AE NEWTON PTY LTD v MIKE WALKER TRANSPORT PTY LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SHELLER JA, DUNFORD and SPERLING AJJA 28 February 1997, 7 April 1997 [1997] NSWCA 2 Contract — Cartage — whether contract between parties to action — question of fact — assessment of Witness — advantage of Trial Judge Sheller JA I agree with Dunford AJA. Dunford AJA This is an appeal against the judgment of His Honour Judge Twigg QC in the District Court at Parramatta by which he found for the defendant in an action for cartage fees allegedly due from the respondent to the appellant during two periods, namely from January 1983 to January 1986 (the earlier period) and from March 1987 to July 1988 (the later period). During that time the appellant carted shipping containers from the wharves to various destinations around Sydney and its case was that it was doing this as the subcontractor of the respondent which was another trucking company; whereas the respondent claimed that the contracts of cartage were made by the appellant directly with the various shipping companies, in particular with Karlander Shipping Line (KKL) before that company went into liquidation in February 1986, and later with the DuPont and Hong Kong Island Shipping Lines. There was also a defence in respect of the earlier period based on the Limitation Act 1969. It appears that whatever the arrangements between the various parties were they were quite informal, that initially no one paid much, if any, attention to who was contracting with whom, and it was only when KKL went into liquidation that it was sought to make the respondent liable to the appellant. There was evidence that when there were containers to be moved the trucking companies would be notified and when they turned up at the wharves the work would be allocated by employees of the shipping company. In respect of those loads carried by the appellant's trucks, the drivers would complete daily work sheets (Ex. D), which were on the plaintiff's stationery and in respect of those relating to the appellant's claim in the first column headed "Account" the name "Walker" was generally (or always) written. These work sheets were in due course given to Mr Walker of respondent company who took them, along with those relating to loads carried by its own trucks and those carried by another trucking contractor, Boyle, to the shipping company, which then drew a cheque for the total amount due for cartage in favour of the respondent and gave it to Mr Walker of the respondent company, who deposited it in a special bank account which he opened specifically for this purpose at Westpac Banking Corporation, Leichhardt Branch, which was separate from the other bank accounts of the company. He then withdrew in cash the amounts due to the appellant and Boyle and handed such amounts to Mr Newton and Mr Boyle respectively. When giving these cheques to the respondent, KKL attached to them a "with compliments" slip on which was written by employees of KKL the "invoice numbers" and the amount of each invoice together with an indication of how much was to go to 2 UNREPORTED JUDGMENTS "Ray" (the appellant) and "Mungo" (Boyle) (Ex. J). Mr Newton (of the appellant company) said that although when his trucks did work for other consignors it was his practice to send them formal invoices on his own stationery, he did not do so in respect of the cartage of containers for KKL, either to-the respondent or to KKL. The appellant relied on a series of documents which became Exs El and E2 which were daily work sheets on the respondent's stationery which showed the driver's name as Newton and the numbers of which corresponded with the numbers referred to as invoice numbers on the "with compliments" slips (Ex. J) at least in respect of Ex. E 1 which it was said was those that had been paid, but which Mr Walker said were prepared at about time KKL went into liquidation. The rates at which payment was made were determined by the shipping companies eg Ex K headed "Cartage Rates between KKL Kangaroo Line Pty Ltd and Mike Walker Transport Pty Ltd" and were later varied, see Ex L - which is a document on the respondent's stationery. It appears that the cartage rates paid to the appellant were the same as those paid to the respondent and, in respect of cartage done by the appellant, the respondent did not receive any payment for itself. Mr Newton said that he had no dealings with Messrs Brian & Moss of KKL, but both those gentlemen gave evidence for the respondent to the contrary, and said that invoices were received from the appellant and payments made to it. The respondent's version of the arrangement between the parties was set out in Mr Walker's statement (Ex 2) as follows: "4. Approximately seventeen years ago, I started Mike Walker Transport Pty Ltd. I had already known Jeff Brian for many years when he first approached Mike Walker Transport Pty Ltd to do work for Karlander