CATCHWORDS CONTRACT - contract claimed to have arisen from conversations and correspondence - whether communications in contemplation of reaching a binding agreement have formed a contract - whether parties intended to form a concluded bargain - legal principles discussed. TRADE PRACTICES - misleading or deceptive conduct - Trade Practices Act 1974 (Cth) s 52 - Fair Trading Act 1987 (NSW) s 47 - whether misrepresentations made as to approval by the respondent to inclusion of applicant in Egg Marketing Scheme. Trade Practices Act 1974 (Cth) s 51AB(6), s 52 Fair Trading Act 1987 (NSW) s 47 Co-operation Act 1923 (NSW) Masters v Cameron (1954) 91 CLR 353 Rossiter v Miller (1878) 3 App Cas 1124 Santa Fe Land Co Ltd v Forestal Land Timber & Railways Co Ltd (1910) 26 TLR 534 Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 Allen v Carbone (1975) 132 CLR 528 Inland Revenue Commissioners v Raphael (1935) AC 96 Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68 ABC v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 Hooper v Commonwealth of Australia (Unreported, Sup Ct NSW, Comm Div, Gleeson CJ, 16 Nov 1990) Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Short v The City Bank of Sydney (1912) 15 CLR 148 NICHOLAS IAN FRANCIS v NSW EGG PRODUCERS CO-OPERATIVE PTY LTD No. NG 540 of 1992 Tamberlin J Sydney 10 March 1995 IN THE FEDERAL COURT OF AUSTRALIA) NEW SOUTH WALES DISTRICT REGISTRY) No. NG 540 of 1992 GENERAL DIVISION ) BETWEEN : NICHOLAS IAN FRANCIS Applicant AND : NSW EGG PRODUCERS CO-OPERATIVE PTY LTD Respondent NSW EGG PRODUCERS CO-OPERATIVE LIMITED Cross-Claimant NICHOLAS IAN FRANCIS and JOSEPH SCHEMBRI Cross-Respondents CORAM : TAMBERLIN J PLACE : SYDNEY DATED : 10 MARCH 1995 MINUTES OF ORDER THE COURT ORDERS THAT: 1. The application be dismissed with costs. 2. The cross-respondents pay the cross-claimant the sum of $129,602 together with interest. 3. The cross-respondents pay the cross-claimant's costs of the cross-claim. NOTE : Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA) NEW SOUTH WALES DISTRICT REGISTRY) No. NG 540 of 1992 GENERAL DIVISION ) BETWEEN : NICHOLAS IAN FRANCIS Applicant AND : NSW EGG PRODUCERS CO-OPERATIVE PTY LTD Respondent NSW EGG PRODUCERS CO-OPERATIVE PTY LTD Cross-Claimant NICHOLAS IAN FRANCIS and JOSEPH SCHEMBRI Cross-Respondents CORAM : TAMBERLIN J PLACE : SYDNEY DATED : 10 MARCH 1995 REASONS FOR JUDGMENT Nature of the Proceedings The applicant ("Francis") claims damages from the respondent ("Co-op") for breach of contract in relation to an alleged agreement whereby, it is alleged, the respondent was bound to pay an allowance ("consolidator's allowance") to him and his partner, Joseph Schembri ("Schembri"), trading as Ranch Poultry Farm ("Ranch"), for the grading, weighing, packing and distribution of eggs sold by the Co-op to Supermarkets. Damages are claimed for loss of profits which would have been earned by Ranch if it had been allowed to perform the contract. Alternatively, damages are claimed by Ranch against the Co-op for misleading and deceptive conduct, unconscionable conduct, estoppel, undue pressure and inducing breach of contract as well as under several other heads which are no longer relevant. The Co-op has cross-claimed against Francis and Schembri for moneys due by Ranch to it for goods supplied by the Co-op to Ranch. Background Francis and Schembri were at relevant times partners in a business known as Ranch Poultry Farm. That partnership was dissolved in May 1993, when a receiver and manager was appointed. The relevant time-frame for present purposes is 1991 to 1993. During that period Ranch's business consisted of the purchase or acquisition of eggs from growers in New South Wales. These eggs were then graded, packed, sold and distributed to customers in the Sydney metropolitan area. Ranch also graded eggs for a fee for other wholesalers. It was not a grower or producer of eggs in the relevant period and did not own any hens. The Co-op is a trading corporation as defined for the purposes of the Trade Practices Act 1974 (Cth). It is a society registered under and subject to the provisions of the Co-operation Act 1923 (NSW). The Co-op sells eggs wholesale to supermarkets and other customers in New South Wales. Since the dispute arises against the backdrop of the Co-op's Egg Marketing Scheme it is convenient to set out that Scheme so far as it appears from the evidence. The Co-op Marketing Scheme The principal business of the Co-op at all material times was the supply of eggs wholesale to supermarkets in New South Wales. Under the Co-op Marketing Scheme growers who were members of the Co-op, and who supplied eggs to the Co-op for selling to supermarkets and other customers were paid a "pool" price for their eggs. This pool price varied from time to time and was determined largely by the price agreed between the Co-op and supermarkets as the wholesale price. From that price the Co-op would deduct its costs, packaging allowance and any discounts to determine the pool price. During the relevant period the Co-op operated a system of what is called Central Accounting System entitlements ("CAS entitlements"). Such a CAS entitlement gave to a Co-op member a right to supply eggs to the Co-op which were then onsold to its customers, most of whom are supermarkets. The present case concerns the claim by Ranch to be paid what is described as a "consolidator's allowance". A "consolidator" in the majority of cases is also a member of the Co-op and is entitled to supply eggs to the Co-op's supermarket customers as an agent of the Co-op. In practice the Co-op's customers are invoiced by the consolidator on behalf of the Co-op using the Co-op's letterhead. The Co-op then pays the supplier of eggs an amount which is calculated in accordance with a formula. It is not necessary to be a grower in order to be a consolidator but it is possible for growers to be consolidators. In some cases growers do not supply direct to supermarkets, but supply to consolidators within the Co-op's system who grade and pack the eggs, and then supply them to supermarkets. During the relevant period these growers were given a pool price, and the consolidators were given allowances in respect of their work in grading, packing, selling and distributing the eggs. During the period 1991 to 1993 Ranch had a large egg grader. When a CAS entitlement was granted to a member it did not confer a right to supply eggs to any particular customers of the Co-op, but only to supply eggs up to a certain volume or percentage to the Co-op. The consolidator/supplier was aware of the invoiced price, but was not aware of the amount of rebate paid to particular customers as such rebates varied from customer to customer, and therefore a consolidator was not aware of the net invoice price paid by customers to the Co-op. Eggs which were sold to the Co-ops's customers under the CAS entitlements system in the relevant period were in effect sold by the Co-op to those supermarkets supplied with eggs by consolidators. The Co-op was paid direct by the supermarkets for eggs supplied by consolidators and the Co-op paid the consolidators and growers for eggs supplied under the system. The eggs were supplied directly by the consolidators to supermarkets because of the perishable and fragile nature of eggs. Outside the market for the supply of eggs to supermarkets is what is called in the trade, the "box market". The box market is a market identified as being made up of smaller stores but does not normally include the larger supermarket chains. Generally it includes the smaller supermarket chains. Prices obtained in the box market fluctuate from time to time, primarily due to surpluses or deficiencies in supply and therefore such prices may be higher or lower than prices prevailing between the larger supermarkets and the Co-op, depending upon the