Supreme Court New South Wales Medium Neutral Citation: Con Ange v Calogo Bloodstock AG t/as Coolmore Australia [2012] NSWSC 666 Hearing dates: 4/06/2012 Decision date: 19 June 2012 Jurisdiction: Common Law Before: Harrison AsJ Decision: (1) The appeal is dismissed. (2) The decision of his Honour Magistrate Brydon dated 20 October 2011 is affirmed. (3) The summons filed 4 April 2012 is dismissed. (4) The plaintiff is to pay the defendant's costs as agreed or assessed. Catchwords: APPEAL FROM LOCAL COURT - whether there was actual or ostensible authority for a party to act on behalf of the plaintiff - whether the correct issue was addressed in relation to a written agreement - notice of contention for allowing leave to reopen the case Legislation Cited: Local Court Act 2007 Cases Cited: Australia and New Zealand Bank Ltd v Ateliers de Constructions Electriques de Charleroi [1967] 1 AC 86 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 221 Australasian Meat Industry Employees' Union (WA Branch); Ex parte Ferguson, Re (1986) 67 ALR 491 Field v Shoalhaven Transport Pty Ltd [1970] NSWR 96 Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 Instrumatic Ltd v Supabrase Ltd [1969] 1 WLR 519 North v Loomes [1919] 1 Ch 378 Pao On v Lau Yiu Long (1980) AC 614 Pianta v National Finance & Trustees Ltd [1964] HCA 61; (1964) 180 CLR 146 Roscorla v Thomas (1842) 3 QB 234 Smith v New South Wales Bar Assn (No 2) (1992) 176 CLR 256 Swain v Waverley Municipal Council [2005] HCA 4; (2005) 220 CLR 517 Thornley v Tilley [1925] HCA 13; (1925) 36 CLR 1 Tuitaalili v Minister for Immigration and Citizenship [2012] FCAFC 24 US Manufacturing Co Pty Ltd v ABB Service Pty Ltd [2008] NSWSC 705 Wragg v Lovett (1948) 2 All ER 968 Category: Principal judgment Parties: Con Ange (Plaintiff) Calogo Bloodstock AG (ACN 070 652 890) t/as Coolmore Australia (Defendant) Representation: Counsel: Levitt Robinson Solicitors (Plaintiff) Norton Rose (Defendant) File Number(s): 2011/364857 Decision under appeal Date of Decision: 2011-10-20 00:00:00 Before: Byrdon LCM File Number(s): 2009/3516743 Judgment 1HER HONOUR: By amended summons filed 4 April 2012, the plaintiff appeals for the whole of the decision of his Honour Magistrate Brydon dated 20 October 2011 to be set aside. The Local Court proceedings concerned payment in accordance with an "Agistment and Stallion Agreement 2007" ("the Agreement"). 2The plaintiff in this Court is Mr Con Ange ("Mr Ange"), who was the defendant in the Local Court proceedings. The defendant in this Court is Calogo Bloodstock (ACN 070 652 890) t/as Coolmore Australia ("Coolmore"), who was the plaintiff in the Local Court proceedings. For convenience, I shall refer to the parties by name. The Appeal 3Section 39 of Local Court Act 2007 ("the Act") provides that a party who is dissatisfied with a judgment or order of the Local Court may appeal to the Supreme Court, but only on a question of law. The onus is on the plaintiff to demonstrate that there is an error on a question of law. 4Section 40 of the Act provides that a party who is dissatisfied with a judgment or order of the Local Court may appeal to this Court on a question of mixed law and fact but only with leave of this Court. 5Section 41 of the Act provides that the Supreme Court may determine an appeal (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal. 6In Swain v Waverley Municipal Council [2005] HCA 4; (2005) 220 CLR 517, Gleeson CJ at [2] reiterated that in the common law system of civil justice, the trial process determines the issues between the parties. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal. 7In US Manufacturing Co Pty Ltd v ABB Service Pty Ltd [2008] NSWSC 705, Hall J, after referring to Instrumatic Ltd v Supabrase Ltd [1969] 1 WLR 519, stated at [54]: "It is clear that an error in point of law may include: (1) A finding made where there is no evidence to support it or draws an inference from facts that cannot be reasonably drawn. (2) A finding that no person acting judicially and properly instructed as to the relevant law could have made. (3) Where a Court has misdirected itself in law: Australian Gas Light Co v Valuer-General." 8So far as an error of law is concerned, in Instrumatic Ltd v Supabrase Ltd, Lord Denning MR said at 521: "There are many tribunals from which an appeal lies only on a "point of law"; and we always interpret the provision widely and liberally. In most of the cases the tribunal finds the primary facts (which cannot be challenged on appeal); and the question at issue is what is the proper inference from those facts. In such cases, if a tribunal draws an inference which cannot reasonably be drawn, it errs in point of law, and its decision can be reviewed by the courts. That was settled, once and for all, in Edwards (Inspector of Taxes) v Bairstow. In other cases the question is whether, given the primary facts, the tribunal rightly exercised its discretion. In such cases, if the tribunal exercises its discretion in a way which is plainly wrong, it errs in point of law, and its decision can be reviewed by the courts. ..." Orders sought 9Mr Ange seeks the following orders: that the judgment of the Local Court be set aside; that leave under section 40 of the Local Court Act 2007 be granted to appeal to the Supreme Court on the grounds set out, to the extent that those questions involve a question of mixed law and fact; that the costs orders of this Court follow the determination of the appeal; and that Coolmore repay Mr Ange $49,650.87 plus interest. Grounds of Appeal 10Mr Ange appeals from the whole of the decision of his Honour Magistrate Brydon dated 20 October 2011 on the grounds that the Magistrate erred in law in: first, finding