Supreme Court New South Wales Medium Neutral Citation: Williams v. Walker [2013] NSWSC 1013 Hearing dates: 17/7/13 Decision date: 17 July 2013 Jurisdiction: Common Law Before: Campbell J Decision: 1. Appeal and summons dismissed 2. The plaintiff to pay the defendant's costs on the ordinary basis after they have been agreed or assessed. Catchwords: LOCAL COURT APPEAL - s39 Local Court Act 2007 (NSW) - purchase of motor car - whether case put below was fairly arguable on the pleadings - whether on the facts as found only one conclusion was legally open - whether primary judge committed error of law by failing to appreciate the significance of argument seriously advanced Legislation Cited: Local Court Act 2007 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: -Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139 -Colyer Fehr Tallow Pty Ltd v KNZ Australia Pty Ltd [2011] NSWSC 457 -Cox v Goldcrest Developments Pty Ltd [2000] NSWSC 763; 50 NSWLR 76 -Currie v Dempsey [1967] 2 NSWR 532; 69 SR (NSW) 116 -Dare v Pulham (1982) 148 CLR 658 -Dennis Wilcox Pty Ltd v Federal Commissioner of Taxation (1988) 79 ALR 267 -Devries v Australian National Railways Commission [1993] HCA 78; 177 CLR 472 -Drew v Nunn (1879) 4 QB 661 -Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 -Hope v Bathurst City Council (1980) 144 CLR 1 -Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Category: Principal judgment Parties: Keith Williams (plaintiff) Diane Rosemary Walker (defendant) Representation: Counsel: M. Gunning (plaintiff) T. Bors (defendant) Solicitors: Pope & Spinks Law (plaintiff) Schrader Legal (defendant) File Number(s): 2012/365412 Decision under appeal Jurisdiction: 9109 Date of Decision: 2012-10-29 00:00:00 Before: Magistrate Stapleton File Number(s): 2011/385583 EX TEMPORE Judgment 1CAMPBELL J: The plaintiff, who I will refer to throughout as Mr Williams, appeals under section 39(1) of the Local Court Act 2007 (NSW) from the judgment of her Honour Magistrate Stapleton, given in favour of the defendant on 29 October 2012. I will refer to the defendant as Mrs Walker. 2Mrs Walker was the plaintiff below and the judgment in the sum of $68,446, and interest, was based upon what the learned Magistrate found to be a total failure of consideration proffered on a contract for the sale of a Mercedes Benz motor car. 3Mr Williams advances seven grounds of appeal involving what are said to be questions of law only. Mr M Gunning of counsel, who appears for Mr Williams, has grouped the seven grounds into three substantive arguments as follows: (1)Grounds 1 and 2 which relate to Mrs Walker being permitted to advance a case which Mr Williams says was not fairly open on the pleadings (2)Grounds 3, 4 and 5 are to the effect that there was only one conclusion open as to the characterization of the contract between the parties on the evidence accepted by her Honour, namely, that Mr Williams was not a party principal to the contract for the sale of the car, but rather was a mere agent acting on behalf of Mr Williams, Mrs Williams' late husband. This argument arose by way of confession and avoidance, in a manner which I will explain later in my reasons. (3)Grounds 6 and 7, in substance, allege a failure to consider a substantial argument advanced on behalf of Mr Williams at trial which, if accepted, would have put a different character on his post-contractual conduct. Again I will explain the argument further below. 4Mr T Bors of counsel, who appears for Mrs Walker, joins issue, arguing that none of the grounds of appeal raises or demonstrates a material error of law. 5To resolve the appeal, it is necessary to say something briefly about the facts and evidence below. Mr and Mrs Walker carried on a hire car business in partnership. Mr Williams was in business as a commercial agent accredited in Hong Kong and New Zealand. He and Mr Walker became friendly through their mutual engagement in a service club. 6Prior to the events that gave rise to the dispute they had entered into what for present purposes I will call an arrangement to import a different Mercedes Benz motor vehicle into Australia for use by Mr and Mrs Walker in their business. That particular arrangement was performed successfully. There is no issue between the parties that an arrangement had been entered into to bring another Mercedes Benz into Australia. The question is what was the character of the legal relationship so created. 7From the argument I have heard today I accept that the substantive issues at trial have been accurately summarised at paragraph 11 of Mr Bor's written submissions which are found at pages 386-87 of the court book provided by the parties: There was no issue in the proceedings below that Mr Williams had found a car for sale in Hong Kong, and that he would purchase it. The issue was whether: a) on Mrs Walker's case - having been paid in advance, Mr Williams would import it to Australia and deliver it to Mr and Mrs Walker by way of a sale, or; b) on Mr Williams case - he would purchase it as agent for Mr Walker in Hong Kong, and thereafter owe no further obligations. 8Mr Williams' case that he would purchase the Mercedes Benz as agent for Mr Walker in Hong Kong, and thereafter owe no further obligations, as it was put below and explained on appeal, had further refinements. The first essential aspect of his case was that Mr Walker, during the currency of the agency, had in fact, in that limited capacity, purchased the vehicle by paying the money provided to him by Mr Walker to the vendor for that purpose. Secondly, under the terms of the agency it was Mr Walker's obligation, not his, to make the necessary arrangements to bring the car into Australia (Mr Williams not being licensed here for that purpose). Thirdly, that the agency was terminated by Mr Walker's untimely death in the first half of 2009 and that Mr Williams was discharged from any further legal obligation under the terms of the contract of agency, and that any further conduct that might be seen as referable to an ongoing contractual arrangement to which he was a party principal rather should have been viewed as motivated by a desire on the part of Mr Williams to lend Mrs Walker a helping hand because of the previous friendship between him and her late husband. I might add, it could be said that if the agency was as confined as Mr Gunning persuasively put it in argument before me, it was probably discharged by performance at the point of sale. 9 It is important to record at this point in time that the learned Magistrate at [32] of her judgment, p 12 of the court book, rejected Mr Williams' case about him acting as a mere agent, finding in particular, as I will set out in more detail later, that he was not an honest or reliable witness as to the terms of the agreement and that he could not be relied upon in relation to his evidence about whether he carried out "his admitted obligation to buy the motor vehicle". 