour.
HAYNE J: Leave aside, I am sure, the various regulatory requirements that would
have attached.
CALLINAN J: And that is why the whole thing failed, because both the Queensland
and New South Wales health authorities rejected the consignments.
MR WHITE: At the time the contract is said to have been established, which, as we
understand it, is either on 17 or 18 February – I go back a step. At the time of the
conversation on 15 February, which we understand to be the basis upon which there
was a conferral of authority, Alphapharm had no interest in the product. No risk had
passed until delivery to the warehouse on or about the 18th.
CALLINAN J: It had a contractual obligation with respect to storage.
MR WHITE: Yes.
CALLINAN J: Would it not have been anxious to satisfy that obligation? It did not
want to break its contract, did it?
MR WHITE: No, but we submit it does not therefore follow that there was some
express or implied conferral of authority on the part of Richard Thomson to contract
with Finemores on its behalf. The interest of Richard Thomson was on behalf of
Ebos, to ensure that the goods were collected from the wharf and delivered to cold
storage premises. Thereafter, Ebos and Richard Thomson really had no real interest
in where the goods went and how they were delivered. The suggestion, however,
was from Richard Thomson that they might reduce handling costs if they used the
same carrier.
CALLINAN J: But did not Ebos have an interest of the kind – it still had property in
the goods, did it not? It had property in the goods until payment.
MR WHITE: Yes, I accept that, and there is no dispute that to the extent there was a
contract, Richard Thomson was acting on behalf of the owner of the goods. As the
trial judge found, to the extent that there was agency between Alphapharm and
Richard Thomson, it was simply Richard Thomson carrying out administrative
arrangements on its behalf by forwarding to Finemores the details about the number
of batches and the timing of dispatch.
GUMMOW J: Who was going to be paid for the sector warehouse storage, delivery
warehouse to health authority?
MR WHITE: The evidence is that Mr McGee said that there was virtually no
discussion about that issue, and that is why problems arose later about who was to
pay for what. Ebos did eventually pay the inward-bound and storage costs. In respect
of the invoices they received for outbound, they were returned unpaid, because they
took the view they were not responsible.
GUMMOW J: Do we see those invoices that bounced, as it were?
MR WHITE: They are not in the appeal book. I do not know why. It may be because
the deponent who annexes all the invoices to his statement did not have those,
because they had been returned to Finemores unpaid. The invoices that are in the
appeal book – I do not know whether your Honours are - - GUMMOW J: We do not have the invoices for the outbound activity?
MR WHITE: No, you do not, but you do have evidence that they were unpaid and
returned, which is at page 237 of the appeal book, paragraph 17, where Mr Van Der
Pluijm says he received the invoices for storage. He annexes and marks copies of
the invoices.
GUMMOW J: Who is making this statement?
MR WHITE: Mr Van Der Pluijm – Mr Gardiner, I am sorry, from Richard Thomson:
They came to me for authorisation. I authorised for payment the cost
of inward transport (i.e. cost of moving the goods from the airport to
Finemores’ storage facility) and storage –
and in respect of the others he returns unpaid –
Richard Thomson has not paid, nor has Finemores required payment
of, those invoices.
GLEESON CJ: Those invoices were addressed to Thomson.
MR WHITE: Yes, and there is a document which records at page 460 in volume 2 of
the appeal book a document from Ebos to Finemores in which your Honours will see,
about halfway, at line 25 some handwriting “ON BEHALF OF RICHARD THOMSON”
and then sets out the numbers in respect of some invoices and some amounts, and
then underneath:
FEB/MAR INVOICES TO THE VALUE OF AUD$5044-00 ARE NOT
BEING PAID AS SHOULD BE CHARGED TO ALPHAPHARM PER
PHILIP GARDEN – RICHARD THOMSON CO.
GLEESON CJ: Then, if we can come back to this conversation on page 175, Richard
Thomson says to Alphapharm:
We recommend that you use Finemores for carriage from the
warehouse to the purchasers –
and the goods are carried from the warehouse to the purchasers pursuant to
arrangements made by Richard Thomson with Finemores. The question is whether
Richard Thomson made those arrangements with Finemores as agent for
Alphapharm.
