New South Wales Supreme Court CITATION : Hinkley v de Vries (No. 2) [2006] NSWSC 1049 HEARING DATE(S) : 4/10/06 JUDGMENT DATE : 9 October 2006 DECISION : Declaration refused. CATCHWORDS : CONTRACTS - General Contractual Principles - Offer and Acceptance - Draft agreement forwarded by post - Later agreement different in terms forwarded by letter stating that on receipt of duly signed and witnessed agreement an identical copy duly signed witnessed and dated would be returned - Duly signed and witnessed agreement posted - Letter sent and received before receipt of duly signed and witnessed agreement - Whether the postal acceptance rule applied - Whether the letter sent before its reciept was a notice of revocation of offer - First agreement and not second agreement signed, witnessed and returned - Whether plaintiff entitled to declaration of a subsisting agreement PARTIES : Neil John Hinkley - Plaintiff Willem Joost de Vries - Defendant FILE NUMBER(S) : SC 4919/06 COUNSEL : Mr C Wood - Plaintiff Mr M Tyson - Defendant SOLICITORS : Pigott Stinson Ratner Lawyers - Plaintiff Aubrey Brown Partners Solicitors - Defendant LOWER COURT JURISDICTION : Compensation Court IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J MONDAY 9 OCTOBER 2006 4919/06 NEIL JOHN HINKLEY V WILLEM JOOST DE VRIES (NO 2) JUDGMENT 1 Willem Joost de Vries is the holder of a licence for a taxi-cab. He let the licence to Neil John Hinkley. The lease was due to terminate on 5 September 2006. It contained an option to extend the lease by not more than six months nor less than three months written notice to that effect before the expiration of the term. No such written notice was given. 2 On 9 June 2006, Mr de Vries wrote to Mr Hinkley indicating that cl 12 of the lease required notice in writing for its extension. He said he was unsure of Mr Hinkley's intentions and had prepared a new agreement should he wish to continue with the leasing of the taxi-cab. The letter concluded with the request that Mr Hinkley notify his intentions as soon as possible and no later than 11 July 2006. A draft agreement was attached to the letter. 3 On 11 July 2006, Mr Hinkley spoke to Mrs de Vries by telephone informing her that he wished to carry on. There was a conflict in the evidence as to whether Mr Hinkley spoke to Mr de Vries. He said he did. Mr and Mrs de Vries said he did not. In any event on 11 July 2006, Mr de Vries wrote again to Mr Hinkley in these terms: "Thank you for your telephone response to my correspondence date 09th June, 2006 and your indicated intention to renew the Lease Agreement of Taxi Plates TC 253. Please find herewith the Agreement renewal for your perusal and execution and return to Lessor. On receipt of the duly dated, signed and witnessed Agreement, an identical copy, duly dated, signed and witnessed will be forwarded to you for your records." 4 An agreement in slightly different terms was attached to the letter. One of the agreements was to be made on an unspecified date in August 2006. It called for a lease bond of $2,460. The other was to be made in September 2006 had a water stamp "draft only" on each page and called for a lease bond of $2,640. There were other differences as well. 5 On 14 August 2006, Mr de Vries wrote to Mr Hinkley stating: "The Lease Agreement between you Neil John HINKLEY and myself Willem Joost DE VRIES will be terminated and cease to exist as from the Agreement expiration date at 0600hrs on the 05th day of September, 2006. Clause 12. of the above mentioned Agreement will not apply." 6 There followed a recitation of cl 12 of the original lease and statements that the lessor (sic) had failed to give any notice in writing within the required time frame, had not paid all moneys payable pursuant to the agreement promptly and had not complied with the covenants, terms, conditions and provisions of cl 14 of the original lease. The letter was posted from Western Australia on 14 August 2006 and received by Mr Hinkley on 16 August 2006. 7 On 15 August 2006, Mr Hinkley wrote to Mr de Vries enclosing a signed lease agreement that had been witnessed as instructed. The enclosed document was the form of agreement to be made in August 2006 requiring a lease bond of $2,460. The letter was received by Mr de Vries on 17 or 18 August 2006. 8 Mr de Vries said the agreement to be made in August 2006 was the one included with his letter of 9 June 2006 and the draft only agreement to be made in September 2006 was forwarded under cover of his letter of 11 July 2006. 9 In his affidavit, Mr Hinkley said the draft only agreement to be made in September 2006 was forwarded to him by the 9 June 2006 letter and the agreement to be made in August 2006 was forwarded under cover of the letter of 11 July 2006. In cross examination, however, Mr Hinkley agreed with the proposition that the agreement to be made in August 2006 was enclosed with the earlier letter and the draft only agreement to be made in September 2006 was sent under cover of the letter of 11 July 2006. 10 There is a logic to that sequence of events. It is unlikely that an agreement to be made in September 2006 would later be supplanted by an agreement to be made in August 2006. Furthermore, there was no suggestion of any bargaining as to the amount of the lease bond and it is unlikely that Mr de Vries would have reduced his demand for $2,640 to $2,460 in a later proposed agreement. 