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Two Lands Services v Gregory Robert Cave

TWO LANDS SERVICES PTY LTD V GREGORY ROBERT CAVE [2000] NSWSC 14

Supreme Court of NSW – 10 February 2000

FACTS

Cave was employed by Two Lands as a finance consultant in the mortgage origination business.

The employment contract included a restraint of trade clause which provided that Cave would not work for a competitor for twelve months and would not contact any referrers used by Two Lands for twelve months. Two Lands developed a list of referrers and graded these referrers by the likelihood that the referrer would refer clients to Two Lands.

Cave left the employ of Two Lands and went to work for another company in the mortgage origination business. Cave also took a copy of the list of referrers which included their grades as assessed by Two Lands. There was evidence that Cave contacted some of the referrers on the Two Lands’ list.

Two Lands issued proceedings to enforce the restraint of trade clause.

ISSUES

Was the restraint of trade clause unenforceable for being unreasonable or against public policy?

FINDING

When considering the nature of Two Lands’ business and the nature of Cave’s employment both the restriction on contacting referrers and on being employed by another mortgage originator were reasonable and the restraint of trade clause was not against public policy.

QUOTE

Santow J said:

“Turning to the scope of the relevant restraints as they apply to the particular claimed breaches, the referrer restraint does not fit aptly with the earlier quoted test proposed by Professor Blake. Here, one is not dealing with replacement or supervision of one  blue-collar worker with another, readily able to master the job.

Rather we are dealing with the replacement of a referrer relationship that requires considerable time and effort to establish and whose fructification in terms of referrals requires a relatively long lead-time. Indeed if Professor’s Blake’s test of the time taken for a reasonably competent new employee to master the job were applied, that time period when related to the referrer would necessarily have to take into account both the period of time required to create the relationship and the time for it to fructify; twelve months would not be an unreasonable estimate of that period.”

IMPACT

When considering whether restraint of trade clauses are enforceable it is important to note the nature of the relevant industry and the nature of the position held by the employee.

Turner Corporation Limited v Austotel

TURNER CORPORATION LIMITED V AUSTOTEL PTY LTD (1992) CLD100015 OF

Supreme Court of NSW – 3 April 1992

FACTS

By contract in the form JCC A 1985, Turner agreed to construct a hotel for Austotel.

Turner issued proceedings against Austotel for declarations and orders relating to extensions of time and payment under the contract, damages for breach of the contract and other matters.

In response, Austotel sought an order that the proceedings be stayed pursuant to section 53(1) of the Commercial Arbitration Act 1984 (NSW). This provision allows for a party to an arbitration agreement to seek a stay in legal proceedings to allow an arbitration to be conducted.

The relevant clause of the contract provided that one party could serve a notice of dispute on the other party. If the dispute was not resolved a party could elect to issue proceedings or refer the dispute to arbitration. In this case Austotel served on Turner a notice to refer the dispute to arbitration.

ISSUES

The Court had to decide whether there was an arbitration agreement within the meaning of the act.

FINDING

The court held that clauses 13.1 and 13.2 of JCC-A and B constitute an arbitration agreement for the purposes of the Commercial Arbitration Act.

QUOTE

Giles J said:

“If the parties have agreed that disputes are to be referred to arbitration should one of them so elect, that is aptly described as an agreement to refer the disputes to arbitration. To treat an agreement of that nature as an arbitration agreement for the purposes of s 53 of the Act is consistent with the evident objective of requiring those who have chosen to have their disputes determined by arbitration to be bound by that choice. Indeed to exclude agreements of that nature for other purposes of the Act might leave an arbitration consequent upon a notice of referral to arbitration such as that for which clause 13.02 provides unregulated by the Act because there could be no arbitration agreement other than that flowing from the original contract” – pages 14 and 15 (1992) CLD100015 of 1992

“In my opinion, cl 13 of the contract constitutes an arbitration agreement for the purposes of S53 of the Act because Turner and Austotel agreed that disputes between them would be referred to arbitration if one of them gave to the other a notice of referral to arbitration (and complied with clauses 13.02.01 & .03), that being in my view an agreement to refer disputes to arbitration.” – page 19 (1992) CLD100015 of 1992

IMPACT

The decision of a party to refer a matter to arbitration using the JCC A 1985 contract may be deemed to be a decision to refer a matter to arbitration for the purposes of the Commercial Arbitration Act.

