531

Brambles Holdings Ltd v Bathurst City Council

(NSW Court of Appeal; 23 March 2001; [2001] NSWCA 61)

[In 1982 Brambles agreed to manage the Council’s garbage depot under a contract which gave Brambles the right
to charge and retain fees set by the Council for garbage deposited at the depot. At the time only dry waste was in
contemplation. However, in 1985 Brambles began accepting liquid waste, for which it also charged and retained a
fee set by the Council. The 1982 contract expired in 1989 but the parties continued to operate under it.
On 9 January 1990 Brambles wrote to the Council proposing two successive increases in the liquid waste fee.
The Council replied by letter dated 20 February 1990, consenting to the first increase but suggesting deferral of the
second. However, the increases proposed by Brambles were put into effect. They raised the liquid waste fee to 1.1
cents per litre.
On 12 July 1990 the parties executed a new contract, specifying fees to be charged in respect of listed items of
garbage. The list included “General commercial waste $ 3.00 per m3”. Clause 21 of the contract provided that
Brambles was entitled to retain fees collected by it other than “disposal fees specified in Clause 22.” Clause 22
provided for payment to the Council of disposal fees of $1.00 for each cubic metre of compacted waste, and 50
cents for each cubic metre of uncompacted waste. However, Brambles continued to charge and retain a fee of 1.1
cents per litre of liquid waste, to the knowledge of the Council.
On 19 September 1991 the Council wrote to Brambles stating that it had resolved to increase the liquid waste fee
to 1.3 cents per litre as from October 1991, rising thereafter by quarterly increases up to 6.0 cents per litre, “and that
the additional income be placed in reserve for the establishment of a Liquid Waste Treatment Plant.” The letter
continued: “you are requested to charge these fees to … all … depositors of liquid wastes at the Depot. … Payment
of all liquid waste fees should be made to Council each quarter in accordance with clause 22 of the Contract."
Brambles replied on 3 October 1991. It stated that “present rates do not make it viable to continue providing a
liquid disposal service” and that Brambles “has no contract with Council for liquid disposal. The present contract is
for the management of a solid waste disposal depot.” Thereafter Brambles collected fees for liquid waste at the rate
of 1.3 cents rising to 6 cents per litre as set out in the letter of 19 September 1991. It continued to retain all fees
collected by it. Although the Council was aware of this, it made no complaint until 1995. The Council brought
action in 1996, claiming the fees collected by Brambles for liquid waste, in the alternative damages for breach of
contract or relief based on unjust enrichment.
The trial judge upheld the Council’s claim. He held that the contract of 12 July 1990 had set a fee of $ 3.00 per
m3 for liquid waste, which was comprised within "general commercial waste" under cl 21. But this fee had been
varied as the result of a further contract between the parties. Council’s letter of 19 September 1991 was an offer
which Brambles had accepted by its conduct in charging the fees set by it. The contract as so varied required
Brambles to pay the "additional income" to the Council. The "additional income" was the income in excess of the
1.1 cents per litre which Brambles was charging prior to 19 September 1991. This amounted to $797,104.88.
The trial judge held further that if no contract had been formed by acceptance of the 19 September 1991 letter,
Brambles was in breach of the contract of 12 July 1990 by charging the fees specified in the letter of 19 September,
and was liable to pay the amount of those fees to the Council (minus a reasonable remuneration for managing
liquid waste) as restitutionary damages for that breach.92 Brambles appealed.]

