Application for Special Leave to Appeal
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd & Ors
[2004] HCATrans 13 (13 February 2004)
Last Updated: 2 March 2004
[2004] HCATrans 013
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S176 of 2003
BetweenTOLL (FGCT) PTY LIMITED (FORMERLY FINEMORES GCT PTY LIMITED)
Applicant
and
ALPHAPHARM PTY LIMITED
First Respondent
EBOS GROUP LIMITED
Second Respondent
RICHARD THOMSON PTY LIMITED
Third Respondent
Application for special leave to appeal
GLEESON CJ
CALLINAN J
TRANSCRIPT OF PROCEEDINGS
AT SYDNEY ON FRIDAY, 13 FEBRUARY 2004, AT 10.19 AM
Copyright in the High Court of Australia
MR S.J. GAGELER, SC: If the Court pleases, I appear with MR A.S. BELL for the
applicant. (instructed by Clayton Utz)
MR S.T. WHITE: May it please the Court, I appear for the first respondent with my
learned friend, MR E.G.H. COX. (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: Mr Griffiths, just remind us where you fit into the picture. You are
supporting the first respondent, are you?
MR GRIFFITHS: Yes, that is correct, your Honour.
GLEESON CJ: Yes, Mr Gageler.
MR GAGELER: Your Honours, the critical document is the application for credit
which your Honours have in a slim volume headed “DOCUMENTS NOT INCLUDED
IN THE APPLICATION BOOK”. The document appears at pages 5 and 6. Looking at
page 5, your Honours see a document that is undoubtedly commercial in character.
GLEESON CJ: Mr Gageler, just before you take us to this, there was an earlier
document, was there, a fax or some other form of communication?
MR GAGELER: Yes. That is at page 2.
GLEESON CJ: I would just like to have a look at that because something turned on
that, as I understand it.
CALLINAN J: Just remind me of the date of the first contract document, Mr Gageler.
MR GAGELER: The first document at page 2 is 11 February. The document that I
was about to take your Honours to was signed on 17 February.
CALLINAN J: Are there any other documents?
MR GAGELER: I think these are the critical contractual documents.
CALLINAN J: On what date do you say the contract was made?
MR GAGELER: On or about 17 February. There is some vagueness in the findings,
but the precise date does not matter. What his Honour found at first instance
undoubtedly was that the application for credit formed part of the contractual
documentation.
CALLINAN J: The application - - MR GAGELER: At page 5.
CALLINAN J: That was in relation to terms of payment, and that is a fairly essential
term, I would have thought.
MR GAGELER: It is pretty essential to the contractual arrangement, that is right.
GLEESON CJ: Mr Gageler, on page 2 at line 39 there is a reference to “complete the
Credit Application”. Is that the document on page 5?
MR GAGELER: Yes. It was not attached, but the only credit application that was
completed is the document that then appears at page 5.
GLEESON CJ: That is what I want to be clear about. Insofar as the document at
page 2 refers to some later documentation to be completed, it is or includes the
documentation on page 5?
MR GAGELER: That is correct, yes.
GLEESON CJ: I am puzzled. I got the impression from the reasons for judgment of
the Full Court that their Honours thought there was something inconsistent between
the understanding that would be created by the document on page 2 and the
contention that the credit application formed part of the contract. Maybe I
misunderstood the reasons.
MR GAGELER: I had not read the reasons in that way, your Honour. I think there is
some mention of the terms of the credit application on one view being inconsistent
with the terms of a document which was not included with the fax of 11 February.
Can I go back to the credit application itself: undoubtedly commercial, undoubtedly
contractual, proffered, signed and returned by a commercial customer in the course
of a commercial transaction, the signature on behalf of the customer appearing at
line 40, page 5, immediately below the words “Please read ‘Conditions of Contract’
(Overleaf) prior to signing”, the “Conditions of Contract” then appearing at page 6 and
including, relevantly, in clause 6 an exclusion clause and in clause 8 an indemnity
clause. Your Honours, the textbook question before the Court of Appeal was: were
those “Conditions of Contract (Overleaf)” part of the contract between the parties?
CALLINAN J: Mr Gageler, you cannot treat as entirely insignificant either what is
said in the third paragraph on page 2, that “We do not insure goods”.
MR GAGELER: And your Honour will note in the third paragraph, “Please note we
are not common carriers”, et cetera, the first clause of the conditions of contract, “The
Carrier is not a common carrier”.
CALLINAN J: Well, how does the Court of Appeal deal with all of - - MR GAGELER: The Court of Appeal, in our submission, deals with it in a way that
misapplies a very basic principle of contract law and fails adequately to exercise the
appellate function.
GLEESON CJ: I do not want to interrupt you, but I still do not understand entirely
these two documents you have taken us to. The 11 February document at page 2
says “our trading terms are strictly [net] 14 days from the date of invoice.” Is that
right?
MR GAGELER: Yes.
GLEESON CJ: The document at page 5 says, “Trading terms: Nett 7 days”. Which is
the applicable trading term?
MR GAGELER: Well, your Honour, “(unless otherwise confirmed in writing)”.
GLEESON CJ: Yes. Which was the applicable term, 7 days or 14 days?
MR GAGELER: It is not material for present purposes but it appears to be - - -
GLEESON CJ: I want you to say, consistently with your theory of what the contract
is, was it payment within 7 days or 14 days?
