BH Australia Constructions Pty Ltd v Kapeller

1. [1]

   LEEMING JA: BH Australia Constructions Pty Ltd seeks leave to appeal, pursuant to s 83 of the Civil and Administrative Tribunal Act 2013 (NSW), from the decision of the Appeal Panel of NCAT made on 13 February 2019: Kapeller v BH Australia Constructions Pty Ltd [2019] NSWCATAP 40. That decision allowed an appeal from a decision made in the Consumer and Commercial Division of the Tribunal published on 19 September 2018, which dismissed the application brought by Mr Phillip Kapeller and Ms Rachael Cesnik (the present defendants) in relation to a dispute concerning the identity of the builder.

2. [2]

   That may seem complex. But the dispute is simply stated. The defendants entered into a written contract for the building of their home. They dealt with Mr Daniel Roberts. Was their contract with the plaintiff, a company then known as “Blissful Constructions Pty Ltd”? Or was it with a company then known as “Blissful Developments Pty Ltd”, a company to which voluntary liquidators were appointed in April 2018? Mr Roberts was an employee of the former and a director of the latter. Both companies were referred to in the written document, which is far from being an exemplar of attention to detail.

3. [3]

   The Consumer and Commercial Division found that the defendants had contracted with Blissful Developments Pty Ltd, and accordingly dismissed the proceedings. The Appeal Panel found that the defendants had contracted with Blissful Constructions Pty Ltd, and remitted the proceeding for determination on the merits. The identity of the contracting party in a written contract is a question of law. As it turns out, that question of law is moderately complex. So too are the facts, which may be summarised immediately.

Factual background

1. [4]

   The litigation to date has focussed upon the interrelated activities of two separate companies. Both companies have, repeatedly, changed their names. Both have traded under the same, or similar, logos. From time to time, the natural persons who have prepared documentation have used similar names which are different from the name of any company, or any business name. As will become apparent below, the frequent name changes have led to confusion, not confined to the defendant home owners. It is not unlawful for a company to change its name, repeatedly, including in short succession so long as there is a proper commercial purpose, but if the natural persons controlling the company choose to do so then it is highly desirable that they attend carefully to the changed name. That did not always occur, adding to the difficulty in this case.

2. [5]

   I shall call the plaintiff “Constructions”. It was incorporated in May 2015 with the name “Blissful Constructions Pty Ltd” and ACN 605 815 825. By resolution at a meeting on 26 June 2017, it resolved to change its name to “SSDR Pty Ltd”. The notification to ASIC (dated 4 July 2017) said that all the shareholders agreed “that it was essential to change the name of the company for operational reasons”. A week later, on 11 July 2017, its name changed again, to “BH Australia Constructions Pty Ltd”. Constructions had the benefit of insurance in respect of the property, provided by HIA Insurance Services (NSW), and was licensed, with licence number 283976C. Broadly speaking, residential building work may only be done by persons licensed under the Home Building Act 1989 (NSW). An ASIC search in evidence stated that its sole director and secretary was Ms Aarthi Dhandayutham, with a company (ATRFT Holdings Pty Ltd) being its sole member.

3. [6]

   I shall call the second company “Developments”. It was incorporated in January 2015 under the name “Prospective Developments (Aust) Pty Ltd” with an ACN of 603 550 867. It acquired ownership of a business name “Blissful Homes” in January 2015. In July 2015, its name was changed to “Blissful Developments Pty Ltd”. On 24 March 2018, its name changed to “Prospective Developments (Aust) Pty Ltd”, but then changed again, a mere three days later, to “ACN 603 550 867 Pty Ltd”, and in April 2018, liquidators were appointed. An ASIC search disclosed that its sole director, shareholder and member was Ms Bonita Dawes.

4. [7]

   The evidence did not disclose any sound commercial reason for both companies to change their names, not once but twice, only a few days apart, as occurred in July 2017 in the case of Constructions, and March 2018 in the case of Developments.

5. [8]

   Neither of the ASIC searches in evidence was an historical search. Both showed that from December 2017, the registered office and principal place of business of both companies was the same unit on Honeysuckle Drive in Newcastle. The affidavit filed in NCAT by Mr Roberts dated 12 December 2017, which annexed the ASIC searches, stated that he was a quantity surveyor in the employ of Constructions and a director of Developments.

6. [9]

   In September 2015, when the home building contract was entered into, the plaintiff, Constructions, was known as “Blissful Constructions Pty Ltd”, while Developments was known as “Blissful Developments Pty Ltd”.

7. [10]

   The contract entered into by Mr Kapeller and Ms Cesnik was in standard form. There is no reason to doubt Mr Kapeller’s evidence that it was executed by him, his wife and Mr Roberts at a cafe in Morriset in early September 2015. At the top of each page were the words “Blissful Properties”. The builder was described as “Blissful Developments Pty Ltd” with an ABN of 50 603 550 867. This section of the contract concluded:

8. [11]

   It will be seen that “Blissful Properties” is neither a business name nor the name of any company, so far as the evidence discloses. Further, “daniel@blissfulproperties” is not a well-formed email address. Those two errors are minor. Of much greater significance were the errors relating to the identity of the contracting party.

9. [12]

   The contract referred to Developments as the builder, and specified Developments’ ABN. However, Developments was neither licensed nor insured. The builder’s licence number and insurance details on the contract were those of Constructions.

10. [13]

    The contract appointed Mr Daniel Roberts to be the agent for the owner and said that he was “of Blissful Developments Pty Ltd”. The clause provided that “The agent must provide instructions to the builder on behalf of the owner as required by this contract”.

11. [14]

    The contract provided for a deposit followed by progress payments reflecting various stages of construction, totalling $405,000. It attached what was described as a scope of works, being a document of some 7 pages with the heading “Blissful” on each page. The email address, daniel@blissfulproperties, was also found on the head of each page.

12. [15]

    The contract also annexed building plans which, like the scope of works, referred merely to “Blissful” on each page. The plans are described as B2503. Only the first 2 sheets appeared in the copy of the contract annexed to Mr Kapeller’s affidavit, and they were described as Issue “A” with a date 15 October 2015.

