2013 WAIRC 00872
APPEAL AGAINST A DECISION OF THE COMMISSION IN MATTER NO. RFT 13/2012 GIVEN ON 20 MAY 2013

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

FULL BENCH

CITATION : 2013 WAIRC 00872

CORAM
: THE HONOURABLE J H SMITH, ACTING PRESIDENT
COMMISSIONER S J KENNER
COMMISSIONER S M MAYMAN

HEARD
:
TUESDAY, 20 AUGUST 2013 AND BY WRITTEN SUBMISSIONS FILED ON 3 SEPTEMBER 2013 AND 11 SEPTEMBER 2013

DELIVERED : FRIDAY, 18 OCTOBER 2013

FILE NO. : FBA 4 OF 2013

BETWEEN
:
SHACAM TRANSPORT PTY LTD
Appellant

AND

DAMIEN COLE PTY LTD
Respondent

ON APPEAL FROM:

JURISDICTION : ROAD FREIGHT TRANSPORT INDUSTRY TRIBUNAL
CORAM : ACTING SENIOR COMMISSIONER P E SCOTT
CITATION : [2013] WAIRC 00294; (2013) 93 WAIG 637
FILE NO. : RFT 13 OF 2012

CatchWords : Industrial Law (WA) - Appeal against decision of single Commissioner sitting as the Road Freight Transport Industry Tribunal - Whether binding agreement made to vary contract between parties considered - Whether terms of agreement uncertain considered - Price not agreed - Agreement to vary not binding - Whether requirement for signage on appellant's truck an essential term (condition) or intermediate term of contract considered - Removal of signage did not entitle respondent to terminate contract without notice
Legislation : Industrial Relations Act 1979 (WA) s 49(5)
Owner-Drivers (Contracts and Disputes) Act 2007 (WA) s 43(1), s 47
Result : Appeal allowed
Representation:
APPELLANT : MR A DZIECIOL (OF COUNSEL)
RESPONDENT : MR J UPHILL, AS AGENT