MR GAGELER: Your Honour, it does not matter on my theory of what the contract is,
because I say the application for credit was part of the contract. It says, “Nett 7 days
(unless otherwise confirmed in writing)”, and the only issue then would be whether
what is said in the letter of 11 February at page 2 is otherwise a confirmation in
writing, so it does not matter.
GLEESON CJ: What was the, as it were, credit that was granted by acceptance of
this application?
MR GAGELER: The credit was as set out in the application for credit. It was either 7
days or 14 days. It does not matter for present purposes.
GLEESON CJ: It is odd, is it not, that on the face of it the application for credit was
an application for less credit than you would have received under the document on
page 2?
MR GAGELER: It is not odd, your Honour, if one realises that a critical aspect of the
application for credit are the “Conditions of Contract” that are contained on the
reverse side and which are noted above the customer signature block. That is not it
at all. But what has been said very clearly in the letter of 11 February at page 2 is
that we will do business with you only on our standard conditions of credit. It does not
matter for my purposes whether the terms of credit ended up being 7 days or 14
days.
GLEESON CJ: I am sorry, I interrupted you. You were showing how the Court of
Appeal dealt with it.
MR GAGELER: I was about to go to the relevant paragraph of the judgment in the
Court of Appeal at page 78, paragraph 139, where, in our submission, what
your Honours will see in the one paragraph is a misapplication of the law of contract,
a failure of the appeal court adequately to exercise the appellate function, and
through those two elements the introduction of confusion where there ought be
commercial and legal certainty.
Your Honours, I will not read that paragraph out, but we say that as a matter of
contract his Honour’s preferred view expressed from about line 21 to about line 29 is
orthodox and correct and that the test of reasonable notice applied by the trial judge
is wrong. We also say whatever the legal test, the role of the appellate court in a
rehearing was to assess the facts for itself and give the judgment that ought to have
been given by the trial judge. This is straight Warren v Coombes. The error that
emerges from that paragraph, in our submission, emerges even more starkly in the
short concurring judgment of Justice Sheller at page 35.
CALLINAN J: Just before you get to that, just remind me why did notice of existence
of the condition or content of it have to be given anyway?
MR GAGELER: Because the trial judge and the Court of Appeal imported a notion
drawn from the Ticket Cases about reasonable notice being necessary.
CALLINAN J: What about the discussion of onerous conditions? There is a
discussion of them, is there not?
MR GAGELER: There is a discussion of that.
CALLINAN J: What is onerous about it?
MR GAGELER: There is nothing onerous.
CALLINAN J: It seems to me to be a standard sort of condition.
MR GAGELER: Absolutely.
CALLINAN J: It obviously is the sort of thing parties contracting for a contract of
carriage would turn their minds to.
MR GAGELER: Yes, absolutely. Your Honour, it really gets worse because when
you look at the other judgment of Justice Young at page 50 at paragraphs 66 through
to 68, one sees the same two basic errors: misapplication of the law of contract and
misunderstanding of the appellate function. Would your Honours look particularly at
paragraph 68? What it says is:
Of course, there is a distinction between drawing a customer’s
attention to an exclusion clause and drawing its attention to a contract
of indemnity. The task on performing the second is more onerous.
However, in the present case, the judge could come to the view he did
that both provisions were not sufficiently brought to RT’s attention.
So not only is there some requirement of reasonable notice, but there is some grade
of reasonable notice required in relation to different terms.
CALLINAN J: It is almost inconceivable that a person engaged in commerce
requiring carriage would not turn his mind to who is going to bear the loss if the
goods are damaged in transit. It is almost inconceivable, is it not?
MR GAGELER: It is inconceivable on both sides of the transaction.
CALLINAN J: Particularly when you have been warned that the carrier is not a
common carrier.
MR GAGELER: Yes.
GLEESON CJ: I am sorry to be tedious about the facts, Mr Gageler, but - - MR GAGELER: I wish I had appeared at first instance, your Honour.
GLEESON CJ: - - - coming back to page 2, am I right in thinking, looking at the
second-last paragraph of the letter of 11 February, that the “Rates and Conditions”
referred to in that paragraph are those set out on page 4?
MR GAGELER: Yes, your Honour.
GLEESON CJ: That I think is what I had in mind when I asked you earlier a question
about the reasoning of the Court of Appeal. I had the impression that, directly or
indirectly, the Court of Appeal said that is a representation that the conditions of
contract are those signed on page 4 accompanying the letter of 11 February. The
Court of Appeal seemed to have taken the view that that was some kind of a
representation that there were not any other conditions of contract. I may have
misunderstood the reasoning, but I thought that was involved in it.
MR GAGELER: I may have misunderstood the reasons because I did not see that as
a critical part of the reasoning process, your Honour. The critical part of the
reasoning process appears to focus on the application for credit itself, looking at that
document.
GLEESON CJ: Yes. What would you say to the proposition that the letter of 11
February, fairly understood, contains a representation that the conditions of contract
are or will be those attached to the letter – that is to say, those described as freight
rate schedule and conditions which are to be signed by Richard Thomson Pty Ltd?
MR GAGELER: Your Honour, there is nothing in the letter that would allow for the
reasonable inference that those were the only terms and conditions for the contract.
GLEESON CJ: When did they get hold of the credit application form?
MR GAGELER: That is unclear in the findings of the trial judge. Your Honours see a
reference to that at the top of page 20.