13. [16]

    The execution clause was not fully completed. Where the builder was to sign, there is a signature which appears to be “D Aalthi”, but the name has been left blank. Beneath the signature, in very small typeface, are the words “signed for and on behalf of Blissful Developments Pty Ltd”. The signature has been witnessed by Mr D Roberts. The owners have not signed the execution page, although both signed under certain printed acknowledgements at the end of the document. One of the acknowledgements was as follows:

14. [17]

    Immediately under the execution clause, there was a note:

15. [18]

    Confining attention, for the moment, merely to the written contract that was executed, the position in light of the facts now known is that either Developments was the contracting party, a company which is now under external administration, and which was never licensed or insured, but which was named as the builder, or Constructions, which was licensed and insured, was the contracting party and the builder was erroneously named “Blissful Developments Pty Ltd” rather than “Blissful Constructions Pty Ltd”. It was not suggested that there was no contract. There were no submissions based on estoppel, or rectification in equity, or variation. The only issue presented was one of construction.

16. [19]

    The documents predating and following the execution of the contract point in various directions.

17. [20]

    Mr Kapeller affirmed an affidavit in which he said that he made contact with “Blissful Homes” via its website, following which he inspected some properties in Cooranbong in August 2015. On 9 September 2015, Mr Roberts sent him an email attaching a draft construction contract. The email was sent from “daniel@blissfulhomes.com.au”. The draft contract which Mr Roberts provided to the defendants in September 2015 has the logo “Blissful Homes” on the cover page and the first 27 pages which followed. (The header of the 28th and last page is blank.) The headers to those pages are to be contrasted with the form of the contract that was executed. The draft identified the builder as “Blissful Developments Pty Ltd”, gave a HIA membership number but omitted reference to any licence number.

18. [21]

    The post-contractual documents (it is these that give rise to the question of law the subject of this appeal) are confusing. I put to one side the disputes about delay, quality of work and payment which arose almost from the outset, which need not be summarised here. The documents fall into two broad categories: (a) documents brought into existence prior to the engagement of solicitors by the defendants (when the disparity between named contracting party and insurance policy was exposed), and (b) documents after the parties had fallen into dispute including as to the identity of the builder.

19. [22]

    Dealing with the first category are documents all save the first dated in 2016:

    1. (1)

       There is a notice of determination of a development application by Maitland City Council dated 14 December 2015 which describes the applicant as “Blissful Developments Pty Ltd”. It refers to 8 sheets of plans with number B2503 described as “revision C” with date 16 November 2015. Elsewhere in the evidence are copies of the other sheets of these plans, stamped to indicate they are council approved.

    2. (2)

       There are three invoices addressed to the defendants dated 8 March, 6 September and 5 December 2016, all in the name of “Blissful Developments Pty Ltd” and giving its ABN.

    3. (3)

       There is a document described as “Final Variation Agreement” which specifies some 21 variations for the kitchen, at a price of $14,000. The document appears to have been drafted by Mr Kapeller. After listing the variations, it states:

    4. (4)

       The document appears to be signed by Mr Kapeller and Mr Roberts. Save for the sentence reproduced above, it does not refer to either Developments or Constructions.

    5. (5)

       The statement of insurance cover states that it was issued on 21 March 2016. It identified the builder as “Blissful Constructions Pty Ltd” and gave that company’s licence number.

    6. (6)

       There is a document from a kitchen contractor dated 16 May 2016 which is addressed to “Blissful Homes” which sheds little light on the position. That document attaches plans which have “Blissful” on them, and an email address “info@blissfulhomes.com.au”. The plans described the “client” as “Blissful – Kapeller”.

    7. (7)

       A certificate concerning a framework inspection dated 28 November 2016 is said to have been requested by “Daniel – Blissful Constructions”.

20. [23]

    A document at p 306 of the Joint Court Book, which appears to have been p 250 of the documents tendered in NCAT, and was relied on by the defendants’ expert, introduces further complexity. It appears to be a screenshot of an electronic message from Mr Roberts. The message states, “Hi Phil, Please find updated variation as promised. Thanks”. I mention it because at the bottom of the screen is the following sentence:

21. [24]

    No submissions were made of the significance of the reference to a further company with a similar name. So far as I can see, no other document in evidence referred to it. The document tends to confirm that the evidence is not a complete picture of the corporations involved in the business carried on under the “Blissful” or “Blissful Homes” names.

22. [25]

    In early 2017 the parties were in dispute, and the defendants retained a firm of solicitors, who wrote to “the director, Blissful Developments Pty Ltd” on 30 March 2017, identifying Blissful Developments Pty Ltd as the builder and drawing attention to the fact that that company was not licensed nor insured, giving rise to a liability for substantial fines on the part of the company and Mr Roberts. The letter made claims that the building work was incomplete and that goods had been removed from the site and flagged an intention to recover damages for the cost of completing the contracted work and some consequential loss.

23. [26]

    A response, which is unsigned but which was identified in the evidence before the tribunal as having been sent by the husband of the sole director of Constructions, advised that: “Blissful Developments Pty Ltd is happy to fully assign and novate the entire contract over to Blissful Constructions Pty Ltd …”. It gave an explanation for the delay in completing the construction and proposed a resolution. It also seems to have attached a proposed statement of claim, in the name of Blissful Developments Pty Ltd, seeking some $112,395 from the defendants.

24. [27]

    The defendants’ solicitors wrote back, rejecting the offered assignment and novation, and denying that Blissful Developments Pty Ltd was contracted as a developer.

