Local Court of New South Wales CITATION: Enterprise Finance Solutions Pty Ltd v Charter One Pty Ltd and Slobodan TRAJKOVICH [2007] NSWLC 5 JURISDICTION: Civil Enterprise Finance Solutions Pty Ltd PARTIES: Charter One Pty Ltd (First Defendant) Slobodan TRAJKOVICH (Second Defendant) FILE NUMBER: 8147/06 PLACE OF HEARING: Downing Centre Local Court DATE OF DECISION: 03/05/2007 MAGISTRATE: Magistrate H Dillon CATCHWORDS: Contracts – Whether defendant entered agreement with plaintiff – Whether a third party who presented pro forma application for credit to defendant the plaintiff's agent or a stranger – Whether the plaintiff induced by false or misleading representations to enter the contract – Whether defendant signed all relevant parts of written contract – Whether defendant bound by written contract. LEGISLATION CITED: CASES CITED: Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 Mr P.J. McDowell (counsel) Turnbull Hill, Solicitors for plaintiff. REPRESENTATION: Mr S. Trajkovich (director) for 1st defendant. Self for second defendant. ORDERS: Verdict and judgment against each defendant jointly and severally in the sum of $14,141.13. Costs to follow the event in a sum agreed or assessed. REASONS for DECISION 1. The plaintiff, Enterprise Finance Solutions Pty Ltd, is a finance company. The first defendant, Charter One Pty Ltd, is a company operating a pizza restaurant and charter boat business in Manly, NSW. The second defendant is a director of Charter One. EFS sues on a rental contract which it alleges was repudiated by Charter One. It now seeks to recover an amount of $14,141.13. History of the dispute 2. Most of the facts in the matter are not in contest. This is not to say that the plaintiff admits certain statements made by Mr Trajkovich in his evidence but it does not contradict them. 3. In August 2005, a Ms Claudine Southwell approached Mr Trajkovich at his pizza restaurant. It appears that she represented a telecommunications company called "Axis" and she appears also to have been acting as an agent for another company related to Axis, Link Solutions Pty Ltd. The plaintiff denies, and the defendants assert, that Ms Southwell was also an agent for EFS. We shall come to that issue below. 4. Ms Southwell appears to have offer various enticements to Mr Trajkovich to persuade him, on behalf of Charter One, to enter a contract for the provision of telephony services with Axis. The inducements offered to him included cheaper telephone calls than he was getting from his then supplier, Telstra Ltd, and a plasma television set. 5. According to Mr Trajkovich, Ms Southwell told him that the cost of telephone calls with Axis would be $45 plus the value of the calls per month. He also said that she represented that the price of the calls (assuming his current usage) would not rise above $300 per month. His evidence was that, at that time, Telstra was charging approximately $200 per month. 6. He signed two documents: a contract with Axis; a direct debit request form addressed to EFS authorising it to debit his account (which was page 2 of seven in an EFS document called a "Rental Plan") and the seventh page of the Rental Plan. On that page Mr Trajkovich signed on behalf of Charter One and also signed a personal guarantee. The signatures were witnessed by Ms Southwell. Mr Trajkovich denies having initialled the document on its third, fourth, fifth and sixth pages. 7. On page 3 of the document, Charter One was nominated as the renter and eight items were listed as the equipment being rented. They included four [telephone] handsets, a plasma television, a "surround sound" system, a digital set-top box, and "installation and training". According to the document, the rental period was 60 months with a total bill payment of $326.93 per month inclusive of GST. 8. At the top of that page appears the name Link Solutions Pty Ltd in handwriting with an agreement number and a commencement date of 17 October 2005. Evidence was given for EFS that Link had provided the equipment to Charter One and had been paid by EFS. It can be inferred that the reference is to an agreement for that purpose between EFS and Link. 9. Mr Trajkovich's evidence was that he simply signed the Rental Agreement form where he was told by Ms Southwell and had had no understanding of its contents. Indeed, he initially told the court that he had never seen any of the document except page 7 which he had signed. In cross-examination, however, he agreed that this was incorrect – he had signed the direct debit form on page 2. 