HEYDON JA. [20] [Construction of 12 July contract.] The defendant [argued that] the trial judge erred in
holding that liquid waste was commercial waste within clause 21 of the agreement dated 12 July 1990. [23] The
defendant's arguments turned on the conduct of the parties before [and] after the contract was made, their subjective
beliefs, and the implication of terms.
[24] Pre-contractual conduct is only admissible on questions of construction if the contract is ambiguous and [it]
casts light on the genesis of the contract, its objective aim, or the meaning of any descriptive term.93 [25] Post-
contractual conduct is admissible on the question of whether a contract was formed.94 [26] Post-contractual conduct
is not admissible on the question of what a contract means as distinct from the question of whether it was formed.95
[27] The construction of a contract is an objective question for the court, and the subjective beliefs of the parties
are generally irrelevant in the absence of any argument [for] rectification or estoppel by convention. No [such]
argument was advanced in this case
[28] Terms may be implied in four ways: (i) Implications contained in the express words of the contract. (ii)
Implications from the ‘nature of the contract’. (iii) Implications from usage. (iv) Implications from business
92
[Restitutionary damages are measured not by the plaintiff’s loss, but by the defendant’s gain, resulting from a breach of contract. They are
also known as ‘disgorgement’ damages.]
93
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347-352.
94
Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68 at 77; Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 at 668, 669 and
672; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR [97011] at 9149 and 9154-9156; Film Bars Pty Ltd v Pacific Film
Laboratories Pty Ltd (1979) 1 BPR [97023] at 9255.
95
As explained by Priestley JA (Meagher JA agreeing) in Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310
at 326-330, the status of the relevant High Court authorities is unclear: hence unless it is demonstrated that later decisions of the Victorian
Full Court and Court of Appeal against admissibility, Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235 and FAI
Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343, are clearly wrong or overruled, they should be followed in NSW.
532

efficacy.96 [30] The defendant cited leading cases about implying terms to give business efficacy to show that the
terms found by the trial judge were not reasonable, equitable, necessary or obvious. This criticism is baseless. The
trial judge made it plain that he was not implying a term to give business efficacy. He said: "This is not an
implication of a term by operation of law or on the basis of business efficacy; but rather the drawing out of what is
implied by the language of the contract itself." [31] Of the four implications he referred to [above], he was not
making implication (ii) or (iv), but (i). He employed processes of construction.
[35] The next argument was that the charge for "general commercial waste" was a rate per cubic metre, [whereas]
when rates were set in relation to liquid waste, units of liquid measurement were used. One cubic metre is a
measure of volume. So is one gallon or one litre. Only elementary calculations are needed to convert one into
another.
[37] The defendant argued [that] a rate is specified in relation to general commercial waste, namely, $3.00/m3,
which does not bear any relationship to the amount charged by Brambles in relation to liquid waste. So far as the
charges postdate 12 July 1990, they are inadmissible [in] construing the contract. So far as they predate it, they are
inadmissible because they do not appear to be part of the background of which account can be taken [in] construing
the contract, which is in any event not ambiguous.
[38] The defendant [also] submitted [that the trial judge’s] construction of the contract is inconsistent with what
the parties subjectively believed the contract covered.97 A memorandum of 1989 demonstrates that Council was of
the view that the contract did not cover liquid waste. The letter of 3 October 1991 suggests that Brambles was of the
[same] view. [However,] the memorandum says nothing at all about the 12 July 1990 contract. The letter was not
admissible on question of construction.
[39] The defendant submitted that the conclusion that the contract did not deal with liquid waste was supported
by correspondence of 9 January and 20 February 1990. Those letters are inadmissible on the question - a question
of construction - what the words "general commercial waste" in the 12 July 1990 contract mean.
[46] The trial judge's conclusions about the 12 July 1990 contract are correct. There is some evidence that in 1990
and 1991 both the Council and the defendant did not share his conclusions, but in the absence of any argument for
rectification or estoppel by convention the actual opinions of the parties are irrelevant.
Offer of 19 September accepted by conduct. [50] [The defendant’s] submissions boil down to three
propositions. First, the 19 September 1991 letter was not an offer. Second, if it was, it was rejected on 3 October
1991 and was not thereafter available for acceptance by conduct; and, even if available, the conduct did not result in
agreement. Third, even if there was agreement there was no consideration. [52] There is much to be said for the
view that the letter was not an offer. The letter does not take the form of proposing a particular course for
acceptance or rejection. The letter uses the language of command. [53] [However,] the point was not pleaded. It is a
point on which evidence might have been called. It should not be entertained in this Court.
[66] Read through the eyes of a reasonable bystander the 3 October 1991 letter is a rejection of the Council's
offer. [68] According to the defendant, the effect of rejection of the offer was that it ceased to have effect. Hence it
was not capable of being accepted by conduct.
[71] The defendant's contentions depend heavily on the view that offer and acceptance analysis must invariably
be employed in reaching decisions about the formation of contracts. That analysis is neither sufficient nor necessary
to explain all cases. Offer and acceptance analysis does not work well in various circumstances. One example is a
contract for the transportation of passengers on mass public transport.98 Another example concerns simultaneous
manifestations of consent.99 Another example concerns contracts negotiated at meetings but not assented to until
each party executes counterparts. Another is where the contract is made through a single broker acting for both
parties. Another is where the parties are deadlocked and they agree to submit to a solution reached by a third party.
[72] Difficulty exists in many situations of daily life, e.g. sales at auction; supermarket purchases; boarding an
omnibus; purchasing a train ticket; tenders for the supply of goods; offers of rewards; acceptance by post;
warranties of authority by agents; manufacturers' guarantees; gratuitous bailments; bankers' commercial credits.100
[74] In Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd McHugh JA101 said:
Commercial discussions are often too unrefined to fit easily into the slots of ‘offer’, ‘acceptance’,
‘consideration’ and ‘intention to create a legal relationship’ which are the benchmarks of the contract of
classical theory. In an ongoing relationship, it is not always easy to point to the precise moment when the
legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be
too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties'
subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic
commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to

