Monarch Building Systems Pty Ltd v Quinn Villages Pty Ltd
[2006] QCA 210
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- Notable Unreported Decision
- Monarch Building Systems Pty Ltd v Quinn Villages Pty Ltd[2006] QCA 210
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Monarch Building Systems Pty Ltd v Quinn Villages Pty Ltd[2006] QCA 210
Monarch Building Systems Pty Ltd v Quinn Villages Pty Ltd[2006] QCA 210
SUPREME COURT OF QUEENSLAND
CITATION: | Monarch Building Systems P/L v Quinn Villages P/L [2006] QCA 210 |
PARTIES: | MONARCH BUILDING SYSTEMS PTY LTD (defendant/appellant) |
FILE NO/S: | Appeal No 10093 of 2005 SC No 2436 of 2001 |
DIVISION: | Court of Appeal |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 9 June 2006 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 4 April 2006 |
JUDGES: | Williams and Jerrard JJA and Mullins J Separate reasons for judgment of each member of the Court, each concurring as to the order made |
ORDER: | Appeal dismissed with costs |
CATCHWORDS: | GENERAL CONTRACTUAL PRINCIPLES – OFFER AND ACCEPTANCE – MATTERS NOT GIVING RISE TO BINDING CONTRACT – VAGUENESS AND UNCERTAINTY – SALE OF GOODS – where the respondent (manufacturer) and the appellant (developer) entered into an agreement for the design and supply of steel products – where the respondent provided a substantial quantity of product to be incorporated into the appellant’s development – where the appellant claimed that a concluded contract existed between the parties and hence it was entitled to set-off damages for delay and other breaches of contract against the money it owed to the respondent – where the respondent sued the appellant (quantum meruit) for the unpaid value of goods supplied – whether there was a concluded contract between the parties Alford & Ors v Ebbage & Ors [2004] QCA 283; Appeal No 8863 of 2003, 6 August 2004, cited Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153, cited Eastgate Properties P/L v J Hutchinson P/L [2005] QSC 196; SC No 8870 of 2003, 30 June 2005, cited Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601, considered Thorby v Goldberg (1964) 112 CLR 597, considered |
COUNSEL: | S W Couper QC for the appellant B A Laurie for the respondent |
SOLICITORS: | Plastiras Meredith Mohr for the appellant Simmons Crowley & Galvin for the respondent |
- WILLIAMS JA: After the close of pleadings (and that included the delivery by the appellant of the Third Amended Defence, Set-off and Counter-claim) it was ordered that there be "a separate determination of the issues raised by paragraphs 6 – 10 of the Third Amended Defence, Set-off and Counter-claim dated 23 December 2003 and paragraphs 4, 6 and 7 of the Reply and Answer dated 22 December 2004." That issue came before the Chief Justice and for reasons which he delivered he made a declaration "that there was not a concluded contract between the parties as alleged by the Defendant". From that order this appeal is brought.
- Essential facts are fully and accurately set out in the reasons for judgment of the Chief Justice, but in order to make my reasons for agreeing with his conclusion intelligible it is necessary to set out the material facts in some detail.
- The respondent is a manufacturer and supplier of steel products used in the building industry. In the year 2000 the appellant was the developer constructing a number of home units at Mt Coolum. The appellant’s Project Manager was Global Construction Management Pty Ltd ("Global"); the appellant admitted that Global was its agent for all purposes associated with the project and this litigation. There is no doubt that the respondent provided a substantial quantity of product for incorporation into the appellant’s development throughout the year 2000. Ultimately the respondent sued the appellant on the basis of a quantum meruit for the unpaid value of goods supplied. By its defence the appellant pleaded that a contract was in fact concluded between the parties and that, pursuant to the terms of that contract, the appellant was entitled to set-off against any monies owing to the respondent damages for delay and other breaches of that contract.
- At the outset it can be stated in broad terms that on 17 May 2000 the appellant forwarded to the respondent a draft contract in the TC/CM1–1999 form approved by the Master Builders Association; that draft contract bore the number 99Q/005‑002. It is not in dispute that the contract as so submitted was never signed by the respondent. Relevantly in correspondence in August 2000 the appellant claimed an entitlement to set-off or recover "delay costs"; that could only be a reference to the entitlement to liquidated damages for delay as provided for in the form of contract forwarded on 17 May 2000.