Case(s) referred to in reasons:
Acorn Consolidated Pty Ltd v Hawkslade Investments Pty Ltd [1999] WASC 218; (1999) 21 WAR 425
Anderson v Rogers Seller & Myhill Pty Ltd [2007] WAIRC 00218; (2007) 87 WAIG 289
Australian Securities and Investments Commission v Fortescue Metals Group Ltd [2011] FCAFC 19; (2011) 274 ALR 731
Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130
Browning v The Great Central Mining Co of Devon Ltd [1860] 5 H & N 856
Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1
Codelfa Construction Proprietary Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Council of the Upper Hunter County District v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429
Donut King Australia Pty Ltd v Wayne Gardner Racing Pty Ltd [2001] NSWCA 275
Dura (Aus) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [2013] VSCA 179
Godecke v Kirwan [1973] HCA 38; (1973) 129 CLR 629
Hall v Busst (1960) 104 CLR 206
Hill v Canberra Centre Holdings Ltd (1995) 122 FLR 434
Hillas & Co Ltd v Arcos Ltd [1932] All ER Rep 494
Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26; [1962] 2 WLR 474; [1962] 1 All ER 474
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115; (2007) 82 ALJR 345; (2007) 241 ALR 88
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623
Lewandowski v Mead Carney-BCA Pty Ltd [1973] 2 NSWLR 640
Luna Park (NSW) Ltd v Tramways Advertising Proprietary Limited (1938) 61 CLR 286
Malago Pty Ltd v A W Ellis Engineering Pty Ltd [2012] NSWCA 227
May and Butcher Ltd v R [1929] All ER Rep 679
Meehan v Jones (1982) 149 CLR 571
Poussard v Spiers and Pond (1876) 1 QBD 410
Shevill v Builders Licensing Board (1982) 149 CLR 620
Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106
Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632
WMC Resources Ltd v Leighton Contractors Pty Ltd [1999] WASCA 10; (1999) 20 WAR 489
Case(s) also cited:
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101
Appleby v Johnson (1874) LR 9 CP 158
Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; (1982) 149 CLR 600
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266; (1977) 16 ALR 363; (1977) 52 ALJR 20
Byrne & Frew v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410; (1995) 131 ALR 422
G Scammell & Nephew Ltd v HC & JG Ouston [1941] AC 251
Reasons for Decision
SMITH AP:
The appeal and the order appealed against
1 This is an appeal under s 43(1) of the Owner-Drivers (Contracts and Disputes) Act 2007 (WA) (the Owner-Drivers Act), against an order made by the Road Freight Transport Industry Tribunal (the Tribunal). The order appealed against was made pursuant to s 47 of the Owner-Drivers Act on 20 May 2013.
2 The matter came before the Tribunal as two disputes in RFT 13 of 2012 and RFT 3 of 2013. RFT 3 of 2013 was a claim by the respondent seeking loss and damage in respect of a breach of contract by the appellant. Although the two referrals were heard concurrently RFT 3 of 2013 was not finally disposed of by the Tribunal in its order made on 20 May 2013.
3 In RFT 13 of 2012 the appellant sought damages of $41,700 against the respondent trading as Damien Cole Group, for pay in lieu of reasonable notice, on grounds that the respondent had terminated a contract between them. The appellant also claimed the amount of $2,420 which was said to have been wrongly deducted from a final payment.
4 The respondent claims that the appellant breached the contract between them in a manner which entitled it to terminate the contract without notice. The respondent in its application, RFT 3 of 2013, sought damages for the costs incurred as a result of the appellant's breach.
5 Whilst the notice of appeal does not specify whether the appeal is against the whole or part of the order given on 20 May 2013, it is clear that the appeal is against part of the order. The first paragraph of the order states that Damien Cole Pty Ltd (the respondent) is to pay to Shacam Pty Ltd (the appellant) the amount of $2,420 no later than seven days from the date of the order. The second paragraph of the order is that the referral otherwise be and is hereby dismissed. The appellant does not take issue with the first paragraph of the order. The grounds of appeal go solely to the second paragraph of the order.
Background
6 The respondent undertakes a cartage business. It operates with 21 contractors, all owner-drivers. Part of its business is the carriage of offal and waste products from three abattoirs in the south-west of the state at Balingup, Cowaramup and Dardanup, and from retail outlets around Perth under a contract with the Craig Mostyn Group. The respondent also collects offal from a plant in Gingin and another in Linley Valley, both of which are close to Perth.
7 Edward Gregory Richardson and Carol Anne Richardson, who are husband and wife, are the directors of the appellant.
8 In 2010, the respondent was in the process of taking over a contract from another transport company, Fertal Holdings Pty Ltd. In late 2010, Mr Richardson was advised by a friend who was working for the respondent as a sub-contract truck driver that the owner of the respondent, Mr Damien Cole, was pursuing the Fertal Holdings Pty Ltd run and would need several trucks and drivers. Mr Richardson contacted the respondent and later spoke to Mr Cole. As a consequence of those discussions the parties entered into an agreement. There was no written contract between the parties. The terms of the agreement were that the appellant would purchase a truck and make the truck and Mr Richardson available to do a daily run to collect offal from the three abattoirs in the south-west. It was also agreed that the contract would involve between 55 and 65 hours per week, depending upon conditions and circumstances and that the appellant would be paid $7,400 per week. Under this arrangement the appellant worked exclusively for the respondent. The day-to-day management of the south-west run was managed by the respondent's joint transport managers, Mr John Vassiliou Phatouros and Mrs Nolita Renee Phatouros.
9 In accordance with the agreement, Mr Cole arranged for the appellant to directly purchase a 2007 Volvo prime mover from Fertal Holdings Pty Ltd. Once the truck was available and transferred to the appellant, Mr Richardson commenced sub-contract driving work for the respondent. His first three trips were undertaken with a person from Fertal Holdings Pty Ltd, who showed him the requirements of the job.
10 After the appellant purchased the truck the respondent arranged and paid for the appellant's truck to be sign written in the same manner as the other trucks hauling its trailers. A few months after the appellant commenced the south-west run until shortly before the contract between the parties came to an end, the appellant's 2007 Volvo prime mover was sign written in livery which clearly designated the truck as part of the Damien Cole Group. The name Damien Cole Group was in two places on the front of the prime mover and the prime mover had a number of plastic or vinyl stickers which was part of an integrated pattern of leaves on the side and front of the prime mover. The pattern on the prime mover was designed to be part of a pattern of leaves which continued across a substantial part of each trailer attached to the prime mover. The trailers were owned by the respondent. Each trailer also had affixed on them a Craig Mostyn Group logo.
11 When not in use, the appellant's truck was usually parked at the respondent's yard in South Guildford. At the commencement of each day, Mr Richardson drove to the yard, left his car and took the truck to Talloman in Hazelmere to collect a trailer and travel to an abattoir. At the abattoir, the empty trailer was dropped off and a full trailer was picked up and brought back to Talloman in Hazelmere, where it would be left. After Mr Richardson finished his daily run he drove the prime mover back to the respondent's yard in South Guildford and collected his car to go home. From time to time, Mr Richardson would take the prime mover home for cleaning and maintenance work. It appears Mr Richardson was meticulous about the appearance of the prime mover as it is common ground that each time Mr Richardson took the prime mover home for cleaning and maintenance Mr Phatouros saw an improvement in the condition of the truck.
12 Until late 2011, the pick-up of offal from the abattoir in Gingin was undertaken by one owner-driver employed by the respondent, Mr Brad Willis. This arrangement was, however, unprofitable. The respondent was paying Mr Willis $580 per round trip, to assist Mr Willis to cover his costs and keep going. As the arrangement was not sustainable, the respondent wanted to integrate the Gingin run into the south-west roster and redeploy Mr Willis. This required the respondent to take one of his trucks off the south-west run, for Mr Willis to purchase a new prime mover and the agreement of the other drivers to take on the Gingin run in addition to the south-west roster. Under the new arrangement there would be a three week roster of two trips to Gingin in week one, two trips to Gingin in week two and one trip to Gingin in week three.
13 Mr Phatouros spoke to Mr Richardson about the proposal to incorporate the Gingin run into the south-west work. Both Mr Richardson and Mr Phatouros gave evidence about their discussion. Having heard the evidence given by Mr Richardson and Mr Phatouros the Tribunal preferred the evidence of Mr Phatouros where it conflicted with Mr Richardson. There is no appeal against this finding.
14 Mr Phatouros gave evidence that they needed four trucks to do the south-west and trips to Gingin each week. He told Mr Richardson they were trying to get Mr Willis into the south-west to give him full pay, but he needed all trucks involved in it otherwise they could not do it. He did not discuss a rate of pay for the Gingin run with Mr Richardson. Mr Phatouros gave evidence that Mr Richardson asked about the rate and Mr Phatouros told him it had not been set yet and that 'we don't know where it's gonna go. We were going to try it out and see what's going to be fair for us' (ts 80, AB 113). Mr Phatouros also gave evidence that there was no discussion about the rate that was paid to Mr Willis and that Mr Richardson told them that they would be 'in the work' and said that 'Well, we'll discuss the rate when we start doing it' (ts 81, AB 114).
15 Mr Phatouros also gave evidence that the Gingin work was going to be a fixed arrangement but they were going to work out the rate for the run and could not do so until they had done it to see what hours were required to carry out the work. He also told Mr Richardson that they needed to put hydraulics on the appellant's truck to fit the trailers for the Gingin work. There was no discussion about the cost of that work, but Mr Richardson did not object to having the hydraulics fitted to the appellant's prime mover. The appellant's prime mover then had new hydraulics fitted to enable it to do the Gingin run. After the appellant commenced carrying out the Gingin run Mr Phatouros and Mr Cole determined that the appropriate rate for the Gingin run would be $400. By this time Mr Richardson had done three runs to Gingin.
16 On Friday, 16 March 2012, Mrs Richardson received a payslip for the period which covered two of the three Gingin trips already undertaken by the appellant. She noted that the rate was $400. She telephoned Mr Richardson and told him that the rate was $400. Mr Richardson then telephoned Mr Phatouros and told him that 'he's not doing Gingin anymore because there was not enough fat in it' (ts 82, AB 115). Mr Phatouros asked Mr Richardson, '[W]hy can't we just work it out?' and told Mr Richardson he could not take one truck off the road and he needed all trucks in otherwise they were going to muck around the workshop to obtain a spare driver. He also told Mr Richardson he would speak to Mr Cole and 'we'll try and work it out'. Mr Richardson told Mr Phatouros that he was not interested, there was not enough fat and until there was enough money in it he was not touching it. Over the weekend Mr Phatouros arranged for the spare driver from the workshop to do the Gingin run on Monday afternoon, 19 March 2012.
17 Mr Phatouros arranged for Mr Richardson and Mr Cole to meet on Monday, 19 March 2012. At that meeting Mr Richardson informed Mr Cole that he was not interested in doing the Gingin run at the rate of $400. Mr Cole undertook to consider reviewing the rate and he told Mr Richardson that he needed to be part of the team and work in the arrangement including Gingin. It was Mr Cole's view that all of the truck drivers who were carrying out the south-west run were recovering their overheads from the south-west and that the Gingin run was 'virtually an extra on top' so it could be done at the same rate as the south-west per kilometre per hour. Thus, he was of the opinion it was unlikely that they would change the rate for the Gingin work. However, he undertook to look at it overnight and get back to Mr Richardson.
18 Mr Cole and Mr Phatouros had fixed the rate at $400 for the Gingin run by looking at the $7,400 rate paid for the south-west run, divided that by 55 (to get an hourly rate) and came up with a figure of about $130 per hour. They then multiplied the approximate rate of $130 by three for the three hour Gingin run (ts 60, AB 93).
19 On Tuesday, 20 March 2012, Mr Cole sent Mr Richardson and Mrs Richardson an email stating as follows (AB 14);
1) The position here is that we need 4 trucks to manage GinGin, not 3.
When we re-arranged the logistics, which was driven by my lack of confidence in the viability or sustainability of Willis's job, we planned around giving more work to each of 4 trucks (one of which is yours).
That logistics need still exists. Our 4 prime movers need to do GinGin.
I have revisited the rate and it seems more than fair, and we will not be reviewing it any time soon.
The position we have is that we need your (or our 4th) truck to be part of this new arrangement.
I understand your concerns about an extra 7 hours work affecting your lifestyle, but at present I have no option but to require your truck to do its share of our total long distance operation. I would also respect your decision not to work it the extra hours. However if not I would have to engage another Contractor in your place, in our complete long distance system. Please get back to me on this.
2) We also need a key left near your truck, for obvious reasons as explained.
3) Please look into your insurance as promised for maximum flexibility.
4) We need your dockets to assist our Admin by 8:00am Mondays. Late dockets hold us up no end.
5) Get back to us on GinGin.
20 Mr Richardson replied on the same day as follows (AB 14 - 15):
In response to your email, I advise the following.
1. The verbal contract between Shacam Transport and Damien Cole Group in December 2010 was for the South/West runs in your long distance operation. Additional runs were never discussed.
2. The Gin Gin run extends the hours and that is both, unacceptable and unwanted. I am currently working in excess of 60 hours per week.
3. The rate offered for the Gin Gin run does not cover the costs of an owner driver for wages/ super /fuel/ maintenance.
4. Further to the meeting 19th March 2012 - I have liaised with my Insurance company. They advise that prior to driving, any intended driver is to complete a Driver's Declaration for approval by the insurance company. If this is not complied to, and information is not disclosed, it could prejudice the outcome of any claims.
5. In keeping with the Heavy Haulage Accreditation for my truck and the Occupational Health and Safety Act – Prior to driving the truck, any driver must provide a current medical certificate, copy of driver's licence and complete/or have proof of completion of the Driver Fatigue Management Online Assessment. Non compliance can result in fines of $5000 for the driver, $25000 for Owner/Driver and in excess of $60000 for companies.
6. Taking the above reasons into consideration, I stand by my decision not to undertake in the additional Gin Gin run.
7. You state in your email that if my decision is to not participate in the Gin Gin run, that you will engage another contractor to take my place in the complete long distance system. I believe this action contradicts your Company Philosophy, Values and Business Model that you gave me a copy of on commencement of my contract.
21 Sometime after Tuesday, 20 March 2012 and prior to Monday, 26 March 2012 Mr Willis was at the home of Mr Richardson and Mrs Richardson. Mr Richardson told Mr Willis that he did not think the Gingin run was worthwhile and that Mr Cole had told him that he would get another contractor to do it (ts 123, AB 156). Mr Richardson then said to Mr Willis that if he had to go and get another job he would remove the 'leaves' off the truck as he would not be able to get work with the leaves on the truck.
22 On Monday, 26 March 2012, Mr Phatouros received telephone calls from two callers who informed him that there was no signwriting on the appellant's truck. One telephone call was from a contractor and the other one was from Talloman where they deliver the offal. Mr Phatouros had noticed that morning that the appellant's truck and car had not been in the yard. Mr Phatouros telephoned Mr Cole and told him the signwriting had been removed from Mr Richardson's prime mover. Mr Cole instructed Mr Phatouros to contact Mr Richardson and ask why he had removed the signwriting. Mr Phatouros also told Mr Cole that the appellant's truck and car were not in the yard on that morning and that he had heard whispers that Mr Richardson had found other work and was possibly leaving. At that time Mr Cole had arranged to meet with Mr Richardson and Mrs Richardson the next day.
23 When Mr Richardson gave evidence he said he had removed the stickers because he wanted to paint, cut and polish the prime mover because there were a few minor dents from stone damage across the front (ts 17 and 33, AB 50 and 66).
24 Mr Phatouros gave evidence that there was no reason to remove the stickers from the roof unless one is spray painting the whole cab and that this was done when the truck was sold. Otherwise the stickers would generally not be removed unless there was major damage (ts 84, AB 117). However, not all trucks carrying out work for the respondent have Damien Cole signwriting. Mr Phatouros with his wife own two trucks; one is sign written, the other is not. Mr Phatouros explained the reason why one is not is because he does work at the wharf and other 'bits of work here and there' and it is desirable not to have the truck 'standing out' (ts 79, AB 112).
25 On Monday, 26 March 2012 Mr Cole sent an email to Mr Richardson and Mrs Richardson about the meeting that was proposed for the following day. In the email he said (AB 15 - 16):
I believe the communication between us has been either lost, not working or been unclear from the start.
The reason for the meeting tomorrow is to communicate better. If I have failed to communicate the values of this organisation to you, then I re-iterate them to you, and my expectations of our people and our contractors.
Put simply, this is how we work, how we want to work and how we will work.
I do understand that there could be some dissonance between our value systems and yours here. If we have that dissonance it does not make one of us right or wrong. It simply means we should not be working together because of value dissonance. I understand that not everyone can work here under this organisations conditions, and values.
Before the meeting your good self and Greg need to decide whether you want to work with us as a team, with trust and with total cooperation. To me it looks simple, our organisation has an expectation, you need to decide whether you wish to meet it. If you choose not to work with us because of our values etc, then we can meet and discuss an orderly finalisation of your time with us.
We will always uphold our 'fairness to all concerned' tradition in any circumstances.
What we won't be doing at the meeting is discussing the (6) items one by one. That is a committee based approach, and cannot work in a trust based organisation, which works for the better good.
We will see you on Tuesday.
26 On Tuesday, 27 March 2012 Mr Phatouros telephoned Mr Richardson and asked him why had the stickers been removed. Mr Richardson said that he would not speak to him and that he would talk to Mr Cole about why the stickers were removed. At the time of that conversation a meeting with Mr Richardson and Mr Cole had been arranged for later that day.
