New South Wales Supreme Court CITATION : ICTA Investments Pty Limited & Anor v GE Commercial Corporation (Australia) Pty Limited & Anor [2005] NSWSC 656 HEARING DATE(S) : 4 July 2005 JUDGMENT DATE : 11 July 2005 JURISDICTION : Common Law Division JUDGMENT OF : Associate Justice Malpass at 1 DECISION : The summons is dismissed; the plaintiffs are to pay the costs of the summons; the exhibits may be returned. CATCHWORDS : Rental equipment - did the parties enter into a contract - alleged failure to communicate acceptance and to satisfy condition precedent - leave considerations - no error. LEGISLATION CITED : Local Courts (Civil Claims) Act 1970, s69(3) CASES CITED : Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR [97326] ICTA Investments Pty Limited t/as Jolly Roger (First Plaintiff) Donald Steven Raice (Second Plaintiff) PARTIES : GE Commercial Corporation (Australia) Pty Limited t/as GE Commercial (First Defendant) D Huber LCM (Second Defendant) FILE NUMBER(S) : SC 14232/04 Mr J Horowitz (Plaintiffs) COUNSEL : Mr N J Kidd (First Defendant) Horowitz & Bilinsky (Plaintiffs) SOLICITORS : Kemp Strang (First Defendant) I V Knight Crown Solicitor (Second Defendant) LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 5581/03 LOWER COURT JUDICIAL OFFICER : Huber LCM - 8 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Associate Justice Malpass 11 July 2005 14232 of 2004 ICTA Investments Pty Limited t/as Jolly Roger & Anor v GE Commercial Corporation (Australia) Pty Limited t/as GE Commercial & Anor JUDGMENT 1 His Honour: The first plaintiff (ICTA) had a nightclub in Newcastle known as the Jolly Roger. The second plaintiff is one of the directors of ICTA. The first plaintiff entered into arrangements for the installation of certain equipment (the equipment). The supplier was Lighten Up Productions (Lighten Up). 2 ICTA required finance. Lighten Up referred the matter to a finance broker, Auswest Finance Pty Limited (Auswest). Auswest decided to approach the first defendant (GE) to provide finance for the purchase of the equipment. 3 In early August 2002, ICTA made an application for finance (it was signed by the second plaintiff). GE sent an approval advice to Auswest. Pursuant to the application, ICTA gave Auswest a cheque in the sum of $286. 4 At some time prior to 30 August 2002 (perhaps about 8 August 2002), the equipment was delivered into the possession of ICTA and installed. 5 There were changes made to the proposed financial arrangements. The amount of the finance was reduced to $13,000 and it was to be provided for a term of 36 months. 6 On 30 August, ICTA executed a rental application form. It now seems to be accepted by the plaintiffs that on the same day, ICTA was given and the second plaintiff executed on its behalf certain other documents (including "Equipment rental agreement" (the rental agreement), "Direct debit request", "Privacy consent" and "Delivery acknowledgement"). The second plaintiff also signed a guarantee ("Equipment rental guarantee"). 7 After these executed documents had been returned to Auswest, ICTA was given a document headed "Tax invoice" (the tax invoice). 8 It appears that the first plaintiff came to have concerns about Lighten Up. Auswest was informed that ICTA no longer wished to proceed with the arrangements. There was a return of the equipment. 9 Auswest gave GE a cheque in the sum of $510.38 and GE paid the sum of $13,000 to Lighten Up in settlement of the purchase of the equipment. 10 Payments in respect of rental were made from an ICTA bank account pursuant to the "Direct debit request" until that request was cancelled by ICTA. The rental agreement was terminated by GE. 11 GE then commenced proceedings in the Local Court for recovery of the balance due under the agreement and legal costs. 12 The proceedings were defended. GE recovered judgment against both plaintiffs in the sum of $60,000 (being the jurisdictional limit of the Local Court). The makeup of that sum may be found in Exhibit 1. A cross-claim brought by ICTA for recovery of rental payments failed. 13 ICTA now seeks to challenge the decision of the Magistrate (Huber LCM). An appeal to this court from a decision of the Local Court lies where there has been error in point of law. Leave may be granted in cases involving a question of mixed law and fact. In either case, the appellant must demonstrate error that justifies the disturbing of the decision. 14 The appeal was heard on 4 July 2005. The parties have relied on written submissions supplemented by oral argument. 15 Initially, counsel for ICTA had taken the stance that leave was required. During oral submissions, he changed his position. For present purposes, that question can be put aside. 