Case: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191
Outcome: applied
In a commercial setting between experienced business people, the express words of the contract, even if contained in exchanges of correspondence, will often be an authoritative guide as to the matters on which each party relied in entering the contract. They will know that often events will have moved on from earlier communications. Courts will be mindful that representations made early in a negotiation process, can be potent and can continue to influence a party's understanding of what is being discussed, or what becomes the subject-matter of a contract. Nonetheless, courts must also be realistic about how negotiations progress; they are not static and when the context evolves, so does the understanding of each party as to what, at the later point of time, is being discussed. Gibbs CJ noted in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 199 (in a passage approved by Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ in Campomar Sociedad Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45 at 85 [102] ) that s 52 of the Trade Practices Act did not impose burdens which operated for the benefit of persons who failed to take reasonable care of their own interests. Gibbs CJ was discussing representations made to the public, as opposed to particular individuals. However, the judgment in Campomar 202 CLR at 83-84 [98]-[100] also discussed the need to consider all of the circumstances of the particular case. And, as McLelland CJ in Eq in Watson 49 NSWLR at 318-319 noted, recollections of pre-contractual conversations relied on as the source of an allegedly misleading or deceive representation can be affected by later events and the lapse of time. 109 Additionally, it is important to be mindful of the particular relations between the parties. Here, two experienced commercial men were discussing a proposed transaction over many months. The discussions involved a considerable degree of planning and reworking in the course of arriving at a final, evolved concept. That concept was the subject of their contract. It is important, in that context, to evaluate what effect any representation conveyed at an earlier point in the negotiations, had at the time of entry into the contract, and how, at that time, any such representation was understood. Also, as Gibbs CJ identified in Puxu 149 CLR at 199, it is important to evaluate whether, at the time the contract was made, the representee had taken reasonable care to protect his or her own interests. The context, including subsequent events, statements or writings which cast a different light upon an earlier representation may be all important in determining whether it continued to have any operative effect or the effect alleged. 110 The letter of 29 July 2002 commenced by stating that it set out an outline of a system which Mr Proud believed would fulfil Mr Tana's desire to pack 150 tonnes of carrots over an 8 hour working day, and that it would include a number of specific items. Subsequently, the discussions evolved the concepts until these were crystallised in the contractual correspondence commencing with the letter of 30 September 2002 and ending with the letter of 18 October 2002. Both parties knew that the design and the drawings for the proposed line under discussion had changed on a number of occasions in the period between 29 July and 30 September 2002. 111 I have already explained what I find to be the contractual terms that emerged from the negotiations in relation to the tonnage per hour that the new line was warranted to process. It is not reasonable to read either of the two letters in isolation from the context in which they were communicated. That context included the background of what preceded each letter. The 30 September 2002 letter replaced and updated what had been said and written earlier in relation to the tonnage per hour figure. I find that the only representation, relating to the capacity of the new plant to produce any tonnage of carrots per hour, on which Mr Tana and North East Equity acted in relation to, was embodied in the contractual term I have found at [87] above, arising from sub-pars (a) and (g). 113 Thus, I am satisfied that at the time of the entry into the contract, the representation made originally in the letter of 29 July 2002 continued, namely that the nine cooling tanks would allow one tank for each length/size grade and provide the opportunity to have a spare tank. However, it was understood by Mr Tana and North East Equity, through him, in the context of the intervening events, including his visit to Belgium: see Puxu 149 CLR at 199 per Gibbs CJ. 114 The letter of 29 July 2002 said that, when a desired grade was selected to be sent to a packing position, the pumps and blower were activated in a manner appropriate to obtain a constant product output. North East Equity alleged that this representation was not fulfilled when the plant was commissioned and in operation. That was because the outflow system was said to rely on a combination of water pressure and compressed air to force carrots onto the discharge conveyor. That method of removing carrots from the tank was said to cause product surges, and then droughts, for the sorting tables, resulting in delays and inefficiencies in the continuous operation of the line. The letter of 29 July 2002 said that there was a 'PID control loop' which would calculate the speed of the pump and blower motor to ensure a controlled feed. The letter also indicated that it was possible to bypass that program and operate the tank manually. 115 I am satisfied that a representation was made, which continued to the time of contract, that the chilling tanks could be controlled in a way that would make them capable of producing a constant product output for the packing line.