- In the appellant’s pleading of 23 December 2003 the following relevant allegations were made:
"6.In or about March 2000, the plaintiff and the defendant entered into an agreement for the design, fabrication, supply and delivery of the Goods.
- The contract was partly written, partly oral and partly implied.
…
- It was an express term of the Contract that:
…
(f)If the plaintiff failed to complete the Works or any stage of the Project, by the dates specified in the schedule to the Trade Contract Document (or within any extended time approved in writing by the Project Manager) the plaintiff would pay or allow by way of liquidated damages the sum stated in the schedule to the Trade Contract Document for each day during which the Works or the relevant stage remained incomplete (Clause 2);
(g)Stage 1 of the Works would commence on 15 May 2000 and be completed by 15 July 2000 and liquidated damages would be paid by the plaintiff to the defendant of $2,918 for each day of delay (Item D of the schedule to [the] Trade Contract Document)."
- In its response to that pleading the respondent denied there was such a contract as pleaded, and specifically denied any agreement with respect to the payment of liquidated damages.
- It was against that background that the matter came before the Chief Justice. In outlining the issues for determination counsel for the appellant said this:
"A contract was admitted [sic] for signature. It was returned, signed with some amendments. The defendant then returned some pages with further amendments. The conduct of the parties thereafter constituted this situation, in my submission: that the contract was agreed but for [the] the liquidated damages clause, and my primary submission will be [that] your Honour will find there was a contract complete and certain but shorn of the liquidated damages provision. That is the conduct of the parties after the plaintiff said, ‘You haven’t placed liquidated damages for us before. We will not agree to pay them.’ The conduct of the parties thereafter was consistent with there being an agreement otherwise complete but shorn of that provision."
- It is immediately obvious that the issue the Chief Justice was being asked to determine was inconsistent with the conduct of the appellant up to that point of time. Until then, both in correspondence particularly in August 2000 and in its last amended pleading, the appellant asserted that the contract contained an express clause providing for liquidated damages. Once counsel made that statement to the Chief Justice the appellant was patently contending for a contract different from that which it had asserted at all material times up until then.
- Strictly speaking the preliminary issue ordered to be separately determined by the order of 28 January 2005 could have been simply resolved. Clearly there was no contract as alleged in paragraphs 6 to 10 of the Third Amended Defence, Set-off and Counter-claim. But the Chief Justice also considered the issue raised by counsel for the appellant at the outset of the hearing before him, namely whether it could be said there was a contract, entered into in March 2000, in the TC/CM1-1999 form, but without a liquidated damages provisions. That was the issue raised by counsel for the appellant on the hearing in this Court and for that reason it is necessary for this Court to consider the broader question.
- Against that background it is necessary to consider the relationship between the parties step by step.
- On 8 December 1999 and 3 February 2000 the respondent submitted prices for supplying material for 57 units in Stages 1 and 2 of the proposed development. The latter document referred to a total price of $763,500. There was then a meeting on‑site on 7 March with a view to approving trade contracts. Global then prepared a document dated 10 March 2000 relating to a tender from the respondent for "steel framing/part roofing supply" and referring to a total tender price of $774,486. Then on 21 March 2000 Global wrote to the respondent as follows:
"We are pleased to confirm our client’s acceptance of Monarch Building Systems Pty Ltd as the successful trade contractor for Stage 1 of the Steel Framing/Part Roofing Supply package to the above project for the fixed lump sum of $360,435 …
Similarly acceptance is given towards Stage 2 works for the provisional sum of $403,065 …, subject to client approval to proceed with Stage 2 works.
Formation of the trade contract would be deemed to include the following:
- [(a) to (e) referred to drawing specifications and programs].
(f)Acceptance of our Standard Trade Contract Agreement and Annexures.
…
- Our Standard Trade Contract Agreement will be forwarded in due course for your execution.