GLEESON CJ: When, if ever, did Richard Thomson sign the freight rate schedule
and conditions?
MR GAGELER: I am not sure there is any finding about that at all, your Honour. We
do not think there is.
GLEESON CJ: It just occurs to me there is a considerable degree of factual
confusion if you read the detail of all these documents. The letter of 11 February
encloses what are called rates and conditions and says, “it would be very much
appreciated if you would sign them”. So far as I can see, they were never signed.
MR GAGELER: Correct.
GLEESON CJ: The letter of 11 February also refers to the credit application as
though it was enclosed with the letter.
MR GAGELER: It does not say that and it was not enclosed.
GLEESON CJ: It was not enclosed?
MR GAGELER: It was not enclosed.
GLEESON CJ: But it was the credit application only that was signed, is that right?
MR GAGELER: Your Honour, I am told that the evidence was probably that the other
document at page 4 was also signed, but there is no finding to that effect.
GLEESON CJ: In terms of the earlier question you were asked, that is when the
contract was entered into, was the document on page 4 signed before the document
on page 5?
MR GAGELER: I cannot answer that, your Honour. There is nothing in the record to -GLEESON CJ: If so, why was not a contract entered into when the document on
page 4 was signed, bearing in mind that the letter on page 2 gives 14 days for
payment, so that aspect of the contract had been fixed?
MR GAGELER: That certainly was not the way the trial judge characterised it. The
way the trial judge found when the contract was entered into is at page 20, lines 15
and following:
It seems to me that on analysis there was then an offer by Finemores
to accept bailment of goods on the basis of the Freight Rate Schedule
and Conditions set out in the fax of 12 February 1999 together with its
being satisfied about Richard Thompson’s creditworthiness on the
basis of the information contained in the Application for Credit.
Finemores appears to have been satisfied about creditworthiness.
Richard Thomson accepted the offer by arranging for Finemores to
collect the goods at the airport and transport them to its store.
At line 36:
The relevant writing –
and the judge is there referring to the application for credit –
forms but part of one document out of a number which partly evidence
the contract.
So his Honour sees the contract had been formed after this document is signed and
returned.
GLEESON CJ: I suppose another way of expressing that argument is to say that
notwithstanding that the schedule of rates and conditions contains contractual
conditions and had to be signed, there was to be no contract until the carrier had
been satisfied of the creditworthiness of the customer, whatever the terms of
payment were, whether they were 7 or 14 days; therefore there could not have been
a contract formed until the application for credit was both signed by the customer and
accepted by the carrier.
MR GAGELER: Yes. If your Honour looks at the nature of the conditions that are set
out at page 4, they are very much mechanical conditions about picking up the goods,
et cetera, whereas even what is referred to in the body of the letter of 11 February as
being important, “we are not common carriers”, et cetera, those sorts of fundamental
boilerplate conditions are in the printed conditions of contract at page 6.
CALLINAN J: Mr Gageler, one matter. Would the result at first instance and in the
Court of Appeal have been any different had the respondent been a common carrier?
MR GAGELER: No.
CALLINAN J: Do you rely upon that, given that it made it clear, on one view of the
letter, that they are not going to carry as a common carrier because they are not
common carriers?
MR GAGELER: Yes, but, of course, critically what mattered for the issues joined
below was the exclusion of an indemnity clause in the conditions.
CALLINAN J: I know that, but the Court has to look at the whole document, all the
documents and the contractual document.
MR GAGELER: Yes, your Honour, I do call that in aid.
GLEESON CJ: I have some news for you, Mr Gageler. The technology has crashed
and your time is up. Mr White.
MR WHITE: Your Honours, it is our primary submission that the decision of the Court
of Appeal involved nothing more than the application of non-controversial contract
principles to the facts that were before the court. It was not, in our respectful
submission, an appropriate vehicle for special leave to argue that in some way the
scope of the principle enunciated in L’Estrange v Graucob should be revisited.
GLEESON CJ: When do you say the contract was entered into?
MR WHITE: As the Court of Appeal found, that was very difficult because, the
contract not being made up of one document and there were various
communications passing between the parties, none of the courts below I think made
a definite finding as to when the contract was formed.
GLEESON CJ: Let me ask you this question. Bearing in mind that the letter of
11 February refers to a credit application, is it reasonable to infer from that that credit
was not automatically going to be extended if, for example, this was a $2 company?
MR WHITE: I think that is right, your Honour.
GLEESON CJ: Bearing that in mind, how could the contract possibly have been
entered into before the credit application was signed, considered by the carrier and
agreed to?
MR WHITE: The contract may well have been subject to the creditworthiness of
Richard Thomson having been satisfied by the carrier.
GLEESON CJ: You mean a condition subsequent?
MR WHITE: Yes. Can I put it this way. The court found at page 73 of the application
book that the evidence of Mr McGee, who received the letter of 11 February,
understood that “the two documents enclosed with the message . . . to be the freight
rates and conditions referred to”. Part of the problem arose from the fact that neither
the application for credit nor the consignment note referred to in the letter of 11
February were annexed. You there have a situation in which Mr McGee, who, or
certainly someone on his behalf, signed the freight rate schedule and conditions, as
was found by the trial judge, believed that they were the conditions of carriage. At
page 76 of the application book at about line - - GLEESON CJ: Did you just say the finding that they believed?
MR WHITE: I beg your pardon?
GLEESON CJ: A finding that they believed something?