that the Agreement, last signed 10 October 2007, was a contract enforceable against Mr Ange; secondly, failing to have any or sufficient regard for Coolmore's pleadings or its case as presented in evidence before the Court as being entirely different from that which it argued in its closing submissions; thirdly, recasting the burden of proof from Coolmore to Mr Ange in respect of those matters which Coolmore was required to prove to establish the existence of a valid and binding contract supported by valuable consideration; fourthly, failing to determine all the matters pleaded in paragraph 6 of the amended statement of claim; fifthly, and alternatively, drawing an inference from the facts found that Coolmore arranged for the mare to be covered by the stallion pursuant to the Agreement, thereby completing and performing its obligations under and pursuant to the Agreement, that being an inference that could not be reasonably drawn; sixthly, finding that there was sufficient evidence to support a finding that Mr Ange had authorised an agent to enter into the Agreement on his behalf; seventhly, drawing an inference from the facts found that Mr Ange had given actual authority to Mr Gerald Ryan ("Mr Ryan") to enter into the Agreement on behalf of Mr Ange, that being an inference that could not be reasonably drawn; and eighthly, drawing an inference from the facts found that Mr Ange represented that Mr Ryan had authority to enter into the Agreement on behalf of Mr Ange, that being an inference that could not be reasonably drawn. 11Hence the appeal addresses two main issues: (i) whether the Magistrate was incorrect in finding there was both actual and ostensible authority, and (ii) whether the Magistrate addressed the correct issue in relation to the Agreement. Coolmore's Notice of Contention 12By notice of contention filed 28 November 2001, Coolmore contends that: first, the Magistrate should have refused leave to Mr Ange to file and serve a further amended defence, in particular the amendments contained in paragraph 11(b), (c), (e), (f), (g), (h) and (i) after the end of trial and to reopen Mr Ange's case by tendering further evidence; secondly, that the Magistrate should have found that Coolmore was entitled to judgment in the proceedings on the basis that: (a) the only issue litigated at trial was whether Mr Ryan had actual authority or apparent authority to enter into the Agreement, pleaded in paragraph 5 of the statement of claim, for Mr Ange; (b) Coolmore established both actual or, in the alternative, apparent authority as alleged; and (c) no other defence was open on the pleadings or the conduct of the trial. 13Coolmore contends that the decision of the Magistrate ought to be affirmed on grounds other than those relied upon by the Magistrate, but does not seek a discharge or variation of any part of the decision. 14Coolmore submitted Mr Ange should not have been able to reopen and pursue an argument based on the stallion having covered the mare prior to the Agreement being signed as that issue was not pleaded nor run at trial. The facts relating to this are further discussed later in the judgment. If Mr Ange had raised this in his defence Coolmore says that it could have: first, sought to prove that an oral agreement had been entered into by Mr Ryan on behalf of Mr Ange and Coolmore prior to 4 October 2007 (rather than relying on the written agreement) and secondly, advanced a case in restitution on the basis of quantum meruit. According to Coolmore, the interests of justice would have been better served by dismissing the application. The Local Court proceedings 15In the Local Court, Coolmore sued Mr Ange to recover $38,500 plus interest and costs said to be owing by Mr Ange pursuant to the Agreement. 16The starting point in this appeal is the pleading framework. Coolmore, in its amended statement of claim, pleaded: "5. On or about 5 October 2007, the defendant, by his agent with actual or ostensible authority, Mr Gerald Ryan, entered into an agistment and stallion agreement with the plaintiff for the Mare to be covered by the Stallion for the sum of $38,500 including GST (The Agreement). 6. The Mare attended the Stud and the plaintiff arranged for the Mare to be covered by the Stallion pursuant to the Agreement thereby completing and performing its obligations under and pursuant to that Agreement." 17Mr Ange, in the further amended defence, filed 1 September 2011, denied paragraph 5 (at paragraph 4) and did not admit paragraph 6 (at paragraph 2) of the amended statement of claim. Hence, whether or not Mr Ryan acted as Mr Ange's agent was in dispute. Performance of the Agreement was not admitted which meant Coolmore was put to proof on that issue. The cross-claim 18By way of cross-claim, Mr Ange sought the recovery of the sum of $49,650.87 plus costs and interest from Coolmore. The cross-claim alleged that the amount claimed was inadvertently paid to Coolmore following a default judgment being entered against Mr Ange. Mr Ange alleged he was not aware his solicitor paid the sum claimed and he would not have paid it "but for the mistake of [his] previous solicitor". Therefore Coolmore was "unjustly enriched". The default judgment has since been set aside. 19Coolmore, in its defence to the cross-claim, admitted that the default judgment had been set aside but denied that it had been "unjustly enriched" by its retention of the $49,650.87. 20The question whether or not Coolmore is obliged to pay back that sum only arises if a decision is made in favour of Mr Ange on this appeal. Undisputed Facts 21The following facts were undisputed. Mr Ange was the owner of a racehorse mare known as Immunity ("the mare"). Coolmore operated a horse stud and was the owner of a stallion, Holy Roman Emperor ("the stallion"). Mr Ryan had trained the mare for a period of time prior to the mare being retired for breeding purposes. 