…"
- The respondent replied by letter dated 22 March 2000 relevantly stating:
"Regarding your letter dated 21 March 2000 that refers to trade contract agreements throughout, Monarch Building Systems is not a trade contractor as we are supplying materials only. Therefore your Trade Contract Agreement and Annexure B are not applicable to us. To follow is a copy of our standard supply terms …"
- Accompanying that letter was a copy of the respondent’s document entitled "Conditions of Sale". There was then a site meeting on 27 March 2000 at which the appellant, the respondent, Global and other participants in the project were represented. It is clear from the minutes of that meeting that the project was underway with the respondent as a main supplier of materials. By fax on 4 April 2000 Global forwarded to the respondent a blank contract in the TC/CM1-1999 form. The fax requested that the respondent "identify which areas you believe do not apply in your situation". It should be noted that no amount for liquidated damages was specified in the document so sent; nor were commencement or completion dates specified. That document as it appears in the record book (pages 103-123) has a number of clauses crossed out and a number of amendments made. It is not clear who was responsible for each of those alterations, but it was accepted that it was the respondent who wrote the words "Design, Supply and Delivery" in clause 24.5.
- By fax dated 5 April 2000 Global forwarded to the respondent the supply program for Stage 1 of the development. Then by fax on 7 April 2000 the respondent returned the "Proposed Trade Contract" it had received from Global on 4 April with amendments proposed by the respondent. The document so returned is that which appears from pages 149 to 172 of the record. The alterations are obvious. Importantly no amount was included in the standard clause in that document relating to liquidated damages, either as sent or returned. Also of some significance is the fact that the description of the work inserted by the respondent was "Design, Supply and Delivery of Steel Building Frames (no on-site trade work is included)." The response from Global was by fax on 7 April reading as follows:
"Further to your fax dated today’s date we wish to advise that we concur with you on some of the issues raised and will inform you of our final proposal (which will be the minimum acceptable to Global Construction Management) early next week."
- Then followed the more substantial response by letter dated 10 April 2000. It dealt with the document as returned by the respondent on a page by page basis "commenting and clarifying our minimal requirement as opposed to your inserted notations". Global put forward an altered description of work to that inserted by the respondent. It is not necessary to detail Global’s response; it is sufficient to say that a number of the amendments proposed by the respondent were not accepted. Of particular importance is the fact that the letter did not refer in any way to liquidated damages; certainly no daily amount for liquidated damages was mentioned.
- There was another site meeting on 11 April which referred to materials being supplied by the respondent.
- On 14 April 2000 Global sent a letter to the respondent which largely replicated that of 10 April 2000; it corrected some matters and clarified others. Again it is not necessary to refer to it in detail. But significantly it made it clear that there was still a dispute between the parties as to what the terms of the contract should be, and again there was no reference at all to liquidated damages or how they were to be calculated.
- On 19 April 2000 the respondent forwarded a letter setting out a "program for frame deliveries". There was obviously a meeting between the parties on 18 April 2000 with respect to the terms of an agreement still in dispute and in consequence Global sent the respondent a letter dated 19 April 2000 setting out the latest position. Some further agreement was reached as evidenced by that letter but there were still items in dispute. Again there was nothing in the letter about liquidated damages. Discussions followed that letter and on 19 April 2000 Global sent a further letter dealing with those matters, but significantly the basic position was not altered thereby.
- The respondent reviewed the program for frame deliveries and forwarded a letter on 20 April setting out the latest position. That indicated deliveries commencing on 15 May 2000 and concluding on 8 June 2000.
- Then came a letter which was referred to extensively in the course of submissions in this Court; it was from Global to the respondent dated 20 April 2000 and stated, inter alia:
"Please proceed with the works for the supply, fabrication, installation of box band system to Type F deck floor system, for the additional cost of $40 per Type F Block of units."
- The point emphasised by counsel for the respondent was that that letter, along with other matters referred to at site meetings, confirmed that the supply of materials by the respondent was proceeding at the request of the appellant notwithstanding the fact that no contract had by then been formalised.