MR WHITE: A finding that Mr McGee believed that the documents that were annexed
to the letter of 12 February constituted the conditions referred to in the letter.
GLEESON CJ: What is the relevance of what Mr McGee thought?
MR WHITE: It is relevant, your Honour, for this reason, that - - GLEESON CJ: This was not a case of fraud or something, was it?
MR WHITE: No.
GLEESON CJ: Well, what does what was buzzing around inside the head of
somebody matter in a case like this?
MR WHITE: What it goes to, your Honour, is that the Court of Appeal found that
when the application for credit was placed before Mr Garden on 17 February for
signature, the conditions on the back of the application for credit had never been
brought to the attention of anyone from Richard Thomson.
CALLINAN J: You are assuming and the court seems to have assumed, as
Mr Gageler submitted, that this is a Ticket Case. That is what it really comes down to.
Parties’ beliefs about what the contract is and - - -
MR WHITE: I accept that, your Honour. Justice Bryson said the objective theory of
contract is well entrenched.
GLEESON CJ: Especially in the commercial context.
MR WHITE: Especially in the commercial context. He said that the principle in
L’Estrange v Graucob is relevant where there is no issue as to what the contract is or
its terms and, where a party has signed that document, there is no room for any
subjective analysis of what the party understood he or she was signing.
CALLINAN J: Does anybody suggest in this case that the contract consisted of other
than written terms?
MR WHITE: I do not understand that to be the case, no, your Honour.
CALLINAN J: So the contract is entirely in writing?
MR WHITE: The contract is entirely in writing.
CALLINAN J: So what does anybody’s belief about what it might mean matter?
MR WHITE: I accept that.
CALLINAN J: What the contract was is to be deduced from the writing.
MR WHITE: From the writing, but also an inquiry has to be undertaken to ascertain
what the parties regarded to be the terms of their contract. Justice Bryson said true it
is that where a signature appears on a document - - CALLINAN J: But that cannot be right, can it? Parties cannot say that the contract is
what they think it is.
MR WHITE: No, your Honour. Objectively ascertained to identify what the parties’
intentions were as to the terms of their contract.
CALLINAN J: Which is to be done entirely by reference to the writing.
MR WHITE: No, your Honour, by reference to where there is a signature, the
circumstances in which the signature was placed on the document. It must always be
the case, your Honour, that if there is an issue as to what the contractual terms were,
one must divine what the parties’ intention was by looking at the circumstances - - CALLINAN J: So if I have a mental reservation when I sign a contract, I am not
bound by it.
MR WHITE: The position of the Court of Appeal, your Honour, was at page 76 at
about line 35:
In response to Richard Thomson’s statement of 20 January –
that was the request to see whether the carrier could provide refrigerated transport
and the like –
Finemores had in a considered message on 12 February stated that
all the cartage was subject to conditions, and had enclosed a page of
conditions; and the conditions on the back of the Application for Credit
were not enclosed; the possibility that there would be further
conditions to those enclosed was not mentioned at all, nor was the
possibility that there might be another document with conditions on the
reverse side which [the applicant] also wanted to be part of the
contemplated arrangement. The message of 12 February . . . was not
an offer open to acceptance by a simple indication of acceptance; it
was not so according to its terms . . . Further
communications . . . were obviously contemplated . . . The Application
for Credit was mentioned in a request to complete it . . .
The Application for Credit was not altogether clearly an indication that
the conditions were to be part of the contractual arrangement - - -
GLEESON CJ: It says immediately above where the signature appears, “Please read
‘Conditions of Contract’ (Overleaf) prior to signing.” What was the lack of clarity?
MR WHITE: The lack of clarity, your Honour, was that the carrier did not bring to the
attention of Richard Thomson that those conditions might exclude, for example,
liability, might require indemnity - - GLEESON CJ: It said, “Please read them before you sign this thing”.
MR WHITE: Yes, but, your Honour, the Court of Appeal found that anyone signing an
application for credit might reasonably think that the conditions would relate to credit
rather than conditions relating to carriage.
CALLINAN J: He would soon find out, if he turned the thing over, as the document
suggested he do, and read it, what it did mean.
MR WHITE: Your Honour, the Court of Appeal found - - CALLINAN J: It is a bit like the mental reservation: “I won’t read the back in case it
contains something that’s unpalatable”.
MR WHITE: The evidence was that Mr Garden did not read the back of the
document.
GLEESON CJ: Again, what does that matter?
MR WHITE: Again, I accept that. If he had read the document, there may be some
force in the proposition that it should have become apparent to him what the
conditions related to.
CALLINAN J: But it was also accepted, was it not, that his failure to read the
document was not occasioned by any representation? That is at page 21.
MR WHITE: That is correct.
GLEESON CJ: It would not make any difference to the outcome of the case, would it,
if unknown to the carrier Mr Garden was blind?
MR WHITE: .....correct, but the Court of Appeal found - - CALLINAN J: Subject to non est factum.
MR WHITE: But always subject to an inquiry where there is an issue as to what were
the terms of the contract, an analysis of the circumstances in which the party came to
sign it and to ascertain whether the parties intended that condition or conditions to be
a part of that contractual arrangement.
GLEESON CJ: Mr White, the document is expressed in polite terms saying
immediately above the place for signature, “Please read what’s on the other side of
this before you sign it”. Would it achieve the result that the carrier contends for if the
document had said, “You are absolutely forbidden to sign this document until you
have read what’s on the other side”? The result would be the same according to you,
would it not?