27 When Mr Cole gave evidence he said that the removal of the signwriting from the appellant's truck was in his opinion significant. It had never happened before and he expected Mr Richardson to leave. Mr Cole said (ts 62, AB 95):
In the light of the events that were current at the time it seems to me that we - well, at the time when I'd found out that they were removed I had thought that he'd found other work elsewhere and he was sooner or later going to hang us out to dry and go and get the other work. It - it - clearly taking the brand off the truck is an issue of, I think, finalisation of - of the contract between us really and I had expected him to leave shortly after - after I'd found that out.
28 When asked by Monday, 26 March 2012 what assessment did he make about the relationship between himself and Mr Richardson and his company he said (ts 62, AB 95):
[I]t seemed at that time to be deteriorating. He had refused to do Gingin flatly and – and - and said he - he - he wouldn't do it although he had said to John Phatouros and he'd relayed that to me that he'd do it for - for - for extra money. At that point on that Monday he had virtually refused to talk to John Phatouros or to take any instruction from Nolita or John who were co-Transport Managers and he'd - I could see the deterioration in the relationship there and it led me to believe that he was leaving but hadn't actually come out and said so. I'd asked John to repeatedly ring him and talk to him, ask him why the sign writing had gone, why the vehicles were gone and get some explanation to the matter and clearly there was no communication there. So I saw it deteriorating.
29 Mr Cole then went on to say that he was not working full-time at the business at that time and had left the running of the business to the transport managers and did not have any contact with day-to-day operation of the truck drivers or any of the other contractors and had had nothing to do with them in almost 12 months prior to that.
30 On Monday, 26 March 2012 Mr Cole had decided to arrange a meeting with Mr Richardson and Mrs Richardson because he thought that there might be some hope that they could come to some agreement, but he decided the contractual relationship with the appellant should come to an end when Mrs Phatouros rang him on the Tuesday morning. Mrs Phatouros when giving evidence recounted the conversation she had with Mr Cole on Tuesday 27 March, 2012 as follows (ts 91, AB 124):
I'd actually had numerous phone calls with Mr Cole so - and it was brought to my attention that the stickers had been removed on Mr Richardson's truck and I spoke to Damien about that as well as other matters that are not - pertaining to this and he asked me to get John to ring Mr Richardson and ask why they had been removed. John had his conversation with Mr Richardson, rang me back and told me the outcome. I then relayed that outcome to Damien Cole and the outcome of that was basically he refused to answer and then my phone conversation with Damien was with - he said, 'Well, if he cannot communicate with you guys as Transport Managers, why should - you know, I think the communication's broken down, tell him today is his last day,' and that was the phone conversation.
31 Mr Cole did not attend the meeting scheduled for the afternoon on Tuesday, 27 March 2012 as he was ill. Mrs Phatouros met with Mr Richardson and Mrs Richardson. Mrs Richardson asked why Mr Cole was not coming and Mrs Phatouros explained that he was ill. Mrs Phatouros told Mr Richardson and Mrs Richardson that because the signs had been removed and Mr Richardson refused to speak to the manager, this would be his last day. Mrs Richardson asked if they were Mr Cole's exact words and she confirmed that they were. Mrs Phatouros then asked Mr Richardson for the keys and for the dockets. Mr Richardson refused to hand over the keys, saying that 'if Damien wants the keys he can contact me'. Mrs Richardson told Mr Richardson to hand over the keys. He said no, and left (ts 91, AB 124).
32 After considering the evidence given by Mr Cole and Mrs Phatouros about what occurred on Tuesday, 27 March 2012, the Tribunal found that around the middle of the day on Tuesday, 27 March 2012 Mr Cole decided to bring the contract to an end because the relationship with Mr Richardson and Mrs Richardson had broken down due to the refusal to participate in the Gingin run, the removal of the signwriting and the failure to answer Mr Phatouros' question about that, and the coincidence of the absence of both the prime mover and Mr Richardson's car from the yard.
The decision of the Tribunal
33 The material findings made by the Tribunal were as follows:
(a) The issue was whether the appellant breached the contract with the respondent such as to enable the respondent to bring the contract to an end without notice, or whether reasonable notice was due.
(b) Whilst the appellant was a separate corporate entity to the respondent and operated under a contract, part of that relationship was the integration of the appellant with other owner/drivers into the respondent's operation. There was a significant level of goodwill, trust and co-operation required and existing between them. The appellant was involved in a roster for the south-west run and the evidence of Mr Cole, Mr Phatouros and Mrs Phatouros established that there was a need for regular communications and flexibility. There was a level of co-operation amongst them all exemplified by the decision of the respondent to subsidise the Gingin run to enable Mr Willis to remain and to cover his overheads. Mr Willis was not earning a good income, it was not profitable for the respondent and Mr Cole wanted to remedy this. All drivers agreed to work the new arrangement to integrate the Gingin run and Mr Willis into the work. The level of trust and regard amongst them all was reflected in the way in which Mr Richardson agreed to take on the Gingin run.
(c) Mr Richardson agreed to do the Gingin run, not on a conditional basis, but on a permanent basis. The evidence of Mr Phatouros establishes that Mr Richardson trusted that an appropriate rate would be paid in due course. The arrangement between all of the drivers and the respondent was such that, as Mr Cole indicated, there should not have been 'cherry-picking of jobs amongst them' but a co-operative arrangement. As a consequence of the agreement to do the Gingin run, new hydraulics were installed on the appellant's truck.
(d) In those circumstances, the appellant agreed to take on the Gingin run, not as part of a trial, not to see how things went, but on the basis that it was part of that new arrangement and that the rate would be worked out. When Mr Richardson was advised that the rate was less than expected, the appellant withdrew from that agreement.
(e) In the circumstances, the appellant's refusal to continue in that arrangement constituted a breach of a condition of the contract as it existed at the time: Poussard v Spiers and Pond (1876) 1 QBD 410. The respondent was not prepared to accept part performance of the contract. In the context of the arrangement and the relationships, the respondent was entitled to elect to accept the breach and bring the contract to an end (Shevill v Builders Licensing Board (1982) 149 CLR 620 and Hill v Canberra Centre Holdings Ltd (1995) 122 FLR 434), and to indicate that if the appellant was not prepared to participate in the whole roster then the respondent would need to consider replacing the appellant in the entire roster.
(f) It was a condition of the contract that, once the signwriting was put onto the truck by the respondent, the appellant not remove that signwriting without the agreement of the respondent. It was essential that the truck be branded as part of the fleet of the Damien Cole Group. It is noted that the respondent's truck, which did regular trips to the port, was not branded for good commercial reasons.
(g) Even if it was not a term of the contract that the signwriting not be removed without consent, the decision to remove the signwriting was significant. Its significance was that it integrated the vehicle with the trailer, indicating the integration within the Damien Cole Group of the appellant's vehicle, branding it with the trailer, as Damien Cole Group's fleet. The significance of the removal of the branding is exemplified by two comments being made to Mr Phatouros when the vehicle undertook its run on Monday, 26 March 2012 with the stickers removed. The removal was not merely of a few stickers to be later reinstated, but was a clear indication that the appellant was separating itself from the Damien Cole Group. Thus, it was an expression of an intention to no longer be bound by the contract during a period when the parties were negotiating about the future of the relationship, given the appellant's refusal to perform part of the contract.
(h) The evidence given by Mr Richardson as to the reason for removing the signwriting is improbable. Given the timing of the removal of the signwriting, coming as it did after Mr Richardson had refused to further undertake the work on the Gingin run, it seems to be quite a logical extension to, and expression of, the deterioration in the relationship between the parties. The appellant was either preparing to end the relationship with the respondent, or it was protesting at not being offered a higher rate for the Gingin work and the removal of the stickers was a means of attempting to negotiate a higher rate. It was not merely an innocent act undertaken for the purpose of maintaining and upgrading the appearance of the truck. It is not plausible that Mr Richardson would have taken the signwriting off without first discussing it with anyone from the respondent and then indicate, for the first time during the hearing, that it was his intention to replace it at his own cost at a later time once some repairs were done.
(i) The significance of the evidence of Mr Willis is that when he and Mr Richardson discussed the possible end of the appellant's contract after the refusal to continue with the Gingin run, Mr Richardson said words to the effect that he would have to remove the leaves, meaning the signwriting, from the truck to enable him to look for other work. That is what Mr Richardson did in the time between receiving the letter or email from Mr Cole about the need to do the Gingin run or that the respondent would need to replace the appellant in the entire system. In that context, it is too much of a coincidence to conclude that the signwriting was removed to do some minor repairs and to replace the signwriting soon after.
(j) The removal of the signwriting constituted a serious breach of a condition of the contract. It also entitled the respondent to bring the contract to an end. In addition, the removal of the signwriting was a sign of Mr Richardson's withdrawal from the co-operation necessary for the operation of the contract.
(k) Mr Richardson's response to Mr Phatouros, who was the respondent's transport manager, by declining to explain why the stickers had been removed indicates a refusal to explain in circumstances which confirms that Mr Richardson was either separating the appellant from the Damien Cole Group or would be utilising the issue of the signwriting as a negotiating tactic in his discussions with Mr Cole that day. It was also indicative of a breakdown in communications between the parties or a refusal to speak to the person in the position of transport manager, to whom Mr Cole had left much of the management of the business following his semi-retirement some time earlier.
(l) The appellant breached the contract with the respondent by refusing to perform part of the contract. Secondly, in removing the signwriting from the truck, the appellant confirmed an intention to no longer be bound by the contract, entitling the respondent to bring the contract to an end without notice. Whilst Mr Cole's email to Mr Richardson and Mrs Richardson indicated that if the appellant was not prepared to participate in the Gingin run then he would need to replace the appellant in the entire operation, he also indicated that they would need to discuss an orderly end to the arrangement. An orderly end would have involved sufficient time for both parties to make alternative arrangements, including the appellant continuing to participate in the roster. Mr Richardson's refusal to do the Gingin run and the removal of the signwriting meant that this was not practicable and the relationship had broken down beyond the point where there could have been a co-operative working arrangement to enable them to part ways amicably and to bring the arrangement to an orderly conclusion. In removing the signwriting, Mr Richardson jumped the gun and prevented the contract coming to an orderly conclusion.
Application to amend grounds of appeal
34 On the day before the appeal was listed for hearing the appellant filed an amended notice of appeal and at the hearing of the appeal counsel for the appellant made an application to amend the grounds of appeal as set out in an amended notice filed on 19 August 2013. The appellant also filed amended written submissions which addressed the proposed amendments to the grounds of appeal. In the amended notice the appellant sought to amend ground 4, by correcting one minor typographical error and deleting the words 'breach by it of an implied condition' and substituting the words 'repudiation by it'. The reason why the amendment of substance was sought was that counsel for the appellant had formed the opinion whilst preparing for the appeal that the grounds did not adequately cover all of the arguments that the appellant sought to make. Whilst putting the argument for the amendment, counsel sought to re-amend the grounds of appeal by retaining ground 4 as it stood and adding a new ground 5 in the form of the amendments proposed to ground 4 as set out in the proposed amended grounds of appeal.
35 The respondent opposed the application to amend on grounds that the addition of a new ground 5 would be a significant change to the grounds of appeal and that the respondent had insufficient time to prepare a case that would meet an argument that the Tribunal erred in finding that the removal of the signage by the appellant was a repudiation of the owner-driver contract between the parties.
36 After considering the submissions made on behalf of the parties the Full Bench granted leave to amend to add a new ground of appeal. The Full Bench then directed the appellant to orally put its submissions in respect of each ground, including ground 5. The respondent was not required to respond at that time to the matters raised by the appellant in respect of ground 5. At the conclusion of the hearing the Full Bench granted the respondent 14 days to provide written submissions on ground 5. The Full Bench also informed the respondent that if it formed the opinion that it required an opportunity to make an oral submission in support of its written submission the Full Bench would reconvene to hear those submissions. The appellant was granted seven days from the date of receipt by it of the respondent's submissions to file any submissions in reply. The respondent filed its written submissions on 3 September 2013 and did not seek an opportunity to put an oral submission to the Full Bench. The appellant filed its written submissions in reply to the respondent's written submissions on 11 September 2013.
37 The reasons why I was of the opinion that the Full Bench should grant the application to amend the grounds of appeal was as follows. In Anderson v Rogers Seller & Myhill Pty Ltd [2007] WAIRC 00218; (2007) 87 WAIG 289 Ritter AP and Scott C set out a number of factors to consider when considering an application to amend an appeal [106]:
(a) The time when notice was first given to the Full Bench and the respondent of the intention to apply for the amendment.
(b) The explanation, if any, for seeking the amendment including why it is sought at the hearing of the appeal.
(c) Whether the proposed amendment constitutes a reasonably arguable ground of appeal.
(d) The consequences to the appellant of the non-granting of leave to amend.
(e) The extent of any prejudice to the respondent.
(f) Any measures which may be taken to eliminate or reduce the prejudice to the respondent.
(g) Issues of delay and costs.
38 In the present case the issue sought to be raised in proposed ground 5 it was clearly arguable. Whilst the amendment sought was very late, the issue is discrete and could be dealt with separately from the other grounds of appeal. Thus, the prejudice to the respondent in granting leave to amend could be overcome by allowing the respondent time to answer the amended ground in written submissions.
Grounds of appeal
39 The re-amended grounds of appeal are as follows:
1. The learned Acting Senior Commissioner erred in law in finding that there was a binding contract between the Appellant and the Respondent that the Appellant would do the Gingin run, notwithstanding that there was no agreement between the parties in relation to the amount that the Appellant would be paid for undertaking that work. In this regard the learned Senior Commissioner failed to have regard to the principles of formation of a valid contract which require that the agreement must be supported by consideration.
2. The learned Acting Senior Commissioner erred in law in finding that the refusal by the Appellant to undertake the Gingin run amounted to a breach of the owner-driver contract between the Appellant and the Respondent in that the learned Acting Senior Commissioner failed to have proper regard for the fact that the parties had not finally agreed on all of the terms upon which the Appellant would undertake that work.
3. The learned Acting Senior Commissioner erred in law and in fact in finding that the requirement for the Appellant to have the Respondent's signwriting on its truck was an implied condition of the owner-driver contract between the Appellant and the Respondent, in that there was insufficient evidence to support a finding that this term was so important that the Respondent would not have entered into the contract without it.
4. The learned Acting Senior Commissioner erred in law in finding that the removal by the Appellant of the Respondent's signage from its truck amounted to a breach by it of an implied condition of the owner-driver contract between the Appellant and the Respondent which enabled the Respondent to terminate that contract without notice. In that regard that action on the part of the Appellant was not such as allowed the Respondent to terminate the owner-driver contract without notice in any event.
5. The learned Acting Senior Commissioner erred in law in finding that the removal by the Appellant of the Respondent's signage from its truck amounted to a repudiation by it of the owner-driver contract between the Appellant and the Respondent which enabled the Respondent to terminate that contract without notice. In that regard that action on the part of the Appellant was not such as allowed the Respondent to terminate the owner-driver contract without notice in any event.
The central issues in the appeal
40 The central issues in this appeal before the Full Bench were as follows:
(a) Was the contract between the parties varied to include a term to undertake the 'Gingin' run?
(b) Was the requirement for signage on the appellant's truck a condition of the contract or a non-essential term?
(c) Was the respondent entitled to terminate the contract between the parties without notice?
Was the contract varied to incorporate the Gingin run?
(a) The parties' submissions
41 The appellant's arguments are as follows:
(a) A contract that leaves an essential matter for later determination by one of the contracting parties will be unenforceable as it is either incomplete or uncertain or because the promises contained in the agreement are illusory: Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1.
(b) The Tribunal erred in fact in finding that Mr Richardson trusted that the respondent would 'come up with a fair rate' for the Gingin work. The evidence at its highest established that there was a conditional agreement to carry out the work subject to agreement being reached on the rate to be paid.
(c) No binding contract was entered into to carry out the Gingin run as there was no agreement about the amount the appellant would be paid. Thus, there was no certainty of terms. Without there being an agreement on the critical issue of the amount the appellant was to be paid for the Gingin run, one of the essential requirements for the formation of a contract was missing.
