Case: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165
Outcome: applied
the claims under ss 51AC and 52 of the Act must be approached on the basis that there is a written agreement between the parties containing terms which are expressly in the teeth of alleged representations or of alleged oral contractual terms. Absent some misrepresentation, the written agreement executed by the person complaining must be taken as authoritative: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 at 179 [39] , 180-183 [45]-[50]. The process of negotiation was pleaded and was also referred to by Mr Harrison in his affidavit. The time in which substantial cost and effort were said to have been expended causing old Boston damage in preparing its proposal, involved about 9 days in February 2004. Following that, whatever may have happened in the meantime about which no complaint is made, only in November 2004 was the GE Capital contract signed. The GE Capital contract appears to have been the result of a long process of negotiation. There is no suggestion that its terms were misrepresented. However, the written form of the GE Capital contract expressly negated any promise of a particular level of referrals to old Boston by GE Capital (Services Sch par 3). Old Boston had every opportunity to review the proffered terms which, according to Mr Harrison, GE Capital had sent in early September 2004 before it signed them in November 2004. There is no basis that appears in the pleading or in Mr Harrison's affidavit to support a claim that the express terms of the GE Capital contract were misrepresented to old Boston before it signed. Further, the statement of claim pleads the claim under s 51AC in a way which is not easy to comprehend. It does not disclose any intelligible basis on which it could be found that GE Capital acted in contravention of s 51AC by proffering the GE Capital contract to old Boston for consideration before signing. The allegations have no substance. The manner in which GE Capital was performing during the period in which old Boston purported to carry out the GE Capital contract indicated that the GE Capital was not acting on the basis of any such promise. Both old and new Boston knew this by July 2005. These factors induce me to consider that the claims have no reasonable prospect of succeeding although I cannot say that it is hopeless or bound to fail. I think that this view is reinforced by the difficulty with which the pleader has sought to articulate the claims. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 at 180-183 [45] - [50] the High Court held that where parties had signed a written contract, they were to be taken as intending the act of signature to be conclusive, absent misrepresentation or fraud. While misrepresentations had been pleaded as to the statements made many months earlier in February 2004, when the parties actually signed the written agreement on 9 November 2004, there is no material before me which suggests that old Boston could have been acting under the influence of any misrepresentation as to the terms of the GE Capital contract. Its terms were in writing, they had been provided to old Boston in advance. They were not in the form of a contract of adhesion. Old Boston was free to sign or not the GE Capital contract as it pleased. Old Boston had the opportunity to review and consider the draft or proffered terms. In those circumstances, I consider that there is no reasonable prospect that old Boston would be able to establish, as alleged in the statement of claim, that there was a term of the GE Capital contract that some minimum number of field calls would be referred to old Boston per month. Such a proposition is not only expressly excluded by express words in the services schedule of the GE Capital contract, it is also inconsistent with the entire agreement clause. In considering the claim in contract, it is important to appreciate that there is no claim that the GE Capital contract was vitiated by misrepresentation. Rather, it is claimed that an additional term was made either orally or by conduct which was part of that contract, although inconsistent with the express terms to which I have just referred. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 at 179 [39] , Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ referred to the position of a person acting on behalf of a company who signed a contractual document without reading it. They noted that the person could have read the contract had he wished and that the other party did not set out to conceal from him the terms and conditions on the document or to encourage him not to read them. As their Honours said, the other party '... had no way of knowing that he did not read the document. No case of mistake or non est factum is advanced'. They continued (219 CLR at 179 [40]: 'This Court, in Pacific Carriers Ltd v BNP Paribas ((2004) [2004] HCA 35 ; 218 CLR 451), has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction ( Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 at 461-462 [22] ).' In trade and commerce, it is important that the courts encourage certainty in contractual relations. Here the parties entered into a contract at arms length in which there was a full opportunity to negotiate and where, as also in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 at 179 [39] - [40] , 182 [47], the parties had a full opportunity beforehand to consider the written terms which they signed. Neither party insisted on including what is now said to be a critical and agreed term which is inconsistent with what they signed. I do not think that there is any reasonable prospect that old Boston would have been able to establish that the alleged term as to the minimum number of field calls per month was in fact a term of the GE Capital contract. As Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said (219 CLR at 180-181 [45]): 'It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.' Moreover, cl 20(a)(v) of the GE Capital contract provided that GE Capital was able without liability to terminate that agreement immediately by written notice if old Boston entered into liquidation or any other type of insolvency or if it ceased to conduct business to properly give effect to the GE Capital contract. By cl 20(b) GE Capital was also able to end the GE Capital agreement or a particular services schedule at its discretion at any time by giving 14 days written notice. Next, cl 20(d), provided that if GE Capital did terminate the GE Capital contract, other than pursuant to cl 20(b) no further amounts would be payable to old Boston even if they had already been invoiced. Again, the existence of those clauses tends to suggest that any term involving the non-termination of the GE Capital agreement for the proposed two year term could not be implied into the agreement and no such representation would have any reasonable prospect of being established. Accordingly, while it may be arguable that old Boston incurred expenses in performing the task of preparing a response to GE Capital's invitation to provide field services in February 2004, and to that extent incurred some damage, I am of opinion that by the time the GE Capital contract was entered into in November 2004 the effect of those representations was well and truly spent. There is nothing in the material before me to indicate there is any reasonable prospect of new Boston establishing that it is entitled to enforce a contractual term to the effect alleged or that it can rely upon any representations or contraventions of s 52 of the Act. New Boston sought to argue that the GE Capital contract was constructed on the basis of a price per call which old Boston had provided in February 2004 after doing the analysis based on the minimum number of calls per month. While that may have been the subjective intention of old Boston, the written agreement which it and GE Capital signed in November 2004 does not reflect anything other than a price which both parties were prepared to agree would be payable upon GE Capital referring any calls to old Boston: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 at 179 [40] . GE Capital also argued that on its proper construction the sale agreement did not purport to assign the right of old Boston to claims it may have had as at the date of the sale agreement for breach of contract or under the Act, even if the latter were assignable.