25. [28]

    Ultimately proceedings were commenced in NCAT by the defendants, who asserted a written agreement with Blissful Developments Pty Ltd, which had been breached. They joined Blissful Developments Pty Ltd as the first respondent, and Mr Roberts as the second respondent, suing him for misleading or deceptive representations contrary to the Australian Consumer Law. A defence was filed and signed by a solicitor on 25 October 2017. The only identification of the “respondent” [which was in the singular] was in the title to the document, which referred only to “Blissful Developments Pty Ltd”. Even so, the “respondent” denied the claims alleged against Mr Roberts personally, and then alleged that “the Respondent claims a complete set off as referred to in the Cross-Claim filed herein”. However, a greater degree of precision was deployed in the defence, paragraph 3 of which alleged that “The First Respondent has been incorrectly named and should be identified as Blissful Constructions Pty Ltd ACN 605 815 825”.

26. [29]

    By a cross-application, also dated 25 October 2017 and signed by the “Solicitor for the Builder”, Blissful Constructions Pty Ltd positively advanced that it had been a party to the residential contract and sued the defendants for “$123,634.50”. The cross-application described the cross-applicant as “Blissful Constructions Pty Ltd ACN 603 550 867”, although that was the ACN of Developments. That is a relatively minor error. A larger error is the different name given by the same solicitor to the respondent and the cross-applicant, notwithstanding the documents were signed on the same day and the defence referred to and relied on a set-off in the cross-claim. But those errors are dwarfed by the volte-face as to the identity of the respondent/cross-applicant during the hearing, to which I am about to come.

27. [30]

    Mr Roberts swore an affidavit on 12 December 2017, confirming that the insurance and licence numbers on the contract were those of Constructions, saying that the contract should have been in the name of Constructions, rather than Developments, and that “Unfortunately, the error was not detected prior to the issue of the contract to the Home Owners”.

28. [31]

    Some six months later, on 5 June 2018, Mr Shasanth Shankar Telakula Gowri Shankar made a witness statement. This was shortly after liquidators were appointed to Developments. Mr Shankar gave his address as the same Honeysuckle Drive office which was stated on the ASIC searches as the registered office of Constructions and Developments. He said that he had been the “Administration manager” for Developments, but had ceased that role in around July 2017. He also said that he was the “Administration manager” for Constructions. The statement annexed, in paragraph 3, the written contract. He then said:

29. [32]

    No objection was taken to either paragraph, notwithstanding that both are statements of legal conclusion.

30. [33]

    Conspicuous by its absence from Mr Shankar’s witness statement was any reference to Mr Roberts, or any attempt to reconcile the error to which Mr Roberts had deposed to the effect that Constructions was the contracting party, with the bald statements to the contrary in Mr Shankar’s statement.

The hearing in NCAT

1. [34]

   The hearing commenced on 25 July 2018. Very early there was an explanation as to parties:

2. [35]

   The transcript of the December hearing was not in evidence.

3. [36]

   Mr Kapeller was cross-examined, including as to whether he accepted that the name on the written contract (namely, Developments), was a mistake. Counsel for Mr Kapeller opposed the question. The Senior Member is recorded as saying:

4. [37]

   It was said that Mr Roberts had received a summons to attend but did not do so; nonetheless his affidavit was read. Later on the same day, Mr Shankar gave evidence and was cross-examined, following which the Senior Member suggested that there might be a difficulty with the named contracting party. There followed a major change of stance from the position of the respondent/cross-applicant:

5. [38]

   The Senior Member dismissed the defendants’ application against Constructions, on the basis that their contract had been with Developments. It also followed that the cross-application was dismissed.

6. [39]

   The Appeal Panel reached the opposite conclusion. It rejected eight reasons which had been given by the Senior Member for concluding that Developments had been the contracting entity. It addressed each of those reasons in turn, but after first identifying the principles of law relevant to the appeal as follows at [28]:

7. [40]

   The reasons given by the Appeal Panel for rejecting the eight reasons are lengthy, but parts need to be reproduced in full in light of Constructions’ submission that the third principle (which has been emboldened above) was wrong in law and was material to the decision insofar as it infected much of the reasoning. The reasons dealing with the fourth, fifth, seventh and eighth points of the Senior Member were as follows at [33]-[34] and [36]–[37]:

8. [41]

   The Appeal Panel then said at [39] that:

9. [42]

   The Appeal Panel stated that the post-contractual conduct did not assist either party in the determination of the contracting entity, and considered that the crucial facts were those contained within the contract itself, being at [40]:

10. [43]

    The Appeal Panel concluded at [41]:

11. [44]

    Subsequently, the Appeal Panel dealt with other aspects of the appeal which need not here be summarised.

Constructions’ submissions

1. [45]

   As refined during the hearing, Constructions sought leave to advance a single ground of appeal, namely, “the Appeal Panel erred in determining that post-contractual conduct is largely equivocal on the question of the contracting parties, unless it constitutes an admission by a party.” (The second and third proposed grounds were withdrawn at the outset of the hearing and it was accepted, properly, that the fourth proposed ground stood and fell with the first.)

2. [46]

   It was said that that was an incorrect formulation of legal principle, falling within the limited scope of appeal to this Court. It was said that it gave rise to a question of principle, which warranted a grant of appeal. The incorrect formulation was said to have infected the process of determining the parties to the contract, insofar as it could be seen that at least four of the passages rejecting the eight reasons given by the Senior Member deployed the incorrect principle that post-contractual conduct which was not an admission was equivocal.

3. [47]

   In support of that submission, I was taken succinctly and effectively to a series of decisions, mostly of this Court, on the use of post-contractual conduct for the purposes of identifying a party to the contract. The purpose of doing so was twofold: (a) to explain how it was that the Appeal Panel had made the error which it contended had been made, and (b) to identify authority which was binding or highly persuasive upon me on the point. I shall deal with those decisions below.

4. [48]

   Constructions said that the matter should be remitted to NCAT. However, it accepted that if this Court found that there was an error of law and could resolve it, that should occur.

5. [49]

   Mr Kapeller appeared for himself and his wife. He made submissions which were succinct and to the point. He said that on a fair reading of the Appeal Panel’s reasons, its members had considered each point of evidence, forming the view that the post contractual conduct did not much assist either side. He denied that the Appeal Panel had applied a proposition of law to the effect that post contractual conduct was equivocal:

6. [50]

   Mr Kapeller concluded:

Authorities

1. [51]

   It will be seen that the Appeal Panel formulated, and thereafter applied, a principle of law in relation to the use which could be made of post-contractual conduct. This is an area of the law which is not free from complexity.