MR WHITE: That may be so, your Honour, but one has to have regard to the
circumstances in which - - CALLINAN J: Only for the purposes of identifying what is the contract, not for
construing the contract.
MR WHITE: You have a factual matrix in which Richard Thomson is told in a letter
what the conditions will be.
GLEESON CJ: That is the point that I was getting at earlier with Mr Gageler. If you
look at what they were actually told in the letter, they were told, amongst other things,
that they were going to have to complete a form of application for credit. No doubt
somebody wanted to check up that they were not a $2 company, that they were
worth powder and shot.....they were going to have to give some information about
themselves. Then when you look at the form of application for credit that they are
required to sign, they are exhorted to read the conditions overleaf before signing.
What more can you do than that?
MR WHITE: The Court of Appeal said that because the facsimile of 12 February, in a
considered statement said that all cartage was subject to conditions and enclosed a
page of conditions relating to cartage, it was not reasonable without more to have
placed the application for credit before Mr Garden and get him to sign it - - -
GLEESON CJ: Was that on the theory that there was something misleading about
the conduct of the carrier?
MR WHITE: Whilst the Court of Appeal does not seem to say in terms that was the
case, in my respectful submission, a fair reading of the judgment does point to the
fact that Richard Thomson was misled in what the conditions of carriage were going
to be.
CALLINAN J: Would you not need pleadings about that? Would there not need to be
a real issue joined, assuming it is relevant and it is a defence, about which I have a
serious doubt? But assume it were, it cannot be invented by the court. It does seem
to have been a non-issue, and probably a non-issue because the correct view is that
it really is not relevant unless there is a full-blown allegation of misrepresentation. It
would probably need to be section 52 or fraudulent misrepresentation, I would have
thought.
MR WHITE: I think Dr Griffiths will deal with the pleading aspect, your Honour,
because it may well have been the case that such a matter was pleaded by Richard
Thomson, of course, for whom I do not appear.
CALLINAN J: You still have an equivocal finding about it anyway, and it is something
that a court, you would think, would need to be definite about rather than vague
about.
GLEESON CJ: Mr White, would you mind just explaining to us – and Dr Griffiths can
do this also – how the various respondents fit into this argument about the contents
of the contract of carriage. We dived straight into the issue that people want to make
the subject of the appeal, but can we just step back a moment and look at the
question of how the issue arises in relation to each of the three respondents.
MR WHITE: In 1998 Ebos Group Limited and Alphapharm, the second and first
respondents respectively, entered into a sub-distribution agreement to distribute the
doses of Fluvirin throughout Australia. As part of that agreement, legal title would
remain with Ebos until payment but risk passed to Alphapharm on delivery to a
designated warehouse, which was held by the trial judge to be the warehouse of the
applicant. At the time of the destruction of the goods, Alphapharm had asserted
dominion over the goods in the sense that they were taken from a large batch of
dosages, they were labelled for customers, thermometers were put in it for
temperature purposes and so forth.
At the time of the destruction of the goods, the trial judge found that whilst legal title
had not passed to Alphapharm because it had not then paid for the goods, it had a
right of immediate possession to the goods and therefore had standing to sue the
applicant in relation to their destruction. Richard Thomson was the organisation that
had arranged with the applicant for the storage of the goods prior to their
dispatchment to the customers of Alphapharm.
GLEESON CJ: What was it that made the terms and conditions of the contract
between Richard Thomson and the applicant binding upon the other two
respondents?
MR WHITE: His Honour found, as did the Court of Appeal, that there was no agency
as between Alphapharm and Richard Thomson in relation to that contract and there
was no agency found in relation to those two entities at all at any time. In relation to
Richard Thomson and Ebos, his Honour found that while it was true enough that
Richard Thomson had acted as the agent of Ebos for certain purposes, one being the
arrangement of the storage of the dosages, it did not extend to entering into the
contract which Richard Thomson did with the applicant.
GLEESON CJ: I have not understood your answer to my question. Is it the case that
the courts below found that the terms of the contract between Richard Thomson and
the carrier bound either or both of Alphapharm and Ebos?
MR WHITE: They found it did not.
GLEESON CJ: Then what is the relevance to Alphapharm and Ebos of the dispute
as to whether the conditions printed on the back of the application for credit formed
part of the contract between Richard Thomson and the carrier?
MR WHITE: The applicant puts in issue that finding as to agency and contends there
was an agency relationship between Richard Thomson and Alphapharm at the time
of entering into the contract.
GLEESON CJ: You mean that in order for the applicant to succeed against the first
respondent and the second respondent, it would need not only to defeat the
argument that prevailed about the terms of the contract, including what was on the
back of the application for credit, it would also need to make good another argument
on which it failed in the courts below relating to the binding effect of those terms on
Alphapharm and Ebos?
MR WHITE: That is correct.
CALLINAN J: But as to which the primary facts are undisputed, is that right?
MR WHITE: As we understand it, that is correct.
CALLINAN J: The inference is to be drawn from the found primary facts?
MR WHITE: That is true. I should say to clarify that, if it is not entirely clear, of course
the applicant relies on the indemnity clause on the back of the application for credit to
bind Richard Thomson in respect of any liability that the applicant has to any other
party, so it is relevant.
CALLINAN J: It was both an exemption clause and an indemnity clause?