MR WHITE: Your Honour, that requires an examination of what are the
arrangements. Now, the arrangements were as identified in the letters, I think
commencing at page 340 of the appeal book, is the first of the pieces of
correspondence in which Alphapharm at 340 forwards a letter to Richard Thomson
setting out the details for the first deliveries, and your Honours see there are four
locations identified, and then - - GUMMOW J: No 3 is the one that went wrong, is it?
MR WHITE: That is correct, yes, to Queensland. Then at 362 you see a letter from
Richard Thomson to Finemores of some time later. Can I go back a step. Of course,
as at 12 February – this was before the conversation with Mr McGee and Mr Van Der
Pluijm and before any decision had been made as to who the carrier might be, and
on 24 February at page 362 Thomson simply forwards on the shipping details for that
consignment to Finemores in virtually identical terms, identifying them as details for
Alphapharm consignments.
GUMMOW J: What page is that?
MR WHITE: Page 362 and 363. Then in respect of the second consignment there is
the material at page 405 and 407 which again is simply Alphapharm informing
Richard Thomson of the details and Richard Thomson on-sending that material to
Finemores.
Now, that was the extent of, we say, the involvement of Richard Thomson in
organising the outward bound deliveries for Alphapharm. As his Honour found, with
respect, those matters could not have constituted Richard Thomson the agent of
Alphapharm for the purpose of entering into a contractual relationship with
Finemores.
HAYNE J: Why?
MR WHITE: Why? Because - - HAYNE J: You start with 340. “Here are the details”:
I will arrange the temperature loggers and dispatch notes to go with
the goods. Can you please inform me about the details of the
transport –
Page 362, in response to that, Thomsons deal with a carrier.
MR WHITE: But, of course, you have Alphapharm, not the owner of the goods,
dealing with the agent of the owner of the goods, in relation to the timing of when the
goods can or should be extracted from general stock and where they are to go. Now,
simply passing on information of that kind to the carrier, with respect, could not have
constituted Richard Thomson as agent to a contract of the kind that is being asserted
against us. One would require, with respect, a lot more evidence to establish that we
reposed in Richard Thomson some authority to contract on our behalf, especially a
contract of the kind that contains exclusion clauses and indemnity clauses of a kind
which is being asserted against us.
The cross-examination, again, with respect, does not come anywhere near, we would
say, the type of authority that would be required for that to occur. The crossexamination commences in respect of Mr Van Der Pluijm at page 55 of volume 1 of
the appeal book, in particular, at about line 35. I do not propose to read the crossexamination to your Honours, but - - GUMMOW J: We had better get to the guts of it.
MR WHITE: We do.
GUMMOW J: His actual oral evidence, not these manufactured declarations.
MR WHITE: At line 40 a question - - GUMMOW J: What page?
MR WHITE: Sorry, page 55. At line 40, there is a reference to the meeting of
15 February in relation to:
using Finemores to carry from the airport to their warehouse –
That is obviously the inward bound movements, and then:
Q. He recommended that you also use Finemores?
A. Correct.
Q. And you accepted that as a good idea?
A. Correct.
Q. You then left it to him to make the arrangements with Finemores?
A. Yes.
That is at the bottom of the page. Now, the issue there is that, of course, on
12 February a letter had been sent by Alphapharm - - GUMMOW J: What date is this conversation at 55?
MR WHITE: The date is the 15th. There is a reference to the conversation on
15 February at page 175 of the appeal book. The “arrangements” referred to, we
submit, at the bottom of page 55 is the understanding whereby Richard Thomson, on
behalf of Alphapharm, would forward to Finemores the details about the timing of the
batches, and nothing more than that. We submit that that is made clear by the letter
of 12 February - - GUMMOW J: Wait a minute. So stopping at 55, you can then jump forward and the
witness is agreeing eventually that there was no discussion at that conversation
about invoices, is that right?
MR WHITE: Correct, yes.
GUMMOW J: That that was the - - MR WHITE: The refrigerated roadways.
GUMMOW J: The refrigerated people. So it was being left then to Thomsons to
make the arrangements with Finemores. We are left with the sentence at the bottom
of 55 at the moment.
MR WHITE: Yes, The question is: what is the arrangements? The arrangements
were as set out in the letter at appeal book 340 organising the timing of the
dispatchments.
GUMMOW J: But who was going to pay?