2. [52]

   The complexity has a number of sources. It is said to be well-settled in this country that post-contractual conduct may not be used to construe a contract, but may be used to determine whether or not a contract exists. As it turns out, that is a relatively recent rule. However, it needs to be borne in mind that the rule applies only to contracts which are wholly in writing. Further, the distinction between construction of a contract and the existence of a contract is not necessarily as crisp as it might seem.

3. [53]

   A series of cases considers the admissibility of post-contractual conduct in order to determine the identity of a party to a written contract. As conventionally formulated, the rule summarised above does not definitively answer that problem. On one view, the identity of the contracting party is of the essence of the contract, and so post-contractual conduct may be used for that purpose. On the other hand, in a case where it is clear that a contract has come into existence, but it is uncertain who the contracting parties are, the problem may more naturally be framed in terms of the construction of the contract. That is, perhaps, merely a way of observing that the distinction between “existence” and “construction of terms” is not inevitably a crisp one.

4. [54]

   Priestley JA demonstrated in Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 326-328 that earlier High Court decisions permitted recourse to subsequent conduct, while in later decisions, notably Administration of the Territory of Papua and New Guinea v Daera Guba (1973) 130 CLR 353; [1973] HCA 59, the High Court proceeded on the basis that post-contractual conduct could not be used as an aid to construction, albeit without overruling the earlier statements. Priestley JA addressed the post-contractual material in case his Honour’s view that the earlier decisions no longer bound was wrong.

5. [55]

   Thereafter, in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61, a case where an offer in a letter was accepted by conduct, Heydon JA influentially stated the principle that:

6. [56]

   No differently from all judgments, the proposition must be understood in context. As Lord Porter once said:

7. [57]

   If a written offer is accepted by conduct, then there is a clear distinction between the evidence which is relevant to the issue whether or not there has been acceptance of an offer, and evidence which is relevant to the legal meaning of the words of the offer assuming it has been accepted.

8. [58]

   A minor issue, best addressed immediately, is terminological. Very regularly, the authorities – especially the older authorities – refer to these rules in terms of “admissibility”. Those references reflect usage which is poorly adapted to proceedings to which the Evidence Act 1995 (NSW) applies. That Act distinguishes between admissibility and use. An example is sufficient to illustrate the point. Suppose there be a dispute whether a contract was formed, and also, if a contract was formed, as to its terms. Evidence as to the post-contractual conduct of the parties is relevant, within the meaning of s 55 of the Evidence Act. It follows that it is admissible. However, that evidence may only be used for the purpose of determining whether or not a contract exists. Post-contractual conduct may not be used for the purpose of construing the terms of the contract, if one exists. The distinction in the Evidence Act between admissibility and use is perhaps made plainest in provisions such as s 95 (which refers to both concepts) and s 136 (which empowers the court to limits the use which may be made of evidence which is admitted). See also R v AH (1997) 42 NSWLR 702 at 708, El-Haddad v R (2015) 88 NSWLR 93; [2015] NSWCCA 10 at [38]-[45] and Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 at [50] and [55].

9. [59]

   A helpful account of the ways in which post-contractual conduct may be used was given by Basten JA (with whom Gleeson JA agreed) in Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150 at [120]-[121]

10. [60]

    I turn to the cases relied on by Constructions in support of its contention that where there was an issue as to the identity of a contracting party, regard could be had to post-contractual conduct.

11. [61]

    In Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154, Campbell JA, with whom Beazley JA agreed, referred to the precise question, namely whether it was “permissible to have regard to subsequent communications for the purpose of deciding with whom the contract was entered”: at [59]. His Honour stated that the present state of the law was “not yet settled”. His Honour also referred to a submission which echoes the point mentioned above:

12. [62]

    However, it was not necessary to determine that submission. Basten JA likewise said that he would not wish to form a concluded view on that point: at [2]. The case resembled the present facts, in that the issue was whether the builder was a company or the man who stood behind it, and there was ambiguity on the face of the written contract as to who was intended to be bound.

13. [63]

    The decision of the Court of Appeal in Tomko v Palasty [2007] NSWCA 258 is significant, because according to Constructions, this was misread by the Appeal Panel and led to its erroneous formulation and application of principle. The question was whether money had been lent to Liverpool Hotels Pty Ltd, or to the respondent, Mr Palasty, personally. There does not appear to have been a written contract. In evidence was a letter from the appellant which was construed as an admission that the moneys had been loaned to the company. Basten JA and Einstein J in separate judgments both considered that that evidence could be used as an admission as to whether a contract had been formed between the parties: at [19]–[20], [68]–[69]. Einstein J said:

14. [64]

    The reference to conduct is to be understood as directed to the unwritten contract whose existence or otherwise was to be inferred from the evidence.

15. [65]

    However, the significant judgment for present purposes is that of Basten JA, who stated at [13]:

16. [66]

    Two things may be said of this. First, his Honour in terms relied upon post-contractual conduct as an admission, and said that the primary judge was entitled to rely upon it to support the conclusion that the advance had been made to the company rather than to Mr Palasty personally: at [20]. To that extent, the judgment as a matter of ratio authorises regard to be had to post-contractual conduct.

17. [67]

    Secondly, it is plain that [13] is a proposition concerning the quality of the evidence in the particular case, rather than a general proposition of law that post-contractual conduct which is not an admission is largely equivocal.