supply situation. Ranch asserts that box market prices are generally lower than supermarket prices but the Co-op does not agree that this is necessarily the case. History of Ranch's Purchasing Arrangements In May 1990 Ranch purchased a Diamond 8200 Egg Grader from the New South Wales Egg Corporation following deregulation of the egg market in New South Wales. That grader is said to be the largest in New South Wales and one of the three largest in Australia. It has the capacity to grade eggs at a maximum rate of 90,000 eggs per operating hour. Its normal operating rate is 60,000 to 70,000 eggs per operating hour. The evidence indicates that the market for eggs in New South Wales is approximately 2.2 million eggs per day, and that there were in about May 1992 approximately 3 million laying hens in New South Wales. Laying hens, it is said, lay about 70% of capacity per day, that is to say 70 eggs from 100 hens for example. The egg grader has the capacity to grade half the entire eggs supplied in New South Wales each week with time to spare. Prior to 28 May 1992, Ranch had purchased most of its supply of eggs from the Vella group of companies ("Vella"). Vella became a member of the Co-op in about January 1992. Ranch continued to purchase eggs from Vella after January 1992 but was not itself a member of the Co-op at that time. In this period Ranch was selling its eggs to the box market. In the first half of 1992 relations between Ranch and Vella deteriorated. In about November 1991 Mr Alvin Lee, General Manager of the Co-op ("Lee"), had a meeting with representatives of the Vella companies to discuss the terms of trading if, as then contemplated, Vella was accepted as a member of the Co-op, and if Ranch bought eggs or materials from the Co-op, as to what would happen with respect to credit terms. In 1992 Francis and Schembri, trading as Ranch, were incorrectly understood by the Co-op to be part of the Vella group of companies. Although it is not perfectly clear it appears that Ranch made no such representations but the misunderstanding may have arisen as the result of discussions between the Co-op and Vella. The only significance of this is that the Co-op was later concerned that it had been misled when it discovered in April 1992 that in fact Ranch was not part of the Vella group of companies. On or about 21 January 1992, payment terms were again discussed at a meeting attended by Francis, Schembri and Mr Michael Waight ("Waight"), a management consultant, on behalf of Ranch, and Mr Lee on behalf of the Co-op. The payment terms as understood by Ranch were that eggs supplied to the Co-op in the first and second weeks of the producer pay period would be paid for by the Co-op at the end of the fourth week. It was also understood by Ranch from early 1992 that the pool price calculations could not be worked out by the Co-op until the end of the fourth week. Further, if Ranch bought eggs or other products from the Co-op they were to be invoiced at the beginning of the fifth week and payment was expected by Thursday of the fifth week. In cross-examination Francis conceded that he was aware of the above terms as of early 1992. He agreed that it was well known in the industry how the Co-op paid their producers. Furthermore, in the period January to June 1992 there was no suggestion by Ranch that, in relation to eggs or other goods purchased from the Co-op it would not comply with the payment terms set out above. Up to June 1992 Ranch bought most of its eggs from Vella. Also in that period January to May 1992 the Co-op sold eggs, packing material and egg products to Ranch. As at 9 June 1992 Ranch Poultry owed the Co-op an amount in excess of $61,000. By 16 June 1992 the amount of $68,317 was "well overdue". On about 13 April 1992, Lee became aware that Ranch Poultry was not part of the Vella group in the sense that there was no investment by Ranch in the Vella group or any investment by Vella in Ranch. The Co-op Board was concerned that the Co-op had been misled into believing that Ranch was in fact part of the Vella group. On 27 April 1992 Waight on behalf of Ranch wrote to the Co-op applying for Ranch to become a consolidator under the Co-op's system in respect of Co-op members' CAS entitlements. On 30 April 1992 the Board of the Co-op considered this application and the Board minutes record: "4.9 Ranch Poultry/Consolidator Application The General Manager tabled a covering note and a formal application from Ranch Poultry to become a Consolidator. The Board was concerned that Vella had misled us into thinking that Ranch was part of the Vella Group and that Ranch had been able to re-register the business name which the Co-operative had reserved for tactical purposes. As it transpires, Ranch technically are not a Member of the Co-operative and unlike Tamegg, cannot be considered for a Consolidatorship. It was resolved not to consider Ranch's application any further until a check on existing resources suggests we need more Consolidator capacity but to monitor the position carefully in the light of any applications from Members from the Tamworth area to transfer Consolidators." On 9 May 1992, Waight on behalf of Ranch sent a fax to the Jobe family who were growers having a CAS entitlement under the name Kelso Park ("Kelso") with the Co-op. This fax is claimed by Ranch, along with other documents, to record and constitute the basis of a tripartite agreement between Kelso, Ranch and the Co-op. The fax is on the letterhead of Ranch Poultry Farm and is entitled "DRAFT COPY ONLY". It is addressed to Jobe Family Holdings of Tamworth and is expressed to be Strictly Private and Confidential. The relevant parts of the document are as follows: "I wish to set out the basis of a proposed agreement for the supply of all your eggs to Ranch Poultry from all of your Chicken farms at Tamworth. In this proposal, for the sake of brevity, Jobe Family Farm Holdings representing all their farms at Tamworth will be referred to as Jobe FF and Ranch Poultry of Symonds Rd Dean Park will be referred to as Ranch. It is understood that Jobe FF will need to give the State Co-op one months (sic) notice in writing as to the altered delivery circumstances, should this matter proceed. PREAMBLE a. It is important to note that what is offered is a package proposal. This really means that any disturbance of a part can have the effect of disturbing all the package. There really must be a balance between the various points in order for the package to work, particularly in the long term, for both parties. b. At all times the parties to this agreement consent to discuss any particular problem as directly related to this agreement, as they immediately arise. Such matters are to be put in writing, where reasonable (sic) appropriate, to and by either party. Discussions with a spirit of reasonable compromise are [to] be carried out initially prior to any alternative action, should it be proposed that the agreement is sought to be altered, or cancelled by either party. Such notice in writing does not annul or alter this agreement, but it is agreed that such a notice will allow discussion to occur to give time - normally 14 days - for the parties to come to a fair and reasonable compromise, if possible, in the matter. If the matter is unable to be resolved to the reasonable satisfaction of both parties after such discussions, then both parties have the right with 12 months notice to cancel this agreement. General Responsibilities of the parties: Jobe FF are to generally supply first quality, clean, saleable to the public, ungraded eggs; certified as to weight, packed into fillers as supplied by Ranch. A proportion of these eggs are to be brown eggs. Other egg products are to be supplied by this agreement. Jobe FF are to pack these completed fillers onto pallets as supplied by Ranch and shrinkwrap