16 ICTA has filed an amended statement of grounds. It contains 15 grounds of appeal. Grounds 5 and 12 are no longer pressed. 17 Primarily, the focus of the challenge was directed to two questions. The first question concerned error in finding that a contract had been made between the parties. It was said that any acceptance of what is described as being an offer by ICTA was not communicated. The second is that there was error in rejecting the defence that there was a condition precedent to the making of a contract which had not been satisfied. 18 I now turn to the first of the two questions. Whether or not it was argued in its present form before the Magistrate is somewhat unclear. In dealing with what was put to her, the Magistrate observed as follows:- The plaintiff terminated the equipment rental agreement by serving notice on the defendant on or about 5 May 2003. The defendants argue that the plaintiff has not proved a fundamental requirement that is that the agreement was signed by the plaintiff. Therefore the defendant argues there is nothing before the Court which shows that the plaintiff acknowledged that it was ever bound by the agreement, that is that it accepted the terms and conditions of the agreement, that is that there was a contractual agreement between the parties. This argument must fail. It is clear from the evidence that the plaintiff paid for the goods and that the agreement was binding when the goods were paid for. The evidence of Mr Bird makes it clear as to why the relevant documentation was not before the Court. Further it is clear from Mr Bird that General Electric accepted the terms and conditions of the agreement. [Tr 30.11.04 p3] 19 In her judgment the Magistrate later observed as follows:- The plaintiff argues the defendant signed the equipment rental agreement and about this there is no dispute be it either 30 August or 6 September 2002. On executing the agreement clause 17.2 comes into effect thereby extinguishing any terms and conditions, provisions and arrangements if any prior to the execution of the agreement. The plaintiff further argues that even if clause 17.2 did not exist, applying the principles set out in Suttor v Grenover (?) [sic]: "Where the event in question is one which cannot occur without default on the part of one party to the contract the position is clear. The provision is then construed as making the contract not void but voidable. Only the party who is not in default can avoid it and he may please himself as to whether or not he does." The plaintiff's argument has merit. [Tr 30.11.04 p4] 20 I am not satisfied that what was argued on this question demonstrates error on the part of the Magistrate. She had before her a document (the written agreement) that had been executed by ICTA. She found that a binding agreement had been made between the parties. It appears that she may have regarded that document as being the agreement made between the parties or the writing that comprised the terms of such agreement. I do not consider that there was error in so doing. 21 Perhaps, I should digress to mention that the document was partially incomplete. However, its terms gave GE authority to complete any blanks. 22 If the conduct of the parties is to be viewed in terms of offer and acceptance (which has been described as "classical theory"; see Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd (1988) 5 BPR 97326), she could have regarded the return of the executed material as an acceptance by ICTA of an earlier offer. 23 The evidence before the Magistrate and what appears in her judgment suggests that the thrust of the case on this question before her may have been somewhat different. Her judgment makes no mention of any question of communication of acceptance. It expressly mentions other questions that were argued. Apart from the question of whether the agreement was signed by GE, there was also mention of, inter alia, the issue as to when the rental agreement was signed by the second plaintiff and as to whether the equipment had been received by ICTA. 24 If the question of communication was not raised in the Local Court hearing, I consider that it should not be allowed to be ventilated in this appeal. It was a matter which could have been expected to give rise to further evidence and further submission. 25 The Magistrate regarded the date of the signing by the second plaintiff as being irrelevant (as he had agreed that it had in fact been signed by him). 26 The defence relied on by ICTA denied supply of the equipment and alleged that it had never had possession of it. 27 This contention had problems in the light of the material before the Magistrate (including Exhibit C). Indeed, it was clearly untenable. The Magistrate was satisfied that the equipment had been supplied and this finding was not challenged during the appeal. 