18. [68]

    I was taken to Brambles, Pethybridge and Tomko by Mr Williams, but not to Lym International Pty Ltd v Marcolongo [2011] NSWCA 303; 15 BPR 29,465. Sackar J agreed with Campbell JA, as did (subject to presently immaterial qualifications) Basten JA. There was a characteristically careful analysis of the authorities bearing on the admissibility of post-contractual conduct. Campbell JA identified a vital distinction, which is often merely implicit in the authorities. There is a world of difference between construing a contract which is wholly written, and construing a contract which is not wholly written. In part, this derives from the separate roles of judge and jury in cases of wholly written contracts, as opposed to contracts which involved spoken words or conduct. The contrast was made by Patteson J speaking for the Exchequer Chamber in Moore v Garwood (1849) 4 Exch 681 at 690; 154 ER 1388 at 1392 (“If the contract had depended solely upon the written documents, the argument [that the Chief Baron ought himself to have determined what the contract was] might have prevailed; but as it does not, we think the question was properly submitted to the jury”) and reiterated by Lord Hoffmann in Carmichael v National Power plc [1999] UKHL 47; [1999] 1 WLR 2042 at 2048. The difference was explained by Campbell JA at [141]-[143]:

19. [69]

    It is clear that in the case of a contract which is partly written and partly oral, regard may be had to the whole of the circumstances. The parol evidence rule applies only to contracts which are wholly in writing: see Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; 261 ALR 382 at [90(3)]. The non-written components of a contract which is not wholly in writing give rise to questions of primary fact, which are capable of being proven in the usual way, including by conduct after the event which bears upon those matters. In particular, an admission after the event may be powerful evidence supportive of a particular aspect of a contract. Indeed, Stephenson LJ said for the Court of Appeal in Mears v Safecar Security Ltd [1983] QB 54 at 77 that:

20. [70]

    That passage was approved in Fazio v Fazio [2012] WASCA 72 at [192]-[195] (Murphy JA, Pullin and Newnes JJA agreeing) and by Black J in In the matter of Centura Global Holdings Pty Ltd [2016] NSWSC 62; 111 ACSR 185 at [64], who also noted that Edelman J had written to the same effect in Hightime Investments Pty Ltd v Adamus Resources Ltd [2012] WASC 295 at [98]–[99]. Thus a conversation between homeowner and tradesman, which is followed by work being done by the tradesman and invoices sent in the name of a company controlled by the tradesman to the homeowner is apt to be regarded as a contract between homeowner and company, the latter having been bound by its agent the tradesman.

21. [71]

    It follows that, contrary to Constructions’ submissions, what was said in Tomko v Palasty is of limited relevance to the issue in the present appeal. Tomko v Palasty is not authority for the proposition that post-contractual conduct may be used to identify the parties to a contract which is wholly written. It also explains why what mattered in Tomko was the probative value of the evidence in respect of demonstrating the terms of the informal contract.

22. [72]

    In Filadelfia Projects Pty Ltd v Entirity Business Services Pty Ltd (No 2) [2011] NSWSC 116, Ball J addressed this question, once again in the context of a building contract. Filadelfia as owner and Zebicon as builder signed a standard contract. The question was whether an electrical contractor, Entirity, which had performed work at the site, had done so as a subcontractor of Zebicon (as Filadelfia contended) or as a contractor with Filadelfia (as Entirity contended). There was no formal contract for the work involving Entirity. In part reliance was placed upon post-contractual invoices from Entirity, which were addressed to Zebicon, and statutory declarations from the principal of Entirity to the effect that the contract was with Zebicon. Ball J reasoned as follows at [38]:

23. [73]

    The Victorian Court of Appeal considered the use of post-contractual conduct in connection with a wholly written contract in Lederberger v Mediterranean Olives Financial Pty Ltd (2012) 38 VR 509; [2012] VSCA 262. A company called Loaders Traders Pty Ltd acted as a bare trustee for a partnership which operated a business of importing, wholesaling and selling camping goods. The partnership used the business name “Loaders Manufacturers & Traders”. At a time when it was expected the partners would shortly make a substantial profit, an application form was executed in the name “Loaders Manufacturers & Traders” in an agricultural scheme which would produce tax deductions. Thereafter, the partners claimed and received tax deductions. Still later, Loaders Traders Pty Ltd entered into a deed of company arrangement, and the respondents sought to recover debts from the partners. Thus the question arose whether, in the case of a wholly written contract which identified “Loaders Manufacturers & Traders”, the partners who traded under the name “Loaders Manufacturers & Traders” or the company Loaders Traders Pty Ltd was bound. The primary judge found the partners, rather than the company were bound, and had regard to the fact that the partners had claimed tax deductions. This part of the appeal was dismissed. The joint judgment of Nettle and Redlich JJA and Beach AJA stated at [31]-[33]:

24. [74]

    It will be seen that the Court of Appeal refrained from expressing a definitive view as to the admissibility of post-contractual conduct on the question of construction, and held that even if the post-contractual tax returns could not be used for that purpose, they could be used to confirm the purpose of the transaction (namely, to enable the partners to obtain a tax deduction).

25. [75]

    The Appeal Panel reproduced an extensive passage from the judgment in Harold R Finger & Co Pty Ltd v Karellas Investments Pty Ltd [2015] NSWSC 354 at [80]–[86]. Part of that passage is at [84]:

26. [76]

    Divorced from its context, the part of the sentence in Basten JA’s judgment in Tomko v Palasty appears as a proposition of law, rather than as a statement applicable to the particular facts of that case.

27. [77]

    In Harold R Finger & Co Pty Ltd v Karellas Investments Pty Ltd, the question was which of two related companies was the party to a written Heads of Agreement, assuming that it constituted a final and binding contract: see at [103]. Robb J paid some regard to evidence after the event, but made it plain that this was inconclusive. His Honour said that he had been “influenced” but “without this factor being in any way decisive” by the parties’ conduct after the date of the heads of agreement: at [103]. The decision is thus limited authority for the use of post-contractual evidence to identify the party to a wholly written contract.

28. [78]

    More recently the Court of Appeal in Damien v JKAM Investments Pty Ltd [2015] NSWCA 368 dismissed an appeal from Rein J’s decision at first instance: Champion Homes Sales Pty Ltd v JKAM Investments Pty Ltd [2015] NSWSC 272. The precise question was as to the identity of the company which had carried out building work, being one of two companies (ACPL and JKAM) controlled by Mr Joseph Elia: see at [5]. Rein J addressed the point at trial at [18], relevantly as follows:

29. [79]

    It is plain from [18] that it was common ground that there was a contract, but one which was not in writing, between Mr Damien and one or other of Mr Elia’s companies. The same appears less unequivocally from paragraph 2 of the cross-claim, reproduced in Tobias AJA’s judgment at [8] (“Around July/August 2012, JKAM commenced carrying out the building works without any written contract for such works.”)