the pallets at Tamworth,and load the trucks. These eggs are to be delivered at Ranchs' (sic) cost to Ranch Sydney. Ranch are to grade pack and deliver these eggs to either approved Co-op CAS or their existing Sydney box market. Ranch are to pay Jobe FF on a specified time frame for such egg supply. General other Conditions: Commencement date: It is recognized that one months (sic) notice is needed to be given to the State Co-op for commencement to CAS supplies. It is proposed that the commencement of the contract between the parties be co-incidental with that date. Term of Contract: The term of the contract is for a (sic) five years for the supply of first quality eggs, and other egg products, by Jobe FF to Ranch, with Ranch having a further five year Call option (with 6 months prior written notice) for all Jobe FF eggs up to 180,000 Hens, as set out hereunder. The contract between the parties can be cancelled with 12 months written notice by either party. Price and Grading: The proposed price is 3 cents kg above the ruling State Pool kg price at all times for all first quality eggs as supplied by Jobe FF to Ranch. This assumes that the existing Pool price as currently calculated remains in place for the term of this agreement. Should the Pool price mechanism be altered then a mutually equitable calculation of what Pool should be will then be instignated (sic) by both parties. The above price can be modified in the following circumstances: Overgrades of any particular size are to be brought to the immediate attention - normally on the day of grading - to Jobe FF. These overgrades will be monitored to attract the fair ruling price allowing for the wholesale box market price prevailing at that time. All recognised second quality and cracked eggs are to [be] supplied to Ranch at a mutually agreed, and variable price. It is noted that the NSW State Co-op via GFA will buy Product egg at a price to be advised mutually acceptable to both parties. Grading: Ranch Computer readouts on gradeouts by weight are to be available to Jobe FF on a weekly basis. Any major differences in the way the eggs are grading through Ranch's grader, aside from State Co-op normal allowances, are to be normally, immediately advised to Jobe FF at the time of the grading. The number of breakages and ungradable (sic) eggs are to be supplied by abovementioned computer printout each week to Jobe FF. This is to be monitored and corrected where possible, to normally stay within the State Co-operative average guidelines for breakages and ungradeables. Where such numbers become abnormal, Ranch are to immediately advise Jobe FF at grading time. Numbers of Eggs: The initial commencing supply phase is to have Jobe FF existing 65,000 layers supplied to Ranch, with 6 months notice in writing, (or as otherwise mutually agreed) and by this agreement, to increase this number up to 130,000 layers. This number can be increased to the aforementioned 180,000 hens with 12 months written notice by Jobe FF, or by other mutually acceptable and agreed time frame. CAS Sales: Sufficient notice in writing by Jobe FF are (sic) to be made to Ranch to allow practical takeover of this CAS system, and otherwise, as increases are allowed, and occur. All CAS sales available to Jobe FF are to be transferred to Ranch for the term of this agreement and any nominated extension, but specifically whilst the agreement continues to be operative. Jobe FF however, are to have an existing agreed capacity continued to supply Tamworth Co-op with 2000 dz eggs per annum to maintain their Co-op membership. Any and all available increases in otherwise available CAS sales by Jobe FF are to be transferred to Ranch, for the term of this agreement, or any extension, at Ranchs'(sic) application. Cartage: The cartage to Sydney is entirely at Ranchs' (sic) cost but with the co-operative organisation and cost for such pickups and loading by Jobe FF. Pickup is to be at one farm as nominated by Ranch, with Jobe supplying an operative fork lift and driver for such pickup purposes. Full semi-trailer loads are to be normally available, (or as otherwise advised only by Ranch) at each pick up time at Jobe FF, with an (sic) proportional adjustment being made to the cost of cartage, to the account of Jobe FF, if full loads are not available for pickup by Jobe FF. Pickup loads are to be available at a nominated normal time by Ranch, but any alteration to this time, is to be advised to Jobe FF, prior to the pickup. The eggs are to be insured by the Ranch appointed carrier as to their cost value for duration of the trip from Jobe FF to Ranch Sydney. The eggs are to be packed in fillers as supplied by Ranch, but fillers are to be recycled and accounted for by Jobe FF on each of the delivery dockets. Ranch are to supply all pallets for such egg deliveries at their cost, but these pallets are to be accounted for by Jobe FF at all times, and returned to Ranch if the agreement expires or is terminated. The eggs are to be palletised and shrink wrapped at the nominated pickup farm and loaded into the Ranch truck at the organisation and expense of Jobe FF. Ranch are to advise any abnormal cartage breakages above State Co-op allowances, to Jobe FF normally on the day of delivery. Egg Weighing: The eggs are to be dry weighed at Jobe FF as to their dry nett weight, and such weight certificate in triplicate is to be signed by an authorised Jobe FF member or employee and supplied to the Ranch carrier in duplicate. The nett weight means the weight of the eggs only, and is not to include any wrapping of any kind, or fillers, or packing, pallet weight or anything that increases the nett weight of the eggs themselves. Each individual pallet is to be marked as to its nett weight. A summary sheet supplied as to the total with each truckload, indicating number of pallets and their respective breakup of product. The carrier is to keep one copy and supply Ranch with a copy when he arrives at Ranch Sydney. Shrink Wrapper: A working shrink wrap machine is to be supplied by Ranch at its cost, for this special purpose; this machine remains the property of Ranch at all times, and is to be returned by Jobe FF to Ranch if this contract, or any extension, expires or is ever cancelled. The shrink wrap machine is to be maintained in working condition at all times by Jobe FF at their cost. Satisfactory material for actual shrink wrapping is to be supplied by Jobe FF. Ranch will use its best endeavours to arrange the best available price for this material to be made known and requested by Jobe FF. Payments: All payments for Ranch delivered CAS egg supplies are to be made via the State Co-op system direct to Jobe FF. All payments for eggs over and above CAS supplies are to be made on the same time frame as the CAS system, for accounts held by Ranch, via electronic transfer to an account nominated by Jobe FF. This should be sufficient to form the initial basis of a contract between the parties. By fax dated 12 May 1992, on the letterhead of Kelso Park Enterprises Pty Ltd, the Jobe family responded to Ranch in the following terms: "We thank you for your offer as per letter 8th March 1992, followed by draft of proposed agreement dated 9th May 1992. We hereby advise that we accept your proposal in principle and with attention to matters as discussed with your Mr Michael Waight this morning we shall instruct our solicitor to prepare a formal agreement for signing subject to approval by both parties and the New South Wales Egg Producers Co-operative. It is felt that the agreement should benefit both parties and we would use our best endeavours at all times to keep the spirit of the agreement to foster a good working relationship and profitability for both parties." (Emphasis added) On 27 May 1992 a meeting took place between Mr and Mrs Jobe of Kelso and Lee from the