BM Culley & Associates Pty Ltd v Metal Roofing & Cladding Pty Ltd [1996] QCA 365

IN THE COURT OF APPEAL [1996] QCA 365 SUPREME COURT OF QUEENSLAND Appeal No 246 of 1995 Brisbane [BM Culley & Associates Pty Ltd v. Metal Roofing & Cladding Pty Ltd] BETWEEN: BM CULLEY & ASSOCIATES PTY LTD (Defendant) Appellant AND: METAL ROOFING & CLADDING PTY LTD (Plaintiff) Respondent Macrossan CJ de Jersey J Dowsett J Judgment delivered 01/10/1996 Judgment of the Court APPEAL DISMISSED WITH COSTS TO BE TAXED. CATCHWORDS: JUDGMENT for price of materials ordered by appellant as disclosed agent - whether judge entitled to find that appellant remained liable notwithstanding agency - approach of appeal court to conclusions drawn from unchallenged factual findings. Counsel: Mr D Gore QC, with him Mr P Hackett for the appellant Mr PA Keane QC, with him Mr R Oliver for the respondent Solicitors: Hallets for the appellant Hemming & Hart for the respondent Hearing Date: 3 September 1996 -- 1 of 11 -- IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No 246 of 1995 Brisbane Before Macrossan CJ de Jersey J Dowsett J [BM Culley & Associates Pty Ltd v. Metal Roofing & Cladding Pty Ltd] BETWEEN: BM CULLEY & ASSOCIATES PTY LTD (Defendant) Appellant AND: METAL ROOFING & CLADDING PTY LTD (Plaintiff) Respondent JUDGMENT OF THE COURT Judgment delivered the 1st day of October 1996 This appeal is brought against a judgment given in the District Court in favour of the respondent, for the price of steel products manufactured and delivered by the respondent for incorporation into a building being constructed by the appellant at Yatala. The total cost of the steel was $165,378.88, of which the appellant had paid $64,991.51. Judgment was given against the appellant for the balance of $100,387.37. The appeal relates, however, to only $79,478.88 of that latter sum. A company named Inverse Construction Systems Pty Ltd ("ICS") was a sub-contractor of the appellant, engaged to design supply and install the steelwork. On 9 June 1994 the -- 2 of 11 -- 2 appellant placed a written order with the respondent for the supply of roof purlins, for the price of $85,900. The order said that the supply was "on behalf of Inverse Construction Systems Ltd", raising the question whether the appellant, as agent, would itself be liable for the cost. Significantly, the respondent had, through its manager Lucas, previously made clear to the appellant (through Bartlett), that because the respondent was not happy dealing with ICS (because ICS lacked "an established financial track record"), the respondent required the appellant "to open an account on this particular job". The appellant therefore completed an application for credit which it provided to the respondent. In these circumstances, the learned judge determined that, notwithstanding the notation on the order of 9 June 1994, the appellant retained a liability to the respondent for that price of $85,900, "whether or not it was the disclosed agent of ICS". The appellant does not challenge that finding. The amount which is the subject of the appeal, $79,478.88, is the difference between the total cost of all steel supplied, $165,378.88, and $85,900. The respondent supplied the additional steel, that is steel beyond the value of $85,900, in response to specifications provided orally, mainly by ICS. The appellant had all along appreciated that much more steel than $85,900 worth would be required. It fell within the expertise of ICS, not the appellant, to provide the details, so the appellant effectively left the ordering to ICS. As time went on and delays occurred with the construction, the -- 3 of 11 -- 3 appellant became anxious to keep up the supply of the steel, lest a liquidated damages clause in its contract with the owner be activated. As the learned judge found, the appellant was "pressuring the (respondent) to manufacture and deliver (the) goods". As the respondent supplied the additional steel, the respondent progressively invoiced the appellant for the price. The appellant did not respond by saying to the respondent that payment of the accounts was not its responsibility. The learned judge rested her judgment in favour of the respondent, in respect of that part of the amount outstanding in excess of the amount specified on the order ($85,900), on a contract arising from the conduct of the parties, obliging the appellant to bear that cost. That is the only finding which the appellant challenged on this appeal. Both parties accepted that the relevant test is "whether a reasonable bystander would regard the conduct of the (appellant) ... as signalling to the (respondent)" that the appellant was undertaking an obligation to pay for the additional steel delivered: see Empirnall Holdings Pty Ltd v. Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523, 534-5. The learned judge expressed the following circumstances as warranting her conclusion: "The defendant (appellant) was aware the plaintiff (respondent) was manufacturing and delivering goods of a value well beyond the $85,900 order it gave the plaintiff; it accepted invoices from the plaintiff without comment or protest and it pressured the plaintiff to supply these goods as quickly as possible, knowing the plaintiff was only prepared to offer credit to it and not I.C.S. -- 4 of 11 -- 4 When looked at in this context, together with the accepted practice within the building industry in these circumstances, the defendant has by its conduct agreed to pay a fair and reasonable price for the plaintiff's goods sold and delivered to it, even if on behalf of I.C.S. Those goods have been supplied and delivered but not paid for. There is no suggestion that the price charged is not a fair and reasonable one." With one reservation, Mr Gore QC, who appeared for the appellant, accepted that those factual observations were supported by the evidence. He queried only her Honour's reliance on "accepted practice within the building industry". We take it that the judge had in mind these matters, to which she had only just referred: "At first blush, it seems at least sloppy housekeeping and even uncommercial conduct on behalf of the plaintiff to continue supplying expensive goods without a firm order from the defendant. When looked at in context and taking into account industry practice, I am satisfied this is not necessarily so. The plaintiff's Lucas explained that once the building work started, further signed orders are not required: "Well, with project work it tends to grow like Topsy, should I say, and orders keep coming through from - maybe from a detailer, we have mentioned previously. It may be from the builder himself. It could be from anywhere for us to proceed and produce that material quickly". (Transcript 62-3) He added that it was not unusual in the trade to receive details as to fabrication from I.C.S. rather than the defendant. Most of the work on the wall girts was done in August 1994. I.C.S.'s Shepherd told the plaintiff's Gibb: "forget about the price, just get the purlins underway or the girts underway because they were in a hurry for them." (Transcript 123). Gibb, when asked about the lack of any further order from the defendant and why goods were -- 5 of 11 -- 5 supplied without an order, said: "We do a lot of jobs for various people and it's quite common for the order number to be left as it is. There is a lot of variations, so usually companies just leave the one order number there." (Transcript 122). As the job reached the wall girts stage in about August, there were difficulties because of problems with material and because the defendant was unaware of the manufacturing procedure and during this period there was contact with the defendant's Bartlett every second or third day as he pressured Gibb for the goods." We read her Honour's reference to "accepted practice within the building industry in these circumstances" (our underlining), to relate to the respondent's preparedness in this particular case to continue to supply although not armed with a further formal order, a preparedness explicable by the pressures and practice to which the judge referred in the passage just extracted. It was permissible for her to take those matters into account. We set out these further findings by the learned judge, to provide a little more detail of the factual foundation for her ultimate conclusion: "The plaintiff continued to supply purlins and girts for walls beyond the $85,900 of roof purlins ordered by the defendant, in response to details or specifications provided orally, mainly by I.C.S. The defendant was certainly aware that a further order would be required for facia purlins and girts and sections required for wall panels to complete the job, (See Exhibit 19) but the defendant did not place such an order. These specifications had to be supplied by I.C.S. whose expertise this was. The defendant's Bartlett agreed that at the stage the walls were to go in, there was a delay in the progress of the job which was running behind schedule and the defendant was concerned about a liquidated damages clause in its -- 6 of 11 -- 6 contract with McDonalds. It was imperative to the defendant and to completion of the project that the plaintiff continue to supply its products as soon as possible. (Transcript 151). Bartlett, as the defendant's project manager, was aware that the plaintiff continued to supply goods beyond the $85,900 order and to invoice the defendant for these goods. By 3rd August 1994 something like $90,000 worth of goods had been delivered by the plaintiff without payment. The defendant did not inform the plaintiff at any time that payment was the responsibility of I.C.S. as the defendant needed the goods on site to finish their contract with McDonalds. Indeed, the defendant was pressuring the plaintiff to manufacture and deliver those goods." Mr Gore submitted that her Honour's conclusion as to the existence of a contract obliging the appellant to pay for the steel was unsustainable, in light of the following eight additional circumstances: "1. under the earlier relationship between the parties (which was temporally very close), the appellant was an agent, not a principal; 2. under that earlier relationship, the appellant's liability was limited to a specific amount; 3. the orders for goods were placed by ICS, for incorporation in work being done by ICS; 4. a "contract" with ICS was consummated before any conduct on the part of the appellant, in that the goods were ordered by ICS, manufactured and/or delivered by the respondent, and invoices were sent by the respondent; 5. to the extent that the appellant's conduct consisted of silence, silence