30. [80]

    One of the grounds of appeal, ground 3, related to Rein J’s reliance in [18](e)] quoted above on the tax invoice supplied after the contract had been entered into. Gleeson and Simpson JJA agreed with Tobias AJA. Tobias AJA said of this at [28]:

31. [81]

    That paragraph was dispositive of that ground of appeal, and therefore must be regarded as ratio, binding upon me, that post-contractual conduct may be used for the purpose of identifying the parties to an unwritten contract. The language was expressed more broadly, and relied on by Constructions as binding authority for the broader proposition that regard could be had to post-contractual evidence to identify the parties to a wholly written contract. While I acknowledge the width of Tobias AJA’s language, I do not regard that proposition as self-evident. “[E]very word in every judgment” is to be read in context: Commonwealth v Bank of New South Wales (1949) 79 CLR 497 at 637-638. That paragraph was the entirety of the reasoning on this point. There is nothing to suggest that the judgment dealing with an unwritten contract was expressing a rule to extend to contracts which were wholly in writing.

32. [82]

    The judgment of Ball J in Nefiko Pty Ltd v Statewide Form Pty Ltd (No 2) [2014] NSWSC 840 falls into a similar category. The ultimate issue was the same, although it arose in the context of an application seeking to set aside the determination of an adjudicator. The question was whether certain building and landscaping work which had been done was pursuant to a contract between two natural persons, or between two companies. The contract was not a written contract. Ball J said at [37]-[38]:

33. [83]

    The Victorian Court of Appeal in Nurisvan Investment Ltd v Anyoption Holdings Ltd [2017] VSCA 141 returned to the relationship between the identity of the party and the existence of a contract at [84], saying:

34. [84]

    Two things may be noted about Nurisvan Investment Ltd v Anyoption Holdings Ltd. First, the pleaded contract was one which was “partly in writing (consisting of the Heads of Agreement) and that it was to be implied from actions pursuant to the terms of the Heads of Agreement”: see at [39]. In accordance with Lym International Pty Ltd v Marcolongo and Masterton Homes Pty Ltd v Palm Assets Pty Ltd and Mears v Safecar Security Ltd it is clear that regard may be had to the subsequent conduct which was itself alleged to bear upon whether the parties entered into contractual relations in order to determine that question. But the decision is not authority for the proposition that regard may be had to subsequent conduct in order to determine the identity of parties to a wholly written contract.

35. [85]

    Secondly, Nurisvan was an unusual case. It concerned the sale of shares in a company FIBO which held an Australian Financial Services Licence. The Heads of Agreement did not contain a formal execution clause, but left space for a director of FIBO, rather than its owner Nurisvan, to sign. This was the occasion for the Court of Appeal to say that “unless Nurisvan was a party to the Heads of Agreement, there could be no valid contract in respect of the sale of the shares in FIBO to Anyoption”. I would read the words I have italicised as meaning no commercially sensible contract. Of course, there can be a valid contract to sell shares which the vendor does not own. Entering into valid executory contracts to sell shares the vendor does not presently own is familiar in (not to mention an important aspect of) modern capital markets. Even if the subject matter of the contract is not fungible, a vendor may still promise to convey something which it does not own, and if and when it breaches the contract, the vendor will be liable in damages to the purchaser. I mention this only because, if read literally, the Court of Appeal has linked Nurisvan Investment being a party with the existence of the contract, and with that I cannot agree.

36. [86]

    The last case to which Constructions referred was Wickham Hill Investment Pty Ltd v Ding [2019] NSWSC 631. That concerned, inter alia, the “Ding Loan Agreement”, an agreement between Mr Ding as lender and Mr Liu and Mr Chen as borrowers: see at [23], and which had not been signed: see at [91]. The question was whether that agreement contained, as a matter of implication or necessary intendment, a grant of security by the plaintiff company (a trustee of a unit trust) over certain assets: at [169]. Parker J relied on Nurisvan to refer to surrounding circumstances and subsequent events for the purposes of determining which parties were parties to the Ding Loan Agreement: at [174]. It was fairly said by Mr Williams that “that is as far as the reasoning goes there effectively, your Honour, in so far as Justice Parker doesn’t draw out the issue any further, he simply relies on the decision in Nurisvan for that proposition.”

Consideration

1. [87]

   Despite Mr Kapeller’s submission to the contrary, I am of the view that the formulation of principle by the Appeal Panel at [28(3)] is, on a fair reading, a departure from what had been said by Basten JA in Tomko v Palasty. It elevates a proposition descriptive of the particular evidence in the case to a general proposition of law.

2. [88]

   Further, the Appeal Panel has ascribed a special status to one category of evidence, namely, admissions. With respect, I disagree. Either there is or there is not a rule which precludes reliance on post-contractual conduct for a certain purpose. Any such rule is a corollary of the objective theory of contract. I do not see how one class of post-contractual conduct can be used while post-contractual conduct which falls outside that class may not be used.

3. [89]

   It follows that there is an error of law in the reasons of the Appeal Panel. Enough has already been said to make it plain that the point gives rise to a question of principle, such that there should be a grant of leave.

4. [90]

   It is common ground that the contract in the present case is wholly in writing. With great respect to the broader statements in the cases referred to above, to the effect that post-contractual evidence may be used to identify the parties, I do not think that is so in the case of a contract which is wholly written and which is not said to be a sham or to involve fraud or is sought to be rectified in equity.

5. [91]

   Mr Williams’ submissions record a body of decisions which contain statements to the effect that post-contractual conduct may be used to determine the identity of a party to a contract. For the most part statements to that effect have been made in cases where the contract was not wholly in writing. In such a case, post-contractual evidence may of course be used for that purpose. It follows ex hypothesi that evidence going beyond the written document is required, and that evidence may include evidence after the contract was entered into. Contracts formed by acceptance by conduct are an obvious example.