Co-op in which Lee was informed that Kelso had applied to transfer from a group known as Tamegg as their consolidator. They said that they were keen to have their eggs processed by the egg grader owned by Ranch so that they could become part of the Co-op system. Lee indicated that there was a technical hitch in relation to Ranch in the sense that they were not, as previously assumed by the Co-op, part of the Vella group. Mrs Jobe was concerned as to whether this would interfere with Ranch's capacity to become a consolidator and Mr Lee stated that the matter was up to the Board. Mrs Jobe then said that Kelso Park would make an application to become a consolidator in its own right. She then wrote out an application to become a consolidator on behalf of Kelso addressed to the Board of the Co-op. On 28 May 1992, the Board of the Co-op met and the minutes record as follows: "4.9 Consolidator Application The General Manager tabled a letter of application from Jobes to be appointed a Consolidator and outlined the background to this request. The majority of other members transferring from Tamegg have nominated an existing Consolidator but Jobes prefer to use Ranch/Vella who are not Consolidators. The matter is still being negotiated by the General Manager. It was resolved that if arrangements currently being pursued by the General Manager with Jobes do not succeed, then the General Manager is authorised to take a position as principal in respect of Jobes eggs and sub-contract the grading only to Ranch/Vella and the distribution to Tamegg (Alexandria) on a back-to-back basis with Jobes. Further that, Ranch/Vella are not to have any access to the Co-operative's CAS or prices. Further that any such arrangement is to be for a period of three months only before review." On 1 June 1992, Lee met with Waight and Francis of Ranch and pointed out that since Ranch was not a member of the Co-op it was not likely to be allowed direct deliveries or to invoice the Co-op for an interim period until the membership of Ranch could be remedied. Lee offered to sell some of the Co-op's excess eggs sourced out of Kelso's supply and said words to the effect that if the matter of Ranch's membership of the Co-op could be sorted out Ranch could give a quote on the basis that it would pack and grade eggs in Co-op packaging and on-deliver these eggs to Tamegg's premises at Alexandria. As at that date Francis understood that decisions on the admission of new members and the appointment of consolidators were made by the Board of the Co-op. Francis understood also that Ranch had to "prove" itself to the Co-op. On 8 June 1992, Waight on behalf of Ranch wrote a short letter to the Co-op making an application for membership of the Co-op. The letter stated that Ranch had bought ownership of 500 hens for this purpose and it had applied for 250 shares in the Co-op. In a longer letter of 8 June, Ranch wrote to Lee stating that Ranch would be carrying out a new consolidator undertaking in its own right and under its own name. The letter informed the Board of the Co-op that Ranch had an agreement with Kelso and that the basis of the agreement was for all Kelso eggs to be consigned to Ranch for 5 years with an option for a further 5 years, with either party having the right to terminate the agreement with 12 months' notice. In addition the further basis of the agreement as expressed by Ranch was stated to be that a transfer of all current consolidator entitlements by Kelso Park would be made to Ranch alone and that all eggs and egg products produced by Kelso would be marketed through Ranch under this agreement. The letter goes on to say that Ranch accept on a temporary basis that the consigned eggs for consolidation will be sent to Tamegg's Alexandria depot. On 12 June 1992 Waight sent a fax to Lee headed "Current Negotiations", from which it is clear that Ranch understood that there remained a number of outstanding matters to be resolved between Ranch and the Co-op and that Ranch's applications to the Co-op had not been processed. It also demonstrates that Ranch was aware at this date that Ranch had not yet been granted consolidator status in its own right. The letter also went on to say: "The Co-op now have had before it for (sic) two applications (since 8.6.92) by Ranch Poultry. They require, reasoned decisions using the above as the correct facts. (It must be noted that under the existing agreement of the Co-op that Vella Group of which Ranch are considered part, that consolidator status is already granted to that group.) (a) Application for membership in its own right. (b) Application to become a consolidator in its own right. It is known already (with absolute certainty) that the CAS allocation that Ranch has organised has been reallocated to other consolidators already, before the event happens". The foregoing is not consistent with Ranch acting on the basis that there was a concluded agreement, or approval by the Co-op of an arrangement whereby Ranch was an approved consolidator in relation to the CAS entitlement of Kelso. On 19 June 1992 Waight sent a further fax to Lee, entitled "Support Evidence for Ranch Financial Position." The substance of this letter is that Ranch sets out to explain that it had re-financed its operations in March 1992, in order to meet what was seen as a definite shortage of working capital. It sets out reasons for the shortage of capital and the steps which were proposed to be taken to recapitalise. It paints a picture of financial difficulties including bad debts and higher costs but anticipates an improving situation in relation to price increases and the drain on cash flows for outside projects. The letter concluded: "That is a fair summary of the current position. It had forethought and planning, but timing is askew and beyond our reasonable control. I trust that the Board sees our efforts as genuine to become a stable Co-op member. I can otherwise advise that Ranch will pack into The Good Egg cartons immediately - beginning next week - and will favourably consider phasing out "Ranch" brand upon admittance to full Consolidator status, assumed over the next 3 - 6 months." Again, the above letter indicated that Ranch perceived itself to have had significant financial problems. On 22 June 1992, Ranch took delivery of its first eggs from Kelso, a quantity of 164,355 first quality eggs. On 26 June 1992, Ranch took delivery of a further 209,693 eggs and on 30 June of another 196,493 eggs. On about 22 June 1992, the Co-op advised Ranch that it would only pay Ranch the "pulp" price for eggs and not the nominated sale price to supermarkets ordinarily paid to consolidators. The pulp price is significantly lower than the nominated sale price for eggs sold to supermarkets. Ranch alleges that it was thereby denied the profits which would have otherwise been available had it been able to supply eggs to supermarkets as it had allegedly been agreed. In evidence there is a "Board Paper" signed by Mr Lee of 24 June 1992, which refers to the question of membership and consolidatorship. In that Board Paper Lee relevantly states that: "Letter dated 8th June appears to satisfy requirements as to basic membership but I believe the Co-operative is not in a position to allow just any small producer, access to the Co-operative. However, Ranch do have a history in the industry pre & post deregulation as small producers and some relevant history as a (sic) both a Member and as a quasimember of the Co-operative. While there have been some aberrations, Ranch or their distributors have substantially reduced their anti Co-operative box market activities. They have attempted to source eggs from the Co-operative with very little success and as a result have given up markets. .... I believe membership should be offered to Ranch on the basis outlined in the following draft letter:- " The Board Paper goes on to set out the terms of this draft letter. The draft included a number of conditions, including condition 8 which states: "..... 