MR WHITE: Correct. There are two clauses. One is clause 6 and I think the
indemnity is clause 8.
CALLINAN J: But the indemnity clause would not bind the other two respondents.
MR WHITE: That is correct. It is only in relation to Dr Griffiths’ client that it might bind.
GLEESON CJ: You have three minutes to go.
MR WHITE: Your Honours, very briefly, in relation to the assertion that the Court of
Appeal failed to accord the applicant an appeal within the meaning of section 75A, in
our respectful submission, their Honours in fact state that there was ample basis for
concluding that the parties did not intend to include the conditions on the back in their
contractual arrangements. Without taking your Honours to the detail of their Honours’
reasoning, it is quite clear, in our respectful submission, that Justice Bryson, with
whom Justice Sheller agreed and Justice Young, all believed that the findings of fact
made by the trial judge were available to him. In fact, I think Justice Bryson says
expressly:
Far from holding that the finding was wrong, I am of the view that
there was ample basis for it, and it should not be upset.
In our respectful submission, their Honours did not misconceive the obligations of the
Court of Appeal when reviewing a decision of the District Court.
GLEESON CJ: Thank you. Yes, Dr Griffiths. You appear for both Ebos and Richard
Thomson?
MR GRIFFITHS: That is correct, your Honour.
GLEESON CJ: What is Ebos’ interest in this? I do not see anything in the application
for special leave to appeal that challenges the conclusion that Richard Thomson was
not an agent of Ebos.
MR GRIFFITHS: Yes, there is, your Honour, at page 88 of the application book,
ground 7.
GLEESON CJ: I was looking at page 84.
MR GRIFFITHS: The applicant seeks to put that finding in contention.
GLEESON CJ: So that, leaving aside the position of Richard Thomson, in order to
succeed against the first and second respondents, the applicant is going to have to
make good an argument to the effect that they are bound by the terms and
conditions, even assuming those terms and conditions on the back of the application
for credit were part of the contract with Richard Thomson?
MR GRIFFITHS: That is our position, your Honour.
GLEESON CJ: What was the process at trial and on appeal by which it was argued
that Alphapharm and Ebos became bound by those terms and conditions, including
the indemnity?
MR GRIFFITHS: Your Honour, the proceedings were initially commenced by
Alphapharm and Ebos alone as plaintiffs and the applicant before this Court served a
cross-claim on Richard Thomson in order to rely upon the indemnity provision in the
event that the two plaintiffs were successful against it. I may not have answered
your Honour’s question; I may have misunderstood it.
GLEESON CJ: So the - - MR GRIFFITHS: Because the contract which was found to exist was a contract
between the carrier and Richard Thomson.
GLEESON CJ: But in relation to the claim for damages by Alphapharm and Ebos
because of the destruction of their goods, what did the conditions of contract
between Richard Thomson and the carrier have to do with that claim?
MR GRIFFITHS: In our respectful submission, nothing. It only would be if the plaintiff
in the proceedings at first instance was found liable that an issue of indemnification
from Richard Thomson would become relevant. It was, of course, argued, I might
add, by the carrier at first instance that Richard Thomson was acting as the agent of
Alphapharm, but that finding, as my learned friend has already indicated, was
rejected and that is now pressed before this Court.
GLEESON CJ: But was there any defence in the claim made by Alphapharm and
Ebos for damages for breach of the contract of bailment or for damages to the effect
that the conditions on the back of the application for credit operated in some way to
defeat that claim?
MR GRIFFITHS: Your Honour, it was, I am told.
GLEESON CJ: That is in the pleadings, is it? Where can we see that?
MR GRIFFITHS: Apparently the pleadings are not in the application. I do not believe
the relevant pleadings are in the book.
CALLINAN J: I do not think they are included, Dr Griffiths.
MR GRIFFITHS: No, I do not think they are. The only pleadings that have been
included are in our supplementary folder that I wanted to take the Court to in due
course, but it is on another point that the Chief Justice has raised, namely the
misrepresentation point.
CALLINAN J: Dr Griffiths, the trial judge did not deal with agency, did he, or am I
wrong about that?
MR GRIFFITHS: Yes, he did. He found that there was no such agency and that was -CALLINAN J: Where do I find that? It was not strictly necessary for him to do so, I
suppose.
MR GRIFFITHS: Pages 16 and 17 of the application book, your Honour.
Your Honours then see that there is some discussion on the point in the Court of
Appeal only in the judgment of Justice Young commencing at page 51. On this point
the other two members of the court agreed. Your Honours see the conclusion at the
bottom of paragraph 75 on page 51.
GLEESON CJ: I have to say that I am still at something of a loss to understand how
this contract law point affects or touches Alphapharm and Ebos.
MR GRIFFITHS: I am not sure that it does, with respect, your Honour. The contract
point touches the right to indemnification against my client.
GLEESON CJ: I understand that entirely. It is a third party claim.
MR GRIFFITHS: Indeed.
CALLINAN J: I suppose you would want to argue though on the same side as the
other respondent.
MR GRIFFITHS: Of course, because we do not get to the issue.
CALLINAN J: You do not get to that point.
MR GRIFFITHS: Then we do not get to any liability under the indemnity clause,
indeed.
CALLINAN J: So you say you would have an interest in the outcome anyway,
provisional interest?
MR GRIFFITHS: A provisional interest, but that takes me to my second point.