10. Mr Trajkovich also gave evidence that he had only found out about five weeks after the event that he was being charged $326.93 per month and that he had been then surprised to find that he was being charged a further $290 per month, all this at a time when his telephone usage had not altered in any significant way. 11. He then complained to Axis and also to EFS. At some point his telephone was disconnected and remained so for about seven days. 12. Mr Trajkovich does dispute the fact that he did not pay the monthly amounts claimed by EFS. The essence of his defence is that he was induced by false representations made by an agent of EFS to enter the contract and that he placed reliance on those representations to the company's and his detriment. He expressed willingness to return the equipment to EFS. 13. He also complained that the sums charged in the contract for the equipment and the training and installation were excessive. He said that he was willing to pay a reasonable price for the equipment. 14. I have started, somewhat unusually, with a consideration of the evidence of the defendants first because Mr Trajkovich paints the background rather more fully than does the plaintiff. 15. Evidence was given by Mr Robert Brandt for EFS. He is the finance officer for the company. Through him were tendered a number of relevant documents. 16. Apart from proving the terms of the contract, Mr Brandt gave evidence that Ms Southwell was not an employee of EFS. No records can be found of her ever having been so. Nor has EFS any records appointing Axis Telecommunications Pty Ltd or Link Solutions as its agent. 17. No other documentary evidence has been led by either party to prove that Ms Southwell was an agent of EFS. The issues 18. The issues to be resolved are relatively simple. First, was Ms Southwell an agent for EFS? While the plaintiff bears the onus of proving its claim, as Mr Trajkovich asserts that he was induced to enter the contract by the false representations of its agent, it is for Mr Trajkovich to prove, on the balance of probabilities that she was the agent of EFS. 19. As I understand the plaintiff's position, it concedes that the contract cannot be held to bind the defendants if Ms Southwell was its agent. On the other hand, if she was not, and presuming that there is no issue of unconscionability or "unclean hands" (none was pleaded by the defendants in their Defence), the plaintiff's position is that the contract must bind the defendants. 20. Second, did Mr Trajkovich sign the written contract? 21. Third, if so, does the written contract bind the defendants? The general law is that a person is bound by a signed contract whether or not he or she read it before signing. There are some exceptions to that rule but this is the starting point. 22. Mr Trajkovich also complained that the contract contained what appeared to be an inflated amount in relation to "installation and training". He challenged the reasonableness of the sums relied upon by EFS. Agency 23. An agent is a person with an authority or capacity to create contractual relations between a principal and third parties. A principal, such as a company, may do its business through agents. A principal will generally be liable for the acts of the agents, including misleading conduct or the making of misrepresentations. 24. In this case, the defendants have pleaded that Ms Southwell was the plaintiff's agent and that she made misrepresentations upon which they relied. An inference may be available from the fact Ms Southwell presented Mr Trajkovich with the plaintiff's standard form of contract that she was its agent. That inference can be countered and rebutted by other evidence. Here the evidence of the plaintiff is that Ms Southwell was not an employee of EFS and neither is there documentary evidence to show that EFS had appointed Axis or Link as its agent. 25. It is well known that sellers or hirers of goods frequently use finance companies to provide credit to potential purchasers and hirers. Cars are probably bought this way more often than not. In certain circumstances, this may lead to a supplier of goods and a credit provider being linked for the purposes of liability. For example, s.73 of the Trade Practices Act 1974, provides that in certain consumer contracts, suppliers and linked credit providers are jointly and severally liable for breaches of certain warranties. But this statutory linkage of two corporate entities fills a gap that would otherwise lie between them if one is not the agent of the other. 26. Just because a supplier uses a finance company's standard form of contract does not necessarily make it an agent of the finance company. More is needed, namely, the authority, actual or apparent, of the finance company for the alleged agent to act for it. 27. There is no evidence of actual authority upon which the defendants can rely. May they rely on apparent or ostensible authority? We must ask the further question: did EFS represent Ms Southwell to be its agent? Apart from the fact that it provided Axis or Ms Southwell with the standard form of contract it is difficult to see any other possible evidence that it did so. On the other hand, it was clear from his own evidence that Ms Southwell in fact appeared to Mr Trajkovich to be representing Axis, a telecommunications company, not EFS. He addressed his complaints later to Axis and EFS. It is understandable that Mr Trajkovich may have assumed that Ms Southwell was, in some way or other, an agent for EFS by virtue of her use of its standard form of contract but this did not make it so, nor did it constitute a holding out by EFS of Ms Southwell as its agent. 