8. NSWEPC To consider Ranch's application for consolidatorship at its September 1992 Board meeting or at such earlier time as required." Again, it is clear from this Board Paper that Lee did not consider that any approval had been given to Ranch's application for consolidatorship status as at 24 June 1992. On the next day, 25 June 1992, the Board Minutes of the Co-op record: " 4.2.2 - Ranch Poultry Correspondence from Ranch and a recommendation from the General Manager were tabled. The Board again considered the matter at length, especially the relevance to Jobes, other Members based in Tamworth and consolidator capacity generally in the metropolitan area. It was resolved to accept Ranch as a contractor to the Co-operative but not accord membership status. Further that the contractual relationship be based on the General Manager's recommendations except for Cl 5 which is to be modified by removing the emphasis on "pool prices" and substituting "a price agreed from time-to-time" and Cl 8 & Cl 1 which is not appropriate. Further that the term of the contract is open ended but cancellable on one weeks notice. A final proposal is to be circulated to Board before negotiations are resumed with Ranch, and this could include an option to Ranch/Jobe to put any "surplus" through the co-operative accounting system." (Double underlining added) It is significant that the Board decided not to accept Ranch as a member on 25 June but rather to accept it as a contractor. It is also important that the Board did not consider it appropriate to consider Ranch's application for consolidator status since this clause was deleted from Lee's draft. Further, the option to Ranch to put "surplus" through the CAS was left to future negotiations. In addition the price was not to be the pool price but was left open as a price to be agreed. In the period 15-17 June 1992, the Co-op required Kelso Park's CAS entitlement to fulfil an order placed by Good Foods Australia, an existing customer of the Co-op. Therefore at that time the Co-op was unable to fulfil Ranch's order and no delivery was made to Ranch in the week beginning 15 June 1992. Damages are no longer sought by Ranch in respect of that occurrence for the period 15 to 21 June 1992. During the period 26 May to July 1992, there were a number of conversations between Mr Ritchie, Secretary of the Co-op, and Ranch, requesting payment of outstanding amounts. On 16 June 1992, Ranch was informed that the amount of $68,317 was "well overdue". On 18 June 1992, a payment of $10,933 was received by the Co-op from Ranch being payment of an amount due on 27 February 1992, and 21 May 1992. On 16 July 1992, there were a number of conversations between Mr Ritchie and Mr Waight, in which Mr Ritchie stated that without payment of the amount then outstanding of $59,327 there will be "no eggs tomorrow". By 14 July 1992, Ranch had been supplied with eggs and materials to the value of $115,568 of which $59,327 was due and owing on 16 July. By fax on 14 July 1992 the Co-op demanded payment from Ranch in the sum of $59,327. There were conversations between Lee and Waight on 16 July, in which Lee stated that without receiving payment for the outstanding $59,327 the Co-op would not supply any further eggs. On 17 July 1992, Lee demanded immediate payment of an outstanding amount of $17,000. The amount was paid on 18 July 1992. On 17 July 1992, eggs originally to be sold to the applicants were sold to Good Foods Australia at Lidcombe. The reason for this was that the Co-op took the view that Ranch had been given adequate notice that the failure to comply with credit terms meant that the eggs for delivery on 17 July 1992 would not be sold to the applicant. On 20 July 1992, the Board of the Co-op considered the applicant's indebtedness and resolved to impose more stringent credit terms. The relevant part of the Boards's minute reads as follows: "5. 3 Ranch/Jobe Mr Lee reported on latest developments including the necessity to cut off supply as no progress payments have been received for eggs or materials. Ranch had responded by offering $33K out of $59K outstanding and the difference was yet to be finalised. The account is currently approximately $60K and the next account deadline is Thursday week (30 July). Outstandings can reach in excess of $100K including cost of materials depending on volumes. The Board was concerned at this level of credit exposure, given Ranch's patchy performance record and the fact that they are not a Member of the Co-operative. Mr Lee reported that apparently Ranch's bank has yet to provide a long promised $100K working capital facility and has become aware of other significant debts owed by Ranch, which have been outstanding for a considerable period. In view however of the increased risks of default in uncertain times and the history of the Vella/Ranch/Jobe arrangement, it was resolved to:- 1) limit the Co-operative's exposure to Ranch to $50K at any one time. 2) base invoice prices to Ranch off last known pool price .... to facilitate prompt payment on terms which should not be as good as the terms extended to Members and Consolidators. 3) add a fee for collection and credit risk ..... 4) maintain notice period for terminating the arrangement at one week. 5) refuse further supply, notwithstanding the notice period, if the account exceeds $50K at any time." On 22 July 1992 a letter was sent by the Co-op notifying Ranch of these new credit terms. On 22 July 1992, the respondent by fax demanded a further outstanding sum of $75,949 of which $25,949 was to be payable by the evening of 24 July 1992, failing which further egg supplies would be stopped. On 30 July 1992, the Co-op wrote to Kelso stating that as from 30 July the Co-op was not prepared to guarantee or to be responsible for payment to Kelso for any eggs supplied by it directly to Ranch. On 31 July 1992, Kelso (B. Jobe) wrote to Ranch (Waight) in relation to the agreement claimed by Ranch to exist with Kelso and said among other things: "Our letter to you of 12th May 1992 no more than said that we accepted your proposal in principle, subject to an agreement then yet to be formulated and approved. Over the past several weeks we have been evaluating the position generally, and have had to meet apparent problems as they arose. We do not have, at this point of time any "ongoing agreement" with you. We are however prepared to further work with you in a hope that an agreement based on our requirements and a good working arrangement, and profitability for both parties, can be achieved." It is apparent from the above letter that Kelso did not consider there was any binding agreement reached with Ranch in terms of the correspondence of 9 and 12 May 1992. Indeed the letter contemplates the possibility of a future agreement being reached. The letter also indicates that Kelso had concerns about the viability and financial position of Ranch because as part of the delivery arrangements it was suggested that until a bank guarantee was in place in a form to the satisfaction of Kelso it required that provisional payment be made for relevant consignment by bank transfer on closely defined terms. Between June 1992 and November 1992 Ranch continued to buy eggs from Kelso but sold those eggs into the box market basically at cost. In February 1993, Francis had a meeting with Schembri to discuss the partnership. Schembri was concerned that cheques presented by Ranch to various creditors were not being met on presentation. On or about 14 May 1993, a receiver and manager was appointed to the partnership. The Contract Claim The applicant submits that there was by June 1992 a binding contract between Ranch and the Co-op to which