ALLBRITE INDUSTRIES LIMITED v P & C GILL CONTRACTORS LIMITED [2002] NZCA 317 (11 December 2002)

IN THE court of appeal of new zealand

ca163/02

	between	allbrite industries limited
		Appellant

	and	p & c gill contractors limited
		Respondent

Hearing:	5 December 2002
Coram:	Gault P Blanchard J Glazebrook J
Appearances:	A E Lankovsky and T Romana for Appellant B A Corkill for Respondent
Judgment:	11 December 2002

judgment of the court delivered by blanchard j

[1] The appeal involves whether there was an acceptance of an offer admittedly made by the appellant Allbrite Industries Ltd to the respondent P & C Gill Contractors Ltd on 7 December 2001.In the High Court at Wellington Master Gendall has entered summary judgment for Gill against Allbrite as to liability and ordered an inquiry into damages.The Master has also dismissed Allbrite's summary judgment application.

[2] Both parties were intending to submit tenders to the Hutt City Council for Contract 3133 for a recyclables collection service.Allbrite's primary interest was in obtaining a supply of recyclable materials for its recycling plant.Gill's primary interest related to the picking up and carriage of such materials.Those interests would obviously dovetail if Gill were to uplift materials and supply them to Allbrite's plant.

[3] Allbrite was aware that Gill was also considering the possibility of supplying the rival plant of Carter Holt Harvey.

[4] Tenders were to close at 5pm on 7 December 2001.In the circumstances which we have outlined, on that day Allbrite sent the following letter to Gill:

7^th December 2001

P & C Gill Contractors LTD

71 Ararino St

Upper Hutt

Dear Paul

RE: Hutt City Contract 3133 Recycling Collections

This letter serves as confirmation that should All Brite be successful with it's [sic] conforming tender for the above contract we will agree to work with P & C Gill contractors [sic] to provide collection services on our behalf.

Your price of $390,000 per annum is acceptable for the delivery of this service.The bonus payment will be additional to this and payable to you provided your collections do not result in unacceptable levels of non-recyclables being collected and delivered to All Brite for processing.The price will be reviewed should All Brite's non-conforming tender be accepted as this will allow room for growth in recycling volumes and reward the collector and processor with more money for more volume.

The material is to be collected in 3 streams:

1. Mixed glass

2. Paper and Cardboard

3. Plastic Bottles 1 & 2, tin and aluminium cans commingled.

This agreement becomes effective upon the receipt of confirmation from P & C Gill Contractors that they will include All Brite as their processor in your tender document and allow $60,000 per annum for processing and subsequently commit the material to All Brite should your tender be successful.

We look forward to a mutually beneficial relationship.

Yours sincerelysigned for by

[Signed]

Bruce EmersonP & C Gill Contractors

Please fax back your confirmation of agreement together with your letter committing to us by 4.30pm today.

It is admitted by Allbrite that this letter constituted an offer to Gill.It will be noted that provision was made on the face of the document for a signature on behalf of Gill.

[5] Prior to 4.30pm on the same day the following reply from Gill reached Allbrite:

7^th December 2001

National Development Manager

Allbrite Industries Ltd

PO Box 3137

NAPIER

Attention Bruce Emerson

Bruce

Ref. Hutt City Council Collection of Recyclables Contract No. 3133

Thank you for today's facsimile.

I confirm I have tendered for the HCC Contract No. 3133 and that your company has been included to "receive, process, store and market" all of our collected recyclables.

I understand Allbrites will receive all the collected recyclables from us as contracted collector irrespective of whichever of your tenders is accepted by the Council.

I also understand that on acceptance of tender a formal, detailed contract will be put in place to cover our inter-company relationship.

Please note our price to you is GST exclusive.

Yours faithfully

Paul Gill

Director

[6] The single issue in the case is whether, in the circumstances in which it was written, that letter constituted an acceptance of Gill's offer so as to give rise to a contract binding upon Allbrite.

[7] It should be added that both Allbrite and Gill submitted two tenders to the Hutt City Council.Allbrite's conforming tender made mention of services intended to be performed by Gill.We have not seen the non-conforming tender but, in the view which we take, it makes no difference whether or not that tender also mentioned Gill.

[8] One of Gill's tenders indicated an intention to supply materials to Allbrite but the other said that supply would be to Carter Holt Harvey.