22In 2006, Mr Ryan had had a prior dealing with Mr Ange concerning the impregnation of the mare. In 2006, Mr Ange contacted Mr Ryan to request his assistance in arranging for a stallion to service the mare. The stallion chosen at this time was Southern Image who was then standing at Widden Stud. Mr Ryan negotiated a service fee and the mare was duly served by Southern Image. Widden Stud forwarded a breeding contract to Mr Ryan for signature, and Mr Ryan signed that contract with the approval of Mr Ange after Mr Ange had seen the contract. The mare fell pregnant and prior to her foaling Mr Ange paid the service fee to the owner of Southern Image, Iskander Racing. 23In 2007, Mr Ange again contacted Mr Ryan to arrange for the mare to be serviced. There was dispute about whose choice the stallion was. Mr Ryan contacted Mr Santry from Coolmore to inquire about the stallion. 24Mr Ryan negotiated a service fee of $35,000 plus GST making a total of $38,500. Mr Ryan told Mr Ange the fee and Mr Ange said to him, "book the horse in". Arrangements were made to transport the mare to Coolmore Stud. 25On 5 October 2007 the Agreement was signed on behalf of Coolmore Stud. On 10 October 2007, Mr Ryan signed the Agreement and sent it back to Coolmore. Mr Levitt conceded that there was no issue "that Immunity was impregnated by Holy Roman Emperor". 26Around February 2008 the mare suffered a misadventure and died. On 9 June 2008 an invoice was issued to Mr Ange for $38,500. Findings of Fact 27The Magistrate made the following findings of fact. It was Mr Ange who expressed the desire to use the stallion. Mr Ryan spoke to Mr Santry and advised him that he was ringing on behalf of Mr Ange. Mr Ryan communicated the price to Mr Ange who agreed to proceed by saying words similar to "book the horse in". 28The Agreement was sent to Mr Ryan, who contacted Mr Ange by phone and advised him of the existence of the Agreement. Mr Ange indicated that Mr Ryan could sign the Agreement. Mr Ryan signed it, returned it to Coolmore and retained a copy. The stallion served the mare on 4 October 2011 prior to the execution of the Agreement by Mr Ryan on behalf of Mr Ange. Coolmore raised no challenge to the certificate. The witnesses 29At the hearing Messrs Ryan, Santry and Ange gave evidence and were cross examined. 30Regarding Mr Ryan's evidence, the Magistrate stated: "At no point was the issue of a live foal guarantee raised with him according to his evidence, although nor was it discussed with Coolmore Stud in his discussions with them. Mr Ryan gave clear evidence that all the transactions with Coolmore Stud, he was acting on Mr Ange's behalf and had received an authority to do so. Whilst there was inconsistency between his affidavits and his evidence and there was some vagueness about his recollection, I do not find that his evidence should be rejected, particularly as it related to his instructions to organise the service of the mare in 2006 and 2007. Nor should his evidence be rejected, and that his conversations with Mr Ange extended to the existence of the written agreement, and Mr Ange's preparedness to continue." (J 5.31-41) 31The Magistrate outlined Mr Ange's evidence and made unfavourable findings as to credit. Not surprisingly the magistrate rejected his evidence on whether there was any agreement to pay out of the coverage of the mare by Coolmore's stallion. His Honour had this to say: "... The defendant [Mr Ange] accepted in his evidence that he knew he was going to be charged a fee for the servicing of the mare, however "presumed it was going to be similar to Widden Stud where he would receive an invoice after whatever, and unless you paid your invoice, your horse couldn't race". When asked if he understand (sic) that he had an obligation to pay the fee, Mr Ange responded, "I chose to pay the fee." He maintained in his evidence his belief that if he did not pay the service fee, he could not race the foal as born (see p 78). He expressed an ignorance of "how the breeding industry worked". This is significant for a number of reasons. Firstly he owned outright or had been a shareholder in a number of horses. He had the previous year bred a foal from Immunity. He also had access to other persons within the racing industry other than Mr Ryan, such as Mr Mike Byers, his present trainer. Yet he claimed a belief that he had a choice as to whether he paid the fee for the stallion service as provided. He denied knowledge that there was any form of agreement in such a relationship (see transcript p 80 line 13). His view appeared to be at odds with his view of a live foal guarantee which he suggested that studs offered and could be enforced in some way, despite the fact that there was no contract (see p 87 line 35 to 40). Mr Ange further suggested that if he received an invoice, then because of the existence of a live foal guarantee, he would pay that invoice. I note that Mr Ange paid the invoice for servicing by Southern Image in 2006 in circumstances where there was not a live foal guarantee before the foal was born. His view that it would have been paid if there was a live foal guarantee seems to be at odds with his view that he had a choice to pay depending on him registering the foal. On his view, there would never have been an occasion for a live foal guarantee to have been put in place, because if no foal was born, there was nothing to register, and therefore no reason to pay. I reject the evidence of Mr Ange on the issue of whether there was any agreement to pay arising out of the coverage