(d) In certain cases courts have been prepared to find that terms of a contract are sufficiently certain where, although the parties may not have agreed on an important issue, the agreement includes a mechanism by which that issue can be determined. In this matter, there was no agreement about the amount that the appellant would be paid for the Gingin run, or a mechanism to determine this.
(e) Even if there was an agreement that the respondent would provide appropriate remuneration for the Gingin work, there could be no binding contract because the terms of the contract would be too vague and uncertain. If the appellant did not consider the new rate to be fair and reasonable, a court or tribunal could not determine the appropriate remuneration for the work on the basis of what had been agreed between the parties.
(f) In any event, the finding that the respondent was able to set the remuneration for the Gingin run is a finding that the respondent was able to unilaterally determine the rate of remuneration which is not permissible.
42 The respondent's arguments are as follows:
(a) A verbal agreement was made between the parties to carry out the Gingin run which satisfied the necessary criteria to establish a valid contract; that is, there was an intention to create a legal relationship, an offer and acceptance and valuable consideration passed between the parties.
(b) Starting work in response to an offer will generally be accepted as acceptance of an offer by implication: Browning v The Great Central Mining Co of Devon Ltd [1860] 5 H & N 856.
(c) In Council of the Upper Hunter County District v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429, 436 - 437 Barwick CJ observed:
But a contract of which there can be more than one possible meaning or which when construed can produce in its application more than one result is not therefore void for uncertainty. As long as it is capable of a meaning, it will ultimately bear that meaning which the courts, or in an appropriate case, an arbitrator, decides is its proper construction: and the court or arbitrator will decide its application. The question becomes one of construction, of ascertaining the intention of the parties, and of applying it. … So long as the language employed by the parties, to use Lord Wright's words in Scammell (G.) & Nephew Ltd. v. Ouston [1941] AC 251 is not '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', the contract cannot be held to be void or uncertain or meaningless. In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements. Thus will uncertainty of meaning, as distinct from absence of meaning or of intention, be resolved.
(d) In this matter the intention of the parties was clearly to create a contract to carry out the Gingin run and the deliberations were not so obscure or unclear so as to be devoid of meaning.
(e) An offer must be in sufficiently definite terms for it to be capable of acceptance although the courts do not insist on formality. Informal contracts may be enforceable at law. All that is required is that the terms must be sufficiently clear and must be accepted: Lewandowski v Mead Carney-BCA Pty Ltd [1973] 2 NSWLR 640.
(f) The parties were clear about what was being accepted and decided to leave the precise amount to be paid for the Gingin run to be later determined. The evidence of Mr Phatouros was that the rate would be determined once the work was undertaken and it was clear what hours were necessary to complete the task. When Mr Phatouros told Mr Richardson that 'they needed to work the rate out' what Mr Phatouros was saying was that the rate would be dependent upon knowing how much time was involved in doing the work. There was knowledge between the parties that Mr Willis was being paid a rate of $580 to do the work. There was also some knowledge about the duration of the work, how long it would take to drive to the location, to unhitch an empty trailer and hitch up a full trailer. Thus, the parties were not considering this arrangement as novices. They had a sufficient understanding of the arrangement.
(g) The evidence was that Mr Willis bought a new truck to do the south-west work, the respondent removed one truck from the road so as to share the work among contract drivers and hydraulics were fitted to the appellant's truck. None of these things would have been done had a contract not been entered into for the appellant to do the Gingin run.
(h) It is clear from the evidence that it was agreed that the respondent could set the rate. Thus, the respondent had the unilateral right to set the rate and there was no appeal mechanism. The question of fairness of setting the rate was not an issue. The appellant had waived any right to challenge the rate by giving the respondent the discretion to set the rate without attaching any conditions to it. Mr Richardson may have had some expectation about what the rate may be, but he made a conscious decision to allow the respondent to determine an appropriate rate for that work once it was clear what hours and other aspects were required to do that particular work with not one truck but three trucks doing that work.
(i) The evidence indicates that Mr Willis was previously paid $580 for the Gingin run because it was necessary to provide him with a reasonable income and to cover his fixed costs. The rate of $400 for the Gingin run was below the rate previously paid to Mr Willis because it was only designed to cover the variable costs. The fixed costs were covered in the payment of $7400 per week to each contractor who undertook south-west runs including the appellant.
(j) When the appellant was advised of the rate it decided it was insufficient but it was not able to renege on the arrangement to do the Gingin work because it had given the respondent the sole right to determine the rate for the trip.
(k) Once the rate of $400 for the Gingin run was determined it is able to be enforced in the same manner that the other terms of the contract are able to be enforced.
(l) The Tribunal's finding that the appellant's refusal to undertake the Gingin run amounted to a breach of contract was supported by the evidence and was sufficient in itself for the entire appeal to fail.
(b) Consideration – ascertainment of the terms to carry out the Gingin run
43 The ascertainment of the terms of a contract whether oral or in writing always turns on the words used by the parties and the construction of the words used by the parties are to be judged objectively. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 the Full Court of the High Court said [40]:
This Court, in Pacific Carriers Ltd v BNP Paribas (2004) 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 at 461-462 [22]).
44 Whilst regard can be had to surrounding circumstances, to understand the subject matter of the contract, evidence of subjective intention is not admissible. In Acorn Consolidated Pty Ltd v Hawkslade Investments Pty Ltd [1999] WASC 218; (1999) 21 WAR 425, Owen J said [46]:
If extrinsic evidence of the surrounding circumstances is admitted, it can be used only for an objective assessment of what a reasonable person, armed with the knowledge that the parties actually had, would have understood the words to mean.
45 The finding that the evidence of Mr Phatouros established that Mr Richardson trusted that an appropriate rate would be paid in due course is not a surrounding circumstance but, at its highest, evidence of the subjective intention of Mr Richardson. Thus, regard should not have been had to what Mr Phatouros thought Mr Richardson's expectations were.
46 The surrounding circumstances were that:
(a) Although Mr Willis had in the past carried out all of the Gingin run, when the respondent made the decision to integrate the Gingin run with the south-west run, the respondent required four prime movers to carry out the south-west and Gingin work each week.
(b) The new arrangement would have to be implemented by the appellant, the respondent and the other owner-drivers before a rate of pay for the Gingin work could be worked out.
(c) Mr Willis would purchase a new prime mover for the work and Mr Cole would take one of his trucks off the south-west run.
47 It is clear from the evidence given by Mr Phatouros that Mr Richardson on behalf of the appellant agreed to work the new arrangement of work which would include some work on the Gingin run. He also agreed that prior to the commencement of the new arrangement a price for the Gingin run would not be determined.
48 It is also clear that prior to the commencement of the new arrangement all material terms to incorporate the Gingin run into the south-west work were agreed by the appellant and the respondent other than the price to be paid for the additional work.
49 The appellant says the evidence establishes there was no agreement about the price to be paid for carrying out the Gingin run and that this was a matter that was to be agreed after the new arrangement had been implemented. Thus, there was a conditional agreement to carry out the work subject to agreement being reached on the rate to be paid. As no agreement on the rate was agreed the agreement to carry out the Gingin run or incorporate it into the south-west run was unenforceable.
50 The respondent says it was agreed that the price for the run would be fixed by the respondent unilaterally.
51 The law does not recognise a bargain as enforceable or binding unless the essential terms or critical terms have been agreed: Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597, 607 (Menzies J). A contract is incomplete if the parties have deliberately left some essential term to be settled by their future agreement: Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106, 130 (Brooking J).
52 Where further agreement between the parties is required to conclude an agreement uncertainty arises. In some matters a term requiring the parties to engage in negotiations reasonably to conclude the bargain may be implied: see observations of Kitto J in Thorby v Goldberg (603). However, such a term will not be implied where the parties have not agreed on an essential term of their bargain: Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd at 39(B) (Handley JA). Justice Finkelstein in Australian Securities and Investments Commission v Fortescue Metals Group Ltd [2011] FCAFC 19; (2011) 274 ALR 731 explained why such a term will not assist when no price is agreed [223] - [227]:
223. In this case the problem is of a different order: if an arrangement is incomplete it may be impossible to find that a contract has come into existence notwithstanding the intention of the parties. For a contract to be valid the agreement must be sufficiently definite and explicit so that the parties' intention can be ascertained with a reasonable degree of certainty. Put another way, a court cannot enforce a contract unless it can determine what the contract is, applying all applicable rules of formation and interpretation. Otherwise the court would be imposing its own perception of what the bargain is rather than implementing what has been agreed by the parties.
224. Often the problem of incompleteness arises when the parties have left an aspect of their bargain for later agreement. In recent years some court have, by a process of implication by law, supplied a term requiring parties to a commercial contract to exercise 'good faith' in the performance of their contractual rights and obligations. And there are cases which hold that when parties to a commercial contract have reached a preliminary agreement but have left a term of their contract open for future negotiation the parties are under an obligation to negotiate the open issues in good faith in an attempt to reach agreement on the open terms. This obligation does not mean that a final agreement will be reached. Good faith negotiations will not necessarily bridge all gaps that stand in the way of a concluded agreement. The obligation does, however, bar a party from walking away from the preliminary agreement without a legitimate attempt at negotiation.
225. Imposing an obligation (whether expressly or by implication) to negotiate open terms will not overcome all cases of incompleteness. It will not, for example, deal with the problem created where parties have not agreed on the important (some might say the essential) terms of their bargain. A good faith obligation to negotiate cannot make a fatally incomplete contract valid and enforceable.
226. This case is a good example. The projects contemplated by the agreements were, on any view, complex multi-million dollar projects. The construction of port facilities would likely cost in excess of $1 billion. The construction of a railway line would cost around $1 billion. The construction of mines would cost several hundreds of millions of dollars. Yet almost nothing was agreed about the nature and extent of those projects. One would expect that it would require significant time, effort and expertise to resolve these matters and arrive at the appropriate terms.
227. One missing element of each agreement is the price to be paid for the works. In construction contracts the price is of fundamental importance. If it is not agreed, or there is no agreed method of ascertaining it, there can be no bargain.
53 Where an agreement does not specify a price to be paid for the work or benefits that accrue under the contract, unless the contract is for the sale of goods, the court will not imply a term that the price is to be a reasonable price. In Hall v Busst (1960) 104 CLR 206, Fullagar J said (222):
So far as contracts for the sale of goods are concerned, there may or may not be a general rule, applicable in respect of executory, as distinct from executed, contracts, that, where the price is not otherwise determined, a promise to pay a reasonable price is to be implied: see Acebal v. Levy (1834) 10 Bing. 376, esp. at p. 382 [131 E.R. 949, esp. at p. 952], Hoadly v. M'Laine (1834) 10 Bing. 482 [131 E.R. 982], Sale of Goods Act 1896 (Q.), s. 11, Chalmers on Sale of Goods, 11th ed. (1931), p. 27, note (c). But such a rule, if it exists, is anomalous. The contract contemplated here is not a contract for the sale of goods: it is a contract for the sale of 'land and improvements.' In such a case there cannot, I think, be held to be a binding contract unless the three essential elements are the subjects of concluded agreement. The three essential elements are the parties, the subject matter and the price. If, but only if, these are fixed with certainty, the law will supply the rest. When it is said that the price must be fixed with certainty, it is not, of course, meant that it must be fixed at a specified figure. It will be sufficient if the sale is expressed to be for a price or value to be fixed by a named or described person. In such a case, if the named or described person dies or cannot or will not fix the price or value, the contract cannot, as a general rule, be enforced, but, if and when he does fix the price or value, there is a concluded contract. If, however, the parties are silent as to price, there can be no implication of a term that a reasonable price is to be paid. And it is not, in my opinion, sufficient if the sale is expressed to be 'for the value of the land' or 'for the fair value of the land' or 'for a reasonable price.' For, in such a case, the actual price payable can only be arrived at in one of two ways-either by further agreement between the parties or by the court in an action or suit. If the price is fixed by further agreement, cadit quaestio. If it is not so fixed, the party who brings an action or suit comes into court without a complete cause of action. He is saying to judge or jury: 'Complete our contract for us, and then enforce it.' It is the same as if the 'contract' had said: 'for a price to be fixed by a judge or a jury.' And clearly a contract in those terms could not be enforced, for no breach antecedent to litigation could be assigned.
(See also Dixon CJ at 216 - 217 and Menzies J at 231 - 235).
54 When the brief evidence given by Mr Phatouros of the conversation he had with Mr Richardson (out of which the terms of the agreement can only be drawn) is analysed, it is apparent that no agreement was reached about the price. The effect of what Mr Phatouros said was that the respondent was going to try the work out; that is, carry out the Gingin run and 'see what's going to be fair for us'. In saying that he intended to see what is 'fair for us', Mr Richardson was not clear whether the respondent intended to strike a rate that was fair to the respondent or a rate that was fair to the respondent and to the owner-drivers, including the appellant, who were carrying out the Gingin run. However, Mr Richardson did not agree that the rate could be set in this way. Mr Phatouros simply said that Mr Richardson said, 'We'll discuss the rate when we start doing it.' It is clear from this statement that Mr Richardson agreed to discuss what the rate should be after the new arrangement had commenced. It is also implicit in what Mr Phatouros says, Mr Richardson said, that it was agreed that it would be necessary to work the new arrangement to make an assessment of a price for that work. Nor was any formula or ascertainable standard agreed for striking a price for the work.
55 Even if it could be found on the evidence that the appellant had agreed to leave the respondent unilaterally to determine the price for the Gingin run, the arrangement to do the work may not be enforceable.
56 In May and Butcher Ltd v R [1929] All ER Rep 679 the parties had agreed that the prices to be paid and the dates of payment for old tentage shall be agreed from time to time. After considering the arguments, the House of Lords rejected the argument that a reasonable price should be implied. Lord Warrington found (684):
In my opinion, the decision of this case depends on the application of a well-known and elementary principle of the law of contracts, which is that, unless the essential terms of the contract are agreed on, there is no binding and enforceable obligation. In the present case, we have a document which purports to be an agreement for the sale by one party to the other party of certain specified goods at a price to be hereafter agreed on between them. If that price is thereafter agreed, then there is a binding contract within the principle to which I have alluded; each of the essential terms of the contract has then been agreed. If the parties fail to arrive at an agreement, then the price has not been ascertained in the way in which the parties stipulated that it should be ascertained, and there is, therefore, no binding agreement.
57 Viscount Dunedin was also of the opinion that there was no concluded contract unless a bargain settles everything necessary to be settled. His Lordship then went on to say (684):
[Y]ou may very well agree that a certain part of the contract, if you take sale, such as price, may be settled by somebody else. As a matter of the general law of contract, as I have said, you have to have all the essentials settled. What are the essentials may vary according to the particular contract with which you are dealing. We are here dealing with sale, and, undoubtedly, price is one of the essentials of sale, and, if it is left still to be agreed between the parties, then it is no contract. It may be left, as I say, to the determination of a certain person, and, if it was so left, and that person either would not or could not act, I have no doubt also that there would be no contract because the price was provided between the parties to be settled in a certain way, and it has become impossible to settle it in that way, and, therefore, there is no settlement. No doubt in the matter of goods, the Sale of Goods Act, 1893, says that, if no price is mentioned and settled in the contract in any way, it is to be a reasonable price. The simple answer in this case is that the Sale of Goods Act provides for silence on the point, and here there is no silence, because there is the provision that the two parties are to agree. As long as you have something certain it does not matter. For instance, it is a perfectly good contract as to price to say that the price is to be settled by the buyer.