- It was subsequent to that, on 17 May 2000, that the respondent was sent a contract in the TC/CM1-1999 form bearing number 99Q/005-002. The oral evidence confirmed that the document was sent on that date though it bears date 21 March 2000. For the first time figures were inserted into the provisions in the draft contract relating to liquidated damages. Also for the first time, commencement and completion dates were specified for Stage 1. The layout of those provisions can be seen from the reasons for judgment of the Chief Justice.
- The material establishes that the first delivery was made by the respondent on
6 May 2000, that is before that contract document was received. The respondent's first invoice was dated 28 May. Further, between when that contract document was received and the respondent replied on 30 May 2000, there were meetings and regular correspondence between the parties in relation to the supply of material by the respondent.
- The Managing Director of the respondent made a number of alterations to the document forwarded by Global on 17 May and initialled those alterations. In particular he crossed out the provisions relating to liquidated damages and placed his initials alongside those amendments. With those amendments he signed the document at the appropriate place. That document with those amendments was returned undercover of a letter dated 30 May 2000 which highlighted the alterations that had been made. In particular the letter stated:
"The value of liquidated damages has never been part of the contract negotiations and has been assumed by Monarch as Nil. Monarch does not accept this late inclusion."
- Global responded by letter of 2 June 2000. For the first time in correspondence Global inserted in the reference heading for the letter the words: "Design and Supply TC/CM1 Contract No 99Q/005-002." Relevantly that letter said: "We do not accept your alterations to page 4 & 5 to the TC/CM1 Contract . . ." It asserted that an identified specification "will remain as a contract condition". It also asserted that certain minutes "will remain within the contract documents", and refused to accept the "late inclusion of Monarch's letter dated 7 April 2000" as one of the contract documents. It then very relevantly said that the clauses relating to liquidated damages "will not be excluded". The letter then returned "unblemished pages 4 and 5 of the TC/CM1 Contract for your correct notarisation".
- Interestingly that letter also stated that "your Claim No 1 has been processed for payment . . . without prejudice to the outstanding contract notarisations."
- There followed a site meeting on 5 June 2000 at which representatives of both Global and the respondent were present. Instructions were given at that meeting with respect to the supply of materials by the respondent.
- The respondent replied to Global's letter of 2 June by letter dated 5 June 2000. Critically that letter stated:
"As you are aware we have not yet signed a contract for this project because there are some matters still not agreed. There are two important matters that I believe you should be aware of :
Liquidated damages
There was no disclosure or discussion regarding an amount of liquidated damages prior to the complete contract delivered to us by yourself. While we are making our best endeavours to get frames to you quickly and committing considerable resources to this project, we are not prepared to accept your inclusion of liquidated damages."
- The other matter addressed in that letter as not being the subject of agreement related to "shop drawings". The letter concluded by saying that the writer would "take up the other outstanding contractual matters direct with" a named executive of Global.
- Between 2 June and 26 June 2000 there were some 11 letters written by Global to the respondent dealing with the supply by the latter of materials for the project; each of those letters in the reference heading stated "TC/CM1 Contract No 99Q/005-002." That was followed by a letter, similarly headed, of 4 July relating to variations in the supply of material.
- By July 2000 payment had been made to the respondent for the supply of some materials, but apparently invoices had not been paid in full as the appellant was claiming an entitlement to "retention monies". That situation resulted in the respondent writing to Global on 6 July 2000 as follows:
"Monarch Building Systems is currently contracted to supply steel frames and trusses to the Coolum Fairways project, reference Design and Supply TC/CM1 Contract No 99Q/005-002.
Please find attached Bank Guarantees . . . . The Guarantees are being provided in lieu of retention monies currently being withheld.
Please release forthwith all retention monies currently held under this contract. Currently this totals $3,591.40 withheld from invoice No 158 for work completed up to the end of May 2000."
That appears to be the only time the respondent referred to a contract number. The letter was signed by Fisher, Senior Project co-ordinator, and not Warner, the Managing Director, who had signed earlier letters dealing with contract negotiations.
- That elicited a response from Global in the form of a letter dated 13 July 2000:
"In reference to your correspondence of 6 July 2000 . . . towards Bank Guarantees, we confirm the following.