If an contractual clause allows a party to elect to advance a dispute by litigation or arbitration, then the clause is an arbitration clause and a stay of litigation will be granted provided that the other party has not issued proceedings before the election to refer the dispute to arbitration.

SJP Formwork v Leda Constructions

SJP FORMWORK (AUST) PTY LTD V LEDA CONSTRUCTIONS PTY LTD (1992) CLD55021 OF 1991

Supreme Court of NSW – 19 May 1992

FACTS

The Plaintiff was a sub-contractor for the defendant on three projects. The subcontract agreement was not in writing.

The Plaintiff claimed more money from the Defendant and the Defendant denied liability to pay any more money and cross-
claimed for the defective work and delay. Court proceedings were referred for a report by a referee.The referee decided the Plaintiff was entitled to a sum in excess of $350,000.00 and dismissed the claims by the Defendant.

The Defendant claimed that the Referee had failed to take evidence into account or had given too much weight to insignificant evidence.

ISSUES

The court had to decide whether the referee had erred in the decision he made. The Plaintiff alleged that the findings of fact by the referee were made against the weight of evidence.

FINDING

The findings of fact by the referee were reasonable and not contrary to the evidence. Therefore the referee’s report was adopted by the Court.

QUOTE

Giles J said

“The report is a well reasoned report. It leaves me with satisfaction that the referee has carefully applied his mind to the findings of fact required of him, a feeling of satisfaction that is confirmed by the occasions earlier mentioned on which I was taken to the evidence before him, and I do not think that the whole purpose of the reference should be rendered futile by my acceding to the invitation to go to the evidence and make up my own mind, possibly with conclusions different from those to which the referee came.” – page 9 of CL55021 of 1991 “I m not persuaded towards rejection of the referee’s report because of a deficiency in reasons or a failure to pay regard to some of the materiel before the referee, but rather am confirmed in the reliability of the referee’s conclusions.” – page 11 of CL55021 of 1991

IMPACT

Courts will not intervene with the decisions of a referee unless there is a clear breach of the duty of a referee to act impartially, a clear error of law, or it is clear that the findings of fact could not be supported by the evidence.

To do otherwise would render the purpose of the referee reporting to the court futile.

MacQuarie Generation v CNA REsources

MACQUARIE GENERATION V CNA RESOURCES [2001] NSWSC 1040

Supreme Court of NSW – 15 November 2001

FACTS

In mid-2000, Macquarie invited tenders for the supply of crushed coal in accordance with the quality requirements defined in the specification. It was a term of the Invitation to Tender that all tenders submitted were to be irrevocable, open for 180 days after the close of the tender period and were capable of immediate acceptance by Macquarie.

CNA submitted a tender in which they proposed to supply coal from two areas which were the subject of a mining lease application by CNA which had not yet been converted into a mining lease. CNA’s tender purported to be subject to a number of conditions including one requiring the approval of a related company’s board.

On 15 March 2002, Macquarie wrote to CNA stating that it had accepted the offer in the tender. CNA did not reply to this letter as prior to 15 March 2002, they had made Macquarie aware that the board had not accepted the conditions of the tender.

Macquarie filed a summons seeking a declaration that CNA had wrongfully repudiated the agreement brought into existence upon submission by CNA of its tender.

ISSUES

Did a contract come into existence when CNA delivered the tender to Macquarie?

Did the tender comprise an unconditional offer by CNA capable of acceptance by Macquarie?

Was the offer still open to Macquarie on 15 March 2001?

Did Macquarie itself wrongfully repudiate the contract by insisting on a formal instrument being executed by CNA?

Did CNA wrongfully repudiate the contract?

FINDING

No tender agreement came into existence because the Tender submitted by CNA did not comply with the requirements of the Invitation to Tender.