GLEESON CJ: Who do you mean by “we”? You are appearing for Ebos and Richard
Thomson, are you not?
MR GRIFFITHS: For both, your Honour, yes.
GLEESON CJ: I do not have any difficulty understanding the interest of Richard
Thomson Pty Limited in the contract point. I am afraid nobody has yet explained to
me the interest of Ebos Limited.
MR GRIFFITHS: I do not think there is any interest on the part of Ebos insofar as the
contract point is concerned. My understanding is that Ebos was added as a second
plaintiff in view of the potential for a dispute as to who had ownership of the goods at
the relevant time.
GLEESON CJ: However, at all stages of the proceedings Ebos and
Richard Thomson have had the same representation?
MR GRIFFITHS: That is correct, your Honour. Richard Thomson is a wholly-owned
subsidiary of Ebos. Ebos is a New Zealand company. Richard Thomson is the
Australian subsidiary. I did not act in the proceedings at first instance.
GLEESON CJ: In whose favour was the award of damages made, Ebos or
Alphapharm?
MR GRIFFITHS: In respect of both, your Honour.
GLEESON CJ: What, jointly, severally?
MR GRIFFITHS: I believe jointly.
GLEESON CJ: Alphapharm and Ebos are quite distinct entities, is that right?
MR GRIFFITHS: Yes, indeed.
GLEESON CJ: And the damages were awarded what, to both of them, or were
different damages awarded to each of them?
MR GRIFFITHS: If your Honours go to page 22 of the application book:
judgment for the plaintiffs against the defendant in the amount claimed
plus interest.
The orders are made on page 24.
GLEESON CJ: Was that a joint claim?
MR GRIFFITHS: It would appear so. Your Honours will see the formal orders are on
page 24. Can I move, if I could, to the second point? It relates to the Chief Justice’s
question about whether there was any point taken about misrepresentation. In our
respectful submission, there was and there has been from the outset a case of
misrepresentation advanced by Richard Thomson at least in order to seek relief
against the indemnity clause in the event that the indemnity clause was found to be
binding. If your Honours go to the supplementary folder of materials, your Honours
will see behind tab 6 a cross-claim filed on behalf of Richard Thomson in the
proceedings at first instance and your Honours will see that the whole cross-claim is
directed very much to a case of misrepresentation and/or misleading or deceptive
conduct.
GLEESON CJ: What findings were made about that?
MR GRIFFITHS: The only finding that was made – whether it was about that is
perhaps debatable - - -
CALLINAN J: It is not, is it?
MR GRIFFITHS: It is at page 21 in the trial judge’s reasons for judgment, where he –
it is not entirely clear whether or not this finding is being directed to an argument that
was advanced before the trial judge that the principle in L’Estrange v Graucob did not
apply because there was a misrepresentation within the meaning of that principle or
whether what the trial judge was directing his attention to here was the misleading
and deceptive conduct under section 52 of the Trade Practices Act, which is the
subject of the paragraphs in the cross-claim to which I just took your Honours.
Your Honours will see that the finding is at the bottom of page 20 going over to the
top of page 21, a finding – I think “equivocal” was the word used by Justice Callinan –
where his Honour said:
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.
If your Honours then may turn to page 22 of the application book at about line 15 and
onwards, your Honours see that the trial judge took the view that it was “unnecessary
to consider the cross claims by Richard Thomson and Ebos against Finemores.”
So as matters stood at the end of the District Court proceedings, this Court does not
have the benefit of any reasoning on the part of the trial judge in respect of that
cross-claim. That cross-claim before the District Court was then made the subject of
an amended notice of contention before the Court of Appeal which your Honours find
behind tab 8 of the additional materials. The amended notice of contention
your Honours will see in paragraphs 3 and 4 squarely raise the issue of
misrepresentation both in the context of the L’Estrange v Graucob rule but also
independently of that in paragraph 4 under both section 52 of the Trade Practices Act
and also section 51AC.
Let me, before I come to one other point, just complete that overview. At page 54 of
the application book at paragraph 91 of Justice Young’s judgment, his Honour says:
5. It is not necessary to deal with the issues raised in the notice of
contention. It is clear from what has already been said that RT –
Richard Thomson –
is not bound by any indemnity clause.
The misrepresentation case remains. It has not been heard and determined, in our
respectful submission, by either the trial judge or by the Court of Appeal.
GLEESON CJ: You mean if the appeal were allowed, the proper order for us to
make would be to remit it to the Court of Appeal?
CALLINAN J: This aspect of the case.
MR GRIFFITHS: This aspect of it would be necessary. This Court would not, of
course - - CALLINAN J: If Mr Gageler’s side lost, then that would be the end of the matter.
MR GRIFFITHS: That would be the end of it.
CALLINAN J: Whether that would be necessary or not would depend upon possibly
– and I do not say any more than possibly – a considered view of the finding on
page 21.
MR GRIFFITHS: It could well be. We would want obviously to be heard on that
because we believe we can still get there even despite that finding.
CALLINAN J: I am not saying you cannot.
MR GRIFFITHS: Yes, your Honour is quite correct. It would also be necessary, I
should add, for whichever court it is that would need to grapple with this aspect of the
case to deal with my learned friend’s contention, namely that we change the
goalposts. In our amended notice of contention, the argument put by my learned
friend in his reply – and he is correct to say that this issue was taken before the Court
of Appeal – was that the amended notice of contention raising the misrepresentation
point was, to use the language from his reply in these proceedings at page 123:
a new and unpleaded misleading and deceptive conduct case,
different from that considered and dismissed by the trial judge.