28 The second question requires the tax invoice to be treated as part of the contractual documentation. It contained, inter alia, the following:- Kindly carry out the functions as indicated below; … … … 4/ ATTACH A CHEQUE FOR $445.38 MADE PAYABLE TO: ' AUSWEST FINANCE' FOR THE FOLLOWING:- 1st RENTAL PAYMENT $445.38 (incl GST) … … … *** PLEASE NOTE *** DOCUMENTS MUST BE RETURNED WITHIN 14 DAYS OF APPROVAL, OTHERWISE APPROVAL WILL LAPSE AND A SERVICE FEE WILL APPLY. 29 In my view, the Magistrate did not err in failing to treat the tax invoice as part of the contractual documentation. There were a number of matters that either did or could have led to that conclusion. I will mention some of them. The terms of the rental agreement provide that it is to constitute the entire agreement between the parties. The tax invoice was not a document that had been executed by ICTA or adopted by it. It came to the attention of ICTA after execution of the rental agreement. 30 Even if a different view had been taken on this matter, I do not consider that the contents of the tax invoice and/or any non-compliance with them assists ICTA in the circumstances of this case. 31 Before the Magistrate, two conditions precedent were relied on. One concerned a rate notice. It is not now pursued (it was a condition of the approval advice). The other concerned the cheque for $445.38. 32 Although payment to GE was made, there is dispute between the parties as to whether or not this first rental payment of $445.38 was made by ICTA. For present purposes, it suffices to assume that it was not so paid. 33 The heading, "Tax invoice" may be regarded as inappropriate, having regard to the contents of the document. The contents suggest that it is a document that would be given to a potential borrower after the granting of financial approval. It has the appearance of being in the nature of an instruction sheet which encloses documents (including the rental agreement) for the purposes of having them executed by the borrower. 34 One aspect of the material relied on by ICTA (the "Please note" provision) relates only to approval (it will lapse). 35 What is relied on by ICTA was not intended for the benefit of the borrower. It can only have been inserted for the benefit of the financier. It would be open to the financier to waive any non-compliance with those provisions. 36 In the circumstances of this case, ICTA was unaware of the contents of the tax invoice until after it had executed the rental agreement and returned it to Auswest. As a consequence, the tax invoice was not in fact used to perform what may be perceived as its intended function. 37 The remaining matters raised by the grounds of appeal were the subject of little attention during oral argument. I have read the relevant grounds and what is said concerning them in the written submissions. In my view, they do not assist ICTA in this case. 38 In the light of what has been said, it is unnecessary to deal with the question of whether or not the challenge brought by ICTA requires the granting of leave. 39 However, as some argument has been directed to the matter of what must be shown to obtain a grant of leave, it may be helpful if I make some brief observations. 40 There seems to be little authority dealing with what is required by the provisions of subs (3) of s69 of the Local Courts (Civil Claims) Act 1970 (the Act). The Act is silent as to the relevant criteria. It may be that it is a question that has to be dealt with on a case by case basis. The Court has an unfettered discretion which has to be exercised having regard to the relevant circumstances of the particular case before the Court. 41 Authority on similar provisions suggests that certain matters may be relevant. One of them is the quantum of the amount in dispute. Other considerations may be the need for there to be questions of principle or of public importance or manifest error. 42 Clearly, the parliament had in mind discouraging litigation where small sums only are involved and there is no error in point of law. 43 In the circumstances of the present case, even if the disputed question of the amount in issue is put aside, the plaintiffs would have failed to demonstrate an entitlement to leave. Apart from there being a failure to demonstrate error that justifies the disturbing of the decision, there is no question of principle or of public importance. 44 The summons is dismissed. The plaintiffs are to pay the costs of the summons. The exhibits may be returned. ********** 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.