Mermaids Cafe & Bar Pty Ltd v Elsafty Enterprises Pty Ltd
[2010] QCA 271
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- Notable Unreported Decision
- Appeal Determined (QCA)
- Mermaids Cafe & Bar Pty Ltd v Elsafty Enterprises Pty Ltd[2010] QCA 271
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Mermaids Cafe & Bar Pty Ltd v Elsafty Enterprises Pty Ltd[2010] QCA 271
Mermaids Cafe & Bar Pty Ltd v Elsafty Enterprises Pty Ltd[2010] QCA 271
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | SC No 12406 of 2008 |
Court of Appeal | |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | |
DELIVERED ON: | 8 October 2010 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 17 September 2010 |
JUDGES: | Holmes, Fraser and Chesterman JJA Separate reasons for judgment of each member of the Court, each concurring as to the order made |
ORDER: | Appeal dismissed with costs |
CATCHWORDS: | CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – AGREEMENTS CONTEMPLATING EXECUTION OF FORMAL DOCUMENT – WHETHER CONCLUDED CONTRACT – where parties fell into dispute as to the renewal of a sublease – where parties met on 15 January 2010 in an endeavour to compromise the litigation – where the meeting produced a hand written document signed by the parties – where trial judge read the document by reference to an earlier letter sent by the respondent’s solicitor which was used as the agenda for the meeting – where trial judge made a declaration that the action and counter-claim had been effectively compromised – where appellant argued no binding agreement had been made at the conclusion of the meeting – whether the handwritten document was intended to be an immediately binding agreement – whether any agreement is uncertain and/or incomplete Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, considered G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, followed Godecke v Kirwan (1973) 129 CLR 629; [1973] HCA 38, followed Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72, followed Moffatt Property Development Group P/L v Hebron Park P/L [2009] QCA 60, cited Scammell (G) & Nephew Ltd v Ouston [1941] AC 251, applied TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130, cited The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54, cited |
COUNSEL: | A P J Collins for the appellant C D Coulsen for the respondent |
SOLICITORS: | Fitz-Walter Lawyers for the appellant QBM Lawyers for the respondent |
[1] HOLMES JA: I agree with the reasons of Chesterman JA and with the order he proposes.
[2] FRASER JA: I have had the advantage of reading the reasons for judgment of Chesterman JA. I agree with those reasons and with the order proposed by his Honour.
[3] CHESTERMAN JA: The respondent holds a lease from the Crown over land in Goodwin Terrace at Burleigh Heads on which the Burleigh Beach Pavilion stands. The appellant took a sublease of part of the ground floor of the Pavilion for use as a restaurant for a term of five years which expired on 25 June 2008. A dispute whether the sublease contained an option to renew was determined in the appellant’s favour after a trial in the commercial list. Thereafter the parties fell into a second dispute, whether the appellant had lost the right to exercise the option because it had breached terms of the sublease.
[4] The second action came on for trial before Dutney J but had not concluded when his Honour died.
[5] That action was to be retried pursuant to s 297 of the Supreme Court Act 1995, before Margaret Wilson J. Three days, commencing 8 February 2010, were allocated.
[6] On 15 January 2010 the parties met in an endeavour to compromise the litigation. They now dispute whether they succeeded. The appellant contends that no binding agreement was made. The respondent contends that the appellant’s cause of action has been effectively compromised.
[7] The three day trial to determine whether the appellant had validly exercised its option to renew the sublease was instead taken up by evidence and argument on the separate point whether a binding agreement of compromise had been made. On 19 March 2010 Margaret Wilson J declared that the appellant’s claim, and the defendant’s counter claim, had both been subsumed into an agreement.
[8] The appellant seeks to have the declaration set aside and asks for an order that its second action proceed to a second trial.
[9] The events which led to the making of the agreement were fully described in the reasons for judgment. (Mr Ingall described himself in evidence as “the director of (the appellant)”).