of the mare by the plaintiff's stallion. It flies in the face of commercial realism. Mr Ange was a man of considerable business experience. As such, his evidence of his commercially naive position of him having some choice to pay could not be accepted as truthful. His testimony in this case on this point completely undermined the credibility of his further accounts that he was not informed about the existence of the agreement that Mr Ryan suggested was discussed, and that he had seen a similar contract at Widden Stud in 2006." (J6.10-49) Appeal Ground 1: Whether Mr Ryan had actual authority or ostensible authority to act for Mr Ange 32The Magistrate found that Mr Ryan had both actual authority and ostensible authority to sign the Agreement on behalf of Mr Ange. 33So far as actual authority is concerned, the Magistrate stated: "...Mr Ryan had told Mr Ange the negotiating service fee. Mr Ange said, "Book her in." Nothing more was raised. No foal guarantee was discussed. Mr Ryan arranged for the horse to be conveyed to Coolmore. There was nothing said by Mr Ange as to what was to happen to her on her stay at Coolmore pending receipt of contracts or restrictions as to timing of the coverage. There was no discussion or restriction as to the terms of payments being made. Mr Santry directed that the accounts department of Coolmore Stud send the standard contract to Mr Ryan. The contract had Mr Ange's particulars as the owner on it, and he was the person who was said to have been the subject or a party to the agreement. By that stage Mr Ange had known the stallion to service his mare was Holy Roman Emperor. The stallion stood at Coolmore Stud. Transport had to take place. That transport was to take place with Mr Ryan. He negotiated the availability and service of - service fee for Holy Roman Emperor. He expected Mr Ryan to communicate with Coolmore to book the horse in in accordance with his direction for the intended service. He allowed Mr Ryan to make arrangements to physically move his mare from a location to Coolmore Stud. He allowed his mare to remain on the premises at Coolmore pending the intended arrangement. Whilst the words, "Do whatever was necessary" from his point to make the coverage take place were not actually said, it could clearly be inferred that that is what Mr Ryan was authorised to do. There was no restriction made known to Mr Ryan that suggested that the coverage should not go ahead. This was not suggested by Mr Ryan in his evidence, I have found on the facts that Mr Ryan contacted Mr Ange once he received the agreement to inquire whether he wished to proceed. On obtaining such approval, Mr Ryan signed the agreement "for Con Ange". In these circumstances, I find Mr Ange gave actual authority to Mr Ryan to act on his behalf as agent and sign the agreement on his behalf. Even if I were to accept that Mr Ange was unaware of the existence of any written agreement as he suggests, I do not believe the term to Mr Ryan "book her in" can convey any other realistic commercial proposition than to do what was necessary to do to have the mare covered by Holy Roman Emperor. That term should not be read down to suggest some further intervening conduct was necessary or to be undertaken which should have prevented the coverage by a stallion. Booking her in was doing what was necessary to make the subject of the agreement happen. I find that actual authority to enable the subject of a written agreement to proceed was conveyed to Mr Ryan. That included the execution of the Agistment and Stallion Agreement on behalf of the defendant. There was a clear intention in my view to be bound by the substance of that agreement. There was no restrictions placed on Mr Ryan's authority to bind the defendant for the completion of the subject matters of the deal. Where an authority is conferred to act in a certain regard, a term giving the agent power to perform all incidental tasks will normally be implied into the principal agent's contract so as to give business efficiency to the deal (see Australian and New Zealand Bank Ltd v Ateliers de Constructions Electriques de Charleroi (1966) 39 ALJR 414 at 419-420). Again even if I'm wrong of the view that Mr Ryan had actual authority, I am firmly of the view that the plaintiff could rely upon the principle of ostensible authority of Mr Ryan to contract on Mr Ange's behalf. I have been taken to a number of authorities relating to ostensible authority. They are Pacific Carriers Ltd v BNP Paribas (2004) 208 ALR 213; Tobin v Broadbent (1947) 75 CLR 389; and Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising and Addressing Co Pty Ltd (1975) 133 CLR 72. I have considered those authorities. The onus of course of proving the alleged facts upon which the ostensible authority is based is on the party seeking Jo establish it (see McLachlan-Troup v Peters (1983) VR 53 at 58)." (J10.5-50; 11.1-17) Mr Ange's Submissions 34In relation to the finding of actual authority, Mr Ange contended that, "the Magistrate's finding of law that the facts as found by the Magistrate amounted to the granting of actual authority by Mr Ange to Mr Ryan to sign the Agreement was an erroneous finding of law". Mr Ange conceded Mr Ryan was authorised to find and negotiate a price with a relevant stud but denied Mr Ryan was authorised to contract with that stud on behalf of Mr Ange. 35Mr Ange submitted that authority to conclude a contract on behalf of a principal cannot stem from vague and ambiguous language: see Wragg v Lovett [1948] 2 All ER 968 at 969; Pianta v National Finance & Trustees Ltd [1964] HCA 61; (1964) 180 CLR 146 at 152; North v Loomes [1919] 1 Ch 378 at 382-3. Mr Ange submitted the words "book her in" were not clear language. 