It is very common for parties to an agreement to refer, in the agreement itself, to additional documents. These additional documents are not always annexed or attached to the actual agreement.
The Federal Court has held that although a particular enterprise agreement referred to the terms of an internal company disciplinary policy document, the terms of that document had not in fact been incorporated into the agreement. While the policy document was referred to in the agreement, it was not attached to it, nor did it form part of the agreement. The policy document was found not to form part of the enterprise agreement.
On the other hand, the Queensland Court of Appeal (Surfstone Pty Ltd v Morgan Consulting Engineers Pty Ltd [2016] QCA 213) enforced the terms of a limitation of liability clause that was incorporated in a document that, although referred to in the main contract concluded between the parties, was not attached to that contract.
Facts
Morgan Consulting Engineers Pty Ltd (Morgan) provided engineering services for Surfstone Pty Ltd (Surfstone).
The parties signed a contract which stated “The commission would be generally in accordance with the ACEA Guideline Terms of Agreement”. (ACEA Guidelines).
The ACEA Guidelines included a statement that the consulting engineer (Morgan) would be “discharged from all liability in respect of the services … on the expiration of one year from the completion services.”
The ACEA Guidelines were not attached to the contract.
Approximately 5 years after the completion of the works, some defects appeared in the concrete floors and Surfstone commenced proceedings against Morgan.
Morgan relied upon the terms of the ACEA Guidelines as a time bar in defence of Surfstone’s claim.
Finding
In his Judgment, His Honour Morrison JA held:
“In my view, a reasonable person would read the proposal as meaning that Morgan’s offer to perform the structural and civil engineering was on the basis that their contract would be governed by the ACEA Guideline Terms, as well as or modified by, any terms set out in the proposal.”
Conclusion
Whenever an agreement refers to an unattached document there will always be an element of uncertainty. Although the decision in Morgan was favourable to the party relying on the unattached document, each matter would have to be judged upon its own facts, and even more so with the introduction of the Unfair Contract Terms provisions provided for in the Australian Consumer Law (ACL).
Under the ACL a Court may take into account such matters as it considers relevant but must take into account the extent to which the term is transparent and the contract as a whole.
A term will be found to be transparent if it is:
• expressed in reasonably plain language; and
• legible; and
• presented clearly; and
• readily available to any party affected by the term.
It is not difficult to foresee a situation where an unattached document is referred to in an agreement and where a party to the agreement may well be successful in arguing that a term, or terms, in the unattached document were not readily available to them nor were they necessarily clearly presented.
If parties intend that the terms of any external or additional document are to be incorporated into the enterprise agreement, then the document should be annexed to the agreement. It is not enough to simply to rely on custom and practice.