96
Carlton & United Breweries Ltd v Tooth & Co Ltd (1986) 7 IPR 581 at 605-6.
97
Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, 330
98
MacRobertson Miller Airline Services v Commissioner of State Taxation (Western Australia) (1975) 133 CLR 125 at 136-140. Another is
the contract between competitors in a regatta: Clarke v Earl of Dunraven (The `Satanita') [1897] AC 59 at 63, applied in Raguz v Sullivan
[2000] NSWCA 240 at [65]-[67]. Another example concerns exchanges of contracts to sell land, which are hard to analyse in offer and
acceptance terms.
99
Lucke "Striking A Bargain" (1962) 1 Adel LR 293 at 295-299.
100
New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd [1975] AC 154 at 167.
101
(1988) 5 BPR [97326] at 11,117-11,118 (Hope and Mahoney JJA concurring).
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look at the whole relationship and not only at what was said and done when the relationship was first
formed.102
[76] In Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd103 McHugh JA said:
where an offeree with a reasonable opportunity to reject the offer of goods or services takes the benefit of
them under circumstances which indicate that they were to be paid for in accordance with the offer, it is open
to the tribunal of fact to hold that the offer was accepted according to its terms.
Thus if a vendor of property, having been informed of its real estate agent's scale of fees, permits the agent to
endeavour to sell the property, the vendor will be taken to have agreed to that sale by conduct.104
[80] If offer and acceptance analysis is not always necessary or sufficient, principles such as that a rejection of an
offer brings it to an end cannot be universal. A rejected offer could remain operative if in the circumstances it
should be treated, despite its rejection, as remaining on foot.
[82] Applying the test stated by McHugh JA in Empirnall Holdings, the 19 September 1991 letter offered
"services" in the sense of a commercial benefit. The commercial benefit was a contractual right to charge up to 6
cents per litre and retain 1.1 of that 6 cents. The defendant initially did reject the offer. However, it soon took
advantage of the benefit offered. It knew that the only basis on which the Council was prepared to permit the higher
prices to be charged and the 1.1 cents retained as a matter of contractual right was the basis stated in the 19
September 1991 letter. Once the Council came to learn that the defendant was charging the higher fees from
October it would reasonably have thought that a contract existed between the parties on the terms of the letter.
[83] There is some evidence that [representatives] of the Council and the defendant believed that there was no
contractual regime for liquid waste fees. That does not matter. Reasonable persons in the position of the Council
and the defendant would construe the 19 September 1991 letter and the defendant's later conduct as henceforth
putting the regime for liquid waste fees on a contractual basis, whatever the position had been before.
[84] Another justification for the conclusion that a contract existed even though the defendant rejected the 19
September offer [is that] there was an element of permanence in it. At its core was a Council resolution. An offer
based on a Council resolution has a much less fleeting character than offers conventionally made in contractual
negotiations, many of which are not expected to be accepted. There is no evidence that the Council rescinded the
resolution before the defendant began to take advantage of it. A reasonable person in the Council's shoes would, in
light of the defendant's decision to charge the higher fees of which the Council speedily learned, have been entitled
to believe that the defendant was assenting to the position asserted in the 19 September 1991 letter despite its initial
rejection.
[86] The fact that the defendant did not communicate its move to the new fee levels directly to the Council does
not matter. ‘So long as the offeror knows of the acceptance, there can be a contract even though the acceptance was
not brought to his notice by the offeree.’105
[88] In the circumstances it was for the defendant to make plain that its conduct amounted only to taking
advantage of the proposal but not to submitting to the disadvantages if that was its position. It did not express that
position until years had passed.
Consideration. [89] While the letters of 9 January-20 February authorised the defendant to retain 1.1 cents per
litre, [they had not] created any contractual entitlement. The effect of accepting the 19 September 1991 offer was to
give a contractual entitlement. That is a benefit amounting to consideration moving from the Council as promisee.
[90] A further benefit to the defendant was that the higher charges, operating as a deterrent to depositing of liquid
waste, benefited the defendant intending to reduce those burdens. There was also a benefit to the Council as
promisor, namely the creation of a reserve to establish a liquid waste treatment plant.
Unjust Enrichment. [93] It is not necessary to examine the validity of [the trial judge’s] opinion that
restitutionary damages were recoverable. The award of restitutionary damages for breach of contract is largely if
not totally unknown to the law. The restitution industry (academic division) has made clamant demands for change
in this respect. However, not all agree.106 It is highly questionable whether alteration to the law in this respect is a
matter for an intermediate appellate court.
Appeal dismissed.

