ROADS AND TRAFFIC AUTHORITY v LUFF SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE, MEAGHER and COLE JJA 8 July 1996, 8 July 1996 [1996] NSWCA 452 ADMISSIBILITY OF CONTRACT AND TENDER DOCUMENT FOR HIRING OF TRUCK — WHETHER COURSE OF TRADING DICTATED THAT ORIGINAL CONTRACTUAL TERMS WOULD APPLY TO LATER HIRINGS Clarke JA This is one of those fairly rare appeals in which the point at issue is the admissibility of a document. On 18 October 1987 the respondent signed a tender for the hire of motor truck with driver to the Department of Main Roads, New South Wales, which it is common ground has been replaced by the Roads and Traffic Authority, the present appellant. In the tender there was a schedule and the tender document itself stated that it applies to all the trucks set out in that schedule. The respondent on the same day signed a document called general conditions and another document described as a contract for the hire of motor truck with drivers. Strangely enough, the department did not sign any document but the case was fought at first instance on the premise that there was, in 1977, a contract between the parties which related to the vehicles included in the schedule. At the time of signing, there was one vehicle included in the schedule, a Bedford International Dodge. The documents I have mentioned are the only contractual documents in evidence in this case relating to transactions between these parties. However, the respondent hired trucks with drivers regularly to the appellant from 1977 onwards. Obviously enough, in later years he was hiring different trucks from the earlier years. There was no evidence that any contract was signed by the respondent in respect of later vehicles. Nor that the respondent was ever approached and asked to subject himself to the general conditions in respect of the hire of later vehicles. What, somewhat quaintly, occurred was that officers of the appellant added to the schedule details of trucks later hired by the respondent, but without his knowledge that they were being added to the schedule. On a regular basis after 1977 the appellant would issue schedules of rates which it would pay to its contractors and the fees paid to the respondent were calculated in accordance with those schedules of rates. Until 1989 the arrangements with the parties seem to have proceeded without untoward incident. However, in 1988, the respondent hired to the appellant a vehicle which was altered to allow of a special use in the operations of the appellant. When the respondent obtained this vehicle, the appellant requested him to modify it to permit it to be used to tow a tar spraying unit which was the property of the appellant. The modifications included an alteration to the braking system, an addition of a marker rod and chain, an addition of a marker wheel and an addition of a lever in the cabin to operate the tar unit. The cost of these modifications were all paid for by the appellant. 2 UNREPORTED JUDGMENTS Furthermore, this vehicle was not to be used to carry rock and stone, as the other trucks were, but was solely to be used in the towing of the tar spraying unit. In this operation, it is clear it was not proposed that it would be driven the many kilometres that the other trucks were driven on each day. In order to protect the respondent from an unduly low return, having regard to the fact that the rates were determined on kilometre basis, the parties agreed that the respondent would be remunerated upon the basis that the vehicle travelled a minimum of fifty kilometres per day. There was, as appears clear from what I have said, a special arrangement or agreement entered into between the parties in relation to this vehicle. On 22 March 1989, the respondent's truck was damaged when the tar spraying unit caught alight. The respondent then sued the appellant seeking damages for the cost of repairing his vehicle. The appellant admitted negligence and admitted that its negligence was the cause of the damage to the respondent's truck. It sought to raise a sole defence that there was a written contract between the parties which included an indemnity or exclusion clause which enabled the appellant to escape liability for its admitted negligence. During the hearing of the trial the appellant sought to introduce into evidence the tender and contract to which I earlier referred. The respondent objected to the admission into evidence of this document upon the basis that it did not apply to the vehicle, the subject of the claim. His Honour, Judge Sinclair, who heard the case, decided, after a full hearing, that the contract was irrelevant to the case. He concluded that it had not been shown that the contract governed the relationship between the parties in relation to this vehicle and he rejected the tender upon that basis. A verdict was entered for the respondent. The appellant has challenged that conclusion and has submitted that the proper finding was that the written contract to which I made reference was binding upon the respondent in respect of all of the trucks hired, including the one that was damaged. In the course of his submissions, Mr Elkaim, counsel for the appellant has pointed out that the respondent regularly hired vehicles to the appellant. That the respondent frequently hired this vehicle to the appellant and that in the year prior to the accident, the truck was permanently used by the appellant. Mr Elkaim submitted that the hire was at rates provided to the respondent pursuant to the contract. There is no statement to that effect in evidence but I will return to that submission in a moment. He pointed out that each time a truck was hired, the parties did not enter into a new contract or go through any other formalities but that officers of the appellant, unbeknown to the respondent, entered the