MR WHITE: Your Honour, I will come to that in a moment, but the evidence of
Mr Cheney was there was no agreement reached, there was no discussion. It was all
left up in the air. That is part of the problem with what happened. The parties did not
turn their minds to putting their relationship on a proper commercial footing.
HAYNE J: The alternative point of view is that it was so staringly obvious that it did
not need to be discussed.
MR WHITE: Well, your Honour, that is not borne out by the cross-examination of any
of the witnesses because confusion reigned supreme amongst this evidence - - HAYNE J: Yes. I am sure by the time it hit the courtroom confusion did reign
supreme.
MR WHITE: Then one has, towards the bottom of page 56, a reference to Mr Van
Der Pluijm’s understanding which, we would submit, is of little utility but, in any event,
he was asked about his understanding at line 49 in which he refers to his
understanding that:
Thompson would have to make a contractual arrangement with the
company with which it was dealing in order for the company to agree
to carry the goods?
We would submit that his understanding is of no consequence at all but, in any event,
again it does not identify what the arrangement was and whether the arrangement
was going to be on behalf of Alphapharm. At the top of page 57:
Q. And again you left it to McGee to enter such arrangement as was
necessary –
Again, your Honours, as the trial judge found, those arrangements were as set out in
the documents that I have taken the Court to at 340 and 362 in relation to the first
consignment and 405 and 407 in relation to the second consignment. At page 58
there are some more questions in relation to this topic and, in particular, can I take
you down to line 24 in which he is asking some questions about the letter of 12
February which is at appeal book 340. At line 24 the questioner asks:
Q. But you were leaving it to Richard Thompson to make the
arrangements with Finemores about the details of the transport? Do
you see in the second sentence you’ve asked them to inform you
about the details of the transport?
A. Yep.
Q. So you were leaving it to Richard Thompson to do the dealings with
Finemores on your behalf?
Now, that is about as good a question as one could expect to ask in this situation, but
the answer he gets is a highly qualified one:
A. I don’t know if it’s that clear or clear-cut. I would ask that and
Richard Thompson would basically give the details of where it should
go and when and I was informed or Richard Thompson was informed
about when it could be delivered and picked up or picked up and
delivered.
So the arrangements that were being left to Richard Thomson, again, as I submit,
and I do not wish to repeat myself again, was in respect of a very narrow aspect of
the relationship, passing on the details about dispatch and so forth.
GUMMOW J: What is the “consignment note” referred to at 58, line 55?
MR WHITE: That may be, your Honour, a reference to the first consignment note.
Yes, I am told it may be a reference to labels of some kind, because evidence was
that we were never shown a copy of the consignment note at any time.
HAYNE J: At page 59, line 5, he says he does not remember it being a Finemores’
consignment note.
MR WHITE: Yes. Mr Van Der Pluijm is further cross-examined at page 67 of the
appeal book, and at line 20 his attention is directed to paragraph 7 of his affidavit,
which is the paragraph I took your Honours to before at page 175 of the appeal book.
Then at line 45, he is asked:
Q. Well you’d set out there –
that is, paragraph 7 of his affidavit –
that Mr McGee suggested to you that you, Alphapharm, might
consider using Finemores. Do you see that?
A. Yes.
Q. Now you certainly didn’t say to Mr McGee did you that Mr McGee
should make the arrangements on Alphapharm’s behalf in relation to
Finemores did you?
A. No I did not say that no.
Then he deals with the question of invoicing and says that it was his understanding:
that it would work in the same way as Refrigerated Roadways as well.
He is asked a bit further down:
Q. You didn’t’ communicate that to Mr McGee, you made an
assumption about it?
A. Yes.
His Honour says at about line 25:
Q. And in fact the arrangements were made, as we’ve previously
heard, with Finemores through Thompsons?
Now, his Honour again there is clearly referring to the arrangements that he found for
which Richard Thomson was the agent of Alphapharm, namely, the forwarding of the
details of the dispatches.
There was no evidence that we can see that Richard Thomson accepted
appointment as agent of the kind that my friend seeks to make out on the evidence.
Mr Gardiner-Garden from Alphapharm was not cross-examined in relation to the
matter. The only cross-examination of Mr McGee that we can find is at page 120 - - GUMMOW J: What about page 69, line 15? He does not recall it, but then he says,
“Yes, that could be the case”.