6. [92]

   None of the statements on which Mr Williams relied was a case where attention was given to the fact that the contract was wholly in writing. But in such a case, the terms are all identified in the document. The question is one of construing the terms which are already identified, rather than identifying the terms themselves. As was confirmed by what was said in Lym International Pty Ltd v Marcolongo at [141]-[143], this is a vitally different process.

7. [93]

   In such a case, the written contract will disclose the names of the contracting parties. That does not prevent questions arising. There are at least two categories of case.

8. [94]

   The first class of case permits evidence to be adduced of mutually known facts to identify the meaning of a descriptive term. An example is the deed in Fung Ping Shan v Tong Shun [1918] AC 403, which was expressed to bind “Tong Shun, of Victoria, in the colony of Hong Kong, trader”, and where there was an uncle and nephew both of whose names were properly rendered in English as “Tong Shun”. The Privy Council said at 406 that “parol evidence as to the identity of a party to a deed is always admissible ...”. This was argued and determined in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 (McLelland J); (1986) 40 NSWLR 631 (CA), a decision better known for its analysis of Masters v Cameron (1954) 91 CLR 353. A binding contract was formed by the exchange of letters to and from “Hospital Corporation Australia Pty Ltd”. No such company existed at the time, and this was said to be a complete answer to the case. However, evidence was adduced that, at the time of that correspondence, an existing company Baulkham Hills Private Hospital Pty Ltd was in the process of changing its name to Hospital Corporation Australia Pty Ltd, and that that was known to the parties. McLelland J identified 19th century decisions where parol evidence was admitted to identify the parties to a contract, and stated at 627:

9. [95]

   An appeal on this point (among others) was dismissed, for substantially the same reasons: see 40 NSWLR 631 at 636-637. McHugh JA for the Court of Appeal made it clear that the parol evidence rule had “no application when the issue is whether the person sued or suing was a party to the contract”.

10. [96]

    A second class of case (it may be a subclass of the first) is sometimes described as “misnomer”. Unlike the first class of case, where there is merely a factual issue as to the denotation of a named party, the essence of the second class of case is that there was a mistake in the words used to identify a party. Thus, in In re Howgate and Osborn’s Contract [1902] 1 Ch 451, a deed referred to “William Gray” rather than “Edward Thomas Gray”, while parol evidence established that the latter must have been intended. It was held that the deed, from the moment of its execution, was to be construed as referring to Edward Thomas Gray (with the result that a later correction by hand was not a material alteration).

11. [97]

    But in all such cases, the question is one of construction or interpretation. There can be no issue that parol evidence may be used to give legal meaning to the label used in the contract to identify the contracting parties. However, I respectfully doubt that post-contractual conduct can be directly relevant to that question. Reasoning to the effect that post-contractual conduct is relevant on the issue of, say, whether an offer has been accepted by conduct, is inapplicable to a case such as the present.

12. [98]

    Ordinarily, the wholly written contract will have come into existence upon execution of the document. Conceivably, it may have been held in escrow. However, at such time as the contract comes into existence, the parties to which contractual obligations attach will, according to the objective theory of contract, be fixed.

13. [99]

    I fail to see how the identity of the parties to a contract which came into existence in January can be affected by conduct which occurs in March, consistently with the objective theory of contract. If that were so, then it must be possible at least in theory for there to be a wholly written contract purportedly between A and B entered into in January which, but for some conduct by B in March, is as a matter of law between A and B, but, when regard is had to B’s March conduct, is as a matter of law between A and C. Phenomena like that arise in physics – most famously, Schrödinger’s cat – but cannot arise consistently with the objective theory of contract. The parties to the contract are determined at all times – including in February – once the contract has been formed.

14. [100]

    Does authority stand in the way of that proposition which I would reach as a matter of principle? When one puts to one side the statements made in cases where the contract was not wholly in writing, at the appellate level there is the tentative view of the Victorian Court of Appeal in Lederberger and the tentative view in Harold R Finger & Co Pty Ltd. Arguably there is also the decision of Wickham Hill Investment Pty Ltd, although I prefer the view that the unsigned loan agreement was not a wholly written contract. All of those decisions are mere dicta, which is not to deprecate the weight they are to be given before reaching a different view. However, none addressed the distinction which I respectfully regard as correct in principle between a contract which is wholly written and one which is formed by oral statements or conduct.

15. [101]

    None of the foregoing should be taken to detract from the proposition that post-contractual evidence may be used in the ways identified in Johnston v Brightstars Holding Company Pty Ltd at [121] (to “establish contextual facts in existence at the time the contract was executed”), Lym International Pty Ltd v Marcolongo at [142] (“restrospectant evidence of a surrounding circumstance that was known to the parties at the time of contracting”) and Lederberger v Mediterranean Olives Financial Pty Ltd at [33] (“the purpose of the transactions”). All three formulations express substantially the same idea, by which evidence after the event may be used consistently with the objective theory of contract to establish some relevant aspect of purpose, context or surrounding circumstances. The narrow question of present concern is different: it is whether post-contractual evidence may be used directly to construe the written contract.

16. [102]

    I am also conscious that it has been said that the identity of parties “goes to the very existence” of a contract. Although not relied on by Constructions, Lord Millett wrote in Homburg Houtimport BV v Agrosin Private Ltd [2004] 1 AC 715; [2003] UKHL 12 at [175] that:

17. [103]

    Although I lacked the benefit of submissions on this passage, I do not regard his Lordship as speaking to the issue of the use of post-contractual conduct for the purpose of identifying whether a named party is the actual party bound by the contract. In the present appeal, it was common ground that a contract had been formed by the execution of a written document by the defendants and Mr Roberts acting on behalf of one or other of Constructions or Developments.

18. [104]

    Do the words “Blissful Developments Pty Ltd” identifying the builder bear as their legal meaning the company to which a liquidator was appointed in April 2018? Or do they mean “Blissful Constructions Pty Ltd”, the present plaintiff?