36In Wragg v Lovett the Court of Appeal considered whether a vendor had authorised an estate agent to make a contract. It was held that the vendors allowed the estate agents to make whatever contract they thought best, and so they had authority to make the contract. Lord Greene MR at 969 stated: "While accepting the learned judge's conclusion upon the particular facts of this case, we must not be understood as suggesting that when a vendor merely authorises a house agent to "sell" at a stated price he must be taken to be authorising the agent to do more than agree with an intending purchaser the essential (and, generally, the most essential) term, ie, the price. The making of a contract is no part of an estate agent's business, and, although, on the facts of an individual case, the person who employs him may authorise him to make a contract, such an authorisation is not lightly to be inferred from vague or ambiguous language." 37For there to be actual authority there must be clear language. However it is my view that Mr Ange's words "book her in" constituted clear language. These words cannot convey any other realistic commercial proposition than to do what was necessary to have the mare covered by the stallion. 38Isaacs J in Thornley v Tilley [1925] HCA 13; (1925) 36 CLR 1 at 12 also said: "Where a principal gives to an agent instructions so ambiguous that they can reasonably be understood in more than one sense, he is bound by whichever of those senses the agent bona fide acts upon..." 39Also in Australia and New Zealand Bank Ltd v Ateliers de Constructions Electriques de Charleroi [1967] 1 AC 86 the Privy Council at 93-94 held: "Where an express authority is conferred by informal instruments, such as letters of advice, or instructions, where they are general in their terms or confer a general authority, they are construed liberally. If the instruction is not expressed in plain and unequivocal terms, free from ambiguity and the language is fairly susceptible of different interpretations, and the agent in fact is misled and follows one interpretation when the principal intended the other, the principal will be bound and the agent will be exonerated, if the agent has acted in good faith and within the supposed limits of his authority: Story's Commentaries on the Law of Agency, 9th ed. (1882), pp. 93, 99." 40Hence even if the instructions were ambiguous, it is my view Mr Ryan acted bona fide, thereby binding Mr Ange. The Magistrate's finding was correct. 41Mr Ange submitted that as the Magistrate found that Mr Ange saw the 2006 Widden Stud contract and approved Mr Ryan executing it prior to Mr Ryan doing so, as opposed to the Coolmore Agreement which Mr Ange did not see but in relation to which he said "book her in", the findings of fact contradict the Magistrate's legal conclusion of actual authority to sign the Agreement with Coolmore in October 2007. 42It is my view that the Magistrate did not consider the 2006 Widden Stud contract to be a benchmark against which to compare the way the process should occur. Rather his Honour considered it reason to find that there was a pre-existing agency relationship between the parties. Hence the Magistrate's finding was correct. Coolmore's submissions 43As previously discussed, Coolmore submitted that no error of law was raised by Mr Ange. There is no error of law in making a wrong finding of fact: see Australian Broadcasting Tribunal v Bond (1990) 170 CLR 221 at 341 (Mason CJ). But Mr Ange also relied upon a question of mixed law and fact and submitted that the Magistrate was not entitled to draw the inferences that he did. 44In relation to the finding of actual authority, Coolmore submitted that "if the facts disclose one party is acting or representing another by the other's authority, the agency exists": see Field v Shoalhaven Transport Pty Ltd [1970] NSWLR 96 at 103. Coolmore submitted that Mr Ryan entering into the 2006 Widden Stud contract evidenced that Mr Ryan was Mr Ange's agent. 45Coolmore also submitted that Mr Ange is an experienced businessman, with significant experience in the racing industry. Mr Ange's suggestion that the contract was conditional on a "live foal agreement" was rejected. There was also evidence from Mr Santry, the sales and nominations manager of Coolmore, that there was no discussion about a live foal guarantee and "it was only very, very, very rarely and generally in less than maybe 1% of agreements where such a live foal guarantee was provided" (J4.7-11). 46Coolmore referred to Mr Ange giving evidence that he had a choice whether to pay the fee, which the Magistrate said "completely undermine[d]" his other evidence. 47Coolmore submitted that the cases referred to by Mr Ange, namely Wragg v Lovett, Pianta v National Finance & Trustees Ltd and North v Loomes, are not about the creation of an agency, but about the scope of agencies. An agency arrangement is construed in accordance with ordinary principles of contract construction, so that the words used are construed in light of the circumstances. Coolmore submitted that it was clear that Mr Ange by his words conferred on Mr Ryan authority to enter into the agistment contract. The alternative view is that, despite Mr Ange telling Mr Ryan to book the mare in at the agreed fee and subsequently telling him to go ahead with the contract, Mr Ryan was not authorised to enter into the Agreement, which is commercially irrational. 48Actual authority may be express or implied. 'Express' actual authority may arise from verbal or written words: see Thornley v Tilley. 