58 Whilst May and Butcher stands as good law for the point that a bare agreement to agree will have no legal effect on grounds of uncertainty, the observation of Viscount Dunedin that an enforceable contract could leave the price to be settled by one party was regarded as doubtful by Gibbs J in Godecke v Kirwan [1973] HCA 38; (1973) 129 CLR 629 when his Honour said, after observing that a contract is not bad for uncertainty if it is agreed that a third party may unilaterally settle essential terms, that (646 - 647):
I should perhaps make it clear that it does not necessarily follow from what I have said that an agreement which left further terms to be settled by one of the parties, rather than by his solicitors, would be treated as a concluded contract. In May and Butcher Ltd. v. The King [1934] 2 KB, at p. 21, Viscount Dunedin suggested that a sale of land which left the price to be settled by the buyer himself would be good. With great respect, it seems to me that there would be no binding contract in such a case, which would fall within the principle that 'where words which by themselves constitute a promise are accompanied by words which show that the promisor is to have a discretion or option as to whether he will carry out that which purports to be the promise, the result is that there is no contract on which an action can be brought': Thorby v. Goldberg (1964) 112 C.L.R. 597, at p. 605, citing Loftus v. Roberts (1902) 18 T.L.R. 532, at p. 534; Placer Development Ltd. v. The Commonwealth (1969) 121 C.L.R. 353, at pp. 359-361. It might be suggested that the same principle would not apply if the determination of the price were left to the seller, for then it would be the promisee, not the promisor, who was left with the discretion as to performance. However, in Beattie v. Fine [1925] V.L.R. 363, Cussen J. drew no such distinction and held that an option for renewal 'at a rental to be agreed upon by the lessor' did not give rise to any contractual obligation. He based his decision on the principle of Loftus v. Roberts (1902) 18 T.L.R. 532, but the same conclusion might have been reached by holding that there can be no concluded bargain if a vital matter (such as price or rental) has been left to the determination of one of the parties (see also the dicta in Foster v. Wheeler (1888) 38 Ch. D. 130, at pp. 132-133). Perhaps it may be different where agreement has been reached on all essential terms but the determination of subsidiary matters has been left to one of the parties.
59 The contrasting views of Gibbs J in Godecke and Lord Dunedin in May and Butcher have been noted in a number of decisions of Australian courts, but the issue whether an agreed arrangement to allow one party to unilaterally determine a vital term remains unresolved: see the observations of Kirby P in Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130, 136 and more recently Macfarlan JA in Malago Pty Ltd v A W Ellis Engineering Pty Ltd [2012] NSWCA 227 [40] - [46].
60 However, there is authority in cases that deal with construction contracts where it has been expressly agreed that the value of work to be done under a contract is to be assessed in the sole discretion of one party that uncertainty may not arise. In WMC Resources Ltd v Leighton Contractors Pty Ltd [1999] WASCA 10; (1999) 20 WAR 489 a mining contract provided that if the value of a variation to the scheduled rates and prices could not be agreed between the parties, WMC could determine the value in its sole discretion. Such a clause is not uncommon in construction contracts. It was not argued that the provision was uncertain. Justice Ipp, with whom Kennedy and White JJ agreed, found that, in any event, such a submission would be untenable. At [46] he said:
Any uncertainty would be cured by the implication of terms requiring the appellant to value by reference to objective criteria. The appellant accepts that those criteria are that it should act honestly, bona fide, and reasonably. The respondent does not dispute that terms to this effect should be implied in the contract. In my view, it is indeed implicit in the contract that, in carrying out a valuation in terms of cl 14.2(b)(iv), the appellant is obliged to act honestly, bona fide, and reasonably: see Sandhu v Ferizis, unreported; SCt of NSW (Young J); 4630 of 1990; 11 March 1994, and cases such as Perini Corporation v Commonwealth [1969] 2 NSWR 530. It was not suggested by the respondent that the appellant should act with due care and skill in performing the valuation. Ordinarily, when a third party carries out such a valuation, the value determined cannot be challenged because of negligence on the part of the valuer: Legal and General Life of Australia Ltd v A Hudson Pty Ltd (at 335). That rule may not apply when the valuer is not a third party but a party to the contract itself. As there was no argument on the question, I express no concluded opinion as to it. I merely observe that the mere fact that a party to a contract is appointed as a valuer of a thing, which is to pass as consideration under the contract, does not mean that that party is at large to determine any value it wishes. Conditions will be implied in the contract which will govern the performance of the valuation function. For the purposes of this appeal, having regard to the way in which the matter was argued, I shall assume that those conditions are solely that the appellant is obliged to act honestly, bona fide, and reasonably.
61 Although the decision of the Full Court in WMC Resources has been criticised by some academics: Professor I N D Wallace QC, '"In its Sole Discretion": An Unpersuasive Interpretation?' (2000) 16 BCL 243; T Thomas, 'The value is whatever I say it is: Determinations by the principal under construction contracts' (2009) 25 BCL 246, the decision has consistently been applied in a number of authorities involving construction contracts: see, for example, the recent decision of the Full Court of the Supreme Court of Victoria in Dura (Aus) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [2013] VSCA 179. The approach of the Full Court in WMC Resources, however, does not seem to have been considered by any authorities in any analysis of the opposing opinions of Gibbs J in Godecke and Lord Dunedin in May and Butcher.
62 It is not necessary, however, to determine this issue, in particular whether an agreement that left the determination of the price to the respondent would be binding in this matter, as the evidence of Mr Phatouros was that Mr Richardson did not agree to such a term. At its highest, the effect of the statements made by Mr Phatouros on behalf of the respondent was that after the Gingin work was incorporated into the south-west run the price would be determined. There was no clear statement as to who would determine the price and, in any event, Mr Richardson made it plain to Mr Phatouros that he would discuss the price to be paid after the new arrangement commenced.
63 For these reasons, I am of the opinion that there was no legally enforceable agreement between the parties to incorporate the Gingin run into the south-west run. Thus, I am satisfied that ground 1 and ground 2 of the appeal have been made out.
Did the removal by the appellant of the respondent's signage from the truck enable the respondent to terminate the contract without notice?
(a) The parties' submissions
64 The appellant makes the following submissions:
(a) The Tribunal erred in finding that the requirement for the appellant to have the respondent's signwriting on its truck was an implied condition of the owner-driver contract between the appellant and the respondent. The appellant concedes that it was an implied term of the contract between the appellant and respondent that the appellant's truck would be sign written with the respondent's livery. However, the appellant importantly contends that this term was not a condition of the owner-driver contract between the parties.
(b) Contractual terms are classified as warranties, innominate (intermediate) terms, or conditions: Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115; (2007) 82 ALJR 345; (2007) 241 ALR 88. A warranty is a 'non-essential term' of the contract, and a 'condition' is an 'essential term', which if breached allows the innocent party to terminate the contract. An 'innominate' or intermediate term is one where the consequences of a breach of the term depend on the seriousness of the breach.
(c) The accepted test for determining whether a term of a contract is an essential term, and therefore a condition, is the test set out in the judgment of Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632, 641 - 642:
The test of essentiality is whether it appears from the general nature of the contract ... or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor.
(d) The primary object of the owner-driver contract between the parties was to cart offal from abattoirs to a processing plant. In that context the issue of signwriting on the appellant's truck was a secondary matter. It was the evidence of the respondent's witnesses that not all of the respondent's trucks have signwriting. Also, there was no evidence before the Tribunal from which the Tribunal could have made a finding that the respondent would not have entered into the contract with the appellant unless it had been assured of a strict performance of the requirement relating to the signwriting. In these circumstances, the term of the owner-driver contract regarding signwriting was a warranty, or at most, an intermediate term. Thus, the removal of the signage was not a serious matter that went to the core of the contract, and that, therefore, did not provide the respondent with a valid ground for the termination of the contract. Further, removal of the signwriting from the truck by the appellant did not deprive the respondent of the benefit for which it had contracted, and, therefore, the action on the part of the appellant in removing the signwriting did not justify termination of the owner-driver contract by the respondent.
(e) In finding that the term of the contract between the parties regarding the signwriting was a 'condition' of the owner-driver contract between the parties, the Tribunal failed to correctly apply the test in Tramways Advertising regarding essential terms of a contract.
(f) The Tribunal also wrongly found that in removing the signwriting from the truck the appellant confirmed an intention to no longer be bound by the contract, entitling the respondent to bring the contract to an end without notice. To establish a repudiation of a contract it has to be shown that the party that is in breach evinces an intention to no longer be bound by the contract or that they intend to fulfil the contract only in a manner substantially inconsistent with its obligations and not in any other way: Shevill v Builders Licensing Board (625 – 627) (Gibbs CJ).
(g) In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623, the High Court upheld the termination of a lease agreement by the lessee following the failure by the lessor to deliver a registrable lease, on the basis that the provision of a registrable lease was central to that contract. The appellant says that the requirement for it to have the respondent's signage on its truck, under the owner-driver contract between the parties, is not as important in the context of the contract as a whole, as was the requirement that the lessor provide a registrable lease in Laurinda. In any event, in Laurinda the lessee made several demands to the lessor for the provision of a registrable lease before it finally terminated the contract. In this case, the appellant was not given any, or any reasonable opportunity to reinstate the signage on its truck before the contract was terminated by the respondent.
(h) From the decided cases it is clear that for conduct to amount to a repudiation of a contract it has to relate to some important aspect of the contract, and has to have the effect of substantially depriving the other party of the benefit of the contract. That is, the breach must be of such magnitude as to entitle the innocent party to treat the contract as at an end: Hill v Canberra Centre Holdings Ltd.
(i) The conduct of the appellant in removing the signwriting from the truck falls well short of being a continued refusal to perform a fundamental obligation under the contract, or being 'substantially inconsistent with' the appellant's obligations under the contract. The removal of the signwriting did not deprive the respondent of a significant benefit under the contract, namely the cartage of offal from abattoirs to a processing plant. In any event, after the signage was removed, the appellant did, on several occasions, undertake runs to abattoirs, whereby he drove to the designated site, collected the offal, and brought it up to the processing plant. Further, the respondent failed to give the appellant any warning that it would terminate the contract if the signage was not reinstated.
(j) Statements made by Mr Richardson to Mr Willis to the effect that he would need to remove the signwriting from his truck in order to look for other work, is a statement of fact that hirers do not like having other companies' livery on their sub-contractors' trucks, and, that, therefore, if the appellant did have to find work elsewhere it would have to remove the signage. Such a statement cannot be said to be an indication on the part of the appellant that it intended to no longer be bound by the contract.
(k) The respondent also seeks to rely on the removal by the appellant of its truck and motor vehicle from the respondent's yard, and the failure of Mr Richardson to communicate with the respondent's transport managers, as an indication on the part of the appellant that it intended to no longer be bound by the contract, and thereby justifying the lawful termination of the contract by the respondent. This cannot be the case. After the removal of the signage the appellant was still turning up at the designated places and times that the respondent required in order to collect the offal, and brought the offal back to the processing plant. That is, the appellant continued to perform the work that it was obliged to do under the contract.
(l) In the circumstances, the appellant says that the respondent could only lawfully terminate the owner-driver contract between it and the appellant by giving the appellant reasonable notice.
65 The respondent makes submissions that:
(a) The evidence of Mr Cole, Mr Phatouros and Mr Willis establishes that the signwriting was a crucial requirement of the contract and not a minor part. It was an essential part of the implied terms of the contract and without it the respondent would not have entered into a contract with the appellant: Tramways Advertising.
(b) The evidence of Mr Phatouros was that there was one truck which did not have signwriting on it so that it would not 'stand out' as it was required to do work at the wharf.
(c) Removal of the signwriting on the appellant's truck deprived the respondent of a benefit, namely the identification and positive branding and marketing of the company. The contract between the respondent and the Craig Mostyn Group required the vehicles to have their name on them.
(d) In the same way that the failure to produce a registrable lease in Laurinda was determined to be crucial, the respondent submits that the removal of the signwriting from the appellant's truck was an absolutely crucial part of the implied terms of the contract between the parties.
(e) Actions by the appellant which indicated the relationship had broken down and that the appellant repudiated the contract are as follows:
(i) The refusal by the appellant to continue to undertake the Gingin run.
(ii) Discussions with Mr Willis in March 2012 prior to the end of the contract where the appellant said that he would need to remove the signwriting from his truck in order to look for other work.
(iii) The action of the appellant in removing the signwriting from his truck.
(iv) Removal of the appellant's truck and motor vehicle from the respondent's yard.
(v) The failure of the appellant to communicate with the respondent's transport managers.
(f) The respondent contends the Tribunal was correct in finding that in removing the signwriting from the truck the appellant confirmed its intention to no longer be bound by the contract, entitling the respondent to bring the contract to an end without notice and in removing the signwriting, Mr Richardson jumped the gun and prevented the contract coming to an orderly conclusion.
(g) The respondent says the appeal should fail as the weight of material before the Tribunal leads to the conclusions that:
(i) The failure to do the Gingin run was a breach of the contract (ground 2).
(ii) The removal of signwriting was a significant breach of the contract that allowed the respondent to end the contract without notice (ground 3 and ground 4).
(iii) The removal of the signwriting amounted to a repudiation of the contract (ground 5).
In the respondent's opinion, a positive finding on any of the above three matters is sufficient to uphold the decision at first instance and dismiss the appeal.
(b) Consideration – was the respondent entitled to terminate without notice?
66 As the learned authors of Sneddon N C, Bigwood R A and Ellinghaus M P, Cheshire & Fifoot Law of Contract (10th Aust ed, 2012) point out at 21.11, the law confers a right on an innocent party to terminate a contract for breach in three circumstances:
1. Repudiation. This consists of a manifestation of unwillingness or inability to perform the contract, in substance or at all, before or at the time when performance is due: see 21.12-21.15, 21.20.
2. Breach of essential term (or condition). This consists of failure to perform, at the time when performance is due, a term regarded as essential by the parties or by the law: see 21.16-21.19.
3. Breach of an 'intermediate' term causing substantial loss of benefit. This consists of a failure to perform an intermediate term, at the time when performance under that term is due, that deprives the injured party of the substantial benefit of the contract: see 21.21-21.22.
Each of these categories of breach focuses on a different rationale for the creation of a right to terminate the contract. Repudiation focuses on the attitude of the contract-breaker before or at the time of performance. Breach of an essential term or condition focuses on the relative importance of obligations under a contract, as determined by the parties or the law. Breach of an intermediate term causing substantial loss focuses on the effect of the breach in question.
However, it is clear that these categories are not entirely mutually exclusive, but rather can overlap in their application. A breach may simultaneously be a failure to perform an essential term, a manifestation of unwillingness or inability to perform, and result in a substantial loss of benefit.
67 The Tribunal found termination was justified on three grounds, repudiation and breach of two essential conditions of contract.
68 The first breach of a condition found was the refusal by the appellant to continue in the arrangement of work that included the Gingin run. As set out in these reasons, I am of the opinion that there was no binding agreement to continue the arrangement to include the Gingin run. It follows therefore that the refusal to continue that new arrangement cannot constitute a breach of a condition of contract.
69 The second breach of a condition of contract found by the Tribunal was the removal of the signwriting from the truck. The appellant contends that the term of contract requiring the appellant's truck to have on it leaves and writing which identified the truck as part of the Damien Cole Group was not a condition of contract. The test enunciated by Jordan CJ in Tramways Advertising requires an objective assessment to determine whether a term of a contract is a condition. It requires an assessment of the relevant circumstances to determine whether the respondent would not have entered into the contract unless it had been assured of strict or substantial performance. The test in Tramways Advertising was recently modified by the majority of the High Court in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd. At [48] Gleeson CJ, Gummow, Heydon and Crennan JJ observed:
What Jordan CJ said as to substantial performance, and substantial breach, is now to be read in the light of later developments in the law. What is of immediate significance is his reference to the question he was addressing as one of construction of the contract. It is the common intention of the parties, expressed in the language of their contract, understood in the context of the relationship established by that contract and (in a case such as the present) the commercial purpose it served, that determines whether a term is 'essential', so that any breach will justify termination.
