Case: Brambles Ltd v Wail [2002] VSCA 150 ; (2002) 5 VR 169
Outcome: applied
In the case of Brambles Ltd v Wail [2002] VSCA 150 ; (2002) 5 VR 169 ('Brambles') , the Court of Appeal (Winneke P, Charles and Batt JJA) held that where the parties to a fixed term contract for the provision of services had, following the expiry of the fixed term contract, continued to deal with each other on the same basis as prior to the expiry of the term of the contract, there could be an implied or tacit agreement that a new contract between the parties was formed on the same terms as the previous contract except as to the term. The new contract would instead be terminable on reasonable notice. 152 In the course of its reasons the Court of Appeal in Brambles at 185-186, at [57] referred with approval to the following statement which appears in Chitty on Contracts 28th ed, (1999), vol i, p 21, para 1-034: 'There may also be an implied contract where the parties make an express contract to last for a fixed term, and continue to act as though the contract still bound them after the term has expired. In such a case the court may infer that the parties have agreed to a newly expressed contract for another term.' 153 The Court of Appeal also considered at some length the North American cases on this issue and also referred with approval (at 186, at [59]) to the following statement in Corbin on Contracts Rev ed, (1993), vol 1, p 60, para 1.19 ('Corbin') : 'Parties who have made an express contract to be in effect for one year (or any other stated time) frequently proceed with performance after expiration of the year without making any new express agreement, of extension or otherwise. From such continued action a court may infer that the parties have agreed in fact to renew the one-year contract for another similar period. Illustrations can be found in leaseholds, employment transactions and contracts for a continuing supply of a commodity...' 162 According to the authorities approved by the Court of Appeal in Brambles , the relevant conduct that is to be assessed on an objective basis, is the conduct between the parties which occurred after the expiry of the consultancy agreement. Whilst it is possible that events prior to the termination date may colour the inferences to be drawn from the post termination conduct, this does not arise on the facts in this case. 163 I do not regard the fact that in late 1999 and early 2000, Mr Brand and Mr Hayes had discussed the prospect of terminating the consultancy agreement as being of any weight in assessing whether a tacit agreement was made after 30 June 2001. The discussions between Mr Brand and Mr Hayes in late 1999 and early 2000 did not lead to any agreement being concluded between the applicant and the respondent. Further and significantly, those discussions were superseded by subsequent events, including, of course, Mr Brand's own letter of 4 August 2000 and the applicant's letters of 7 August 2000, 9 October 2000, 22 December 2000, 20 February 2001, 14 March 2001 and 29 June 2001. All of these letters show that the applicant throughout this period regarded the consultancy agreement as being on foot, and the letter of 29 June 2001 shows that the applicant was prepared to continue to supply services on the then existing terms of the consultancy agreement after the termination of the consultancy agreement. When viewed in its full context this evidence does not support an inference that there was any abandonment by the applicant of the consultancy agreement prior to 30 June 2001. Rather, the evidence demonstrates a dogged insistence on the part of the applicant on the continued existence of the consultancy agreement right up until the termination date of the agreement and a willingness to continue to provide services on the existing terms thereafter. Insofar as the evidence shows that there was a preparedness by Mr Hayes on behalf of the applicant to consider alternative arrangements, it also shows that Mr Hayes was insistent that such alternative agreement be made and recorded, before there would be any abandonment of the consultancy agreement. 164 Likewise, no weight can be placed on the fact that there was a meeting between Mr Elliott and Mr Hayes in February 2001 where Mr Elliott expressed his dislike of consultancy agreements, and discussed with Mr Hayes the possibility of the applicant terminating the consultancy agreement and coming to a different contractual arrangement with the respondent. This conduct also predates termination of the consultancy agreement. Further, after that meeting, Mr Jordan wrote the letter to the applicant which is referred to in [33] above suggesting Mr Hayes had agreed to terminate the consultancy agreement. However, by his letter dated 14 March 2001 and referred to in [34] above, Mr Hayes rebutted the statements made in the letter and asserted the continuance of the consultancy agreement. This evidence must also be assessed in light of all the evidence including the applicant's other letters referred to in the previous paragraph. The