is not normally assent; 6. the respondent deliberately took a commercial risk about payment; 7. as soon as a concern about payment arose, the respondent demanded payment of ICS; 8. a lack of entitlement to recover against the appellant does not defeat the respondent's right to recover against ICS (it being -- 7 of 11 -- 7 immaterial, for this purpose, that ICS is now in liquidation)." Mr Gore relied on Warren v. Coombes (1979) 142 CLR 531, submitting that because the primary facts are not in issue, this appeal court is in as favourable a position as was the trial judge, to reach a conclusion on the question whether or not such a contract arose, and there being apparently no credibility issue in the case, we should be prepared to substitute any different view we hold on that issue. In particular, he would rely on this passage (p. 551): "... The established principles are ... that in general an appellate court is in as a good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it." Mr Keane QC, who appeared for the respondent, submitted that her Honour's conclusion was both open, and the correct conclusion in the circumstances. We consider that the circumstances she summarised as justifying that conclusion do provide a substantial foundation for it. The respondent had previously supplied the appellant with $85,900 worth of steel with the express reservation, accepted by the appellant, that because of the respondent's concern about ICS's financial position, the appellant would have to bear the liability to pay. The appellant knew that the respondent would be providing much more steel than the quantity subject to the order worth $85,900. The appellant accepted that further steel, and -- 8 of 11 -- 8 incorporated it into its own construction. In fact, as time went on, the appellant pressured the respondent to expedite the supply. There is no suggestion that the respondent's lack of assurance about ICS's financial position ever subsided. The appellant accepted the steel; it also received the respondent's invoices, and without challenge or complaint. There is compelling basis, therefore, for the conclusion that, as with the supply which occurred under the written order, where the appellant was liable, so likewise the appellant was to be taken as accepting liability in respect of this subsequent supply. We offer the following brief observations on the additional circumstances offered by Mr Gore. As to 1, the appellant was not simply an agent, but an agent obliged to pay, notwithstanding that agency, as her Honour found. That finding was not challenged. The significance of the circumstance which led to that finding - the respondent's insistence because of the financial doubts about ICS - subsisted throughout the period of the further supply. As to 2, the important additional circumstance is that the appellant knew that much more steel than the $85,900 worth would be required. As to 3, the significant point is that the steel was incorporated into a building being constructed by the appellant: the work was being done by ICS, it is true, but it was being done by ICS for the appellant. As to 5, the appellant's "conduct" is not limited to silence - highly significant other aspects were its utilisation of the steel, and its applying pressure to the respondent to -- 9 of 11 -- 9 expedite delivery. Against that background, the "silence" involved in such features as the appellant's failure to challenge the invoices, takes on significance. As to 6, Mr Lucas gave an explanation which apparently satisfied her Honour (p. 64 transcript). As to 7, her Honour saw this as "an attempt by the (the respondent) to keep its options open at a worrying time", a reasonable view of the matter which diminished any significance the point would otherwise bear. Matter 8 is, in our opinion, simply irrelevant. The additional circumstances relied by Mr Gore would not therefore persuade us to differ from her Honour's conclusion, which we consider to have been the correct conclusion. We would dismiss the appeal, with costs to be taxed. In the course of the hearing, we reserved the costs of an application by the respondent that the appeal be struck out as an abuse of process. The basis of the application was a contention that a compromise entered into after the judgment was given precluded any appeal. Both counsel had been prepared to argue that application concurrently with the appeal. Although the facts which led to it were not in dispute, any inference to be drawn from those facts, as to the particular scope of the compromise agreement, would have had to be the subject of argument. The members of the court queried the appropriateness of ventilating that issue for the first time in this forum. Mr Keane ultimately abandoned the application, essentially, as we saw matters, to facilitate the progress of the appeal. Mr Gore then asked -- 10 of 11 -- 10 for costs. Because the parties had been prepared to argue the application concurrently with the appeal, because it was the court which raised the question of the appropriateness of that course, and because there was no adjudication on the merits of the application, which, as we say, Mr Keane ultimately abandoned so that the appeal could proceed, we consider it appropriate that no order be made in relation to those costs. -- 11 of 11 --