'Implied' actual authority may arise from what is necessarily or ordinarily incidental to the express authority. In Australia and New Zealand Bank Ltd v Ateliers de Constructions Electriques de Charleroi the Privy Council held at 93: "On the proper construction of "realisation" in the confirming letter, one asks oneself what is ordinarily incidental to this agent's powers? and then one asks oneself was there any special situation which affected this particular agent? The answer must be "yes", because, unless that particular agent was given special power, his principal would never get his money, and if you give your general agent power which envisages his being able to do all things necessary to make the venture commercially profitable, then you provide also the power in this case to endorse and pay cheques into his own account. It could not have been done in any other way. Accordingly, on its proper construction "realisation", looking at the whole of the surrounding circumstances, involves doing all matters necessary to enable the principal to gain the advantage of his performing the contract." 49Mr Ryan advised Mr Ange to "book the horse in". The signing of the contract was an incidental task in order to carry this out. Mr Ange had knowledge of the process, based on the 2006 Widden Stud contract. Hence the Magistrate's finding that Mr Ryan had actual authority is correct. 50It is my view that Mr Ryan also had express actual authority. Mr Ryan advised Mr Ange of the agreement over the phone and Mr Ange confirmed, "That is fine. Go ahead an do the deal". Further, even if the instructions were ambiguous, Mr Ryan acted bona fide; hence, Mr Ange would still be bound: Thornley v Tilley at 12. 51There was sufficient evidence, namely the evidence of Messrs Ryan and Santry and the previous 2006 Widden Stud dealing, to support the finding by the Magistrate that Mr Ange had authorised an agent to enter into the Agreement on his behalf. It was also open for the Magistrate to draw the inference from the agreed facts between the parties that Mr Ange gave actual authority to Mr Ryan to enter into the Agreement on behalf of Mr Ange. Hence the Magistrate's finding in relation to actual authority is correct. 52As it is my view that his Honour correctly found there was actual authority, it is not necessary to consider whether there was ostensible authority. This ground of appeal fails. Appeal Ground 2: Whether the Magistrate addressed the correct issue 53Before I deal with this issue, I should say something about the way the hearing proceeded in the Local Court, as this topic is also germane to the matters raised in the notice of contention. 54On 22 June 2011, the Magistrate heard the matter. Both parties had conducted the hearing on the basis that the coverage by the stallion had taken place after the execution of the Agreement. At the conclusion of the evidence, Mr Giles, solicitor for Coolmore, made oral submissions. There was no time left for Mr Levitt to make his submissions and Mr Levitt was ordered to make written submissions. 55After submissions were received, the Magistrate decided that he needed to read the transcript of the proceedings to determine some factual matters. After the transcript was received and considered, the matter was relisted for determination of any further argument on the evidence on 25 August 2011. 56On 25 August 2011, when the matter came before the Magistrate for further submissions, Mr Ange produced a pregnancy certificate, which on the face of it suggested that the coverage had taken place prior to the execution of the Agreement. The Magistrate granted leave to Mr Ange to reopen his case and allowed the tender of the pregnancy certification (Ex 5). The matter was again adjourned to allow Mr Ange to file and serve an amended defence incorporating the issue of past consideration. The Magistrate also allowed Coolmore to consider its position with regard to Ex 5 being the pregnancy certificate. The pregnancy certificate stated that the mare was last served by the stallion on 4 October 2007, which was prior to the Agreement being entered into (5 October 2007). 57On 23 September 2001, the matter came before the Magistrate. His Honour disallowed Coolmore to amend its amended statement of claim and disallowed both parties to call any further evidence. 58In the end Mr Ange's argument in the Local Court was that the Agreement provides for the fee to be payable for service to be provided (in the future), not for past service. According to Mr Ange, as the evidence demonstrated that there was no service to be performed pursuant to the Agreement, there was no obligation on Mr Ange to pay the fee pursuant to the Agreement. The Magistrate rejected this argument. Mr Ange's submissions 59Mr Ange submitted that his pleadings and submissions before the Magistrate put in issue whether Coolmore had performed the Agreement so as to become entitled to payment of the fee. 60Mr Ange submitted that the Magistrate did not deal with that issue and that amounts to a failure to give adequate reasons. In oral submissions counsel for Mr Ange referred to Guijar v Australia and New Zealand Banking Group Ltd [2011] NSWSC 111 and Guijar v Australia and New Zealand Banking Group Ltd [2012] NSWCA 10. If adequate reasons are not given, that constitutes an error of law. Mr Ange says that the evidence that was before the Magistrate did not provide any support for a conclusion that Coolmore had performed the Agreement. 61Mr Ange referred to Pao On v Lau Yiu Long [1980] AC 614 and submitted that it had little to do with paragraph 6 of the amended statement of claim. Mr Ange argues it is not relevant because the evidence that was before the Magistrate demonstrated that there had been no performance. The mare was impregnated by the Stallion prior to the Agreement being made. The Agreement did not purport to contain a promise to pay for performance (servicing of the mare) that took place prior to entry into the Agreement. Had the Agreement referred to prior performance, then the question would have arisen as to enforceability of the promise. ( My emphasis added ). 