Kelso was a party whereby through the agency of the Co-op, the applicant was to be allowed Kelso's CAS entitlement and such entitlement gave to the holder the right, through the system operated by the Co-op, to supply eggs up to a certain quantity to supermarkets in New South Wales. Furthermore, it is claimed that this contract provided that Ranch would receive the allowance paid to consolidators within the Co-operative system for the supply of eggs and that Kelso as the grower of the eggs would be paid the pool price for those eggs determined by the Co-op from time to time. In addition, it is submitted the arrangement was that Ranch was to pay Kelso 3 cents per kilo for eggs supplied under this arrangement and that Ranch would in turn receive from the Co-op the consolidators' allowance in the order of 39 cents per dozen packet of eggs in respect of grading, weighing, packing and delivery of eggs carried out by Ranch. The contract is claimed to arise from conversations between representatives of Ranch, Kelso and Lee on behalf of the Co-op from January to late May 1992. The threshold question is whether any contract came into existence as alleged arising from discussions, negotiations and communications between Ranch, Kelso and the Co-op. Legal Principles In considering the recurrent problem as to whether communications between parties in contemplation of eventually reaching a binding agreement have crystallised into a concluded bargain, the courts have enunciated a number of guidelines. For present purposes some of the relevant principles are as follows: 1. The central question is whether it was the intention of the parties at the relevant date, time, or point of negotiations, to make a concluded bargain. 2. The use of words such as "subject to contract" or "subject to preparation of a formal contract" and expressions of similar import prima facie give rise to an overriding condition that no binding contract is concluded at that point, but rather what has been negotiated is an intended basis for a future contract. See Masters v Cameron (1954) 91 CLR 353; Rossiter v Miller (1878) 3 App Cas 1124 at 1152; Santa Fe Land Co Ltd v Forestal Land Timber & Railways Co Ltd (1910) 26 TLR 534 ("subject to a formal contract to be approved by your solicitors and ourselves"). 3. The answer to the question referred to above depends on the intention disclosed by the language the parties have used and no special form of words is essential to be used in order to manifest an intention that there will be no binding contract as between the parties before execution of the agreement in its ultimate form. See Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 per Hope JA. 4. It is necessary in resolving the question to have regard to the commercial circumstances surrounding any exchange of communications and in particular to the subject matter of the communications. See Allen v Carbone (1975) 132 CLR 528 at 531-532. 5. The subjective intention of the parties is not the controlling factor; what is important is their intention as expressed in the language they have used. See Inland Revenue Commissioners v Raphael (1935) AC 96. 6. Where the communications which the parties have exchanged are in writing the question of their intention is prima facie to be resolved objectively and as a matter of construction of the relevant documents. Actual subjective intention to contract can be taken into account but it is not determinative. See Air Great Lakes Pty Limited at 330 D per Mahoney JA. 7. Where the communications and dealings between the parties indicate that some matters have been agreed upon, but there remain other significant terms yet to be resolved then there will be normally be no concluded bargain. Cf Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582. 8. Regard can be had to the nature and the subject matter of the contract and its complexity in order to determine what terms would normally be expected to be covered in a binding contract. This is not controlling in itself but provides a useful background against which to consider the question of whether there is a concluded bargain. 9. Subsequent conduct of the parties can be taken into account. Later correspondence, oral communications, and action or inaction by the parties can be relevant in determining that it was not the intention of the parties to be presently bound before all the essential preliminaries had been agreed to, nor until a final contract had been drawn up embodying all the matters incidental to a transaction of such a nature. See Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 at 669 ; Howard Smith & Co Limited v Varawa (1907) 5 CLR 68; A.B.C. v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 547-8. 10. In some circumstances such as where there is a pressing and urgent need for one or more of the parties to engage immediately in some activity under the contract and where they cannot wait for the execution of a formal document the court may find that the parties intend to be bound immediately in order to regulate legally the performance of such urgent activity : See Hooper v Commonwealth of Australia (Unreported, Sup Ct NSW, Comm Div, Gleeson CJ, 16 Nov 1990) which held that Heads of Agreement there under consideration were intended to have an immediately binding effect. Offer It is convenient to consider at the outset the written material relied on by Ranch. Reference is first made to a letter from Ranch to Kelso of 8 March 1992. This letter was not tendered and there is no evidence as to its contents. The next document referred to by Ranch was the faxed letter of 9 May 1992 from Ranch to Kelso. It is common ground that this was never shown to, nor approved by, the Co-op or its officers. Even if this fax was unconditionally accepted by Kelso (and it was clearly not), the letter does not evince an intention to form a concluded bargain nor to set out all the terms of a final agreement. The main features which lead to this view are: 1. It is expressed to be a "draft copy only". 2. On the first page it is made clear that the intention of Ranch is to set out "the basis of a proposed agreement". 3. The terms relating to "Price and Grading" in referring to any alteration of the pool price provides that in such event "a mutually equitable calculation of what Pool should be will then be instignated (sic) by both parties". This is simply an agreement to negotiate on a critical matter, namely price. Such an agreement to negotiate is generally but not always regarded by courts as illusory and unenforceable. Cf Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1. 4. There is further reference under the heading "Price and Grading" to "mutually agreed, and variable price" in respect of second quality and cracked eggs. It is stated that the Co-op will buy "Product egg" at a price to be advised which is to be "mutually acceptable" to both parties. 