As verbally advised . . . that as Construction Manager for the Principals, bank guarantees with expiry dates are not acceptable under terms.
. . .
We further note your reference towards TC/CM1 Contract No 99Q/005-002 of which is yet to be duly notarised in full, for which is required with urgency. . . ."
- The respondent replied the following day setting out "target dates for delivery of frames and trusses for each Building and Stage 2". The letter also contained the statement: "We reiterate that we do not accept any liquidated damages and that a Bank Guarantee dated for the warranty period be submitted in lieu of cash retention." Thereafter in July there was correspondence between the parties relating to the supply of materials by the respondent. Included in that correspondence were directions given by Global as to the supply of materials. On 27 July 2000 Global requested a "block by block break-up of prices" to enable them to complete a cash-flow for the project. There was also payments made during that period; for example on 1 August 2000 there was a payment of $64,210.70.
- The next relevant letter was from Global to the respondent of 31 July 2000. It was in the following terms:
"In reference to the above noted TC/CM1 Contract notice is given of delays being incurred to the works of Block 1 roofing. . . .
In accordance with clause 1A subclauses (i), (iii) and (v), Monarch Building Systems have failed to comply with such contractual requirements.
Therefore, in accordance with Clause 2A of your TC/CM1 contract notice is herewith given of the Construction Manager's reserved right to pursue Monarch Building Systems for all delay costs associated with your failure to provide materials."
- The respondent replied by fax on 2 August 2000. At the outset it stated: "We are astounded at the above notice dated 31 July 2000 when we have worked very hard to meet all requests put to us in terms of changes of program, erection documentation, footings etc. In this fax you have raised three areas where you believe that Monarch are delaying your progress." The fax then detailed a response with respect to each of those three areas.
- Then came the letter from Global of 7 August. In relation to the respondent's fax of 2 August 2000 it said: "We can only assume your opening paragraph is a tongue in cheek attempt at humour." The letter went on to assert delay on the part of the respondent in supplying materials.
- There then followed other correspondence including the lodging of progress claims and their consideration.
- Relevantly one can jump ahead to the letter from Global of 19 August 2000. Materially it said:
"Therefore, in accordance with Clause 2A of your TC/CM1 Contract notice is herewith given of the Construction Manager's reserved right to pursue Monarch Building Systems for all delay costs associated with your failure to provide labour and materials attendance."
- Then followed the letter of 22 August from Global in which it was noted that on "pursuing correspondence it particularly noted that your payments are made on account only, and further investigation has revealed you have not signed your contract."
- Monarch's response was the letter dated 23 August 2000, relevantly stating:
"You have also stated that Monarch Building Systems has not signed the contract. I trust that you were aware that I have signed contracts on behalf of Monarch Building Systems which were submitted to your Project Manager on 30/5/00. Your version of the contact had been amended to align with our negotiated agreement, as advised to you in the letter covering the signed contract. It is therefore your company which has failed to sign a contract on behalf of your client and in contravention of State Legislation."
- The foregoing is a complete review of written material in the record books relevant to the issue of whether or not there was a contract between the parties.
- Short oral evidence was called from three officers of Global on behalf of the appellant. That evidence did not significantly impact upon what can be gleaned from reading the written exchanges between the parties. Densely, the Construction Manager of Global, conceded that at all times it was asserted on behalf of the appellant that the liquidated damages clauses in the TC/CM1 - 99 form of contract applied. Further, in that regard, he agreed that the "delay costs" claimed by the appellant were calculated in accordance with the liquidated damages formula in that contract. There can be no doubt that in claiming "delay costs" the appellant was relying on the liquidated damages provisions in the form of contract sent to the respondent on 17 May.
- It is in that factual situation that it has to be determined whether or not there was a contract (either as pleaded or orally asserted at first instance) between the parties. As already noted, the pleadings alleged a contract containing the liquidated damages provisions set out therein. As stated previously, it was impliedly conceded by counsel for the appellant that there was no such contract between the parties when he asked the learned judge at first instance to find a contract without the liquidated damages provisions.