[10] Her Honour said:-
“[14] On 15 January 2010 the parties met to try to resolve outstanding issues in the absence of their lawyers. At the conclusion of that meeting Mr Ingall handwrote a document containing 14 numbered paragraphs. He and Mr and Mrs Elsafty initialled each page and signed the last page.
[15] The defendant alleges that the claim and counter-claim were compromised by an agreement reached at that meeting, and that the agreement is evidenced by that handwritten document.
[16] The meeting was attended by Mr Ingall, Mr and Mrs Elsafty, Mr Mark Henry (Mr Ingall’s financial advisor), Mr Stephen White, (a former building and plumber inspector who was doing some project management work for the Elsaftys) and Mr Michael Hart. Mr Hart, a well respected local businessman known to Mr Ingall and the Elsaftys, was the chairman.
[17] The defendant’s solicitors, Baxters, had written to the plaintiff’s solicitors Fitz-Walters on 22 December 2009 offering to settle the plaintiff’s claim on certain conditions. Mr Hart used that letter as an agenda. A redacted form of it was admitted into evidence. It was in these terms:-
‘The defendant offers to settle the plaintiff’s claim on the following conditions
1. Conditional upon the performance by the plaintiff of conditions 2 to 4 hereunder, the parties execute within 7 days of those conditions being satisfied a new sub lease for a further term of 5 years commencing 26 June 2008 and ending on 25 June 2013 to be submitted to the Minister administering the Land Act within 7 days of being executed by both parties and as follows
(i) Item 1 of the form 7 becomes Elsafty Enterprises Pty Ltd
(ii)Item 6 of the form 7 commencement date becomes 26 June 2008
(iii) Item 6 of the form 7 expiry date becomes 25 June 2013
(iv) Item 6 of the form 7 will also note 2 x 5 year options to renew
(v) Item 4 of the Reference Table becomes 26 June 2008
(vi)Item 5 of the Reference Table becomes 25 June 2013
(vii)Item 6 of the Reference Table rental becomes $248,869 plus GST for areas 3A, 3B, 5D & 6; $41,195 plus GST for area 4C; $5,280 plus GST for area 4F
(viii)Item 7 of the Reference Table CPI review dates become 26/06/2009, 26/06/2010, 26/06/2011, 26/06/2012. If first option exercised 26/06/2014, 26/06/2015, 26/06/2016, 26/06/2017 If second option exercised 26/06/2019, 26/06/2020, 26/06/2021, 26/06/2022
(ix)Item 9 of the Reference Table Market review dates If first option exercised 26/06/2013 If second option exercised 26/06/2018
(x) Item 10 of the Reference Table security amount $27,073.20
(xi) Item 12 of the Reference Table yes – 2 option periods
(xii)Item 13 of the Reference Table – first option period 5 years, second option period 5 years
(xiii)Item 14 of the Reference Table outgoings $2,873.84 plus GST with such amount to increase annually by the increase in the consumer price index in accordance with the formula in clause 5.1
(xiv)The definition of "we, us, our" changes from RJ Enterprises Pty Ltd to Elsafty Enterprises Pty Ltd
(xv)The sub lease terms are otherwise as contained in the expired sub lease 708858690
2. The plaintiff remove all of its plant and equipment from the service yard area (excluding rubbish bins) within 7 days of acceptance of this offer.
3. The plaintiff pay arrears of CPI rent increase due since 26 June 2009 to date within 7 days of acceptance of this offer at the rate of $1,965.24 per month. As at the date of this offer the amount due is $11,791.44 for the period July to December 2009 inclusive.
4.The plaintiff provide insurance as required under the sublease in the joint names of the landlord and tenant within 30 days of acceptance of this offer. To avoid doubt the insurance required is that contained in the policy issued by CGU Insurance as comprised by Exhibit 51 in the trial before the late Justice Dutney.
To make it clear, this offer does not relieve the plaintiff of any obligation to repair or redecorate or expand the kitchen under the previous sub lease, supplemental deed or otherwise, but it is not a condition that the plaintiff do so before a further sub lease is granted.