MR WHITE: I think his Honour found that there was little doubt that it was his
understanding that Alphapharm would be responsible for those costs.
GUMMOW J: Responsible to whom?
MR WHITE: To Finemores. Page 120 of the appeal book is the cross-examination of
Mr McGee in relation to his conversation with Mr Van Der Pluijm on 15 February at
line 40 through to page 121, line 24. Relevantly at the bottom of page 120 he is
asked:
Q. That meant that you could coordinate all the transport, didn’t it?
A. It meant we could coordinate everything.
Q. That’s what happened wasn’t it?
A. What?
Q. That you coordinated everything?
A. That – well Phillip Gardin (as said) and Ron Vanderplume between
them coordinated the deliveries to the various customers, yes.
Q. It was Mr Gardin was it that in your understanding made any
arrangements with Alphapharm about billing and invoicing?
A. No. In fact almost nothing was organised with regard to billing, it
didn’t sort of become clear what we would do until it actually
happened –
which is consistent with what the documents show.
GLEESON CJ: Would the customers have been pharmacies and medical
practitioners?
MR WHITE: Presumably, your Honour. I think Queensland Health was one
organisation and there was another, a serum laboratory I think in New South Wales.
HAYNE J: CSL in Victoria - - MR WHITE: Yes, CSL.
GUMMOW J: And then the medical practitioners deal with CSL, do they not, in New
South Wales, anyway?
MR WHITE: Yes, that is right.
HAYNE J: There would be no margin involved, would there?
MR WHITE: The other two matters that we wish to make submissions briefly on is
that, firstly, the application for credit makes no reference to
Alphapharm, and one would have thought that it was the details of Alphapharm that
would have been inserted in that document rather than those of Richard Thomson if it
had been acting in Alphapharm’s behalf when contracting with Finemores.
Finally, can we take your Honours to the findings of the trial judge at page 488 – I
should go back to 487 at line 40 where his Honour deals with the conversation with
Mr Van Der Pluijm and Mr McGee, and your Honours see there that there is a
controversy about what we said, but his Honour did not think it mattered because:
Mr Van Der Pluijm also expected that Alphapharm would ultimately be
liable to pay . . . and left it to Richard Thomson to inform Finemores of
when transport would be required . . . It was left to staff at Finemores
to appropriate . . . I think Mr Van Der Pluijm also did not then advert to
any need to have a clear contractual relationship between the carrier
and his company about the terms of carriage.
Then finally, your Honours, at line 26 – this is a reference to the evidence that
Justice Gummow was referring to, namely that after a conversation between
Mr Van Der Pluijm and Mr Rogers of Finemores, Finemores made a requirement that
Alphapharm set up a customer account. His Honour found that that was a belated
appreciation of the need to put their relationship on a formal contractual basis.
GUMMOW J: How does clause 8 fit in with your position?
MR WHITE: As I understand it, clause 8 is not pressed against Alphapharm.
GUMMOW J: Well, it is not pressed in answer to your claim.
MR WHITE: Yes. Clause 6 is, of course. Unless there is anything further, those are
our submissions.
GLEESON CJ: Thank you, Mr White. Yes, Mr Gageler.
MR GAGELER: Your Honours, dealing first, perhaps most conveniently, with Mr
White’s submissions, it is correct that Alphapharm sued Finemores in bailment. It is
also correct that Finemores defended that suit in contract; the relevant part of the
defence page 11, paragraph 11. In essence, what is there said in answer to the claim
in bailment is that there was a contract between Richard Thomson and Finemores, a
contract which contained an exclusion clause, and that Richard Thomson entered
into that contract on behalf of Alphapharm. What the trial judge found was that there
was a contract between Richard Thomson and Finemores. He found, of course,
separately, that the relevant term was not incorporated into that contract. That is a
separate point, but he also found that Richard Thomson did not enter into the
contract for and on behalf of Alphapharm.
GUMMOW J: So which is the relevant paragraph of the defence?
MR GAGELER: Paragraph 11, page 11.
GUMMOW J: That is dealing with the second consignment, is it not?
MR GAGELER: I think it deals - - GUMMOW J: It says, “In answer to paragraph 13”.
HEYDON J: It is paragraph 5 on page 10.
MR GAGELER: Yes, that is the equivalent.
GUMMOW J: So 5 and 11.