The General Tender submitted by CNA was in fact a counter offer as it clearly stated that it was subject to the approval of a board of directors of a related company. At 15 March 2001 all offers contained in the General Tender remained conditional offers subject to fulfilment of that condition and the offers were therefore incapable of acceptance.

Even if a contract had come into existence, the Plaintiff itself had wrongfully repudiated the contract by insisting that CNA execute formal Contracts which were not in conformity with the agreement made on 15 March 2001.

QUOTE

“The Plaintiff did not come to Court, as it might have done, seeking declarations as to the existence of a contract and as to its terms.

It acted peremptorily in commencing an action for damages, doubtless hoping thereby to force the Defendant to the negotiating table.”

IMPACT

Parties should be careful to ensure that tenders strictly comply with the requirements in the Invitation to Tender before purporting to accept that agreement.

Where a tenderer has set restrictions on the Tender Submission it should be noted that the Tender may constitute a counter offer rather than an offer capable of immediate acceptance.

Lee Gleeson v Sterling Estate

LEE GLEESON PTY LIMITED V STERLING ESTATE PTY LTD [1991] 23 NSWLR 571

Supreme Court of NSW – 30 May 1991

FACTS

A builder issued proceedings against a property owner (“the owner”) for unpaid building work.

The property owner’s bank informed the builder that it had authority from its customer to make payments on behalf of that customer to the builder.

The customer cancelled those instructions.

The builder had been concerned that the property owner could not afford to pay for the building works. The builder claimed that the bank had agreed to pay it for the building work. The bank held mortgages over the land where the building works was conducted.

FINDING

The bank had a duty to inform the builder of the change in the circumstances.

When a bank customer has authorised it to reveal to a third party information, which would otherwise be confidential and the customer then changes its instructions to the bank, it is implied to authorise the bank to advise the third party of those changed instructions.

QUOTE

Brownie J said:

“The bank’s customer had authorised the bank to write the letter of 13 March and the customer delivered that letter to the builder on behalf of the bank; that is, the customer had authorised the bank to reveal information which would otherwise have been confidential to the owner and the bank; and I consider that it follows that if the customer changed its instructions to the bank, it impliedly authorised the bank to advise the builder of those changed instructions”.

“I accept the submission made on behalf of the builder that, if the owner had sought an injunction to restrain the bank from disclosing to the builder the bank’s changed instructions, that application for an injunction would have failed, because the customer had authorised the bank to disclose its instructions as at 13 March, which authorisation contained an implied authority to disclose to the builder any relevant change in those instructions”

“For it (the bank) to remain silent, in the circumstances where its instructions from the customer had changed, allowed the customer to engage in sharp practice against the builder, described in stronger terms by the referee and to that extent, independently of the position at common law, S52 seems to me to have required the bank to disclose to the builder its changed instructions. That is, in these circumstances, S52 imposed on the bank a duty of disclosure”.

IMPACT

Sometimes silence about a change of circumstances can be found to have breached section 52 of the Trade Practices Act if facts come to their attention which may mislead or deceive another person are not properly communicated to that party.

Critchley v Cross

CRITCHLEY V. CROSS [2000] NSWSC 6

Supreme Court of NSW – 8 February 2000

FACTS

Cross was the owner of land located besides the Shoalhaven River. There was a beach on Cross’ side of the river and the beach was owner used by people travelling by boat along the river. The beach became a grass slope which then became the base of a cliff. Cross had arranged for “no trespasser” signs to be placed near the beach but these signs often went missing. In 1987, Critchley and some friends stopped at the beach.

Critchley went for a walk away from the beach and entered Cross’ land without consent. Critchley ended up near the top of the cliff and he then accidently fell into a crevice and was severely injured. Critchley sued Cross for negligence.

ISSUES

Did Cross owe a duty of care to trespassers on her land to take reasonable action to prevent harm to the trespassers when walking along the cliff area?

If there was a duty of care owed by Cross, had the standard of care required not been satisfied?

FINDING

Cross did not owe a duty of care to Critchley, as it was not reasonably foreseeable that a trespasser would fall into the crevice. Even if a duty of care had been owed, in the circumstances there was nothing that Cross could reasonably have done to avoid harm to people like Critchley.