5. The letter concludes by stating that "This should be sufficient to form the initial basis of a contract between the parties". This is hardly the language of a binding offer. Contrary to the indications derived from the above matters it is to be noted that there are some paragraphs in the letter which are specific, detailed and precise and which could readily be incorporated in a final binding contract if an overall intention to be immediately bound could be established. For example, those relating to General Responsibilities of the parties, Commencement date, Term of Contract, Grading and Cartage. Weighing the competing indications in the faxed letter of 9 May, I do not consider that this letter evinces an intention to be bound immediately, even in the event of an unconditional acceptance. On the contrary, the cumulative effect of the matters referred to in paragraphs 1 to 5 above evinces an intention not to be so bound. Acceptance However, there was clearly no unconditional acceptance by Kelso of this letter. On the contrary, the response of 12 May 1992 by Kelso was to refer to the "draft of proposed agreement" and to advise that it was accepted "in principle". This does not indicate a concluded bargain. Moreover, there is a clear indication that there is to be "attention to matters as discussed" with Mr Waight on 12 May 1992. These matters have not been spelt out or formulated in the evidence. The indication here is that there are further terms left open to be agreed upon. Most importantly, it is clear that solicitors are to be instructed to draw up a formal contract for signing which will require further approval by the parties and by the Co-op, which, of course, was not a party. These latter matters manifest in my view a clear intention by Kelso not to be bound until further agreement is reached on the relevant terms and there is a further approval to those terms both by the parties and the Co-op. In determining the intention of Kelso it is not without significance that about two months later Kelso (Mrs Beryl Jobe) wrote to Ranch (Waight) denying that there was any "ongoing agreement" between Kelso and Ranch. It will be recalled that the fax of 9 May 1992 referred to a 5 year term with a further 5 year option. Further, there is no evidence that the Co-op saw or approved the alleged contract with Kelso or that it adopted, or manifested any intention to be bound by, any such arrangement. Board Minute of 28 May 1992 The third document which is said to embody the agreement is the Co-op Board's Minute of 28 May 1992. This Minute has been set out in full earlier in these reasons. In my opinion this Minute is quite inconsistent with the contention of Ranch that it supports the existence of a contract to the effect that Ranch will be treated as a consolidator in respect of Kelso's CAS entitlement. One of the resolutions is that Ranch/Vella are not to have any access to the Co-operative's CAS or prices. Moreover, it authorises the General Manager to take a position as principal in respect of Jobes' eggs and subcontract the grading only to Ranch/Vella. When pressed in the course of argument as to a time and date when the contract or representation was made, counsel for the applicant could not point to any evidence as to when the alleged acceptance or approval by the Co-op was given in the period May-June 1992. This uncertainty reflects the generalised loose and amorphous arrangements which were being considered in that period. Having regard to the above matters and principles I am satisfied that no concluded bargain was reached as alleged between the Co-op and Ranch, or the Co-op, Kelso and Ranch. This conclusion gains considerable reinforcement from the subsequent behaviour of and understanding manifested by Ranch particularly in its correspondence. Francis agreed in evidence that he was told by Lee on 1 June 1992 (3 days after the Board meeting of the Co-op), that in view of Ranch's current non-membership status it was unlikely that the Board would empower Ranch to carry out the direct deliveries or invoicing at least for an interim period. This statement is quite inconsistent with an understanding that a firm agreement was in place by that time whereby the Co-op was committed to grant Ranch consolidator status. In addition, the correspondence of 8 June, 12 June and 19 June 1992, referred to earlier in these reasons is inconsistent with such an agreement being in place, as are the Board's Minutes subsequent to 28 May 1992. One curious but unexplained feature of the evidence was that Co-op records show the entry "TAMRAN" as a consolidator from 1 June 1992 in respect of the Jobes as Producers with a CAS entitlement of 7.4%. Tamran was identified as short for "Tamworth Ranch". This is, to say the least, rather odd, but the matter was not pursued in evidence any further by the parties. Whilst this entry is consistent with Ranch having been assumed to be a consolidator, the prevailing weight of the other evidence to which I have referred is to the contrary. The subsequent dealings between the Co-op and Ranch in June 1992 were such that Ranch became a customer of the Co-op which sold eggs to Ranch and it was the Co-op which invoiced Ranch for such eggs. All that in fact happened was that Ranch was given access to Kelso Park's CAS entitlement to eggs, but only as a customer of the Co-op which was paid by Ranch for such eggs. This was not consistent with the alleged contract. Furthermore, Ranch at no time took steps to acquire or lease necessary equipment such as trolleys to enable it to distribute directly to supermarkets nor to make any inquiry as to which supermarkets it would be supplying. This is a course of conduct which might have been expected had there been an understanding or agreement that Ranch was to be a consolidator. Misleading or Deceptive Conduct This claim is made under s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987 (NSW). The misrepresentations primarily alleged are stated to have been made to Francis and Schembri trading as Ranch and to have been made by Lee to Francis in a time-frame from January to June 1992. The alleged misrepresentations are that : "a) Ranch would thereby become entitled to exercise the CAS entitlement previously held by Kelso; (b) Ranch would be granted status as a Consolidator under the CAS entitlement system; (c) Ranch would be allowed to supply eggs to supermarkets under the CAS entitlement system; (d) Ranch would receive the nominated sale price for eggs supplied by it to supermarkets; (e) Ranch would otherwise be able to enjoy the benefits of membership of the association; (f) The supply of eggs from Kelso to Ranch under the agreement pleaded in paragraph 18 above would commence on 15 June 1992." I am not satisfied that any of the alleged misrepresentations were in fact made. Francis asserts that in March 1992 Lee said to him words to the effect : "We (meaning Ranch) could use our machine to supply your (Co-op) shops." (material added) This is denied by Lee. There is no direct evidence as to this conversation in March 1992. Francis' evidence in his 28 July 1992 affidavit states that about 7 weeks ago, (that is to say about the beginning of June), Lee told him that Ranch could not supply eggs to Co-op shops and that the Co-op would decide who provides eggs to the Co-op shops. Francis then states he made the statement to the effect "That's not what you (Lee) said in March". It is then alleged that Lee replied "Well that's the way it is now". This evidence is clearly at odds with the affidavit of Francis sworn on 4 May 1993 wherein he asserts clearly and unambiguously that in about the week following 28 May 1992 (which was the date of the Co-op Board meeting), Lees said words to the effect: "The Co-operative has approved your arrangement with the Jobes. Ranch can pack eggs supplied by Jobes and supply them on to shops using all of Kelso's CAS entitlement." This is clearly contrary to the Board resolution of 28 May 1992 which considered and did not grant Ranch's application for consolidator status and is a further consideration in my preference for the evidence of Lee as to what transpired on 1 June 1992. In addition Francis testified that he understood that "shops aren't included in the CAS system only supermarkets and contracts". Francis also admitted in cross-examination that Lee told him in a conversation on 1 June 1992, that given Ranch's non-membership status, the board would most likely not empower Ranch to carry out direct deliveries or invoicing at least for an interim period. As at 1 June 1992, Francis stated that Lee said Ranch had to "prove" itself to the Co-op before it was approved to make direct deliveries. This is some indication (i) that approval was considered a future contingency and (ii) that there was