This offer is open for acceptance until Wednesday 7 January 2010.’
[18] The meeting lasted about three hours (exclusive of a lunch break). Under Mr Hart’s guidance the points in the letter were resolved seriatim, and other outstanding issues between the parties were discussed. Various persons took notes. When all of the issues had been dealt with, Mr Hart said he would have notes/minutes compiled and sent to the parties. Mr White left at that stage. However, the parties decided to record then and there matters agreed. So there was effectively a recapping of the outcome of the discussion on each issue. As the outcome on each was confirmed, Mr Ingall recorded it in a numbered paragraph. There were 14 paragraphs. Mr Hart clarified that there were not outstanding matters, and Mr Ingall put a line against the number 15.
[19] The handwritten document was in these terms:–
‘1. Lease is to be prepared along the lines of letter of offer dated 22/12/09. (i) to (vi) as written. Point (vii) is accepted subject to confirmation these are valuers figures. Points (xiii) and (ix) as written. ‘(x)’ as written subject to confirmation of amount. Items (xii) and (xiii) as written. Items (xiii) and (xv) as written. Outgoing amount to be verified.
2. Work done to date in the service yard is acceptable to the landlord.
3. Subject to clarification of indices and formula application. No interest to be charged. Tax invoices to be sent ASAP after execution of lease.
4. Confirmation landlord is listed on insurance policy.
5. Both parties to pay their own legal costs in respect of these proceedings.
Further issues
6. Ocean Terrace roof structure
(a) Landlord is proposing to replace the structure with a concrete roof. This is subject to statutory approvals. In the short term an independent consultant will be appointed by Steve White/John Ingall to advise on scope of works to effect repairs. The water tightness of the roof to be addressed ASAP.
Time frame – appoint consultant by end of Jan ’10. Water proofing to be completed by end of third week in Feb ’10. Corrosion treatment (short term) to be carried out in conjunction with restaurant closing for refurbishment works. It is agreed that until problems with the roof structure are addressed that refurbishment works are restricted.
7. Kitchen/Kiosk
Plumbing and associated building works to ceiling space to be carried out by Jonco Construction Services P/L. The cost of this work is $23,000.00. This is to be invoiced in four instalments during the period Feb to May/June. Jonco accepts responsibility for the repairs/replacements.
8. Western Terrace and kitchen extensions
There is no obligation on either party to carry out any future works.
9. Service yard
Water proofing work to be carried out. Consultant to determine scope of works, supervise and approve. Careful coordination required. Target completion date ASAP or by end of May ’10.
10. Lower level toilets
Landlord to refurbish – target date end of May ’10. Doorway to be provided in passageway together with keypad entry.
11. Outgoings and part 10 other charges
Outgoings as per lease. Other charges Mermaids to pay for water consumed as per meter, plus their own gas and electricity charges. Landlord to pay for waste water and refuge.
12. Signage invoice
Landlord to credit back signage invoices levied.
13. Security deposit
Landlord to refund security deposit that was taken. Tenant to lodge bank guarantee with new lease.
14. Mechanical exhaust/HWS relocation
All costs are landlord’s expense.
15. - ’
[20] At the conclusion of this process everyone relaxed a little. Mr Henry gave evidence of making a contemporaneous note of what occurred. It was:–
‘2:15 Agreement signed. Fitz-Walter to formalise as Margaret can read Jon’s handwriting!’
Margaret was Margaret Miller, an associate at Fitz-Walter Lawyers and Jon was Mr Ingall. Mr Ingall made a jovial remark to the effect he was glad he would not have to see the Elsaftys’ barrister again. There is no evidence of anything being said about the effect of the handwritten document, apart from Mr Henry’s evidence that it was to be ‘formalised’ by the plaintiff’s solicitors.
[21] Mr and Mrs Elsafty went straight to their solicitor and gave him a copy of the handwritten agreement. He sent a copy to the plaintiff’s solicitor.”
