The case of Coleman v Prentice & Anor [2015] QSC 118 turns on its own facts:

  • It deals with an oral agreement between unsophisticated plaintiffs and a corporation.
  • It serves as a reminder of the importance of properly documenting an agreement.

Facts

Agripower Australia Ltd (second defendant) secured a mining lease in North Queensland in 2009 over a deposit of diatomaceous earth. In order to mine the deposit, an access road was required. The second defendant, through its managing director, engaged John and Dianne Coleman (plaintiffs), proprietors of a local machinery contracting business, to build the access road.

The oral agreement to build the access road was later varied to include mining and processing works and storage of bagged product at the plaintiffs' shed. The plaintiffs invoiced the work in accordance with hours worked, recorded in day dockets verified by site supervisor. Initially the plaintiffs were paid promptly within the agreed 7 days of invoice.

The second defendant failed to pay invoice 9 issued on 10 November 2009. The plaintiffs withdrew their services. Subsequent invoices 10 and 11 (which related to the storage charge) went unpaid. The second defendant was also prevented from removing its bagged deposit from the plaintiffs' shed, as the plaintiffs purported to exercise a lien over the goods pending payment.

The second defendant claimed that the plaintiffs wrongfully terminated the contract. It denied liability for invoices 9 and 10 on the basis of an agreement that there would be a reconciliation of volume of mined product as against invoices rendered, and denied liability for invoice 11 on the basis that there was no concluded lease. The second defendant further claimed that the product screened was unsaleable and that the shed provided inadequate protection which also rendered product unsaleable.

Decision

Henry J determined that the terms of the oral contract for performance of mining and processing works were on the same basis agreed in respect of the access road work. His Honour held:

  • the second defendant's failure to pay invoice 9 was a breach of a fundamental term of the contract with the plaintiffs, who lawfully terminated their services;
  • as no agreement existed to the effect that the volume of mined product would be reconciled against invoices rendered, the plaintiffs were not in breach of contract for unaccounted mined product, nor could it be implied that they had an obligation to account;
  • the plaintiffs were not responsible for loss occasioned by the unsaleable quality of bagged product, as the second defendant assumed responsibility for controlling and testing the adequacy of the screening process; and 
  • although a lease agreement was not entered into, as the second defendant had requested the bagged product be moved to the plaintiffs' shed, and it was never intended they be stored without charge, the second defendant was liable at the rate of the quoted price.