70 Whether a court or tribunal should conclude that a term is essential requires an assessment not only of the terms of the contract itself, but also the evidence of events that occurred prior to the termination of the contract and any damages that flow from the breach of the term. Thus, in each case the resolution of this issue will turn on its own facts. This is illustrated by the relevant matters considered by the Court of Appeal of the New South Wales Supreme Court in Donut King Australia Pty Ltd v Wayne Gardner Racing Pty Ltd [2001] NSWCA 275. In 1997, Donut King entered into a sponsorship agreement with Wayne Gardner Racing. One of the terms of the contract between the parties was that Wayne Gardner Racing was to display a 'Donut King' logo on the bonnet of its racing vehicles. The words in the logo were to be written in pink on a white background. In 1999, Wayne Gardner Racing obtained a new car and sought to discuss the colour of the bonnet with two employees of Donut King. After some delay, each employee suggested the other deal with the issue and one informed Wayne Gardner Racing they would approve the change once they received photos of the car. In the meantime, the car was painted red with Donut King written in white and the car was used by Wayne Gardner Racing in the Melbourne Grand Prix. Shortly afterwards Donut King communicated its displeasure at the colour of the logo and advised they considered the sponsorship arrangement to be at an end. The trial judge found the term specifying the logo colour was not an essential term. The Full Court dismissed an appeal against the decision of the trial judge. They found that the term that the logo be in pink on a white background was not so essential that Donut King would not have entered into the agreement because:
(a) The contract did not provide for an express right of termination for breach of this term. Where the parties intended to make strict and literal performance of a promise essential they expressly provided for it, such as for a failure to pay the sponsorship amount.
(b) The non-essential nature of the term was indicated by the fact that Donut King had approved white lettering on a red background on the Pantech (van).
(c) There was evidence that the response by Donut King to the change in logo colour was leisurely. There was no evidence that the breach caused damage and there was evidence accepted by the trial judge that Donut King wanted to exit the sponsorship agreement for marketing reasons.
71 In this matter, as counsel for the appellant pointed out, the primary object of the contract between the parties was the carting of offal and the removal of the signwriting from the appellant's truck did not deprive the respondent of any benefit accruing or accrued under the contract. Nor was there any evidence of damage caused by the breach. Whilst the respondent argues that it was under a contractual obligation with the Craig Mostyn Group to have the name of the Craig Mostyn Group on the vehicles engaged in carting of offal, the evidence given on behalf of the respondent does not support such a contention. The evidence of Mr Cole was that the respondent had entered into an agreement with the Craig Mostyn Group to sign write all logistic vehicles and trailers used to carry out the work for the Craig Mostyn Group with the name of the Craig Mostyn Group (ts 58, 68 - 69, AB 91, 101 - 102). There was no evidence upon which a finding could be made that the respondent was under a contractual obligation with the Craig Mostyn Group to ensure the prime movers used to carry out the Craig Mostyn Group work were sign written.
72 Also of importance is the fact that the respondent did not require all trucks of subcontractors to be sign written with the respondent's signage. One of the trucks owned by Mr Phatouros was not sign written (ts 79, AB 112). Nor were all the owner-driver trucks and the trailers acquired when the respondent took over the contract from Fertal Holdings Pty Ltd immediately sign written (ts 58, AB 91). Mr Cole said the reason for the signwriting was 'branding' to promote image and uniformity (ts 58, AB 91). Yet, even in the absence of the removal of the signwriting by the appellant, the 'branding' of vehicles was not at all material times uniform.
73 When all these circumstances are considered, it is clear that the requirement for signage was not a term requiring strict or substantial performance but an intermediate term. This is because there was no evidence that the effect of the breach made further commercial performance of the contract impossible.
74 A right to terminate for breach of an intermediate term will only arise if the breach and the consequences of the breach are sufficiently serious to go to the root of the contract: Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26; [1962] 2 WLR 474; [1962] 1 All ER 474 (484) (Upjohn LJ) (All ER). In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd Gleeson CJ, Gummow, Heydon and Crennan JJ pointed out [52] - [55]:
52 … First, the interests of justice are promoted by limiting rights to rescind to instances of serious and substantial breaches of contract. Secondly, a just outcome is facilitated in cases where the breach is of a term which is inessential.
53 As will appear later in these reasons, we rest our decision in the appeal not upon the ground of breach of an essential obligation, but upon application of the doctrine respecting intermediate terms.
54 We add that recognition that, at the time a contract is entered into, it may not be possible to say that any breach of a particular term will entitle the other party to terminate, but that some breaches of the term may be serious enough to have that consequence, was taken up in Ankar Pty Ltd v National Westminster Finance (Aust) Ltd [1987] HCA 15; (1987) 162 CLR 549 at 561-562. Breaches of this kind are sometimes described as 'going to the root of the contract' (For various synonyms used see Treitel, Remedies for Breach of Contract, (1988) at 350-351), a conclusory description that takes account of the nature of the contract and the relationship it creates, the nature of the term, the kind and degree of the breach, and the consequences of the breach for the other party. Since the corollary of a conclusion that there is no right of termination is likely to be that the party not in default is left to rely upon a right to damages, the adequacy of damages as a remedy may be a material factor in deciding whether the breach goes to the root of the contract (Carter, Breach of Contract, 2nd ed (1991) at 199-200).
55 A judgment that a breach of a term goes to the root of a contract, being, to use the language of Buckley LJ in Decro-Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361 at 380; [1971] 2 All ER 216 at 232, 'such as to deprive the injured party of a substantial part of the benefit to which he is entitled under the contract', rests primarily upon a construction of the contract. Buckley LJ attached importance to the consequences of the breach and the fairness of holding an injured party to the contract and leaving him to his remedy in damages. These, however, are matters to be considered after construing the agreement the parties have made. A judgment as to the seriousness of the breach, and the adequacy of damages as a remedy, is made after considering the benefit to which the injured party is entitled under the contract.
75 Thus, the nature of the breach, the consequences of the breach, the foreseeable consequences of the breach and the effect of each of these on the contract as a whole are matters which must be considered to determine whether the breach is sufficiently serious to give rise to a right to terminate: Lawbook, The Laws of Australia (at 15 July 2012) 7 Contract: General Principles, '6 Breach' [7.6.1030].
76 Even if it were established by the evidence that the removal of the signage by the appellant deprived the respondent of uniformity in its branding on one truck of its fleet, there appeared to be little if any consequence that flowed from the breach of contract. No evidence of any damage that flowed or could have flowed was adduced. The evidence of Mr Cole was that the respondent's contractual obligation to the Craig Mostyn Group only required signage on the trailers and logistic vehicles (ts 58, AB 91). Thus, it cannot be said that the removal of the signage was serious enough to give rise to a right to terminate the contract on grounds of a breach of an intermediate term.
77 For these reasons, I am of the opinion that grounds 3 and 4 of the grounds of appeal have been made out.
78 The respondent, however, did not terminate the contract solely on the ground that the appellant had removed the signwriting from the truck. The Tribunal found that the appellant had repudiated the contract. In particular, the appellant evinced an intention to no longer be bound by the contract by the following conduct:
(a) Mr Richardson refused to perform part of the contract (by refusing to continue the Gingin run).
(b) The removal of the signwriting. This was a sign of Mr Richardson's withdrawal from the co-operation necessary for the operation of the contract which meant that an orderly end to the relationship was not practicable.
(c) When Mr Phatouros asked Mr Richardson why the stickers had been removed, Mr Richardson declined to respond saying that he would explain why when he met with Mr Cole. This action was indicative of a breakdown in communications between the parties or a refusal to speak to the person in the position of transport manager, to whom Mr Cole had left much of the management of the business following his semi-retirement some time earlier.
79 The finding that Mr Richardson had refused to perform part of the contract must necessarily fall away as the parties had not reached a concluded agreement to incorporate the Gingin run. Although Mr Richardson may have refused to communicate with the respondent's transport managers, he did communicate with Mr Cole.
80 Whilst Mr Cole may be semi-retired, it is clear from the evidence he gave to the Tribunal in this matter that he negotiated the terms of the owner-driver contract with Mr Richardson, he made the decision to incorporate the Gingin run into the south-west run and determined the rate that would be paid for the Gingin run. He also engaged directly with Mr Richardson in discussions about the terms of the Gingin run and made the decision to terminate the contract between the appellant and the respondent. Although Mr Cole wished to leave the management of the work to Mr Phatouros and Mrs Phatouros and formed the opinion that one of the reasons the contract should be terminated was because communications had broken down between Mr Richardson and Mr Phatouros and Mrs Phatouros, that reason cannot at law form the basis of a finding that the appellant had repudiated the contract. Such conduct may be a reason why the respondent may wish to terminate by giving notice of termination, but it cannot form the basis of a finding of repudiation entitling the respondent to terminate without notice.
81 In this matter there is no basis for a finding of repudiation to stand as there must be a renunciation of the contract as a whole or a fundamental obligation under it. This is repudiation in the first sense discussed by Gleeson CJ, Gummow, Heydon and Crennan JJ in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd at [44] where their Honours said:
First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations (Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at 634 per Mason CJ). It may be termed renunciation (Heyman v Darwins Ltd [1942] AC 356 at 397). The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it (Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at 659).
82 As discussed in these reasons, after removal of the signage, the appellant continued to cart offal in accordance with the roster for the south-west work. Thus, it cannot be said that the appellant had renounced the contract as a whole or a fundamental obligation under the contract. Whilst Mr Richardson had removed the signage to look for other work, it is apparent from the evidence given by Mr Willis and from the emails Mr Cole sent to Mr Richardson on 20 March 2012 and 26 March 2012 that it was plain that if the appellant did not reach agreement to continue the Gingin run, the respondent would terminate the contract. In the circumstances, when the contract was under threat of termination, the fact that Mr Richardson took steps to prepare the truck to look for other work is not unreasonable. The appellant did not, however, cease to carry out the contract or otherwise evince an intention not to carry out the contract. Nor can the nature of the obligation of signage be described as fundamental.
83 For these reasons, I am of the opinion that ground 5 has been made out.
Conclusion
84 I am of the opinion that the respondent was not entitled to terminate the owner-driver contract without notice and that an order should be made by this Full Bench to suspend the operation of the decision of the Tribunal and remit the case to the Tribunal for further hearing and determination.
KENNER C:
85 The respondent, the Damien Cole Group conducts the business of the transport of offal and abattoir waste from abattoirs in the South West of the State and from retail outlets in the Perth metropolitan area, for disposal at designated sites. The appellant, Shacam Transport Pty Ltd, through its director Mr Richardson, was party to an owner driver contract made under the Owner-Drivers (Contracts and Disputes) Act 2007 with DCG. Under the contract, Shacam purchased a prime mover to undertake haulage of DCG's trailers, in providing the services. The work performed by DCG is undertaken on behalf of its client, the Craig Mostyn Group, a company engaged in the agricultural business.
86 Mr Richardson commenced work under the contract in February 2011. All seemed to proceed well for about a year or so. In early 2012, a change to the work arrangements for the owner drivers was proposed by DCG. This change involved the incorporation of additional work, in the form of a regular trip to an abattoir in Gingin. This work was, to that time, performed separately by another owner driver. It was proposed that Mr Richardson, and the other owner drivers, agree to include this as a part of their regular work. The previous owner driver was being paid the rate of $580 for each trip for the work concerned. This rate was not going to continue. There was no rate agreed between Mr Richardson and DCG at the time, rather it was to be "worked out" at a later time.
87 After undertaking a couple of trips only, when Mr Richardson discovered the rate that DCG was paying for this work, he declined to continue with it. As a result, DCG contended that Shacam was in breach of its contract, and along with the decision by Mr Richardson to remove DCG's signage from his truck, DCG considered there were grounds to terminate the contract without notice which it did. Subsequently Shacam commenced proceedings in the Tribunal claiming damages in the sum of $41,700 for payment in lieu of reasonable notice on termination of the contract, and also another amount said to be wrongly deducted from final payments made to Shacam by DCG.
88 A threshold issue raised by Shacam before the Tribunal was whether there was a valid contract in relation to the Gingin work, by reason of there being no agreement as to what remuneration would be payable. What the rate was proposed to be was the central issue in the proceedings at first instance. In the end, the Tribunal found on the evidence, that no rate was agreed at the time. Rather, the Tribunal found that an "appropriate rate" would be paid "in due course" and that the rate "would be worked out": AB 18. It was common ground at first instance, that there was no negotiation or agreement between Mr Richardson and DCG, as to the remuneration for the Gingin work before he undertook any of the work. Also, despite there being some discussion between Mr Richardson and Mr Cole of DCG, after Mr Richardson discovered the rate he was being paid for this work, it was clear on the evidence before the Tribunal, that DCG was not going to change its mind about the rates it had determined for this particular work: AB 14.
89 A second issue also arose at this time. That issue was Mr Richardson's removal of some signage on his truck bearing the DCG name. The Tribunal concluded that it was an implied condition of the contract that the signage be maintained. Accordingly, on Mr Richardson's removal of the signage from his truck, the Tribunal concluded that this was a "serious breach of a condition of the contract": AB 20. It was held by the Tribunal that this conduct by Mr Richardson also constituted a repudiation of the contract with DCG, and accordingly, his claim for damages was dismissed.
90 Shacam now appeals against the Tribunal’s decision. Following an amendment granted by leave of the Full Bench, there are five grounds of appeal. Two issues arise for consideration on the appeal grounds. The first relates to grounds 1 and 2. The second relates to grounds 3, 4, and 5. The issues can be posed as questions as follows:
(a) Did the Gingin work constitute a valid variation of the owner driver contract between Shacam and DCG; and
(b) Was the signage on Shacam’s truck an essential condition of the contract and did its removal give rise to a right in DCG to terminate the contract for breach and/or constitute a repudiation of the contract?
91 If the answer to these questions is no, then the appeal must be allowed. For the following reasons, I would answer these questions in the negative, and accordingly, allow the appeal.
Gingin work – a valid contract?
92 In the proceedings at first instance, the Tribunal posed the question for resolution as follows at par 40 of its reasons (AB 17) as:
The question in this matter is whether Shacam breached the contract with DCG such as to enable DCG to bring the contract to an end without notice, or whether reasonable notice was due.
93 Despite the issue of the validity of the purported variation of the contract between Shacam and DCG to incorporate the Gingin work being put in issue, the Tribunal proceeded on an assumption, without determining the matter, that there was a valid contract and determined the issue of whether it had been breached. With respect, the Tribunal was in error in doing so. The Tribunal, the validity of the variation having been put in issue as a threshold point, was required to determine that issue, as a necessary step in determining whether Shacam had breached its contract with DCG (see AB 40; 82-83; 129-130; 137-138).
94 The Tribunal found on the evidence, which is not challenged on this appeal, that Mr Richardson agreed to include the Gingin run "not on a conditional basis, but on a permanent basis" (par 44 reasons AB 18). Based on the evidence and indeed it was common ground, that the question of remuneration payable to Mr Richardson was not then agreed, but was to be resolved some time later. In this respect, the Tribunal made the findings I have referred to earlier.
95 Whether a contract (or a variation) is validly made, requires the presence of four essential elements of offer and acceptance; valuable consideration; an intention to create legal relations; and certainty of terms (see generally Seddon NC and Ellinghaus MP, Cheshire and Fifoot's Law of Contract (8th ed, 2002) 10-24). An issue arising on this appeal relates to the latter element, that being whether the contract was sufficiently certain to be enforceable. A further, and related question, is whether the contract was complete, in the sense that all of the essential terms for its effective operation, were agreed. DCG maintains that the "Gingin contract" was complete and certain. Shacam contended it was not. In my view, for the following reasons, Shacam's position on this issue is to be preferred.
96 As a general proposition, courts and tribunals will endeavour, as far as possible, to uphold contracts, in particular commercial contracts: The Council of the Upper Hunter County District v Australian Chilling and Freezing Co. Limited (1968) 118 CLR 429; Meehan v Jones (1982) 149 CLR 571; Hillas & Co Ltd v Arcos Ltd [1932] All ER 494.
97 In relation to the principle of incompleteness of agreements, LexisNexis, Carter on Contract (at 11 September 2013) [04-120] states as follows:
3. INCOMPLETENESS