[11] The appellant challenges the trial judge’s conclusion on two separate but interrelated points. The first is that her Honour ought to have found that the handwritten document signed by the parties was not intended to be an immediately binding agreement. The second is that any agreement is uncertain and/or incomplete. The interrelationship arises in the manner described by Gleeson CJ in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548:
“Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention.”
[12] The obvious starting point for a consideration of the first point, is Masters v Cameron (1954) 91 CLR 353 in which Dixon CJ, McTiernan and Kitto JJ said (360):
“Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.”
[13] The question to be determined is into which of the three categories the present agreement should be placed. The answer depends upon the intention of the parties as McHugh JA (with whom Kirby P and Glass JA agreed) explained in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634:
“However, the decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances: Godecke v Kirwan (1973) 129 CLR 629 at 638; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 332-334, 337. If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction.”
[14] There are three matters which indicate, in my opinion, that this case is within the first category described. The first, perhaps least significant, is that the parties met on the eve of a third trial in a conscious and conscientious effort to reach an agreement which would end their respective actions against each other. They met, deliberately, without lawyers to facilitate frank discussion. Their aim was to achieve finality.
[15] The second consideration is that the parties refused Mr Hart’s offer to have his minutes of what had been agreed produced in typescript but instead decided to handwrite the terms of their agreement which they then and there both signed. The act of signing is significant. The execution of a document normally connotes that the party signing gives approval and assent to it. If, as the appellant contends, the agreement was in the third category, in which the parties intend “not to make a concluded bargain at all, unless and until they (executed) a formal contract” there would have been no need for a signature until a formal document in terms satisfactory to both parties had been prepared.
[16] The third consideration is that clauses 6, 7, 9 and 10 all contain dates by which specified work was to have been performed. It is, I think, unlikely that the parties would have fixed a timeframe by reference to dates, the first only two weeks away, had they intended not to be bound to do the work until a formal document had been prepared, agreed to and executed. Given their disputatious past, the parties must have been alert to the possibility that there may be some delay in achieving that formalised, executed, agreement. If they did not intend to be bound until that formal document was signed the timeframe would have been set by reference to that later execution, not from the earlier agreement.
[17] Subject to any incompleteness or uncertainty in the terms of the agreement contradicting these indications of an intention to be bound immediately I would accept the correctness of the trial judge’s conclusion to that effect.
[18] Firstly it is said that the phrase:
“Lease is to be prepared along the lines of letter of offer dated 22/12/09. (i) to (vi) … (viii) … (ix) … (xii) … (xi) … (xiii) and (xv) as written”
is “vague” and without “detail as to what is being referred to”.
[19] The trial judge correctly made the point that the handwritten, executed, document was to be read together with and by reference to the letter from the respondent’s solicitors of 22 December 2009. Her Honour noted:
“Sub-paragraphs (i)-(xiv) of paragraph 1 of the letter refer to essential information to be inserted in the new sub-lease, such as the name of the sub-lessor and the commencement and expiry dates of the new term. They were described by reference to the form and wording of the expired sub-lease.”
[20] The meaning of clause 1 of the agreement of 15 January 2010 is perfectly plain. The parties had agreed upon varied terms for a new sublease in accordance with the details set out in paragraph 1 of the letter of 22 December 2009. No change to those details were proposed. There was nothing vague about it.
[21] Particular complaint was made about:
“Point (vii) is accepted subject to confirmation these are valuers figures”
and:
“(x) as written subject to confirmation of amount.”
These remarks were said to leave the agreement subject to “a further confirmation from an unnamed party” and/or “subject to some other course of action”.
[22] There is nothing uncertain about the qualifications to the agreement as to items (vii) and (x). The amount in each was agreed on condition that the figures in item (vii) had been provided by a valuer and that the figure in item (x) was confirmed by reference to the expired sublease.
[23] Complaint was also made of a qualification that “Outgoing amount to be verified”. This is a reference to the amount of outgoings appearing in item (xiii) in the letter of 22 December and means only that the lessors were to provide proof that the amount claimed by way of outgoings had been paid, and fell within the definition of “outgoings” in the sublease.
[24] The next complaint is to clause 3 about which the appellant says cryptically that it is “not only conditional but subject to further matters … . It also requires the ‘clarification’ of certain matters.”
[25] Clause 3 of the agreement obviously refers to clause 3 of the letter which proposed that the appellant pay arrears of rent, adjusted for CPI, at the rate of $1,965.24 per month and set out the amount due “As at the date of this offer”. Clause 3 of the agreement is a clear acceptance of the offer subject to an arithmetical verification that the inflation index identified in the sublease had been correctly applied to calculate the amounts. The calculation of the amounts was a question the parties were to address themselves by reference to objective criteria. There is no uncertainty or scope for disagreement.
[26] Although not mentioned in its written submissions its counsel also argued that clause 4 of the agreement was uncertain. The argument appeared to be that clause 4 of the agreement had to be read independently of the letter, and so construed was unintelligible. I reject the contention that it should be construed without regard to its context. When read in conjunction with clause 4 of the letter there is no doubt about the meaning. The appellant was to provide evidence that the respondent was either a co-insured on the policy of insurance required by the sublease or that its property interests were identified and were covered by the policy.
[27] The next complaint was to clause 6 which was:
“Ocean Terrace roof structure
(a) Landlord is proposing to replace the structure with a concrete roof. … In the short term an independent consultant will be appointed by Steve White/John Ingall to advise on scope of works to effect repair. The water tightness of the roof to be addressed ASAP.
Time Frame – appoint consultant by end of Jan’10. Waterproofing to be completed by end of third week in Feb’10. Corrosion Treatment (short term) to be carried out in conjunction with restaurant closing for refurbishment works. It is agreed that until problems with the roof structure are addressed that refurbishment works are restricted.”
[28] The complaints are that reference to an independent consultant to be appointed in the short term to advise on scope of works is “so vague as to be almost meaningless”, and that there is “no definition as to who the ‘independent consultant’ will be”. A further complaint is made that the obligation in respect of watertightness is only to be addressed “ASAP”, and that there is no definition of what corrosion treatment was to be carried out, or when.
[29] The trial judge said as to this clause:-
“[36] The Ocean Terrace roof structure: this referred to the covering of the area 5D in the plaintiff’s restaurant. Presently there is sail cloth stretched over a steel frame. It has deteriorated in the weather conditions and the plaintiff has been pressing for a more permanent structure. Counsel for the plaintiff attacked paragraph 6 as vague and uncertain. I do not accept that submission, and shall endeavour to deal with each point taken in relation to it.
(a) A consultant was to be appointed ‘in the short term’. That was rendered certain by the later stipulation that the consultant be appointed by the end of January 2010.
(b) There was no stipulation as to the identity or credentials of the consultant, but it was clearly provided that Mr White and Mr Ingall should select someone. That was understandable in light of their own qualifications and experience.
(c) There was no express provision as to what should happen if Mr White and Mr Ingall did not agree on the consultant. There are two answers to this – (a) the dispute resolution clause in the sub-lease might be activated; or (b) if there were a failure of a mechanism under the contact (sic), the Court might provide an alternative mechanism.
(d) The submission that the scope of the work on which the consultant was to advise was not defined involves a misreading of clause 6, which provided that it was for the consultant to advise on the scope of the repair work that was needed.
(e) The phrase ‘water tightness to be addressed ASAP’ was rendered certain by the later stipulation that water proofing be completed by the end of the third week of February 2010.
(f) The words ‘corrosion treatment (short term)’ are not uncertain. The nature and extent of the corrosion treatment was an aspect of the scope of the repair work needed. The scope of work was a matter on which the consultant was to advise. In the context short term clearly meant pending permanent replacement of the structure.
(g) The words ‘to be carried out in conjunction with refurbishment work’ were attacked as uncertain. However, I accept the submission of Mr Elsafty that that referred to the plaintiff’s obligation to paint and redecorate under the sub-lease (clause 23.4).