MR GAGELER: Paragraphs 5 and 11, to be precise.
GLEESON CJ: Just remind us when the goods the subject of the action were
damaged?
MR GAGELER: You are asking, can I tell you - - GLEESON CJ: Just remind us when they were damaged – during transportation or
prior to transportation or both?
MR GAGELER: During transportation for both consignments, but I think there is also
a suggestion that for one of the consignments there was some damage while not in
transport. I will have to find that for your Honour. I do not know precisely.
Your Honours, our agency case is one of actual authority. Your Honour
Justice Gummow referred to some passages in Mr Cheney’s evidence at page 90
and again at page 93. We accept that those passages may be an answer to a case
based in ostensible authority, but they are no answer, in our submission, to a case
based on actual authority.
In relation to actual authority, yes, we do rely upon the conversation on
15 February 1999 which is referred to in the appeal book at page 175. It is simply
reinforced by the cross-examination to which your Honours have been taken at
page 55 and again at pages 56 to 57. Your Honours have to appreciate that the
conversation occurred in the context of circumstances where Richard Thomson had
no interest in the goods, where the goods were being sold by Ebos to Alphapharm
and where it was Alphapharm that needed to transport the goods to its own
customers.
GLEESON CJ: That is why I asked the question earlier: for whom were the goods
being stored while they were in Finemores’ warehouse? For Ebos or for
Alphapharm?
MR GAGELER: The answer is Ebos, because the goods - - GLEESON CJ: Well, that is a complication, is it not, when you talk about Richard
Thomson being agent for Alphapharm? I do not have any conceptual difficulty with
the idea that Richard Thomson arranged the contract of transportation from
Finemores’ warehouse to Alphapharm’s customers as agent for Alphapharm;
whether on the facts that is sustained is another question. But if and insofar as goods
were damaged in the warehouse and the goods were being stored in the warehouse
not for Alphapharm but for Ebos, there is a problem about Richard Thomson
arranging the contract of storage in the warehouse on behalf of Alphapharm, is there
not?
MR GAGELER: That may be answered by the answer to your Honour’s factual
question about where the goods were damaged. My attention is drawn to page 492,
volume 3, at line 45:
It appears to be common ground –
this is in relation to the second batch –
that the shipment was stored overnight near a cool room, and that
cooler air from it caused the temperature to drop below an acceptable
level.
But that appears to have been in the course of transportation. It was a shipment that
was being talked about. The goods, at the very least, had been appropriated to the
contract.
HAYNE J: Yes, but how does all of this fit with clause 5.4 of the distribution
agreement at 276?
MR GAGELER: Well, the goods had been appropriated to the contract at the time
that they were labelled by Mr Van Der Pluijm for shipment.
HAYNE J: Yes, I understand that, but 5.4 is attaching at a still earlier point, is it not,
or am I wrong? Clause 5.1:
supplied [by Ebos] Free into Store to [Alphapharm’s] designated
Sydney, Australia warehouse.
MR GAGELER: Yes. I think there is a finding by the trial judge that the Finemores’
warehouse was the designated warehouse for that purpose.
HAYNE J: Does it then follow that 5.4 operated so that risk in the consignment of the
product, though not property, passed to Alphapharm at the point of entry to store?
MR GAGELER: We, of course, would be content with that characterisation,
your Honour, but we can also live with the characterisation that the goods as stored
in the warehouse remained Ebos’ goods and became subject to 5.1 and
consequently 5.4 at the time that a particular shipment was appropriated for the use
of Alphapharm. That appears to have been the way in which it was analysed below.
HAYNE J: I understand it is a belt and braces argument and I do not criticise you for
that, but I - - MR GAGELER: But if your Honour is right - - HAYNE J: What is your contention about it?
MR GAGELER: I am content with what I think is a lower contention from my part,
that is at the time of the appropriation of the goods to a particular shipment, 5.1 bit
and 5.4 came into play. I do not need to go back further.
HAYNE J: I understand that. I had been reading it also in the light of what appears in
5.3 which obliged Alphapharm to “dispose of stock”. That may mean simply dispose
of in the most general sense or in a manner which will ensure all product reaches
customers. I do not know. If you put the argument lower, I need not get into it
perhaps.