19. [105]

    It is to be borne in mind that, quite apart from rectification in equity, obvious mistakes in contracts could be corrected as a matter of construction at law. This has been the case for centuries. Lord St Leonards regarded it as a “great mistake” to think there was no such power at common law. Buss P, Beech and Pritchard JJA recently summarised the authorities in Tokio Marine & Nichido Fire Insurance Co Ltd v Hans Bo Kristian Holgersson trading as Holgerssons Complete Home Service [2019] WASCA 114 at [76]:

20. [106]

    Lord St Leonards’ reference (written before the commencement of the Judicature legislation in 1875) to a Court of Law as opposed to a Court of Equity emphasised that there was power to correct obvious mistakes by construction at law, without resort to rectification in equity.

21. [107]

    The test for correcting obviously incorrect contractual language was stated in a further passage from Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liquidation) [2019] NSWCA 11; 365 ALR 345 at [8]-[9]:

22. [108]

    It has regularly been said that the court must be satisfied of those matters to a high level of conviction. Dixon CJ and Fullagar J said in Fitzgerald v Masters at 426-427 that it must be ‘clearly necessary in order to avoid absurdity or inconsistency’. The Court of Appeal said in Miwa Pty Ltd v Siantan Properties Pty Ltd [2011] NSWCA 297 at [18] that the test of absurdity is not easily satisfied. Part of the reason is borne of experience; as Lord Hoffmann explained in Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101; [2009] UKHL 38 at [23], courts do “not readily accept that people have made mistakes in formal documents.”

23. [109]

    I have concluded that the parties must be taken to have intended that Constructions was to be the builder.

24. [110]

    Unquestionably there was an obvious mistake on the face of the contract. The same paragraph referred to the name and ABN of Developments, but the insurance and licence number of Constructions.

25. [111]

    Is what the parties are to be taken to have intended clear to a high level of conviction? I think it is.

26. [112]

    First and foremost, the builder must be taken to have sought to comply with the law. Builders must not do residential building work under a contract unless insurance is in place: Home Building Act 1989 (NSW), s 92(1). The maximum penalty was 1,000 penalty units for a corporation. There is every reason to ascribe an intention to the parties that they not break the criminal law.

27. [113]

    Secondly, builders must not demand to be paid for work done without insurance: s 92(2). That too is an offence. Further, if the contract of insurance is not in force, the contractor is not entitled to damages, nor to recover money under any other right of action, including a quantum meruit: Home Building Act 1989 (NSW), s 94. The whole point of the builder spending time and money on erecting a building is to make profit. That cannot lawfully occur unless there is insurance. That is a further reason to impute an intention that Constructions, rather than uninsured Developments, was the builder under the contract.

28. [114]

    Thirdly, for the same reasons, there is every reason to impute an intention to the defendants to enter into a lawful contract, in which it was lawful for the builder to require payment for work done. Why ever would they be taken to have contracted with a company which was not insured, given the importance and prominence of insurance, including in the contractual acknowledgements?

29. [115]

    Thus I would accept Mr Kapeller’s submission that from the perspective both of the home owners and of the builder, a very significant factor would be to ensure that the contracting party was licensed and insured. Those considerations gave financial benefits to the home owners. The same considerations prevented the contracting company, and its director, from committing serious criminal offences.

30. [116]

    Fourthly, but of much less weight than the foregoing, I note that the contract is, after all, a contract for the construction of a home. The different roles of a developer and a builder are well known. The fact that Constructions was licensed and insured as a builder, and Developments was not, is not unrelated to those companies’ names.

31. [117]

    The date of council approval of the development application (December 2018) is revealing as to the circumstances which obtained at execution. It suggests that at the time of contract, a development application was pending (or perhaps had not even been lodged – this is unclear on the evidence) with the local council. It seems likely that Developments played a role in propounding that application, with the defendants having provided owners’ consent to it (see Community Association DP270447 v ATB Morton Pty Ltd [2019] NSWCA 83 at [37]-[40]). But that does not detract from Constructions being the party which must be taken to have been intended to be the builder.

32. [118]

    On the view of the law I favour, the post-contractual conduct must be disregarded, except insofar as it bears upon some relevant aspect of the pre-contractual purpose or context. The Appeal Panel did have regard to it, but nevertheless reached the correct conclusion.

33. [119]

    If I am wrong about the unavailability of post-contractual evidence to establish the identity of the parties to a wholly written contract, then once again I would come to no different conclusion than the Appeal Panel.

34. [120]

    The self-serving evidence of Mr Shankar, after the appointment of a liquidator to Developments, is of no weight. It contrasts with the evidence of Mr Roberts not to mention the pleaded defence, to the effect that there had been a mistake, although those statements must be assessed in light of the criminal and civil consequences of a contract being entered into by an unlicensed and uninsured builder. The tax invoices and other post-contractual documents refer to both Constructions and Developments, and really do no more than confirm that those controlling the companies were less than scrupulously careful in identifying the corporate names of the entities they had brought into existence.

35. [121]

    If regard may be had to post-contractual evidence, I consider that the Appeal Panel was correct to place those considerations at the forefront of its reasoning in [41], the dispositive paragraph, and to discount the post-contractual evidence which favoured a conclusion that Developments was the contracting party.

Orders

1. [122]

   For those reasons, while on the view I favour there is an error of law in the formulation of principle by the Appeal Panel, as it happens it is immaterial. Whether or not regard is had to post-contractual conduct, the result is the same. The Appeal Panel was correct to conclude that Constructions was a party to the contract. While there should be a grant of leave, the appeal should be dismissed. There is no reason for costs not to follow the event, noting that the defendants’ costs are the costs of unrepresented litigants.

2. [123]

   Mr Kapeller sought to tender some evidence which had not been before the Appeal Panel. All of it post-dated the contract. Because its admissibility went to the ultimate issue in this appeal, I deferred ruling on the tender. Those documents are not relevant, for the reasons already given.

3. [124]

   The following orders will be made: