New South Wales Supreme Court CITATION : Commercial Computer Centre P/L v Chisholm [2001] NSWSC 349 CURRENT JURISDICTION: Common Law FILE NUMBER(S) : SC 13167/2000 HEARING DATE(S) : 30 April 2001 JUDGMENT DATE : 8 May 2001 Commercial Computer Centre Pty Limited (Plaintiff) PARTIES : William Kenneth Chisholm (Defendant) JUDGMENT OF : Master Harrison LOWER COURT Local Court JURISDICTION : LOWER COURT 610/2000 FILE NUMBER(S) : LOWER COURT Magistrate Barkell JUDICIAL OFFICER : Mr J de Meyrick (Plaintiff) COUNSEL : Mr I Latham (Defendant) Lincoln Smith (Plaintiff) SOLICITORS : Henry Davis York (Defendant) CATCHWORDS : Appeal decision of Magistrate LEGISLATION CITED : Supreme Court Rules Local Courts Act (Civil Claims) Act 1970 (NSW) Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 The Australian Gas Light Co v Valuer General [1940] 40 NSWLR 126 CASES CITED : Codelfa Constructions Pty Limited v State Rail Authority of NSW (1982) 149 CLR 337 Colgate Palmolive Pty Limited v Cussons (1993) 46 FCR 225 Rouse v Shepherd (No 2) (1994) 35 NSWLR 277 Maitland Hospital v Fisher (No 2) (1992) NSWLR 723 DECISION : (1) The appeal is dismissed; (2) The decision of Magistrate Barkell dated 2 November 2000 is affirmed; (3) The summons is dismissed; (4) The is to pay the defendant's costs as agreed or assessed. 10 THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION MASTER HARRISON TUESDAY, 8 MAY 2001 13167/2000 - COMMERCIAL COMPUTER CENTRE PTY LIMITED v WILLIAM KENNETH CHISHOLM JUDGMENT (Appeal decision of Magistrate) 1 MASTER: By summons filed 28 November 2000 the plaintiff seeks an order to appeal the decision of Local Court Magistrate Barkell made on 2 November 2000 pursuant to Part 51B of the Supreme Court Rules. The plaintiff relied on the affidavit of Wayne Vincent Annis-Brown sworn 19 March 2001. 2 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the appellant/defendant. Section 69(2) of the Local Courts Act (Civil Claims) Act 1970 (NSW) permits a party who is dissatisfied with a judgment as being erroneous in point of law to appeal to this Court. The onus lies on the appellant to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered, inter alia, in Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 and Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156. 3 No leave is required pursuant to Part 51B r 5(5) of the Supreme Court Rules (SCR) for leave to appeal the decision which was made on 2 November 2000. The summons was filed 28 November 2000. The appeal was filed within time. 4 The grounds of appeal are as follows: (a) The judgment of her Worship relies on the construction of the terms of a written agreement between the parties the interpretation of which involves a question of law. (b) The said agreement provides that the appellant (employer) would pay to the respondent (employee) in addition to salary and other benefits, commission for any "new business introduced" by him after 1 February 1999. (c) Her Worship erred in holding that the words "new business introduced" in the said agreement meant that commission was payable to the respondent on any and all orders placed with the appellant after 1 February 1999 with which he had been involved, whether or not those orders were from new, current or previous clients of the appellant, and whether or not the respondent had personally found those clients and those orders for the appellant. (d) Her Worship erred holding, contrary to the evidence and the true meaning of the said agreement, that the words "new business" were intended to mean and embrace not just orders from new clients introduced by the respondent, but also any and all orders from current and previous clients of the appellant with which the respondent had been involved after 1 February 1999. (e) Her Worship erred in holding, contrary to the evidence and the true meaning of the said agreement, that the word "introduced" was intended to mean and embrace not just orders from new clients found by the respondent (of which there were none after 1 February 1999) but also orders that had been derived by way of current and previous clients making their own contact with the appellant and inviting the appellant to quote for the work involved. (f) Her Worship erred in holding, contrary to the evidence and the true meaning of the said agreement, that the word "introduced" was also intended to mean and embrace any and all orders from any client after 1 February 1999 in respect of which the respondent had in some way been involved in the negotiations and preparation of the quotations for those orders. (g) Her Worship should have held that, upon the evidence and the true meaning of the said agreement, the respondent was entitled commission only on orders secured from new clients which he had found and had introduced to the appellant. 5 Background (1) On 1 July 1995 Mr Chisholm commenced employment with Commercial Computer Centre Pty Ltd ("CCC") as National Business Development Manager. His salary package was $80,000 per annum (including car allowance of $12,000 per annum, together with a home office allowance of $2,600) and superannuation of $4,530 per annum. The company was involved in data entry and reproducing graphics. (2) In January 1999 Mr Chisholm advised Mr Rosengreen, the managing director of CCC, that he has accepted another position and wished to give notice. (3) In February 1999 Mr Rosengreen negotiated an agreement with Mr Chisholm. Mr Chisholm's salary was increased to $90,960 per annum, plus a car allowance of $14,000 per annum, living away from home allowance of $15,000 per annum, a home office equipment allowance of $3,673 per annum, superannuation of $6,367 per annum, plus a yearly allowance for overseas conferences. This agreement was committed to writing. (4) Relevantly the second paragraph of the written agreement dated February 1999 stated: "Commission Structure The commission is effective from 1 February 1999 and is payable at 1.5% on new business introduced to the company. The commission is paid on a quarterly basis one month in arrears and is payable on the monthly revenue as invoiced to the client for a period of not more than twelve months. If the client ceases to do business with Commercial Computer Centre during the twelve month period then the commission payments will cease accordingly. The commission will only be paid upon settlement of the client's account with CCC." (5) On 13 August 1999 Mr Chisholm resigned. Mr Chisholm then claimed $22,182.68 for commission allegedly owed pursuant to the parties' agreement. (6) The parties agree that the issue that the Magistrate had to determine was the meaning of the words "on new business introduced to the company" contained in the agreement of February 1999. The Magistrate's judgment delivered on 2 November 2000. The Local Court Magistrate, Ms C Barkell firstly considered the meaning of the words "new business" and secondly considered the meaning of the word "introduced". Relevantly the Magistrate stated: "As to the meaning of the words of the agreement, the defendant argues firstly that new business means new clients. All of the companies in the claim were clients at the time of the February agreement, therefore the defendant says the invoices do not fall within the agreement. Mr Rosengreen gave evidence that in negotiations leading to agreements the discussion centred on new client. The plaintiff agrees or does not dispute that the defendant had prior to the February agreement done work for each of the companies in the claim. However, he denies that the pre-agreement discussions centred on commission only for new clients. He says that discussions centred in fact on the amount of the commission which should be paid. So far as the terms of the February agreement is concerned, it is for commission on new business. It does not seem to be by any stretch of semantics that those words could be limited to new clients and I refer particularly to the definitions with which I was provided in the course of submissions which show that the word business is not only a wide term encompassing a wide field of human activity but it is a term encompassing activity rather than clients and people. It is my view that the words in the agreement therefore cannot be interpreted as meaning new clients. Secondly the defendant says that the claim of the plaintiff cannot fall within the description of new business introduced to the company because the word introduced requires the plaintiff to do something other than simply his existing salary job. To gain his commission the plaintiff had to go out and find new business, he had to show that by special efforts he bought work to the defendant. The defendant says this meaning of the words is the only meaning consistent with the entering of the February agreement. The agreement would have no rationale if it were an agreement to pay the salary and commission for the same job fore which the plaintiff was hitherto paid only a salary. This argument, it appears to me, ignores the context of the entering of the February agreement. Mr Rosengreen makes it clear that the plaintiff was then regarded as a valuable employee and that the defendant was anxious to keep him. I see no illogicality in reaching an agreement with increases remuneration by way of commission where the object of the agreement is an incentive to stay. However, that does not dispose of the defendant's arguments. He says none of the business was new business introduced because the companies came to the plaintiff and requested a quote or tender. They sought him out. The plaintiff does not dispute this, however, he says that in each case he introduced the business because, "the intellectual knowledge associated with the response to that tender was determined by me and in relation to that unless I was successful in bidding and applying all the intellectual knowledge to the bid and the correct pricing to the bid there was no guarantee we would secure that business, so therefore it was new business". The plaintiff agreed that the same position applied to quotations. It is his uncontested evidence that all jobs were what he called "one off". There was no guarantee of continuing work although there was, the defendant says an expectation that the defendant was continue to receive the client's work. The plaintiff says that on each occasion he would produce a quotation or tender and if the company was happy with it the defendant would get the work. Thus he said it was his expertise which introduced the new business. The defendant said the word "introduced" is not ambiguous and points to the definition in Straads (sic) which says, (1) "to merely introduce a person who becomes a customer is not to introduce business so as to earn an agreed commission. In order to found a legal claim for commission there must not only be a causal, there must also be a contractual relationship between the introduction and the ultimate transaction of sale but if the relationship of buyer and seller is really brought about by the agent, the latter is entitled to commission although the actual sale has not been effected by him". I say this definition does not seem to me to be of great assistance to the defendant. So far as the contractual rather than the causal relationship goes, the plaintiff says the amounts claimed are referrable to agreements between the companies invoiced and the defendants. He says the equivalent relationship of buyer and seller was in fact brought about by his efforts in applying his expertise. He agrees he did not introduce the client but he says he introduced the business, which was new business in that it required separate and successful tender or quote before it was secure. So far as the ordinary meaning of the word introduce is concerned, the Shorter Oxford Third Edition defines the word introduce as "to lead or bring into place or into the inside or into the midst of something, to bring in , to conduct inwards, to put in from without, to insert, to bring a thing into some sphere of action or thought, to bring into use, practice or vogue or fashion." It seems to me that that definition is the definition which should be applied in this matter. The plaintiff says so far as this is concerned that he brought in the business claimed through his efforts. I am satisfied that this is so. I am satisfied that the business claimed by the plaintiff is new in that it had not existed for the defendant prior to the plaintiff's quotation or tender and that it was introduced by the defendant in that it was brought in to the defendant through the plaintiff's preparation of the successful quote or tender." 6 Both parties agreed that the following statements from The Australian Gas Light Co. v Valuer General [1940] 40 NSWLR 126 (at pp 137 & 138) define what constitutes an error of law. They are summarised as follows: (1) The question what is the meaning of an ordinary English word or phrase as used in the statute is one of fact not law. This question is to be resolved by the relevant tribunal itself, by considering the word in its context with the assistance of dictionaries and other books, and not by expert evidence; although evidence is receivable as to the meaning of technical terms; and the meaning of a technical term is a question of law. (2) The question whether a particular set of facts comes within the description of such a word or phrase is one of fact. (3) A finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding and there is evidence capable of supporting its inferences. (4) Such a finding can be disturbed only - (a) if there is no evidence to support its inferences, or (b) if the facts inferred by it and supported by the evidence are incapable of justifying the finding of fact based upon those inferences, or (c) if it has misdirected itself in law. 7 Thus, if the facts inferred by the tribunal from the evidence before it are necessarily within the description of a word or phrase in a statute or necessarily outside that description, a contrary decision is wrong in law. If, however, the facts so inferred are capable of being regarded as either within or without the description, according to the relative significance attached to them, a decision either way by a tribunal of fact cannot be disturbed by a superior court which can determine only questions of law. 8 The Defendant submitted that the errors, if they did indeed constitute errors, were errors of fact which do not give rise to an appeal. The plaintiff submitted that from the facts inferred, the definition fell outside the description of the words "new business" introduced and this constituted the error of law (see point (4) in Australian Gas Light Co). The plaintiff submitted that there was an ambiguity in the meaning of the word "new business". The Magistrate acknowledged that the plaintiff had prior to February carried out work for each of the companies for which he has claimed a commission. She then referred the evidence of both parties. On one hand Mr Rosengreen the director of Commercial Computer Centre understood that the plaintiff was entitled to a commission in relation to "new clients". On the other hand, the plaintiff thought that he was entitled to a commission on "new business". As was stated by Mason J in Codelfa Constructions Pty Limited v State Rail Authority of NSW (1982) 149 CLR 337 at 347 "The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning." There was a dispute as to what the parties understood the meaning of the words "new business". The meaning of the words "new business is clear and is not capable of being interpreted as "new client". This is precisely what the Magistrate decided. The Magistrate referred to the definitions of the word "business" and decided upon its meaning in accordance with the definitions. There is no error of law. 9 The plaintiff's counsel submitted that there was no ambiguity in the meaning of the word "introduced", that word meant that there had to be an action by the initiator to bring one party to another and that plaintiff was only carrying out the same job that he had always done. The plaintiff did nothing more than his job. This argument was ventilated in the Local court and the Magistrate referred to it in her judgment. In relation to the word "introduced", the Magistrate once again referred to a more narrow definition contained in the Strouds Judicial Dictionary (5 ed) together with the wider definition contained in the Shorter Oxford Third edition. The Magistrate preferred the latter wider definition of the word "introduced". The Magistrate said that it was uncontested that all jobs were "on off" and there was no guarantee of continuing work. The plaintiff was obliged to produce a quotation or tender which the contracting company would have to accept. The Magistrate decided these actions fell within the meaning "bringing into place" new business. The facts are capable of being regarded as falling within that description. This is a decision which cannot be disturbed by this court. Hence there is no error of law. The appeal is dismissed. The decision of Local Court Magistrate Barkell dated 2 November 2000 is affirmed. The summons is dismissed. 10 Costs are discretionary. The defendant seeks its costs on an indemnity basis. In the lower Court, the Magistrate ordered that the defendant was to pay the costs of the plaintiff on a party-party basis until 2 August inclusive as agreed or assessed, but as from 3 August 1999 the defendant was to pay the costs of the plaintiff on an indemnity basis as agreed or assessed. 11 In relation to the indemnity costs, a court awarding costs has an "absolute and unfettered" discretion. The normal order for costs is that costs follow the event on a party/party basis (Part 52A r 11). There is inherent jurisdiction of the court to award payment of costs on an indemnity basis (see s 76 of SCA 1970). 12 In Colgate Palmolive Pty Limited v Cussons (1993) 46 FCR 225 Sheppard J reviewed the relevant common law principles and said: "In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course." 13 This passage was cited with approval by Badgery-Parker J in Rouse v Shepherd (No 2) (1994) 35 NSWLR 277 Sheppard J referred to some of the circumstances that have warranted departure from the usual course. They do not purport to cover all the circumstances. The circumstances include where an allegation of fraud was made when it was known that the allegation was false, where an action was continued which had no chance of success or continued for some other purpose or where there was the wilful disregard of the known facts or clearly established law or where a party had been morally or ethically delinquent. 14 Badgery-Parker J in Rouse (No2) referred to Maitland Hospital v Fisher (No 2) (1992) NSWLR 723 where he referred to the objects of the rules of court on indemnity costs as being (a) encourage savings of private costs and avoidance of the inherent risks, delays and uncertainties of litigation; (b) to save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary and (c) to indemnify the plaintiff where notionally the real cause and occasion of the litigation is the attitude adopted by the defendant. Indemnity costs can be awarded where a party pursues a case that has no chance of success. 15 It is my view that the plaintiff's argument cannot be said to have had no chance of success. Even though costs were awarded on an indemnity basis in the local court it is my view that a departure from the normal course is not warranted in this court. It is my view costs should be payable on a party/party basis. The plaintiff should pay the defendant's costs as agreed or assessed. 16 The orders I make are: (1) The appeal is dismissed. (2) The decision of Magistrate Barkell dated 2 November 2000 is affirmed. (3) The summons is dismissed. (4) The plaintiff is to pay the defendant's costs as agreed or assessed. ********** Last Modified: 05/09/2001 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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