[9] In the event, Allbrite's conforming tender was successful but, taking the view that there had not been an acceptance of its offer, it has declined to allow Gill to act as its subcontractor.

[10] The Master was in no doubt that a binding (sub)contract had come into existence.We take the same view and did not find it necessary to call upon Mr Corkill to respond to Mr Lankovsky's oral submissions.Much of Mr Lankovsky's argument was concentrated upon the alleged uncertainty which his client claims to have experienced when it received Gill's letter on 7 December.It claims to have been non-plussed because there had been no signature on a copy of the offer letter, and by reason of the way in which Gill's letter had been worded.What this purported concern about the wording of the letter really came down to, as Mr Lankovsky in the end accepted, was that there was no mention by Gill that it would allow $60,000 per annum in its tender document for processing by Allbrite.

[11] The Master considered that this claim about uncertainty on the part of Allbrite was "scarcely credible".We agree.Although of course there was no obligation in law on Allbrite to make any enquiry of Gill by telephone or other electronic communication, if there had genuinely been some uncertainty, surely that step would have been taken.

[12] The first argument made to us was that Allbrite's offer could be accepted only by Gill's sending back to Allbrite a countersigned copy of the letter.It is of course possible for an offeror to stipulate that acceptance may be signified only in a specified manner.In such a circumstance, unless that stipulation can be taken to have been waived by the offeror, an attempt to accept the offer by another means will not amount to an acceptance.But a mere indication of a particular means of acceptance, without prescription that only acceptance in that mode will be binding, does not preclude acceptance by any other not less advantageous mode (Yates Building Co Ltd v R J Pulleyn and Sons (York) Ltd (1975) 119 Sol Jo 370).Allbrite's letter did not specify that the offeree must sign a copy of the letter of offer.It was therefore perfectly possible for Gill to accept the offer by writing its own letter to Allbrite.

[13] The second question is whether Gill's letter did amount to an unconditional acceptance.That is a matter which is to be judged objectively. Allbrite sought receipt of "confirmation" from Gill that it would "include" Allbrite as its processor in its tender document and allow $60,000 per annum for processing.Gill's response was to "confirm" that it had tendered for the contract and that Allbrite had been "included" to receive etc all of Gill's collected recyclables.It is in our view implicit that what Gill was confirming was that Allbrite had been included on the basis of the allowance of $60,000 per annum.Against the background of discussions about which there was no dispute, no objective reader of the exchange of letters would have thought that Gill did not regard itself as being bound to that price in the event that Gill's tender was accepted.And, of course, Gill had in fact already included Allbrite in a tender - a fact which would have to be taken into account by the objective observer.The further fact that Gill had also submitted a tender which did not include Allbrite is no indication that Gill's letter was not to be taken as an acceptance.As the Master said, at best for Allbrite's argument, Gill might have put itself in a situation of being in breach of contract if the agreement reached with Allbrite had in fact precluded Gill from putting in more than one tender.But, in our view, all that Gill was obliged to do under its agreement with Allbrite was to put in one tender which included Allbrite, with an allowance of $60,000 pa being made.It was not precluded from submitting an alternative tender naming Carter Holt Harvey or another party.Allbrite itself was submitting a second tender on a basis which would not necessarily result in a binding contract with Gill since, if it were accepted by the Council, the price had to be "reviewed".

[14] The final matter which should be mentioned is Mr Lankovsky's submission that the statement of Gill's understanding that on acceptance of tender a formal, detailed contract would be put in place to cover the inter-company relationship amounted to a condition; that accordingly there was no unconditional acceptance of Allbrite's offer.We reject this argument.Gill was not making the acceptance subject to the negotiation of a formal contract. It was merely indicating its understanding that a formal contract would eventuate.Both parties well understood the need for commitment that day because of the need to settle tenders.In a commercial context of this kind, a party will not be taken to be requiring a formal contract document before a contractual relationship comes into existence unless it clearly indicates that reservation.

[15] The appeal is dismissed with costs of $4,000 for the respondent.The appellant is also to pay the respondent's reasonable disbursements, to be fixed if necessary by the Registrar.

Solicitors:

Bate Hallett, Hastings for Appellant

Donald F C Fuller, Wellington for Respondent