IPP AJA. [106] For the reasons set out by Heydon JA, I agree that the July 1990 contract governed liquid waste.
[107] I also agree that the letter of 19 September 1991 has to be treated as a contractual offer, this being how the
case was conducted at trial. [108] I, too, have come to the conclusion that the offer was accepted. I have, however,
done so by a route different to that followed by Heydon JA.
[139] It is a trite proposition that, if the language of a contract is ambiguous, evidence of surrounding
circumstances is admissible for the purposes of construing the contract: Where ambiguities exist, mutually known
102
Cited with approval by Ormiston J in Vroon BV v Foster's Brewing Group [1994] 2 VR 32 at 82-3. Ormiston J said at 81: "agreement and
thus a contract can be extracted from circumstances where no acceptance of an offer can be established or inferred and where the most that
can be said is that a manifestation of mutual assent must be implied from the circumstances. In the language of para. 22(2) of the Second
Restatement on Contracts: `A manifestation of mutual assent may be made even though neither offer or acceptance could be identified and
even though the moment of formation cannot be determined'."
103
(1988) 14 NSWLR 523 at 555.
104
[L J Hooker Ltd v W J Adams Pty Ltd (1977) 138 CLR 52.]
105
Chitty on Contracts (28th ed 1999), Vol 1, para 2-041.
106
See I M Jackman, The Varieties of Restitution (998) at 127-131.
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facts establishing the commercial purpose of the contract, the genesis of the transaction, the background and the
context in which the parties are operating will be admissible.107 [141] In my opinion, the letter of 19 September is
ambiguous and does allow regard to be had to the context and the parties’ common assumptions. The phrase ‘the
additional income’ cannot be understood without reference to the letters of 9 January 1990 [and] 20 February 1990,
as it does not have a fixed meaning.
[151] [After considering these letters and other evidence, Ipp AJA continued:] When the offer of 19 September
1991 is construed by reference to the context and the parties' common beliefs, it is apparent that it was written on
the assumption that, on acceptance, it would give rise to a contract that dealt independently with the fees for liquid
waste. The parties did not believe that the July 1990 contract applied to liquid waste.[155] On that basis, the
appellant's statement in the letter of 3 October 1991 that it "has no contract with Council for liquid disposal" was
not a rejection of the offer. The Council had not asserted that such a contract existed. [156] In context the statement
that "the present rates do not make it viable to continue providing a liquid disposal service" was not a rejection of
the offer. These remarks were merely part of the posturing that often accompanies negotiation. [158] In my view,
the letter of 3 October 1991 did not amount to a rejection. The appellant was attempting thereby to create a platform
for further negotiation.
[162] For conduct to amount to implied acceptance of an offer, it must be "of such a character as necessarily to
lead to the inference on the part of the defendants that the agreement had been accepted on the part of the plaintiffs
and was to be acted upon by them".108 The question is one of fact.109 [171] By the offer, the Council was proposing
an increase in fees, but only on condition that the moneys received from that increase were to be paid to the Council
to be used for the establishment a liquid waste treatment plant. [173] In these circumstances, the appellant's
conduct, objectively viewed, was an unequivocal acceptance of the offer. The appellant accepted the benefits
proposed, namely, the charging of higher fees while using the Council's land. Those benefits could not be severed
from the obligations proposed. Accordingly, by accepting those benefits the appellant accepted the Council's offer
in accordance with its terms.110
Consideration. [174] By the contract [resulting from acceptance of the offer] the appellant was not allowed to
retain any moneys additional to [what] it was entitled under the arrangement already in place. The appellant
submitted that this meant that it received no consideration and, therefore, the contract was not binding.
[175] The contract laid the basis for the establishment of a liquid waste treatment plant that would enable more
liquid waste to be deposited at the depot. This would enable the appellant to earn more. Moreover, the practical
effect of the contract was to enable the appellant to continue using the Council's land for depositing liquid waste
without the real prospect of the Council imposing any limit on such depositing. [176] The[se] benefits were
adequate consideration for the October 1991 contract.
[177] Having found that the offer was accepted and that there was consideration, it follows that I consider that the
contract was binding. [178] It is therefore unnecessary for me to deal with the Council's alternative claims. [179] I
would dismiss the appeal.