General principle:

An agreement is void for incompleteness where an essential part of the agreement is incomplete.

[04-120] Agreement incomplete

The guiding principle in relation to incomplete agreements was stated by Gibbs CJ, Murphy and Wilson JJ in Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd[footnote 1 omitted] in the following terms:

It is established by authority, both ancient and modern, that the courts will not lend their aid to the enforcement of an incomplete agreement, being no more than an agreement of the parties to agree at some time in the future.

Although this statement places the rule as to incompleteness in the context of agreements which amount to agreements to agree, it is applicable both to preliminary agreements and agreements which have simply not been fully negotiated. Accordingly, a contract will fail for incompleteness where, even though the language used may be quite clear in its meaning, if some essential, material or important part of the bargain has not been agreed upon.[footnote 2 omitted] For example, in May and Butcher Ltd v R [footnote 3 omitted] an agreement was incomplete where it referred to a sale of goods at prices to be agreed. More recently, in Fraser Edmiston Pty Ltd v AGT (Qld) Pty Ltd [footnote 4 omitted] an agreement in principle was incomplete where essential terms were still to be agreed. It therefore did not constitute a valid partnership contract.

Equally, however, whenever an essential or material term is uncertain, the effect is to make the agreement incomplete. To this extent at least, the analytical distinction between uncertainty and incompleteness is illusory. Thus, the agreement in Whitlock v Brew [footnote 5 omitted] for a lease 'upon such reasonable terms as commonly govern such a lease', was not only uncertain, it was also incomplete where both the term and the rent were still to be agreed. Again, in Tern Minerals NL v Kalbara Mining NL [footnote 6 omitted] a joint venture agreement was incomplete where a provision required agreement to 'usual' terms. It could not be said that the wording of any particular clause was 'usual' and the term was also meaningless until there was agreement on the particular terms contemplated.

Although the applicable rule is frequently stated in terms of 'essential', 'vital' or 'material' terms, these are relative concepts and therefore, when taken in the abstract, somewhat ambiguous. [footnote 7 omitted] It is impossible to apply the rule without determining what terms are necessary to the particular contract. Such necessity may arise on four main bases.

First, an agreement cannot be binding as a contract unless the parties have reached agreement on those terms which are legally necessary to constitute a contract.[footnote 8 omitted]

In the nature of things, every contract has a minimum content. Obvious illustrations are the price, duration of the contract, and the parties to the contract. For example, in Custom Credit Corp Ltd v Gray [footnote 9 omitted] a term stating the dates for payment of instalments under a credit contract was regarded as an essential provision for that type of contract.

Second, a rule of law or statute may make agreement on a particular term essential.

An illustration is the rule which requires the price payable for land under a sale of land contract to have been the subject of agreement. Thus, in Hall v Busst [footnote 10 omitted] an option to purchase land was void where it provided for the price to be a specific sum plus a reasonable sum for improvements and minus a reasonable sum for deficiencies in chattels and depreciation of property.

Third, a market custom or usage may make agreement on a particular term essential.

An illustration is CPC Consolidated Pool Carriers GmbH v CTM Cia Mediterranea SA (The CPC Gallia), [footnote 11 omitted] where the relevant custom or practice was that an agreement for charterparty was presumed to be incomplete by reason of being 'subject to details'.

Fourth, the parties may have stamped a particular term with the character of essentiality, by agreeing that there is to be no contract unless and until the term is agreed.

For example, in Metal Scrap Trade Corp Ltd v Kate Shipping Co Ltd (The Gladys) (No 2) [footnote 12 omitted] although only matters of 'detail' were outstanding in negotiations for the sale of a vessel as scrap, the parties did not intend to be bound unless and until these had been resolved.