11 Mr Hinkley, in par 1 of his summons, seeks a declaration that a valid lease of the licence for the taxi-cab subsists between he and Mr de Vries. 12 Mr Hinkley relied upon the postal acceptance rule. In Henthorn v Fraser [1892] 2 Ch 27 an option to purchase for 14 days was handed to the plaintiff who lived in another town. The next day, a withdrawal of the offer was posted to the plaintiff. It reached the plaintiff after he had posted an unconditional acceptance of the offer. It was held that there was a concluded contract before the revocation was received. Lord Herschell said at 33: "Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted." 13 That passage was cited with approval by Bowen CJ in Eq in Bressan v Squires [1974] 2 NSWLR 460 at 461. His Honour went on to say that according to the formulation, all that needed to be in contemplation was the post as a possible or permitted mode for the law to impose the consequence that the contract was concluded by the action of posting. 14 But his Honour also said that there was a concluded contract unless there was some other ground for holding that the result did not follow. The option in that case stated that it might be exercised by notice in writing. His Honour concluded that what was required was actual notice. 15 In Nunin Holdings Pty Ltd v Tullamarine Estates Pty Ltd [1994] 1 VR 74 the material words were: "The contract is forwarded on the basis that it will be held by you on our behalf pending receipt by us of an identical contract signed by the vendor company". Hedigan J at 80 pointed out that it must not be overlooked that the offeror may prescribe the method of acceptance. And at 83 his Honour said that it was fundamental to bear steadily in mind that the general rule is that a contract is not completed until the acceptance of the offer is actually communicated to the offeror, and that a finding that a contract is completed by the posting of a letter of acceptance cannot be justified unless it is to be inferred that the offeror contemplated and intended that his offer might be accepted by the doing of that act. At 84 his Honour concluded that the language in that case was more strongly in favour of the general rule than was the language in Bressan. 16 It should be inferred that the parties contemplated the use of the post in offer and acceptance of a new agreement between them. But like the language in Nunin, the letter of 11 July 2006 supports the operation of the general rule because it required receipt by Mr de Vries of the duly executed agreement by Mr Hinkley. In those circumstances it could not be inferred that Mr de Vries contemplated and intended that his offer might be accepted simply by posting an executed agreement. 17 The consequence is that before his offer was accepted, Mr de Vries had dispatched his letter of 14 August 2006 which was received by Mr Hinkley on 16 August 2006 before Mr de Vries received Mr Hinkley's letter of 15 August 2006 and the enclosed executed agreement. 18 In my view, however, the letter of 14 August 2006 does not constitute a revocation of the offer contained in the letter of 11 July 2006. It makes no mention of a new agreement. It puts Mr Hinkley on notice that the original lease agreement will expire on 5 September 2006 and there had been a failure to exercise the option under cl 12. 19 I am not prepared to infer from the reference back to the original agreement that the letter constituted a revocation of the offer contained in the letter of 11 July 2006 and its enclosure. 20 I am prepared to infer that by reason of the inclusion of a different agreement with the letter of 11 July 2006, Mr de Vries revoked his offer to Mr Hinkley to execute the agreement that had been forwarded under cover of his letter of 9 June 2006. 21 That was the offer Mr Hinkley purported to accept by his execution of the agreement returned by him on 15 August 2006. It was an offer that was no longer available for acceptance and, in my view, no new agreement for lease of the taxi-cab came into existence. 22 In consequence, par 1 of the summons must be dismissed. 23 The Passenger Transport (Taxi-cab Services) Regulation 2001, reg 83(1) requires the holder of a licence for a taxi-cab who lets the licence to another person to give to the Director General of the Department of Transport written notice of the letting. Mr de Vries gave a notice dated 6 September 2006. The summons, in par 2, seeks a declaration that the notice is invalid. 24 Since Mr Hinkley has no further interest in the licence for the taxi-cab, he is not entitled to any declaration with respect to any written notice given by Mr de Vries in purported compliance with the Passenger Transport (Taxi-cab Services) Regulation 2001. Par 2 of the summons must also be dismissed. 25 I dismiss par 1 and par 2 of the summons. I order the plaintiff to pay the defendant's costs. I stand the balance of the summons over before the Registrar for further directions on Friday 13 October 2006. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.