(h) The last sentence, which provided that until problems with the roof structure were addressed refurbishment works were restricted, was attacked as uncertain. However, that was merely an acknowledgment that some aspects of the refurbishment the plaintiff would otherwise be obliged to carry out would be negated by non-fulfilment of the defendant’s repair obligations. The sentence meant simply that the plaintiff was not obliged to undertake those aspects until repairs had been effected. This is related to the scope of the necessary repair work, a matter on which the consultants were to advise.
In short, clause 6 was not so uncertain as to be devoid of contractual character.”
[30] I respectfully agree. The complaints are without merit. By clause 6 the parties agreed that Mr Ingall, the controlling mind of the appellant, and Mr White who had been appointed to represent the respondent, were jointly to appoint a consultant who would advise on what work was necessary to make the roof structure watertight. The work to be undertaken was that identified by the consultant as necessary for that purpose. The same observation answers the complaint that “corrosion treatment” was not defined in the agreement.
[31] It is true that the consultant was not identified. He was to be selected by agreement between Mr Ingall and Mr White. Gibbs J pointed out in Godecke that (645):
“It is well established that the parties to a contract may leave terms – even essential terms – to be determined by a third person … . In such a case the contract is not bad for uncertainty because if the third person settles the terms the contract will thereby be rendered certain.”
The objection that the parties’ representatives might not agree upon the choice of consultant does not invalidate the agreement. In the event of an inability to agree the court can make the appointment. See Godecke at 643 per Walsh J.
[32] Objection is then taken to clause 7. It is pointed out that Jonco Construction Services Pty Ltd (“Jonco”) was not a party to the agreement but the obligation to perform plumbing and associated building works was imposed upon it. It was also said that there was no definition of the work to be carried out and that the price for the work was ambiguous because it might include or exclude GST. “Most significantly” it is complained that the party obliged to pay Jonco for its work was not identified.
[33] The trial judge met the submission by saying:
“[37] Counsel for the plaintiff attacked paragraph 7 as purporting to impose obligations on Jonco …, which was not a party to the agreement. Jonco is the vehicle through which Mr Ingall conducts his business as a builder. He is its sole director and shareholder. I accept the submission of Mr Elsafty that Mr Ingall was acting in his capacity as a director of Jonco in accepting this obligation. As between the plaintiff and the defendant, the defendant undertook to retain Jonco to carry out the work for $23,000.00 on the basis Jonco would invoice the amount owing in four instalments and accept responsibility for the work. As between the defendant and Jonco, there was a collateral agreement to that effect.”
[34] Jonco and the appellant were associated companies. Mr Ingall was the director of both. By clause 6, he, on behalf of Jonco, agreed that it would carry out plumbing and associated building works, identified by the consultant in whose appointment Mr Ingall would have a hand, at a cost not to exceed $23,000. The clear implication is that the respondent, as lessor, was to be responsible for payment. There would otherwise be no point specifying the amount. That observation is sufficient to answer the question whether the agreed price included GST. The cost to the respondent was to be no more than $23,000.
[35] The next complaint concerns clause 9. The point taken is that the clause does not specify who should carry out the “waterproofing work” or “in what manner”. There is, as well, a submission that the obligation on the consultant to “supervise and approve” is in some, undefined, way uncertain. It was said that although the work was to be completed by the end of May 2010 the clause does not specify what should happen if that date were not met.
[36] The points cannot withstand scrutiny. Taking them in order the clause imposes on the respondent an obligation to make the service yard waterproof. The consultant appointed pursuant to clause 6 was to specify what work needed to be done and the respondent, or a contractor engaged by it, was to do the work. I do not understand the difficulty said to attend the consultant’s role in supervising and approving the work. The words mean what they say. The work was to be done under the supervision of the consultant and to a standard he approved. The manner in which the work was to be carried out was that which the law implies in all such contracts, to the standard of a reasonably competent contractor. The clause contains a promise to complete the work by the end of May 2010. If the promise were breached the appellant would be entitled to such damages as it could prove it suffered by reason of the delay.