MR GAGELER: I do not need to put it higher. Your Honours, the other point – and
this goes with the context – is the conduct that occurred. That is, there was an
assertion of control by Alphapharm, through the person of Mr Van Der Pluijm, over
the particular batches. There were specific directions from Alphapharm to Richard
Thomson. Your Honours have been taken to those – page 340 in relation to the first
shipment, page 405 in relation to the second shipment – and those specific
instructions were executed by Richard Thomson by giving further specific directions
to Finemores, being conveyed as Alphapharm’s directions. Your Honours were taken
to the documents, page 362, and again at page 407.
HAYNE J: Well, you say that 362 is being conveyed as Alphapharm’s directions.
That, you say, is conveyed, do you, by the expression “Alphapharm consignments”?
MR GAGELER: Yes, on the first page, and then on the second page, last paragraph:
Mr Ron Van Der Pluijm will be co-ordinating the despatch and
regulations.
Mr Van Der Pluijm, of course, of Alphapharm. So that is the first of them. Then on
page 407, one finds really something quite similar. In the middle of the page, about
line 34:
A representative from Alphapharm will collate and insert relevant
[template] recorders.
GUMMOW J: What is the evidence from which we infer actual authority? Can you
just encapsulate it?
MR GAGELER: Yes, I can be fairly precise. The conversation recorded at page 175,
the first paragraph.
GUMMOW J: What was that? Yes, the first, but not the second.
MR GAGELER: No, the first paragraph and the agreement. That is point one. There
is further evidence of the same conversation, to which your Honours have been
taken, at pages 55 to 57 to the same effect. We rely upon that. We rely, as I said,
upon the context in which that occurred, if you like, the factual matrix. Richard
Thomson has no interest in goods, Alphapharm has the interest of a purchaser in the
goods, the transportation was entirely for the benefit of Alphapharm in that the goods
were to go the Alphapharm’s customers. Then, thirdly, your Honour, the separate
head of evidence is - - GUMMOW J: Do you draw into that anything in clause 5 of the Alphapharm
distributorship agreement?
MR GAGELER: Yes, of course, and we also point to the conduct, that is, the
assertion of control and the giving of specific directions in relation to the
transportation of the goods.
HAYNE J: And the specific directions to which you refer are exemplified but not
confined to 340?
MR GAGELER: Pages 340 and 405.
HAYNE J: Yes.
MR GAGELER: And, of course, your Honours have seen the application for credit - GUMMOW J: Is there not oral evidence about the gentleman from Alphapharm
turning up?
MR GAGELER: Yes. Well, not just oral evidence but the evidence in-chief. Yes, he
turned up and he labelled the goods and he said, “I wouldn’t have allowed them to be
dispatched unless I had certain understandings”, yes.
GUMMOW J: So that is part of your notion of asserting dominion.
MR GAGELER: Absolutely, yes.
CALLINAN J: Mr Gageler, is it right – I do not think it is entirely against you – to say
that Richard Thomson had no interest in the goods? Was not Richard Thomson at
least acting as agent on behalf of Ebos?
MR GAGELER: I accept that, yes.
CALLINAN J: And Ebos throughout retained an interest in the goods because it had
not been paid for them?
MR GAGELER: I accept all that, yes. So I would have to qualify what I said - - CALLINAN J: But I do not think it affects your principal submission, but it is just not
right to say that there is no interest in them.
MR GAGELER: Your Honour, I was speaking too loosely, but you are correct.
GLEESON CJ: That would be exactly why Finemores would have this definition of
“Customer’s Associates” in its contract documents, because Finemores would not
know what were the relations going on in terms of property in the goods and risk in
the goods between the importer and the distributor or sub-distributor.
MR GAGELER: Your Honour is exactly right and the definition of “Customer’s
Associates” at page 353 includes “a person having an interest in the goods”.
GUMMOW J: It is a pity in a way there was not reliance on Salmond and Spraggon
and the Himalaya clause vis-à-vis Alphapharm.
MR GAGELER: It would have made it an even more interesting contract case.
GLEESON CJ: I was just having a look at that. The problem is that what was
described a few months ago by the House of Lords as the artificial but deft reasoning
in that case to solve a commercial problem proceeded on the basis that you had to
get a contract between the stevedores and the shippers as well as the carriers and
the shippers. The carriers purported to enter into the contracts as agents for the
stevedores and the stevedores, in effect, ratified that by carrying out the stevedoring
work. So in a sense the boot was on the other foot.