particulars of the new truck onto the schedule. None of these submissions with the possible exception of the contentious one to which I will return, can possibly support the claim that each time a truck was hired to the appellant by the respondent, the hiring was on the basis of the terms set out in the original written contract. I should amplify that by saying that on each occasion that there was a new hiring, no formalities were entered into and there was no discussion proved in evidence that would support the conclusion that the original contract was intended by the parties to continue to apply in respect of a new hiring. As | earlier said, Mr Elkaim relied upon the submission that the hire was at rates provided to the respondent pursuant to the contract but in my opinion the evidence simply does not support that proposition. What occurred was that from time to the time, the appellant would issue standard rates and charges and the respondent was, as he said himself, paid in accordance with those standard rates URJ ROADS AND TRAFFIC AUTHORITY v LUFF (Clarke JA) 3 and charges. There was no indication beyond some evidence of an officer of the appellant (to which I later refer), that those rates and charges were fixed pursuant to a specific contract and that the terms of that contract would continue to bind the respondent. Although the substance of the case was that the course of trading between the parties dictated that the original written contractual terms would continue to apply, there is in truth, no evidence to support that submission. Mr Elkaim referred the Court to a passage from the judgment of Lord Denning in Amalgamated Investment and Property Co Ltd (In Liq) v Texas Commerce International Bank Ltd 1982, 1 QB 84 at 121. That passage reads: "If parties to a contract, by their course of dealing, put a particular interpretation on the terms of it - on the faith of which each of them - to the knowledge of the other - acts and conducts their mutual affairs - they are bound by that interpretation just as much as if they had written it down as being a variation of the contract." Mr Elkaim points to the evidence of a Mr Roberts then an employee of the appellant, in answer to the question "On your understanding of the rules that governed your job, would you have been allowed, or were you allowed to hire a vehicle if there was no contract?" He said, ""No, I wouldn't be allowed to hire a vehicle." It is unnecessary to point out that every hiring involves a contract except perhaps in exceptional circumstances and the question and answer do not take the matter very far. Even if, however, one were to understand it as a reference to a written contract, there is no evidence that the respondent knew this fact or that it was ever brought to his attention. That evidence hardly supports the proposition that the appellant conducted itself in accordance with a course of dealing which was known to the respondent. Greater reliance is placed by the appellant on two answer provided by the respondent himself. The first reads: "Q. And you knew, did you not, that all of this hiring with these conditions of providing rates on the side of the Commissioner and you providing details of insurance and registration, were done pursuant to an agreement that you had with the Commissioner, is that right? A. Correct." That was almost certainly a correct answer because the hiring was itself entered into pursuant to an arrangement or agreement between the two parties in accordance with which the respondent made his trucks available upon a certain fee basis. I do not, however, read that answer as providing any support for the proposition that there was an agreement between the parties that the original 1977 contract should continue to operate in all its glory without any indication from the appellant that it should do so. The respondent was then asked: Q. Right, but the fact is, is it not, that this contract which you had signed back in October 1977 was what was used between you and the Commissioner through its office in Tumut to regulate your hiring of your vehicle to the Commissioner, isn't that right? A. I suppose to, yeah." That question which involves a complex of fact and law was almost certainly inadmissible but it was not objected to. Notwithstanding, the answer involves no more than an indication of the subjective understanding of the respondent, a lay person, and what is more it was a pretty qualified subjective understanding. The answer is completely inadequate to establish a case that the old written contract continued to apply, particularly in relation to the vehicle subject to the claim, 4 UNREPORTED JUDGMENTS which was after all, the subject of a special agreement negotiated between the parties, in the course of which there was not one indication that the original terms would apply. At the end of the day, there was a contract signed relating to a particular vehicle. There were later hirings and no evidence in the case that anyone ever dealt other than informally. There is no evidence that there was any importation of the original written contractual terms into later hirings and the highest the evidence goes is to be found in the particular questions to which I have referred. In my opinion, there was no evidentiary basis upon which that contract could have related to the hiring of the vehicle, the subject of the claim and His Honour was correct to reject the tender. I would propose that the appeal be dismissed with costs. Meagher JA I agree. Cole JA I also agree. CLARKE JA: The order of the Court is that appeal is dismissed with costs. Appeal dismissed with costs. Counsel for the appellant: M Elkaim Solicitors for the appellant: William Grant, Acting Crown Solicitor Counsel for the respondent: M Walton Solicitors for the respondent: Peter Gain and Associates