28. In my view, therefore, the evidence falls short of demonstrating that it is more probable than not that Ms Southwell had been authorised by EFS to act as its agent or that it held her out to be its agent merely by providing EFS with copies of its finance agreement form. Did Mr Trajkovich sign the contract? 29. While Mr Trajkovich appeared, as far as I could gauge, to be an honest witness, he also appeared, at times, to reconstruct his evidence. Indeed, in cross-examination he admitted matters that he had initially denied. For example, he initially admitted having signed a direct debit form but stated that it was a different document from that which is part of the plaintiff's standard form of contract. Under cross-examination, however, he admitted that the signature on the plaintiff's direct debit form, which was part of the whole standard form of contract document, was his. The strong impression his evidence gave was that he had an indistinct recollection of the actual documents signed. 30. In any event, he admitted that his signature appeared on the standard form of contract. He stated that he had been given the contract form by Ms Southwell with the conditions of the contract hidden behind the page on which the signature block appeared. That may have been so, not necessarily to conceal the fine print on the contract from Mr Trajkovich (though perhaps so) but because the construction of the document made it difficult for anyone to sign otherwise. 31. Mr Trajkovich steadfastly denied having initialled all the pages of the contract. There was no handwriting evidence presented and neither party called Ms Southwell to give evidence. I cannot infer one way or the other whether Mr Trajkovich placed his initials on the pages. It is possible that he did but has forgotten. It is equally possible that someone else initialled the pages. 32. In any event, it makes no difference because this was not a consumer contract but a commercial contract. In Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 the High Court applied the principle that, absent fraud or misrepresentation by the first party or its agent, a second party signing a commercial contract is bound by it and it is wholly immaterial whether the second party (or its agent) has read the document or not when signing the document. It is not a necessary ingredient of a signed contract that every page be initialled for the contract to be enforceable. Initialling pages is a wise practice to prevent later disputes about what was and was not in the contract but it is the signature, a mark placed on the contract to confirm the adoption of the terms by the signatories that is important. 33. In this case, there was no inducement or false representation by an agent of EFS. If any false or misleading representations were made, they were made by Axis or Link or both by their agent Ms Southwell and the defendants may have a remedy against it. 34. It is unfortunate, if that is so, that Axis was not joined in these proceedings as a cross-defendant so that any related proceedings could be dealt with simultaneously. Nonetheless, that course is still open to Mr Trajkovich and Charter One. 35. I am satisfied on the balance of probabilities that Mr Trajkovich signed the contract and that both he and Charter One are bound by it. Quantum 36. Mr Trajkovich complained that the quantum the plaintiff seeks to recover is unreasonable. Strictly speaking, this seems to me to be an irrelevancy given that the contract was for a fixed term and a fixed sum: this is liquidated claim. 37. The plaintiff, however, did not object to this line of contention and sought to explain its procedures. Among other things, Mr Brandt gave evidence that it had internal checks made of prices of, for example, plasma televisions and other equipment suppliers were financing through EFS. His evidence was to the effect that EFS would only approve the proposed finance contract if the price being charged by the supplier fell within a range around the recommended retail price and would not approve contracts which appeared to be significantly inflated. That evidence was not contradicted although Mr Trajkovich claimed that he could have done better in the market place. While that is perfectly possible, he produced no evidence of it. 38. Had he done so, however, it seems to me that it would, in all probability, have been irrelevant for the reasons already given above. Conclusions 39. For all the reasons above, I conclude that the plaintiff has proven the contract and the defendants' liability under it. As Mr Trajkovich was Charter One's guarantor the defendants are jointly and severally liable in the sum of $14,141.13. 40. There will be a verdict and judgment against each defendant in that sum. I also order that the defendants pay the plaintiff's costs in a sum agreed or assessed. Hugh Dillon Magistrate DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.