Parties Dispute Obligations Stipulated in the Contract

JustCo (Australia Onshore) Pty Ltd v CPB Contractors Pty Limited [2021] VCC 1870 (25 November 2021)

The plaintiff is a co-working office space provider.  The parties entered into a contract for a government project.  In dispute is whether or not the plaintiff is obliged to provide secure and exclusive access to office space such that it was quarantined from others.  The Court, in resolving this case, relied upon the terms of the contract and the conduct of the parties. 

Facts:

JustCo carries on the business of providing co-working spaces together with ancillary services to business clients.  JustCo’s portfolio includes Levels 17–20, 15 William Street, Melbourne (the Premises).  In 2019, CPB was part of a consortium named ‘OneLink’ who were tendering for the Victorian Government North East Link (NEL) project.  CPB required office space for OneLink members working on the NEL tender.

JustCo and CPB entered into the Agreement to occupy Level 17 of the Premises to commence on 30 September 2019 with a service term of one year.  On 27 February 2020, CPB wrote to JustCo purporting to terminate the Agreement “on the grounds that JustCo breached the terms of the Membership Agreement by not properly securing the 17^th floor despite repeated requests” (CPB Termination Notice).  

On 21 April 2020, JustCo sent CPB a termination notice with immediate effect on the basis of CPB’s failure to pay JustCo outstanding amounts including the membership fees for March and April 2020 when due (JustCo Termination Notice).  

By Statement of Claim dated 15 May 2020, JustCo claimed CPB had no right to serve the CPB Termination Notice, CPB breached the Agreement, and upon service of the JustCo Termination Notice CPB became indebted to JustCo in the sum of $990,590.62 plus interest.  

By Defence and Counterclaim dated 6 July 2020, CPB denied it had no right to serve the CPB Termination Notice and claimed that JustCo breached the Agreement. 

CPB contends that reference to “agreed specifications” in the following wording of the Appendix, is a textual reference to the Statement: “[JustCo] will re-fit Level 17 to the agreed specifications and as per the supplied test-fit floor plan” (textual reference); that the Statement was included on “the supplied test-fit floor plan” and the term required JustCo to secure access to Level 17 including by securing the glass doors such that Level 17 was quarantined from access via the internal staircase.

JustCo submitted that the “agreed specifications” are the specifications constituted by the layout set out in the floor plan Ms McIntyre emailed to Mr Neilson on 16 September 2019.

Issues:

I. Whether or not the plaintiff is obliged to provide secure and exclusive access to office space such that it was quarantined from others. 

II. Whether or not an ordinary and reasonable person in the position of representee may have been led into error. 

III. Whether or not misleading or deceptive conduct could constitute breach of membership agreement. 

Applicable law:

BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 - provides the principle that a term implied into a contract is one which it is presumed the parties would have agreed upon had they turned their minds to it. 

Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 - provides that it is necessary to consider the character of the particular conduct of the particular agent in relation to the particular purchasers, bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known.

Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 - provides that there is no real possibility that a reasonable and ordinary person in the position of the representee may have been led into error when the Statement is “examined in the context of the whole activity”. 

Caratti Holdings Co Pty Ltd v Coventry Group Ltd [2014] WASC 403 - relied upon in holding that JustCo and CPB are well-resourced commercial parties contracting at arm’s length, who chose not to qualify or restrict the contractual right to terminate for breach in that way. 

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 - provides that evidence of prior negotiations may be admitted as part of the surrounding circumstances in a general and object sense, not for the purpose of proving the subjective intentions and expectations of the parties. 

Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 - provides that to understand what a reasonable business person would have understood those words to mean requires consideration of the surrounding circumstances known to the parties. 

Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL [2005] VSCA 228 - held that Victorian courts have often declined to imply a duty of good faith into contracts as a matter of law. 

Fitzgerald v Masters [2014] NSWCA 150 - provides that the intention of the parties is to be ascertained from the instrument as a whole.

Kewside Pty Ltd v Warman International Ltd [1990] FCA 7 - provides that the existence of the clause, in addition to the other circumstances set out above are sufficient to “deprive conduct of [its misleading or deceptive] quality or [break] the causal connection between conduct and loss. 

Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357 - held that statutory claims for misleading or deceptive conduct require clear identification of the conduct said to be misleading or deceptive. 

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 - provided that the rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose. 

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 - where it was not considered that there is a real possibility that a reasonable and ordinary person in the position of the representee may have been led into error.

Ryde Municipal Council v Macquarie University [1978] HCA 58; (1978) 139 CLR 633 - relied upon in holding that an obligation on JustCo to secure Level 17 in the manner contended for by CPB is more in the nature of a lease, with a right to possession of the premises to the exclusion of third parties. 

Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd [1999] WASC 1046 - provides that where the termination clause is clear and unambiguous, a duty to act in good faith will not be implied. 

Weatherbeeta Ltd v Hammersmith Nominees Pty Ltd [2019] VSC 559 - relied upon by CPB in submitting that it is necessary to give business efficacy to the contract because, having regard to “what the nature of the contract itself requires."

Analysis:

Mr Neilson agreed that he assumed that card readers would be installed near the stairwell area and that no-one could access Level 17 via the internal stairwell area and through the glass doors.  On the evidence, there is no basis on which to find that JustCo knew or ought reasonably to have known that Mr Neilson had a mistaken belief as to these matters.  Mr Neilson’s assumptions were not expressly or impliedly communicated to JustCo.  Any pre-contractual statements were expressly negatived by CPB as the basis on which it entered into the agreement by clause 18(a) of the Agreement. 

CPB acknowledged that “it had not relied on any representations outside of this Agreement in entering into this Agreement.”  The existence of the clause, in addition to the other circumstances set out above are sufficient to “deprive conduct of [its misleading or deceptive] quality or [break] the causal connection between conduct and loss.

Conclusion:

The Court concluded that the “agreed specifications” are the specifications constituted by the layout set out in the floor plan Ms McIntyre emailed to Mr Neilson on 16 September 2019; and the “supplied test-fit floor plan” referred to in the textual reference is the floor plan Ms McIntyre emailed to Mr Neilson on 16 September 2019.  Accordingly, the Statement is not a term of the Agreement.  The Court does not consider there is a real possibility that a reasonable and ordinary person in the position of the representee may have been led into error when the Statement is “examined in the context of the whole activity”.  No breaches were established.