QUOTE

Studdert J said:

“In deciding whether the defendant owed to the plaintiff a duty of care in this case, I must apply the test as expressed by Deane J in Hackshaw and as adopted by the majority of the judges in Zaluzna.

I must have regard to ‘all the relevant circumstances’ and this includes ‘the manner of the plaintiff’s entry’. It is, I consider, a further relevant circumstance that the defendant was not aware of the existence of the crevice. I remind myself that ‘a prerequisite to any such duty is that there be the necessary degree of proximity of relationship’.

I further remind myself of ‘the touchstone of its existence’, namely ‘that there be reasonable foreseeability of a real risk of injury to a visitor or to the class of person of which the visitor is a member’.

I have come to the conclusion on the evidence that it was not reasonably foreseeable that a trespasser might venture to where the plaintiff had his fall, and I am not satisfied that there existed the necessary degree of proximity to give rise to a duty of care by the defendant towards the plaintiff.”

IMPACT

A reminder that the scope of a duty of care owned by an occupier of land is limited by the need for the potential danger to visitors and trespassers to land to be reasonably foreseeable. In this case the lack of knowledge by the owner about the danger, and the fact that the plaintiff went to a place that no normal visitor to the beach would go to was decisive.

Allianz v Fyna

ALLIANZ V FYNA [2000] NSWSC 657

Supreme Court of NSW – 6 August 2001

FACTS

In 1993 a company named Fyna Formwork Pty Limited (Fyna 1) was registered in NSW. It was renamed Concrete Formwork Pty Ltd (Concrete) on 23 June 1995 and another company with the same directors was registered with the name Fyna Formwork Pty Ltd (Fyna 2) on the same day.

Fyna 2 and Concrete entered into a contract whereby Concrete would supply labour to Fyna 2 to enable Fyna 2 to meet its obligations under its subcontract.

Fyna 1 entered into a contract for Insurance as required under the Workers Compensation Act with Allianz.

In November 1998 Fyna 1 ceased to exist. After 23 June 1995 a number of claims were made by Fyna 2 using the policy and account number of Fyna 1. These documents referred to the pre-existing contract with Fyna 1.

Allianz sought to have the contract enforced to recover unpaid premiums. For some unexplained reason there were premiums of about $3M outstanding when Allianz issued this proceeding.

ISSUES

Whether Fyna 2 was estopped from denying that there was an insurance contract between it and Allianz.

Whether a contract existed between Fyna 2 and Allianz.

Whether Fyna 2 was liable under S52 of the Trade Practices Act for misleading and deceptive conduct.

FINDING

The representations made by Fyna 2 in various letters and forms were done with the intention of substituting Fyna 2 with Fyna 1. Allianz had merely acted by doing business with whichever company made representations to it.

The type of insurance was not one where the insurance company could decide whether or not to indemnify. The conduct of Fyna 2 by representing that there was a pre-existing contract with Allianz was misleading and deceptive. Fyna 2 had accepted the existence of a contract with Allianz by signing various forms and letters relevant to the insurance.

The documents were held to be sufficient to bind Fyna 2 to contractual representations and commitments with Allianz and it was estopped from denying that it had a contract with Allianz.

QUOTE

“The present case is analogous with one in which a supplier stands ready to supply all-comers in an open market.

Such a supplier pays no attention to the identity of a customer, being concerned only with the factors which are relevant to the structure and terms of the transaction the supplier is prepared to conclude with virtually anyone. The supplier does business with whomever comes forward and fulfils its requirements.”

IMPACT

Reconfirms the principle that a contract need not be formed by a clear offer and acceptance but can be implied by the conduct of the parties. Fyna 2, by carrying on the relationship with Allianz sufficiently represented that they intended to carry on the contract as was agreed between Allianz and Fyna 1.

This publication is intended to be a topical report on recent cases in the construction, development and engineering industries. This publication is not intended to be a substitute for professional advice, and no liability is accepted. This publication may be reproduced with full acknowledgement.

Jim Doyle

Tel.: 1800 888 783

jdoyle@doylesconstructionlawyers.com
www.doylesconstructionlawyers.com