62Mr Ange submitted that the Magistrate made no findings regarding performance, despite the question of performance being raised in the pleadings and in Mr Ange's submissions. Coolmore was only put to formal proof. 63Mr Ange added that no quantum meruit case was pleaded. Had it been, different and other evidence would have been required to be adduced before the Magistrate as to the quantum. Coolmoore's submissions 64Coolmore submitted that Mr Ange's submissions on this matter went beyond the "past consideration is no consideration" argument and should be rejected. The argument now raised was not raised (nor is it the subject of a ground of appeal). There is no error of law in his Honour failing to consider the alternative way the case is now put on appeal. 65Coolmore submitted that the argument advanced before his Honour was "past consideration is no consideration." His Honour correctly applied the principles enunciated in Pao On v Lau Yiu Long. Mr Ange's submissions, however, seek to draw a distinction between the enforceability of the agistment contract and whether Coolmore performed that contract. That distinction is said to be a distinction without a difference. 66Coolmore submitted that, first, it is a distinction not drawn in Pao On v Lau Yiu Long. If there is prior performance, that is not the test to be applied; rather, there are three criteria as provided in Pao On v Lau Yiu Long. In addressing the criteria Coolmore submitted that the relevant act (the stallion covering the mare) was done at the promisor's request; the parties understood the act was to be remunerated by either payment or some other benefit; and the payment was legally enforceable had it been promised in advance. 67Coolmore submitted that the distinction drawn by Mr Ange is misconceived. The relevant promise in clause 1(1) was that the mare fall pregnant and that pregnancy be certified not earlier than 45 days from the last service. Coolmore procured or caused that event, namely pregnancy not less than 45 days after the stallion last covered the mare. Coolmore's relevant promise was performed, so the obligation for payment arose. 68I will first address Mr Ange's submissions. By oral submissions counsel for Mr Ange stated: KIDD: A lot of these submissions go to a point which was decided against us and which we do not complain about, which is past consideration is not consideration. That point, which is the enforceability where the state of consideration is past consideration, the magistrate did decide that question. We say he did not decide the necessary question, namely, para 6 of the statement of claim. We did not need leave to pursue our arguments about performance not having been established because from day one there was a non admission of the alleged performance in para 6. So it was always an issue in the case. At the close of evidence we put on our submissions, which I have already taken you to, which contended there has not been proved to the satisfaction of the conditions that are necessary to give rise to entitlement: performance has not been proved. We did not need leave to raise that matter, it was already in the case from the start of the proceedings, it was in the pleadings, it was in the closing address of the defendants. 69Counsel for Coolmore gave oral submissions: GILES: ... The way Mr Levet [sic] put it post trial was past consideration is no consideration: because the service of Immunity happened before the contract, the contract was unenforceable. Mr Kidd has a more subtle argument than that where he says don't worry about consideration but look at the order of events and that the contract required certain events to happen after the date of contract. That is a different point; his Honour did not err in not dealing with it when it was not run before him. 70It is my view that Mr Ange, after tendering the pregnancy certificate, provided written submissions to the Magistrate which covered the past consideration issue. The Magistrate considered what was put before him, the issue of past consideration. The Magistrate did not fail to deal with the issue as Mr Ange alleged. His Honour correctly considered the relevant issue of whether the past consideration was good consideration. I will now discuss this issue. 71The general rule is 'past consideration is no consideration': see Roscorla v Thomas (1842) 3 QB 234. However 'past consideration', which involves a promise being made after an independent transaction, is distinct from 'executed consideration', where something supplied is part of the same transaction as the promise sought to be enforced. Executed consideration may arise if there has been an earlier request for performance: see Pao On v Lau Yiu Long. 72In Pao On v Lau Yiu Long, the Court considered whether consideration expressed in a written guarantee was past consideration, which by itself was not capable of supporting the defendants' promise to indemnify the plaintiffs against their loss. It was said to be the subject of a vigorous challenge mounted for the first time in the appeal to the Board. At 629 Lord Scarman said: "An act done before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise. The act must have been done at the promisors' request: the parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit: and payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance. All three features are present in this case." 73In addressing the three-part criteria set out in Pao On v Lau Yiu Long, Mr Ange requested his mare be covered by Coolmore's stallion, which was done; Mr Ange understood Coolmore was to be remunerated by payment; and the payment was legally enforceable as it had been promised in advance. Hence there was good consideration. 