However, care must be taken when applying this categorisation. For example, although the price payable under an executory sale of goods must be regarded as an essential term, [footnote 13 omitted] the absence of agreement may not be fatal. Any contract which is otherwise incomplete may contain a machinery provision which allows the contract to be completed.[footnote 14 omitted] In certain cases it will be possible to imply a term[footnote 15 omitted] to complete the contract. Severance may also be possible.[footnote 16 omitted] Moreover, even if an agreement for the sale of goods or supply of services is incomplete, where the agreement is partially performed there may be a liability under statute or in restitution.[footnote 17 omitted]

98 It is not in all cases where an essential term is absent, that a contract will fail for uncertainty or incompleteness. In the case where an essential or important term may not be finally agreed, but the parties have included a mechanism to determine it, the contract will be upheld: Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 at 19 per Kirby P (Waddell A-JA agreeing); Upper Hunter County District per Barwick CJ at 437. Similarly, in cases where there exists some objective external standard by which an otherwise incomplete term could be ascertained, the contract may be upheld. Thus, in Hall v Busst (1960) 104 CLR 206, by a majority (Dixon CJ, Fullagar and Menzies JJ; Kitto and Windeyer JJ dissenting) a contract providing for the payment of "fair value" was held to be effective, in circumstances where there existed a recognised standard of value to measure the price (at 216; 222-223 and 231-235).
99 In the case of contracts of employment or in owner-driver contracts such as presently under consideration, the price or remuneration to be paid for the provision of the services under the contract, is arguably one of, if not the most important term. In the case at hand, there was no agreement as to this crucial term. There was also no mechanism agreed, on the evidence, or an external standard, contained in the contract, by which such a term could be made certain. The "appropriate rate" or the rate "to be worked out", which were the findings of the Tribunal at first instance, could not be resolved between the parties, by an agreed mechanism. Indeed, on the evidence, it seems that the rate was determined unilaterally by DCG, without any input from Shacam at all. There was evidence that Shacam accepted that DCG would strike an appropriate rate. As I have already noted above, the evidence and the finding of the Tribunal also was, that the rate determined by DCG was not going to be reviewed. There clearly was no negotiation or consensus as to this important issue. The parties to the contract were not ad idem on the issue of remuneration for the Gingin work.
100 Accordingly, there was no contractual obligation on Shacam to perform the Gingin run. As such, there could be no breach of the contract in Shacam declining to perform this work. The Tribunal was, therefore, in error in concluding that Shacam's refusal to continue to do this work, constituted a breach of the contract, entitling DCG to terminate the contract without notice.
Signage
101 No issue is taken by Shacam on this appeal, that the contract between it and DCG contained an implied term in relation to signage on Shacam's truck. There was a finding by the Tribunal at first instance on the evidence, that it was an implied term for the signwriting on Shacam's truck not to be removed: AB 18. Put another way, it was an implied term of the contract between Shacam and DCG that Shacam's truck have DCG's signwriting on it. The Tribunal concluded that the requirements for implication, as set out in Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337 were met in this case: AB 18.
102 Having come to this conclusion, the Tribunal then found that the signage "was a condition of the contract that, once the signwriting was put onto its truck by DCG, Shacam not [sic] remove that signwriting without the agreement of DCG. It was essential that the truck be branded as part of DCG's fleet": AB 18-19. The Tribunal then concluded that the removal of the signage by Shacam was, in the circumstances, "a serious breach of a condition of the contract" and "… it also entitled DCG to bring the contract to an end": AB 20. In addition to a serious breach of contract, the Tribunal also concluded that the removal of the signage constituted a repudiation by Shacam of the contract "by refusing to perform part of the contract" and by showing "an intention to no longer be bound by the contract": AB 20.
103 Consideration of this issue on the appeal requires an analysis of relevant legal principle in relation to the classification of terms of a contract and the doctrine of repudiation, in the context of the evidence and the facts as found by the Tribunal.
Condition of the contract?
104 Shacam contended that the term was not an important condition, giving rise to right in DCG to terminate the contract for breach. Shacam submitted that the term was either a less important warranty, or an intermediate term.
105 Whether a term of a contract can be regarded as a condition, and therefore give rise to the right of termination of the contract, was considered in Tramways Advertising Pty Ltd v Luna Park (N.S.W.) Ltd (1938) 38 SR (NSW) 632. In this case, Jordan CJ said at 641-642:
The nature of the promise broken is one of the most important of the matters. If it is a condition that is broken, i.e., an essential promise, the innocent party, when he becomes aware of the breach, has ordinarily the right at his option either to treat himself as discharged from the contract and to recover damages for loss of the contract, or else to keep the contract on foot and recover damages for the particular breach. If it is a warranty that is broken, i.e., a nonessential promise, only the latter alternative is available to the innocent party: in that case he cannot of course obtain damages for loss of the contract: A.H. McDonald & Co. Pty. Ltd. v. Wells.[footnote 1 omitted]
The question whether a term in a contract is a condition or a warranty, i.e., an essential or a non-essential promise, depends upon the intention of the parties as appearing in or from the contract. The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor: Flight v. Booth[footnote 1 omitted]; Bettini v. Gye [footnote 2 omitted]; Bentsen v. Taylor Sons & Co. (No. 2) [footnote 3 omitted]; Fullers' Theatres Ltd. v. Musgrove [footnote 4 omitted]; Bowes v. Chaleyer [footnote 5 omitted]; Clifton v. Coffey. [footnote 6 omitted] If the innocent party would not have entered into the contract unless assured of a strict and literal performance of the promise, he may in general treat himself as discharged upon any breach of the promise, however slight. If he contracted in reliance upon a substantial performance of the promise, any substantial breach will ordinarily justify a discharge. In some cases it is expressly provided that a particular promise is essential to the contract, e.g., by a stipulation that it is the basis or of the essence of the contract: Bettini v. Gye[footnote 7 omitted]; but in the absence of express provision the question is one of construction for the Court, when once the terms of contract have been ascertained: Bentsen v. Taylor Sons & Co. (No. 2) [footnote 8 omitted]; Clifton v. Coffey. [footnote 9 omitted]
106 On appeal to the High Court in Luna Park (N.S.W.) Limited v Tramways Advertising Proprietary Limited (1938) 61 CLR 286, Latham CJ said at 302:
I agree with the Full Court that the guarantee clause was a condition and not a warranty in the sense in which those words are used by Fletcher-Moulton L.J. in Wallis, Son & Wells v. Pratt & Haynes[footnote 1 omitted]. It was a term of the contract which went so directly to the substance of the contract or was so "essential to its very nature that its non-performance may fairly be considered by the other party as a substantial failure to perform the contract at all." The breach of such a term by one party entitles the other party not only to obtain damages but also to refuse to perform any of the obligations resting upon him.
107 Further, at 303, Latham CJ continued:
the question is whether a promise is a condition or a warranty, "there is no way of deciding that question except by looking at the contract in the light of the surrounding circumstances, and then making up one's mind whether the intention of the parties, as gathered from the instrument itself, will best be carried out by treating the promise as a warranty sounding only in damages, or as a condition precedent by the failure to perform which the other party is relieved of his liability. In order to decide this question of construction, one of the first things you would look to is, to what extent the accuracy of the statement—the truth of what is promised—would be likely to affect the substance and foundation of the adventure which the contract is intended to carry out" (per Bowen L.J. in Bentson v. Taylor, Sons & Co. (No. 2) [footnote 1 omitted]); and see Halsbury's Laws of England, 2nd ed., vol. 7, p. 333.
108 It is necessary therefore, to examine the evidence at first instance in relation to the requirement to maintain signage on the truck, in the context of the owner-driver contract between Shacam and DCG and the relevant conduct of the parties in relation to this issue.
109 Mr Richardson's evidence was that he understood that it was DCG's signage that was put on his truck. The signage, which were "stickers" were made out of vinyl. Mr Richardson accepted that he removed them: AB 50. He said he did so to undertake some repairs on the cab of the truck in order that the paintwork may be "cut and polished". As to the issue of signage and the association with DCG, Mr Richardson testified that he did not remove the stickers because he no longer wished to work for DCG. He said that he wore a uniform each day with a name tag on it and that the trailers on his truck had DCG signage "all over them" and they "come two metres high": AB 51 and 70. As to the signage on the trailers, exhibit R2, a photograph of the truck and trailer of the type driven by Mr Richardson, revealed that the trailers are well covered with DCG logos and a maple leaf pattern of signage is prominently displayed all over the trailer. The trailer is also painted with green trim, the same colour as the maple leaf signage.
110 In relation to the question of whether it was ever communicated to him by DCG, that the signage on the truck was a requirement, Mr Richardson responded that this was never put to him: AB 53. In cross-examination, Mr Richardson testified that he was not told of any requirement to have signage, but when DCG requested it he had no objection, and after a discussion with the workshop manager, when he went to work one morning, he found the stickers were attached to his truck: AB 59-60. Whilst Mr Richardson said that he probably should have informed DCG that he had removed the signage to undertake the repairs to the paintwork on his truck, he said that he could not understand how the removal of some stickers from his truck, would suggest that he did not wish to work for DCG any longer. Mr Richardson testified that he regarded the stickers as "a trivial matter" and that his truck was still presented each day for work, in a clean and tidy state, and he wore his uniform each day: AB 67-68.
111 As to the DCG position on this issue, Mr Cole, the proprietor of the business, testified that he first heard of Mr Richardson's removing the signage from his truck, from his manager, a few days prior to the termination of the contract. Mr Cole said that he was not aware of the reason given by Mr Richardson for removing the signage, until he had given his evidence in the proceedings at first instance: AB 94. Mr Cole testified that he had heard "whispers" and he "thought" that the removal of the signwriting by Shacam from the truck was an indication that Mr Richardson was going to leave: AB 95. Mr Cole admitted however, that his view that Shacam had other work and was going to leave was based on hearsay: AB 104. There was no evidence that these beliefs were ever put to Mr Richardson by Mr Cole or anyone else from DCG.
112 In terms of the time at which the contract was entered into between Shacam and DCG, Mr Cole said in cross-examination, that he could not remember it even being specified that the signage on the truck was a requirement. He considered that it would have been "mentioned in conversation": AB 101. Importantly as to this issue, when asked in cross-examination about Mr Richardson's testimony that he intended to cut and polish his truck, and the signage on it, Mr Cole responded at AB 102 as follows:
– Mr Richardson's evidence was that he was going to cut and polish – wanting to cut and polish the truck?I – I find that strange that he was going to cut and polish the truck. We – we run 20, 30, 40 pieces of equipment with the – the same signage on them; when we tried to – when we asked Richardson to sign write the truck, he started in January I think or February and he had – he told us then he couldn't have it sign written immediately because his son was a panel beater and he was cut and polishing his truck and refurbing it before the signs went on and I don't think the signs went on his truck until June, July as I recalled and I find it strange how they had to come off again less than 12 months later but, yeah.
113 This testimony is completely at odds with the assertion of DCG that the signage on the truck was of such importance that a failure to maintain it, constituted a breach of the contract. The uncontested evidence was that Shacam operated its truck without the DCG signage on it for about the first six months of the contract, with the knowledge and acquiescence of DCG. This evidence alone is, in my view, fatal to the proposition that signage on Shacam's truck was of such importance as to constitute an essential term, non-compliance with which would give rise to a right in DCG to terminate the contract without notice for fundamental breach. If signage was as important as DCG maintained, Shacam's truck would not have been allowed on the road without it.
114 Even if the term in relation to signage could be classified as an intermediate term, to give rise to the right of DCG to terminate the contract, "depend[s] entirely upon the nature of the breach and its foreseeable consequences": Hong Kong Fir Shipping Company Limited v Kawasaki Kisen Kaisha Limited [1962] 2 QB 26. It is only if a breach of such a term is serious, that a right to terminate the contract arises (see generally Lindgren KE, Carter JW and Harland DJ, Contract Law in Australia (1986) 205-206). In this case, for the reasons already mentioned, it could not be concluded on the evidence, that the removal of the signage by Shacam had any such serious consequences.
115 Accordingly therefore, in my view, the Tribunal was in error in concluding that the removal of the signage by Shacam constituted a serious breach of the contract.
Repudiation of the contract
116 At first instance, the Tribunal concluded that by removing the signwriting from the truck, Shacam evinced an intention to no longer be bound by the contract. This, according to the Tribunal, entitled DCG to terminate the contract without notice: AB 32.
117 For the reasons that I have already outlined above in relation to the alleged breach of a condition, the conduct of Shacam could not be regarded as a repudiation of the contract. It is well settled that the principle of repudiation of a contract by a party, is based on the proposition that a party evinces an intention to no longer be bound by the contract, or to perform the contract in a fundamentally different way to that originally intended: Shevill v The Builders Licencing Board (1982) 149 CLR 620; Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited (1989) 166 CLR 623. Not only was the removal of the signage by Shacam from its truck, not related to an important condition of the contract, but there was no evidence that the removal of the signage had any material impact on the performance of the contract between the parties. The removal of the signage, as Shacam correctly pointed out in its submissions, did not in any sense deprive DCG of the benefit of the contract or substantially alter the basis of the contract originally entered into between the parties.
118 The evidence was that after he removed the signage from the cab of the truck, Mr Richardson continued to undertake his trips to the Southwest, carting offal as usual, for at least two days on 26 and 27 March 2103 without any difficulty: AB 103; 141. As already noted above, Mr Richardson presented at work with his truck, in a clean and tidy condition, dressed in his uniform ready for work: AB 68; 139. In any event, given that Shacam worked for about the first six months of its contract with DCG without the signage on its truck, it is difficult to see how the removal of it at the time, could give rise to a right to terminate the contract. Accordingly, there was no repudiation of the contract by Shacam in this case, entitling DCG to terminate the contract without notice.
Conclusions
119 In the circumstances, the appropriate order to make under s 49(5) of the Act is to suspend the operation of the decision at first instance, and remit the case to the Tribunal for further hearing and determination.
MAYMAN C:
120 I have had the benefit of reading a draft of the reasons for decision of her Honour the Acting President. I respectfully agree with the conclusions that she reached and have nothing further to add.