- Neither at first instance, nor on the hearing of the appeal, did counsel for the appellant contend that there was some contract between the parties other than one based on the TC/CM1-99 form. Whether or not the conduct of the parties could have resulted in a contract in some other form being implied was not argued. The general consensus appeared to be that if there was not a contract in the form contended for by the appellant then the rights of the parties fell to be determined upon a quantum meruit.
- To my mind one other problem was not adequately addressed by counsel for the appellant. As noted in paragraph [25] of these reasons the appellant did not accept a number of amendments (other than those relating to liquidated damages) made by the respondent when its director signed the contract document as returned under cover of the respondent's letter of 7 April. It is certainly not clear to me whether the appellant was contending for a contract in the precise form signed by the respondent's director and returned on 30 May, or in the form with the "unblemished pages" returned with the letter of 2 June. That really highlights the problem faced by the appellant in establishing with any degree of certainty the terms of the contract which it contends existed between it and the respondent.
- To my mind there is force in the submission of counsel for the respondent that at material times there were two streams of correspondence. One stream requesting the supply of materials, and dealing with an appropriate timeframe for such delivery. The other stream related to the terms of a contract between the parties. In accordance with correspondence in the first stream delivery had begun well before the submission of the draft contract by the appellant on 17 May. Further the supply of materials continued notwithstanding the impasse reached in the contracted negotiations.
- The law applicable when the Court is required to determine whether or not there was a contract between the parties is clear: it is sufficient to refer to Alford & Ors v Ebbage & Ors [2004] QCA 283 at paras [118] to [126]; Eastgate Properties P/L v J Hutchinson P/L [2005] QSC 196 at paras [135] to [140]; and Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at 163 – 4 per Heydon JA. In my view the law was succinctly stated by Bingham J at first instance in Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601 at 611 where he said:
"Where the parties have not reached agreement on terms which they regard as essential to a binding agreement, it naturally follows that there can be no binding agreement until they do agree on those terms: see Rossiter v Miller (1878) 3 App. Cas. 1124 at 1151 per Lord Blackburn. But just as it is open to parties by their words and conduct to make clear that they do not intend to be bound until certain terms are agreed, even if those terms (objectively viewed) are of relatively minor significance, the converse is also true. The parties may by their words and conduct make it clear that they do intend to be bound, even though there are other terms yet to be agreed, even terms which may often or usually be agreed before a binding contact is made: see Love and Stewart Ltd v S Instone and Co Ltd (1917) 33 TLR 475 per Lord Loreburn L. C. at p 476."
- To similar effect is an observation by Kitto J (with the concurrence of other members of the High Court) in Thorby v Goldberg (1964) 112 CLR 597 at 603:
"It is only where future agreement is required in order that the agreed provisions and those to be agreed shall operate together as one contract that the agreed provisions cannot be treated as themselves constituting a contract."
- Put in another way, if a term, regarded by the parties as essential to there being a binding agreement, is not agreed upon, then other terms agreed upon in the course of the negotiations will not constitute a binding contract between the parties.
- In the present case any objective onlooker would not conclude that there was an agreement between the parties evidenced by the TC/CM1-1999 form of contract as submitted to the respondent on 17 May. Nor would such an onlooker conclude there was an agreement between the parties evidenced by the amended form returned by the respondent on 30 May. In each case that would be so because it was clear that the appellant regarded the provisions as to liquidated damages as essential and the respondent was not willing to accept those provisions as terms of any agreement with the appellant. The letter from Global of 2 June, the response of the respondent of 5 June, the Global letter of 13 July, the respondent's letter of 14 July, Global's letters claiming "delay costs", and the appellant's pleading alleging the liquidated damages provisions as express terms of the contract all point to and support that conclusion. As each of the parties regarded the inclusion or exclusion respectively of the liquidated damages provisions as essential to the existence of a contract containing the other terms set out in form TC/CM1-1999 there could be, in the light of the principles referred to above, no contract limited to the terms contained in that form other than those relating to liquidated damages.