[37] Clause 10 is the subject of a complaint that it does not specify how or when the refurbishment to the toilets was to be carried out and that the reference to the provision of a doorway from a passageway was “meaningless”.
[38] The trial judge thought the terms “sufficiently certain … to be of contractual character”. There is, in my opinion, no reason to doubt her Honour’s conclusion. The subject matter of the clause is simple enough. Toilets were to be refurbished. The particular nature of the refurbishment was not specified and so was to be left to the assessment of the respondent who was to undertake the work. As long as that work, when complete, was recognised as a refurbishment the clause would have been performed. The respondent was given a choice as to the manner in which it would perform the clause but that does not make a contractual term uncertain. See TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 150-6; Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 92-93.
[39] The clause does specify the date by which the work is to be complete. It nominates 31 May 2010. Likewise there is nothing uncertain about the requirement that a doorway be provided for the passageway. The refurbishment was to include such an entry.
[40] There is then a charge that clause 11 is uncertain, although it seems plain enough. Outgoings were to be treated in the same manner as under the prior sublease. The appellant was to pay for the water, gas and electricity it consumed, as well as the cost of the local authority, or a contractor, of removing and/or treating wastewater and rubbish. (“Refuge” is clearly a misspelling of “refuse”).
[41] Clause 12 is said to be too vague to allow any meaning to be ascribed to it. The clause contains a plain promise by the respondent to withdraw, or allow a set off against, an invoice it had delivered to the appellant for the cost of providing signage to the restaurant.
[42] Lastly the appellant complains about clause 13, but the substance of its submission appears to relate to the content of clause 14. This complaint is that there is no explanation of what is meant by “mechanical exhaust/HWS relocation” or how the work is to be effected.
[43] Without having heard argument or evidence on that point I am prepared to assume that “HWS” refers to the hot water system in the café which had also a mechanical exhaust to vent kitchen fumes and odours. By the clause the respondent promised to relocate them. That promise carries with it an implied warranty that the work would be done to the standard expected of a reasonable contractor of the type who ordinarily performs that work and that the relocation would be to such a position within the premises as to be serviceable.
[44] There is no merit in any of the appellant’s complaints about particular clauses of the agreement. There is no uncertainty or incompleteness which indicates that the parties did not intend to be bound by what they had written and signed.
[45] It is clear that the parties did not intend the handwritten agreement of 15 January 2010 to be the final form of their agreement. They intended a fuller document to be prepared by their solicitors. That more expansive document would no doubt have dealt expressly with the points the appellant relies upon to claim that they had not reached final agreement. It would have made it unnecessary to refer to another document to ascertain what had been agreed. The case is, nevertheless, one in which the terms they did agree are sufficiently precise to give rise to a binding contract.
[46] The court’s approach to a problem of the type raised by the appellant is, I think, clear. Lord Wright’s exposition in Scammell (G) & Nephew Ltd v Ouston [1941] AC 251 at 268 has stood the test of time:
“The object of the court is to do justice between the parties, and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form. It will not be deterred by mere difficulties of interpretation. Difficulty is not synonymous with ambiguity so long as any definite meaning can be extracted.”
It is only where:
“… the language used was so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention”
that the court will conclude there was no contract.
[47] There is, as well, the principle that “implied terms or … considerations of reasonableness” can be resorted to in order to determine whether the parties have reached a consensus which is “sufficiently comprehensive to be legally binding.” See Australian Broadcasting Corporation at 548 and Moffatt Property Development Group P/L v Hebron Park P/L [2009] QCA 60 at [51].
[48] The appellant points to what does appear to be an error in the trial judge’s reasons but properly, in my opinion, makes little of it. Her Honour said that:
“On the proper construction of the handwritten document, the parties agreed on the items in paragraph 1 – 4 of the letter (of 22 December 2009). In three instances the agreement was conditional … .”