Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Animax Films Pty Ltd v Simlogic Pty Ltd [2011] NSWCA 73
• Hearing dates: 24 March 2011
• Decision date: 24 March 2011
• Before: Macfarlan JA at [1]; [16]; Handley AJA at [14]; Hammerschlag J at [15]

Decision

The appeal is dismissed with costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: CONTRACTS - whether exchange of emails gave rise to binding agreement - no point of principle
• Legislation Cited: Supreme Court Act 1970, s 45(4)
• Category: Principal judgment
• Parties: Animax Films Pty Ltd (Appellant); Simlogic Pty Ltd (First Respondent); Bohemia Interactive Australia Pty Ltd (Second Respondent)
• Representation: Counsel: J Sleight/C Mulvey (Appellant); M McHugh (Respondents); Solicitors: Neville & Hourn Legal (Appellant); Blueprint Law Pty Ltd (Respondents)
• File Number(s): CA 2010/12135

Decision under appeal

• Date of Decision: 2009-12-18 00:00:00
• Before: Bozic DCJ
• File Number(s): DC 4327/2008

Judgment

1 MACFARLAN JA : This is an appeal from a decision of Bozic DCJ of 18 December 2009. His Honour dismissed the claim made by the appellant against the respondents for damages for breach of contract. To succeed on the primary basis of its claim, it was necessary for the appellant to successfully challenge his Honour's conclusion that the parties did not enter into a binding contract by means of an exchange of emails.

2 The Court is however of the view that the appellant fails in its challenge to the finding concerning the existence of a binding contract in writing and also fails on its alternative basis of challenge to the judgment below. The appeal should accordingly be dismissed with costs. As the members of the Court are unanimous in this view and that the appeal does not raise any question of general principle, it is appropriate for the Court to give its reasons in short form pursuant to the provisions of the Supreme Court Act 1970, s 45(4).

3 The appellant contended both at first instance and on appeal that a contract between the parties was constituted by the sending on behalf of the respondents of an email dated 1 November 2007, the sending by the appellant of an email dated 8 November 2007 in response and the respondents' receipt of the latter. The primary judge referred to these emails as the fourth and fifth emails. The relevant parts of the emails, and of three other emails, referred to by the judge as the first, second and third emails, are set out below.

First email (sent by appellant to respondents on 22 October 2007

"Hi David,

I hope this Ok, talk soon.

...

'[A form of agreement was then set out]

...

Please confirm your agreement with these terms by return email or incorporate your required amendments for further discussion'.

Thanks

Damien Lay".

Second email (sent by respondents to appellant on 1 November 2007)

"Hi Damien

I got this back from Pete, again take a look, I haven't read it yet, very busy here, we can discuss it next Tuesday night np.

...

'[The form of agreement as set out in the first email was again set out]

...

Please confirm your agreement with these terms by return email or incorporate your required amendments for further discussion.'

Kind regards

David Lagettie".

Third email (sent by appellant to respondents later on 1 November 2007)

"Hi David,

Thanks, looks the same excluding Bohemia references. Happy to discuss Tuesday.

Damien".

Fourth email (sent by respondents to appellant later again on 1 November 2007)

"Sorry wrong one.

...

[An amended agreement was then set out]

...

Kind Regards

David Lagettie"

Fifth email (sent by appellant to respondents on 8 November 2007)

"Dear David and Peter,

I would like to acknowledge my acceptance of these terms, I will print and sign a copy of the following for you.

...

[The form of agreement as set out in the fourth email was again set out]

Damien Lay

Animax Films Pty Limited".

4 The answer to the appellant's contention that a contract was concluded by the sending and receipt of the fifth email is in my view a simple one, namely, that the email was not a response to any offer made by the respondents. The second email, which was one sent on behalf of the respondents, made it clear by its introduction that it was not intended to be an offer. That introduction stated that Mr Lagettie had not read the response from another person in the management of the first respondent that he was passing on, and that that response could be discussed at a forthcoming meeting that had been arranged.