in approximately late 1981. The work for Karlander involved transporting containers to and from the wharves and to and from various depots. Almost immediately, the work load became too great for only two trucks. I therefore spoke with Jeff Brian from Karlander. As I had known Ray Newton for years, I mentioned various names of drivers including Newton. It was Jeff Brian that forwarded all cheques for payment of drivers to me, with the amount to be paid to each driver written on an attached With Compliments slip. It stated the Invoice numbers and the amounts owing to each driver. For the sake of convenience the cheques were made payable to *Mike Walker Transport Pty Ltd", however I opened a separate account at Westpac (Leichhardt Branch) so that the monies would not be confused with my company's accounts. Ray Newton, Michael Boyle and myself agreed on this payment system, in order to minimise delay and co-ordinate payment. The arrangement with Karlander was that although I would arrange for Michael Boyle and Ray Newton and his drivers to assist, that they would each lodge their own invoices. Ray Newton, Michael Boyle and myself agreed on the rates per container as set by Karlander. Laurie Moraschi and Jack Sinclair worked as sub-contractors for Mike Walker Transport Pty Ltd. 5. In order to arrange for collection of containers, Jeff Brian or Andrew Fellers (if Brian was not available) from Karlander would ring me or Ray Newton and advise of the date on which a boat was due to arrive, and the number of containers. He would then send a list of the number of containers to Mike Walker Transport Pty Ltd by facsimile or would leave it at the wharf. If the list was left at the wharf, whichever driver arrived there first would collect the list. That driver would then organise for the job to be split up and the containers allocated to the various drivers. URJAE NEWTON PTY LTD v MIKE WALKER TRANSPORT PTY LTD (Dunford AJA) 3 6. The drivers for Mike Walker Transport Pty Ltd had daily run sheets. The drivers for AE Newton Pty Ltd had their own daily run sheets. At the end of the day, my drivers would drop in their daily sheets. My sub-contractors would usually drop then in to me when the unloading of a particular vessel was completed. Ray Newton's drivers run sheets were handed in by Ray Newton to Karlander, unless Jeff Brian met either of us at the wharf, or I was going into town, in which case I would drop the rest of them in to Jeff Brian at Karlander." The evidence concerning the making of any agreement between the parties was sparse and vague in the extreme, and in my view the conversations deposed to were in themselves equally consistent with a subcontracting agreement as alleged by the appellant or an introduction by the respondent of the appellant to KKL after which each of the appellant, respondent and Boyle did different cartage jobs for KKL, in circumstances where each of them was dealing directly with KKL to whom they each looked directly for payment, although for convenience their claims were dealt with together and a single cheque issued to the respondent for all of them in the circumstances I have already described. There were a number of undisputed facts which tended against a subcontracting agreement; particularly the amounts specified by KKL on the with compliments slip as due to Ray (appellant) and Mungo (Boyle), because if KKL was only dealing with the respondent it would be not likely to concern itself with how much it paid its various subcontractors; nor would the rates paid to the appellant or other subcontractors be fixed by KKL, and one would expect the respondent to pay its subcontractors at a lower rate than it was paid by KKL. The appellant by reference to the documentation and through Mr Newton's evidence sought to show that the course of dealing was consistent only with the existence of a cartage agreement between the appellant and the respondent (a subcontracting agreement) whereby the appellant was at all times working for the respondent and respondent was responsible for paying it. It also relied an alleged conversation after 1986 when Newton claimed Walker said he would pay him. A lot of the facts relied on were disputed, the promises to pay were flatly denied and Mr Walker's evidence was supported in varying degrees by Brian and Moss. His Honour therefore had to resolve an issue of credibility and resolved it in favour of respondent. He said (Appeal Book p857-p858): "The plaintiff said in regard to this that he had no dealings and it was my impression from his demeanour and his evidence at the time that he was clearly rejecting the proposition that he spoke to or had any contact with Mr Bryan or Mr Moss or any persons in KKL and particularly was firm in denying to me that he'd made any requests for payment to that company or received money directly from him. The plaintiff's demeanour in the witness box gave me the impression that