We do not agree with that, but that would be another issue between the parties that
the court in question would need to grapple with.
CALLINAN J: Whether you can get reliance upon it.
MR GRIFFITHS: Precisely. Your Honours, the third and final point that I wish to deal
with was simply to respond to the Chief Justice’s issue about whether or not there
was in evidence a copy of a signed document accepting the freight rate schedule and
conditions which is at page 2 of my learned friend’s slim booklet. The short answer to
that question is that yes, there was in evidence a signed copy of that document.
CALLINAN J: I think there are findings that both of the documents were signed,
Dr Griffiths, anyway.
MR GRIFFITHS: Your Honour may well have in mind paragraph 124 at page 70,
which accurately reflects the position but also reflects that it is a messy case. There
was no clear evidence of the date on which the freight rate schedule was signed. It
may have been signed when the application for credit was signed with the date, 17
February 1999.
CALLINAN J: He seems to accept that it was signed anyway.
MR GRIFFITHS: It was certainly signed, your Honour, and I have a copy of the
signed document here. It was signed actually by Mr Gardiner-Garden, who was also
the signatory of the credit application.
CALLINAN J: He gave evidence, did he not?
MR GRIFFITHS: He gave evidence, as well as Mr McGee, who was the general
manager. Mr Garden was the operations manager.
GLEESON CJ: Does either Ebos or Alphapharm fall within the definition of
“Customer’s Associates” in clause 3 of the conditions of contract printed on the back
of the application for credit form?
MR GRIFFITHS: That point has never been agitated to my knowledge at any stage
of the proceedings.
GLEESON CJ: It is supplemental to the agency question, is it not?
MR GRIFFITHS: Yes. My understanding is that it has not been agitated at all.
CALLINAN J: You would hardly regard the trial judge’s disposition of the issue of
agency as a comprehensive one.
MR GRIFFITHS: Mr White has indicated to me that he believes that the issue was
pleaded but was not dealt with. Another messy part of it perhaps, your Honour. They
are the submissions.
GLEESON CJ: Thank you, Dr Griffiths. Mr Gageler, in relation to the point of contract
that you want to argue, how do Alphapharm and Ebos get into the act?
MR GAGELER: Your Honour, Richard Thomson is here because of the indemnity
clause. Alphapharm is here because of the exclusion clause, which I need to
combine with the agency point. The agency point is not a special leave point and it is
not a big point. The universe of factors really referred to in the judgment in the - - GLEESON CJ: There is a Himalaya clause in the conditions and the conditions
expressly deal with the circumstances in which parties other than the parties to the
contract are going to be bound by its terms and, as I read it quickly, it is condition 3
that determines whether or not somebody other than Richard Thomson is bound by
these conditions.
MR GAGELER: Yes. It includes “the Customer’s principal”.
GLEESON CJ: Do either or both of Alphapharm fall within clause 3(b) of those
conditions?
MR GAGELER: Your Honour, our contention that we seek to agitate in ground 7 of
the notice of appeal is that Alphapharm falls within that description.
CALLINAN J: Dr Griffiths agrees that that was pleaded but not disposed of.
MR GAGELER: We take a different view, but in any event it was expressly dealt with
in the Court of Appeal. The facts really are within a very small compass. It is not a big
point, it is not a special leave point, but it can be dealt with comfortably on the
appeal. In relation to Ebos, your Honours, Ebos is only here because of the form of
the judgment. If your Honours look at page 17 of the reasons of the primary judge,
having gone to some lengths to determine whether it was Ebos or Alphapharm that
had a sufficient interest to sue, the finding was that it was Alphapharm, and the
holding at line 34:
There will therefore be judgment for the plaintiff Alphapharm against
the defendant –
The difficulty is that when judgment came to be entered, at page 24 of the application
book, paragraphs 1 and 2, it was “The First and Second Plaintiffs” – that was both of
them – “recover against” my client. So it is because of the form of the judgment that
Ebos is here – a purely formal party. The presence of Ebos does not matter.
Your Honours, so far as the misrepresentation point is concerned, that ought not be a
distraction in respect of the contract issue. The worst case scenario is that it is
something that could be remitted but, in our submission, a pretty quick look at the
facts and sequence of events in the course of the trial will show that the point sought
to be raised in the Court of Appeal by the notice of contention was a very different
point from the
one that was sought to be run at the trial. The misrepresentation case sought to be
run at the trial was based on the terms of the credit application itself and the
circumstances that it came to be passed across. That was dealt with, in our
submission, comprehensively by the trial judge in the passage that your Honours
have seen at the top of page 21. The case sought to be run in the Court of Appeal
was based on the earlier communications and some alleged misrepresentation
contained in them; a different case not explored.
In relation to the agency point, your Honours, the universe of fact is really in the
application at page 51, paragraph 74..... If the Court pleases.
GLEESON CJ: Thank you, Mr Gageler. In this matter there will be a grant of special
leave to appeal. Can I say, however, to counsel for all the parties that we will expect
the parties in the preparation of their written submissions to take particular care to
identify the issues that were pleaded and decided in the courts below, particularly for
the purpose of explaining clearly how the various parties are interested in and
affected by the decisions on those various issues.
AT 11.20 AM THE MATTER WAS CONCLUDED