5 By the fourth email the respondents indicated that the response passed on by the second email was an incorrect one. That email did not repeat the terms of the introduction of the second email, but in my view it is clear that that introduction remained applicable. All that the fourth email did was to substitute the correct response for the incorrect one. The fourth email was not an unqualified offer to enter into a contract. Rather, it was the communication of a form of agreement to be discussed at a forthcoming meeting. This view is reinforced by the fact that the appellant's initial response to the fourth email was to say by email, "Looks fine, chat Tuesday," Tuesday being the day on which the meeting was to be held. It was only much later that the appellant sent his email of 8 November, that is, the fifth email.

6 The alternative claim made by the appellant at first instance was described by his Honour as follows:

"The plaintiff alleges that the defendants made part payment of $82,500 to the plaintiff and that on 3 December and 16 December 2007 the plaintiff sent the defendants a tax invoice for $28,572.50 being the balance owing. The defendants have failed to pay the plaintiff the balance due" (Judgment [10]).

7 This alternative claim was one based upon the terms of the oral agreement that preceded the written agreement that was alleged to have been later entered into.

8 His Honour disposed of this claim as follows:

"The 'Man Holding a Gun' scene was one of the scenes selected for the teaser. It was filmed and should have been delivered to Simlogic. Under the terms of the oral agreement the plaintiff did not have the right to withhold the scene. Nor was it entitled to payment of the final instalment of $25,000 until the scene had been delivered" (Judgment [103]).

9 On appeal, the appellant challenged his Honour's finding concerning this alternative claim by submitting that his Honour's finding was inconsistent with an admission made by the respondents in a letter dated 10 July 2008. His Honour said the following about that letter:

"The letter of 10 July 2008 acknowledges the agreement whereby the teaser would be produced for $100,000. The letter indicates that Simlogic is prepared to pay the 'outstanding balance' of $25,000 to resolve the dispute and on the condition that the plaintiff agreed to accept the payment in full settlement of the dispute on terms to be finalised. In my view the letter does not constitute a relevant admission but rather an offer to settle a dispute on terms" (Judgment [80]).

10 What his Honour said reflected the presently relevant terms of the letter which were as follows:

" Bringing this matter to a conclusion

Simlogic has never disputed that it was agreed between Animax and Simlogic that Animax would produce the Teaser and other related materials for the fixed price of $100,000 (ex GST) and remains willing to pay to Animax the outstanding balance of this fixed price in respect of the production of the Teaser and other related materials, being the amount of $27,500 (inc GST). This dispute can be resolved if Animax agrees to accept this final outstanding payment on the terms of a settlement agreement to be finalised in good faith between the parties once agreement on this full and final payment is reached.

We strongly recommend you seek advice in respect of this letter from your new legal advisors and request that you put them in contact with us as soon as possible.

We reserve all of our client's rights and look forward to hearing from you shortly".

11 Included in what was said there was a statement that the dispute could be resolved if the appellant agreed to accept the final outstanding payment of $25,000 plus GST, "on the terms of a settlement agreement to be finalised in good faith between the parties once agreement on this full and final payment is reached." That statement was not in my view an admission contradicting his Honour's finding that the "teaser" had not been fully completed, rendering the final statement not then payable. It was consistent with what was said in the letter of 10 July 2008 that the respondents intended that any outstanding aspect of the production of the "teaser", including the omitted scene to which his Honour referred, would be dealt with in the settlement agreement yet to be negotiated.

12 Accordingly, I would not accept the appellant's challenge to his Honour's rejection of the alternative claim.

13 For these reasons, I propose that the appeal be dismissed with costs.

14 HANDLEY AJA : I agree.

15 HAMMERSCHLAG J : I agree with the conclusion and the reasons given by the learned presiding judge. I would add simply that in my view the original proposed letter arrangement transmitted by way of the first email invited, as one response from the respondents, the incorporation of amendments required by them for further discussion. This is what occurred by way of the fourth email.

16 MACFARLAN JA : The order of the Court is that the appeal is dismissed with costs.

**********

Decision last updated: 01 April 2011