comments I made in the preceding paragraph about the overall effect of that evidence, are equally applicable here. 166 I accept that it is relevant that there was no express response by the respondent of the applicant's letter of 29 June 2001. However, I do not regard this fact as undermining the inference that there was a tacit agreement between the parties that their continuing relationship after 30 June 2001 was to be on the same terms as the consultancy agreement save as to the term thereof. The question of 'silence' or the absence of response to that letter which indicated a preparedness by the applicant to continue to provide services on the existing terms of the consultancy agreement, cannot be looked at in isolation. As is illustrated by the authorities referred to in Brambles , the relevant conduct in assessing whether an agreement is to be inferred, is not confined to the words or absence of words, of the parties. What is crucial is how the parties deal with each other in that period after the expiry of the original term. In this case, on the basis of the findings that I have made, the parties conduct after the expiry of 30 June 2001, when viewed objectively, showed that the parties continued to behave towards each other in the same way as before 30 June 2001. 167 In my view, on the facts that I have found, it is to be inferred that the applicant and the respondent tacitly agreed that the applicant was to provide the services of Mr Hayes to the respondent on the same terms as those in the consultancy agreement, save that the agreement was to be of an indefinite duration. I consider below whether it was a term of that contract that it was terminable on reasonable notice. It follows that I reject the contention of the respondent that the post 30 June 2001 contract between the applicant and the respondent was for the supply by the applicant of Mr Hayes' services on a casual basis at the rate of $75 per hour (exclusive of GST). 168 In [145] above, I said that I would defer consideration of the respondent's contention that there was no forbearance by the applicant during the period 1 July 2001 to May 2003 because the applicant agreed to supply the services of Mr Hayes after 1 July 2001 at a rate of $75 per hour (exclusive of GST) - being the amount reflected in the invoices which the applicant furnished after 30 June 2001. 173 The applicant relied on the Brambles case as authority in support of the proposition that the post 30 June 2001 contract was terminable on reasonable notice. 174 Further, the applicant submitted that, in deciding whether the post 30 June 2001 contract was terminable on reasonable notice, an analogy was to be drawn between the position of an employee under a contract of employment and the position of the applicant under a consultancy contract. It was submitted that, at common law, it was an implied term of any employment contract of indefinite duration that the agreement would be terminable on reasonable notice. The applicant argued that, by analogy, such a term should be implied as a term of the post 30 June 2001 contract between the applicant and the respondent. 175 The respondent argued that it was not necessary to imply a term that the contract be terminable on reasonable notice to give the contract business efficiency. Further, counsel for the respondent submitted, that it was not open to the applicant to rely, by way of analogy, on cases involving an employment relationship. 176 There are similarities between the facts in this case and those in Brambles. In the Brambles case the Court was also concerned with an independent contractor agreement. The contract in that case was a written contract whereby the contractor company, Andar Transport Pty Ltd, was to provide services to Brambles for a period of three years. On the expiry of the term the parties continued to deal with each other in the same way as they had before the term expired. The implication of the reasonable notice term in the successor agreement was necessary to accommodate the circumstance that the initial fixed term had expired and that it was necessary for there to be some procedure for the termination of the agreement. Likewise, in this case, by providing that the consultancy agreement would terminate on the expiry of the fixed term, the parties manifested an intention that the contract, which was essentially a contract for the provision of personal services by Mr Hayes, would be of limited duration. In other words, there was no intention that the respondent would engage Mr Hayes's services through the applicant, for the duration of Mr Hayes' working life. In light of my findings that parties did not transform the contractual relationship after 30 June 2001 into a casual contractor relationship, and, in the absence of an express agreement as to a further fixed term, it is necessary to imply the term that the successor contract be terminable on reasonable notice to give effect to the common intention that the contract was to be terminable in circumstances other than by way of mutual agreement.