74The Magistrate did not fail to determine the matters pleaded in paragraph 6, the issue raised concerning past consideration, what Mr Ange later raised was a new argument. The Magistrate correctly found the Agreement signed 10 October 2007 contained the necessary elements, in particular valuable (past) consideration, and was therefore enforceable. Coolmore proved the existence of the valid and binding contract supported by valuable (past) consideration. Thus, the Magistrate did not recast the burden of proof from Coolmore to Mr Ange. It was open to the Magistrate to draw the inference from the agreed facts that Coolmore arranged for the mare to be covered by the stallion and Coolmore thereby completed and performed its obligations under and pursuant to the Agreement. The Magistrate correctly disregarded that Coolmore's closing submissions differed from the pleadings on the basis that the case was reopened. Hence the Magistrate's finding in relation to past consideration is correct. This ground of appeal fails. 75On the appeal, counsel for Mr Ange submitted that it was wrong for the Magistrate to apply the test in Pao On v Law Yiu Long. He submitted that the test applied only in situations where the act or service constituting the past consideration was "stated" or otherwise referred to in the subsequent document. According to this argument, Coolmore had not provided valuable past consideration (or executed consideration) because the Agreement did not refer back to the act which Coolmore relied upon as consideration. Rather, the Agreement contemplated that consideration in the form of the impregnation of the mare was to be supplied after the execution of the Agreement. This is said to follow from the wording of clause 1(1), which states: "The Mare Owner will send the Mare to the Stud [Coolmore's premises] for service by the stallion named Holy Roman Emperor" (emphasis added). The substance of the submission for Mr Ange is that the terms of the contract itself precluded any reliance by Coolmore upon already executed consideration. Nothing less than future performance would suffice. 76In my view, this argument is misconceived. The use of the future tense in clause 1(1) ("will send") did not evince a clear intention on the part of the parties that consideration could be supplied after, and only after, the execution of the Agreement. The words, construed in their context, were used merely to clarify the order of performance: Mr Ange, the mare owner, was to send the mare to Coolmore's place of business for service by the stallion, after which Mr Ange would be obligated to pay Coolmore on satisfaction of the condition precedent (the mare's pregnancy). Whether that process took place before or after the Agreement was signed is immaterial, so long as the consideration is referable to an agreement to pay Coolmore for the servicing of the mare. The principles that apply to the present case were well stated by Bowen LJ in Re Casey's Patents; Stewart v Casey [1892] 1 Ch 104 at 115-6: "Now, the fact of a past service raises an implication that at the time it was rendered it was to be paid for, and, if it was a service which was to be paid for, when you get in the subsequent document a promise to pay, that promise may be treated either as an admission which evidences or as a positive bargain which fixes the amount of that reasonable remuneration on the faith of which the service was originally rendered." 77It could hardly be suggested that Coolmore gratuitously agreed to have the stallion service the mare. It was implied at the time that Mr Ange was to pay for the service if the mare fell pregnant to the stallion. The subsequent document included a promise to pay for the service supplied by Coolmore. It may therefore be treated as fixing the reasonable remuneration on the faith of which the servicing of the mare was rendered. The particular words used in clause 1(1) of the Agreement do not affect this analysis. 78As I have decided that both appeal grounds fail, it is not necessary to consider Coolmore's notice of contention. While I do not express a concluded view on this topic it seems to me that the pregnancy certificate, a contractual condition, with reasonable diligence could have been discovered and put into evidence: see Re Australasian Meat Industry Employees' Union (WA Branch); Ex parte Ferguson (1986) 67 ALR 491. Had the certificate been in evidence at the trial Coolmore could have asked the witnesses further questions on the topic. There was prejudice occasioned to Coolmore, see Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256 at 267. My tentative view is that Mr Ange should not have been granted leave to reopen his case. 79There is no error of law. Nor does this appeal raise an issue of mixed fact and law for which leave should be granted. The result is that the appeal is dismissed. The decision of his Honour Magistrate Brydon dated 20 October March 2011 is affirmed. The summons filed 4 April 2012 is dismissed. 80Costs are discretionary. Costs normally follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed. The Court orders that: (1) The appeal is dismissed. (2) The decision of his Honour Magistrate Brydon dated 20 October 2011 is affirmed. (3) The summons filed 4 April 2012 is dismissed. (4) The plaintiff is to pay the defendant's costs as agreed or assessed. ********** 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. Decision last updated: 20 June 2012