MASON P. [1] I agree with Ipp AJA's reasons as to the disposition of the contractual claim. As Heydon JA
demonstrates, this case shows the difficulties of pressing too far classical theory of contract formation based on
offer and acceptance.111
[2] This is not a suitable vehicle for addressing the claim for contractual damages according to a restitutionary
measure. There is widespread disagreement on the topic within what Heydon JA aptly describes as the restitution
industry (academic division). Indeed, disagreement about the very structure of the law of restitution and its
interrelationship with other branches of the law seems to be a badge of membership. Such attitudes to the unjust
enrichment concept are also hallmarks of other academic divisions, some of whose members struggle to preserve
the boundaries of their jumbled inheritance rather than strive for conceptual order within.112 [3] In these
circumstances, it is hardly surprising that consensus is lacking as to whether restitutionary damages in contract are
an unwelcome invader or a legitimate development of the unjust enrichment concept. It is best that judges keep
silent until the necessity arises.

107
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352. [140] In B & B Constructions (Aust)
Pty Ltd v Brian A Cheeseman & Associates Pty Ltd (1994) 35 NSWLR 227 Mahoney J (at 245) drew attention to the recent tendency to
apply the parol evidence rule in a less restrictive way (see, for example, McHugh JA in Manufacturers Mutual Insurance Ltd v Withers
(1988) 5 ANZ Insurance Cases para 60 - 853 at 75, 343). Mahoney J went on to say: "The Court is not confined to the examination of the
text of the document. It is entitled to know, by extrinsic evidence or otherwise, what was the context in which the document was executed
and the problem or problems which were to be solved by it."
108
Brogden v Metropolitan Railway Co (1877) 2 App Cas 666 at 686.
109
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 at 535.
110
Ibid.
111
See also Pobjie Agencies Pty Ltd v Vinidex Tubemakers Pty Ltd [2000] NSWCA 105.
112
Cf Review of Snell's Equity 13th ed in (2001) 117 LQR 150.