MR GAGELER: Exactly, and I can assure you that I anxiously considered that boot,
your Honour, and saw nothing in it for this case. The evidence of assertion of
dominion I think I went through in-chief, your Honour, but in particular at page 190 of
volume 1.
Your Honours, may I deal very briefly with Mr Griffiths’ submissions. First, in respect
of the judgment against Ebos, the second and third respondents’ written
submissions, paragraph 19, third sentence, correctly say:
In fact, judgment need and should only have been entered for
Alphapharm.
That is absolutely true. It is also true, as he points out in that paragraph, that the
orders which appear at pages 505 and 506 were signed by the solicitors for the
parties but it is hardly correct to describe them as consent orders. They were not the
product of any compromise. They were an attempt to implement his Honour’s
judgment and the inclusion of Ebos ought really be regarded as a slip.
The second point concerns the timing of the contract between Finemores and
Richard Thomson. It really comes down to this. On 17 February there was the
application for credit. On 18 February there was cartage on credit. By that I mean
cartage occurred and credit was extended. There was in the course of that the
allocation of a customer number. When one comes to the letter of 24 February, it is
formal confirmation, in our submission, of what had already occurred. That is, it
referred to the same customer number that had already been allocated on 18
February. That is really what Justice Bryson was saying at paragraph 140 of the
judgment in the last couple of lines of that paragraph, a view that he, in our
submission, correctly attributed to the trial judge. That is, the view that the contract
was formed on 18 February.
When his Honour went on in paragraphs 141 and 142 to deal with a submission
about the effect of the letter of 24 February, his Honour was dealing with an
alternative case theory then advanced by my client in the Court of Appeal which I do
not now pursue.
Your Honours, in relation to the misrepresentation case articulated by Mr Griffiths,
there are many answers. The answer at the highest conceptual level emerges if one
goes to the actual statement of the ground contained in the notice of contention,
volume 3, page 599. He only relies upon ground 1(a). It is there said:
The signature by a director of the Third Respondent –
that is Mr Garden –
on the Application for Credit form was induced by:
(a) misrepresentation by or on behalf of the Appellant for the purpose
of the rule in L’Estrange v F Graucob Ltd –
Your Honours, the position at law flows from the signature. If there is a
misrepresentation that induced the contract, then what may or may not be involved is
equitable intervention, but he does not seek equitable intervention. So the rule in
L’Estrange v Graucob flows simply from the signature.
Secondly, even if he had sought equitable intervention, we are in the realm of Taylor
v Johnson. He does not seek to put his case any higher than innocent
misrepresentation, and that is simply not enough.
Thirdly, at the factual level, the allegation that the signature of Mr Garden, the
director of the third respondent, was induced by a misrepresentation is simply
falsified by the finding of the trial judge, page 503, line 11, that because Mr Garden
could not remember any of the circumstances in which he signed this document, it
could not be said that he was induced to sign it at all – that is, even if there were a
misrepresentation in the letter of 11 February, which we simply do not accept.
Finally, on this point, it was not pleaded. The misrepresentation pleaded by Richard
Thomson appears at volume 1, page 34, paragraph 5, and it was alleged to be a
misrepresentation made to Mr Garden at the time of signing. Now, that appears to be
common ground that it was not pleaded. Your Honours were then taken to some
excerpts from not the
opening submissions but the closing submissions, that is, once the evidence was in,
and whatever Mr Kidd on behalf of Richard Thomson might have then been saying,
in our respectful submission, what Mr Brender on behalf of my client was saying in
response was in response to the pleaded case.
Finally, your Honour Justice Gummow drew attention to what appears in a paper
published in Justice Finn’s book, page 12. I want to draw your Honours’ attention to
the beginning of that passage – and this is really in self-defence – at page 11, “It is all
introduced”, that is, the discussion of L’Estrange v Graucob is introduced, “with the
statement standard form contracts (contracts of adhesion) in consumer transactions
present different problems”. In any event, your Honours, that was my romantic
period.
GUMMOW J: We are in a classical period now.
MR GAGELER: Yes.
GLEESON CJ: We will reserve our decision in this matter and we will adjourn until
10.00 am tomorrow.
AT 3.43 PM THE MATTER WAS ADJOURNED