some doubt as to Ranch's suitability. In my view the actions, omissions and correspondence of Ranch particularly after 1 June 1992 lead to the conclusion that none of the alleged misrepresentations were made by or on behalf of the Co-op, or were relied on by Ranch. This is particularly so when read in the light of the Board's Minutes from 28 May 1992 onwards and the admissions of Francis. Additionally, it is significant that there was no protest by Ranch when the Co-op invoiced Ranch for eggs supplied which, on the version of Ranch, was directly contrary to the representations made by the Co-op that Ranch would be accorded consolidator status. There are further submissions under this head of claim in relation to an alleged failure to advise Ranch in sufficient time before it entered into its supply arrangements and before it cancelled its other sources of supply that it would not be allowed to enjoy the full benefit of Kelso's CAS entitlements. Further it is alleged that the Co-op did not inform Ranch that it would be obliged to sell all of Kelso's CAS entitlements in the box market and that it would be invoiced for eggs as though a customer of the Co-op and that it would be given the consolidator's allowance under the CAS system. However this claim depends on the existence of the representations alleged above which I have held neither to have been made out nor relied on. I do not accept that Lee on 17 July 1992 represented that Ranch could revert to payment of 14 day terms if the further sum of $17,000 were paid promptly. By early June 1992, the terms of trade had been known to Ranch for about 4 or 5 months. Ranch had been in default of the terms on many occasions in substantial amounts and was in difficult financial circumstances. Ranch was fully aware of the Co-op's concern arising from the defaults of Ranch. It is inherently unlikely in the prevailing circumstances in July 1992 that the Co-op would have agreed to revert to 14 day terms, particularly when on 22 July the Board resolved to impose stringent credit conditions. Finally, reliance is placed on a misrepresentation arising from silence in that it is alleged that during negotiations in March to May, concerning Kelso's entitlement, the Co-op did not inform Ranch of restrictions which it would impose on any transfer of a CAS entitlement to Ranch. The short answer to this claim is that there was no representation made that Ranch would be granted access to the CAS entitlement of Kelso, nor that it would get a consolidator's allowance. It was, on the contrary, made quite clear to Ranch throughout the course of communications that there had been no such access or allowance approved by the Board for Francis. That fact was well and truly brought home to Ranch. There was no misrepresentation by silence. Any expectation Ranch held in this regard was not attributable to or engendered by the conduct of the Co-op on any reasonable view of the history of this matter as outlined earlier in these reasons. Unconscionable Conduct The appellant conceded that the claim under s 51AB of the Trade Practices Act 1974 (Cth) could not succeed because it alleged a contract related to the re-supply of goods: see s 51AB(6). The claim as argued relied on the decision in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447. This claim is again dependent on findings favourable to Ranch on the matters referred to above. I have found against Ranch on these matters and accordingly this claim must fail. Inducing Breach of Contract In order to recover under this ground it must be established that the defendant has induced or procured the doing of what was known to be a breach of contract. As Isaacs J said in Short v The City Bank of Sydney (1912) 15 CLR 148 at 160: "A bona fide belief reasonably entertained that it was not a breach of contract would be fatal to the claim." The interference required to make out this cause of action must be with knowledge of the contract and there must be intention to cause the breach of that contract. Mere negligence is not enough. Neither the necessary knowledge nor intention have been established in the Co-op or its representatives in the present case. I am not satisfied that there is any evidence to establish that the Co-op knowingly intended to procure a breach of contract of supply even if one existed. The Co-op was simply acting to protect and enforce its right to payment in respect of goods supplied or to be supplied. As to the delivery due on 16 July 1992, Lee informed Mr Jobe of Kelso that the Co-op would not supply eggs to Ranch unless Ranch paid the Co-op by that evening. The payment was not made and the eggs were not supplied. The delivery on 27 July was countermanded because Ranch had failed to pay the Co-op outstanding moneys. In each case the Co-op as supplier was holding back delivery because it had not been paid moneys to which it was entitled. This was not a case of the Co-op acting to prevent Kelso performing its contract with Ranch but rather the Co-op as a seller of eggs to Ranch instructing Kelso not to supply eggs to Ranch on behalf of the Co-op. The correct legal analysis is that the Co-op was the buyer from Kelso and the supplier to Ranch. On this basis there has clearly been no inducing of Kelso to breach any contract with Ranch. There is no substance in this claim and I dismiss it. Estoppel For the reasons given above in considering the contract and the misrepresentation issues I do not consider that there were any representations or that there was any conduct on behalf of the Co-op such as would provide a basis for a claim based on estoppel in any of its many guises. Undue Pressure Although this was claimed in the further amended statement of claim, it was not pressed in address. For the above reasons I dismiss each of the claims made by Ranch and accordingly dismiss the application with costs. Cross-Claim The cross-claim by the Co-op alleges that between January and July 1992 eggs and packaging materials were supplied to Ranch by the Co-op and that the outstanding balance was in excess of $129,602. Mr Schembri, who is the second cross-respondent but not an applicant appeared at the hearing but stated that he did not wish to take any active role in the proceedings. Francis has put on a defence to the cross-claim but in substance this effectively relies on the matters raised in the further amended statement of claim. Schembri was party to an earlier defence which also basically relied on the matters raised in the statement of claim. These matters relate to the alleged agreement,representations, estoppel and other causes of action raised in the further amended statement of claim. It is conceded by Francis that the terms of payment were made clear to Ranch as from early 1992, and that there was no departure from these terms of payment or indication that Ranch would not comply with them. In his affidavit of 29 July 1992, Francis admits that by 30 July 1992, $58,000 would be due and owing to the Co-op and Ranch undertook to pay all moneys owing to the Co-op. There is clearly an admission of liability on behalf of Ranch to the Co-op for eggs and materials invoiced. Having regard to the pleadings and the evidence before me I am satisfied that the Co-op is entitled to recover the sum of $129,602 together with interest. Accordingly, I order on the cross-claim that the applicant pay the respondent the sum of $129,602 together with interest and costs. I certify that this and the preceding forty-three (43) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Tamberlin. Associate: Date: 10 March 1995 Counsel for Applicant: Mr M B Evans Solicitor for Applicant: Teakle Ormsby & Associates Counsel for Respondent: Mr C C Hodgekiss Solicitor for Respondent: Champion & Partners Date of Hearing: 6, 7, 8, 9 and 24 February 1995 1ate Judgment Delivered: 10 March 1995