- There was obviously some arrangement between the parties relating to the supply of materials by the respondent for the appellant's project. As already noted the Court was not asked to determine whether the evidence established some other contract than that contended for by the appellant; the matter was put to the Court on the basis that if there was no contract as contended for by the appellant then the respondent's claim was to be resolved on a quantum meruit basis.
- It follows that the judgment at first instance was clearly correct in concluding that there was no contract between the parties as contended for by the appellant in paragraphs 6 to 10 of the Third Amended Defence, Set-off and Counter-claim dated 23 December 2003. Further, the judgment at first instance was also correct in concluding that there was no contract as contended for in oral argument, namely a contract in the TC/CM1-1999 form without the liquidated damages provisions.
- It follows that the appeal should be dismissed with costs.
- JERRARD JA: In this appeal I have read the reasons for judgment of Williams JA, and the order proposed by His Honour, and respectfully agree with those reasons and order, and that Mr Laurie (for the respondent) had the better of the argument on the appeal.
- The respondent was supplying material and doing work for fees it charged, and for which it was paid from or about 6 May 2006, and while the fees charged became referable to the terms of the proposed contract, both parties knew that no agreement had been reached on liquidated damages. That was clear from the correspondence in which the appellant said either that it wanted such a term, as on 2 June 2000; or that there were such terms in the contracts between them, as was claimed on 31 July 2000 and 19 August 2000. Equally it was clear that Monarch said there was no such term, on 5 June 2000; and that it had not and would not agree to one, on 14 July 2000.
- I agree with Williams JA, and the submission of Mr Laurie, that there were plainly enough two themes in the correspondence passing between the parties, one devoted to the supply of materials and building parts and to paying for those, and the second to the negations as to the terms of the formal contract between them. Those unresolved negotiations pretty quickly reached a date whereby if Monarch agreed to the liquidated damages provisions demanded by the appellant, Monarch would automatically be liable to pay those damages, and would accordingly be supplying building materials for nothing. The liquidated damages provision asked for by the appellant was in the region of $2,500 per day. That makes it objectively very unlikely that Monarch either would or did ever agree to such a term, although the appellant said more than once that the term had been agreed, and that Monarch was liable to pay it a penalty, and counter-claimed for it.
- The appellant’s senior counsel, Mr Couper, says that the objective inference is that the parties had agreed to a contract without that liquidated damages clause, but that the appellant kept asserting (wrongly) that there was a such a term. His submission was that the parties had agreed to defer the issue of liquidated damages; and in the alternative that a failure to agree on that unresolved issue did not make the contract either void or unenforceable, citing the reasoning in Pagnan SpA v Feed Products Ltd, referred to by Williams JA.
- I respectfully observe that Mr Couper QC presented that argument well, but, that as Mr Laurie submitted, the assertion relied on conduct by the parties after the date on which the appellant contended that the contract had been agreed, but subject to the dispute about liquidated damages (and perhaps some other small clauses). Mr Laurie’s submission pointed out that the same conduct was happening before the contracts were being passed between the parties as occurred after, and that the argument equally supported an inference (as the appellant originally claimed) of an agreement to a contract with the liquidated damages clause. As he contended, it simply depended upon the date selected; in the pleadings it was 3 March 2000, in the argument either 19 July 2000 or 23 August 2000, (or thereabouts), but there was no magic in those dates. The parties had simply kept doing after those various specified dates what they had been doing before, namely on the one hand supplying and on the other hand paying for materials, in general accordance with the terms of an unsigned contract as to price and quantity. Each party by that conduct accepted that the prices charged were fair or justifiable, and the quantity supplied appropriate. But the prices charged were not referable to any specified price agreed in the contract, other than as a proportion (unspecified) of a total contract price.
- I agree with the submission that from that conduct no binding agreement could be objectively inferred, as opposed to simply a series of quantum merit claims, which were based on the acceptance that the terms of the proposed contract were a fair and proper guide, and on the expectation that the contract would be signed. It was not, and there was no agreement on what each party clearly considered to be a significant term. Further, both parties considered that execution of the contract was an important step, which would then bind that party to its terms.
- I agree the appeal should be dismissed.
- MULLINS J: I agree with Williams JA.