he was adjusting his evidence to create a story imposing a liability on the defendant for work done in relation to cartage for which the plaintiff should have been paid by the shipping lines who provided the goods to be carted." His Honour had the advantage of seeing the witnesses and this Court cannot interfere with findings of fact based even in part on the demeanour of the witnesses: Abalos v Australia Postal Commission (1990) 171 CLR 167. I have read Mr Newton's evidence and, even in printed form without the advantage of seeing the witness, parts of it impressed me, like His Honour, that "his answers were vague and inconsistent and to an extent naive" and "that he was adjusting his evidence to create a story imposing liability on the defendant..." (Appeal Book p858). 4 UNREPORTED JUDGMENTS Mr Drummond, counsel for the appellant, in a careful and well-prepared argument sought to overcome the obvious problems he faced by taking us through the documents and by pointing out that numbers on those Ex. El documents referred to as invoice numbers also appeared on the with compliments slips which accompanied payments made before the liquidation of KKL (Ex J), that Mr Walker must have been wrong when he said these documents came into existence at that time, and that as his Honour had not taken this factor into account his findings on credibility were flawed and this Court should make its own assessment. However His Honour did take these matters into account, saying (Appeal Book p860-p861): "The plaintiff submitted that I should reject the evidence of Mr Walker because his explanation regarding exhibits El] and E2 and exhibit J was inconsistent and therefore unacceptable. It was pointed out that when he said that exhibits El and E2 came into existence when he gave them to Mr Newton at our(sic) about the time of the collapse of KKL for getting in accounts that evidence could not stand against the admitted notations on exhibit J demonstrating that some of the accounts in El had been paid in 1984/1985. That is one interpretation of that part of his evidence. It is in my view capable of the explanation that he was wrong as to the fact that all of the sheets in exhibit El in particular, but also perhaps in E2, were given to Newton at or about January 1986 when the liquidation of KKL was imminent." In relation to the later period, Mr Drummond drew attention to Ex N (Appeal Book p794-p827) which disclosed payments by DuPont (Australia) Ltd but none to the appellant and there were also the appellant's drivers' daily work and time sheets (Ex F, p588-p633) which specified the work carried out for DuPont but gave the account name as M. Walker; and His Honour did not advert to these matters in his judgment. But, although it was submitted these further documents supported the general proposition that the appellant was working for the respondent and not for any of the relevant shipping companies, the evidence did not show a relationship between the amounts appearing on the appellant's work sheets and the payments made to the respondent appearing in Ex N, and there was no evidence whether Mr Walker paid the moneys received into the special bank account and then divided the proceeds, as had been the case with the cheques received from KKL. It was also conceded that there was no evidence of any separate agreements in relation to the later period, and consequently His Honour's finding that there was no agreement between the appellant and the respondent in respect of the earlier period must be equally applicable to the later period, not only for cartage done for DuPont but also for Hong Kong Island Shipping Company and the cartage of timber. These conclusions make it unnecessary to consider in relation to the earlier period the defence based on the Limitation Act 1969 and whether such defence could be overcome by principles of estoppel. There are some rather unusual features about the case and quite possibly the whole of the story has not been told, but the events took place over 10 years ago and it is not surprising that memories may not be so good at this point in time. Notwithstanding these features His Honour saw and heard the witnesses, and having regard to that advantage, I cannot be satisfied that he erred in what is entirely a question of fact. URJAE NEWTON PTY LTD v MIKE WALKER TRANSPORT PTY LTD (Sperling AJA) 5 In the end, the appellant fails because it carries the onus of proof and has failed to prove that it was contracting with the respondent, and that the respondent was not merely acting as its agent when it dealt with KKL and other companies on the appellant's behalf. In my view the appeal should be dismissed with costs. Sperling AJA I agree with Dunford AJA. Appeal dismissed with costs. Counsel for the appellant: JS Drummond Solicitors for the appellant: Proctor Phair & Associates Counsel for the respondent: P Granger Solicitors for the respondent: Loder & Loder