10On a point of law appeal only, Mr Gunning fully accepted his inability to challenge that finding of fact based upon the decision of the Court of Appeal in Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139. Mr Gunning also accepted that even had the appeal been by way of rehearing, which it is not, he would have run into the statement of principle relied upon by Mr Bors from Devries v Australian National Railways Commission [1993] HCA 78; 177 CLR 472 at 479. 11However Mr Gunning relies on the evidence, accepted by the learned Magistrate, set out at paragraphs 12and 13 of Mrs Walker's affidavit, which was exhibit 1 below, and which appears from p 233-4 of the court book, and is in the following terms: 12. In about December of 2008, my late husband Russell, said words to me to the following effect: "Keith Williams has found another two year 2000 model E320 Mercedes limos in Hong Kong. He is thinking of taking one and doing weddings with it. He has asked if we would want the other one for the business." I said: "How much is it?" "The car is about $60,000, and, of course, Keith will take care of the purchase, the shipping and all the red tape. All we need to do is give him the money." I said: "Ok. Let's get it" 13. A few days later, Russell said words to me to the effect of: "I've spoken to Keith. I've told him that we will take the E320. He is organising the purchase and shipping. I will make a part-payment to him this week and the rest in January. It should take less than the 9 months it took for the previous car to arrive." The learned Magistrate found that Mrs Walker was both honest and reliable. 12Before detailing the argument and recording my decision in relation to it I should set out some passages from her Honour's judgment: [32] The failure of Mr Williams to provide a clear account of what he did in purchasing the vehicle, his failure to produce a contract for sale of the motor vehicle and transfer of title, his failure to produce any bank statement or the tike which would establish that he had paid the balance of the purchase price to the dealer on 12 December 2008, his failure to produce any documents evidencing the purchase in answer to numerous requests, the late production of the receipt from the dealer and the commercial invoice dated December 2008, his failure to prove that he repaid the mistaken $5,000 payment, his failure to prove that storage costs had been charged, his failure to prove that he had paid $3,500 for storage costs, his assertion that the vehicle has been sold, his failure to explain the sale or account for the sale proceeds and his unsatisfactory and inconsistent answers in cross examination lead me to conclude that he is not an honest witness nor a reliable witness as to the terms of the agreement between the parties or whether he even carried out his admitted obligation to buy the motor vehicle. [33] The conduct of Mr Williams after the asserted purchase by him is consistent with his obligations under the agreement as described by Mr Walker to Mrs Walker. Mr Williams continually promised Mrs Walker he was arranging or had arranged the shipping. He did not ask her to complete any documents, he said he needed no help from her. He never asserted that he was doing it as a favour to her. He did not ask for payment of shipping fees. His conduct was an admission by him that the agreement required him to ship the motor vehicle to Australia He was paid a fee for that service and his denial of the fee cannot be believed. [34] I find that the agreement made between the parties in December 2008 required the defendant to import and sell to the plaintiff a 2000 Mercedes Benz E320, (then located in Hong Kong) for a total price of $64,946 as alleged in the Statement of Claim. It is not necessary for the Court to make a finding as to the actual words used; (citation omitted). ......................... [37] I reject the defendant's submission that the 2008 agreement was an agency agreement. There is nothing in the agreement that can be objectively construed to mean that Mr Walker gave authority to Mr Williams to contract with dealer to purchase the vehicle. The agreement required Mr Walker to pay the purchase price to Mr Williams with an additional $55OOOwhich can be interpreted as his fee for carrying the transaction. The motor vehicle was for Mr Walker but that is a different concept to the agency proposition that Mr Walker was the buyer in the transaction entered into by Mr Williams with the dealer. [38] Mr Gunning also argued that it is not a case of total failure of consideration. This argument relied upon a finding that Mr Williams was the agent of Mr Walker and so must fail. Mr Gunning cited Fibrosa Spolka Akcyjana v Fairnairn Lawson Combe Barbour Ltd [1943] AC 32. The ratio of that case is that where goods are the subject matter of an agreement, if a vendor has failed to perform the obligation to pass title to the purchaser in accordance with the contractual terms, after having received payment for the goods, the purchaser has not received what he has bargained for, and there is a total failure of consideration. It is irrelevant that Mr Williams was not the owner of the motor vehicle at the time he made the agreement with Mr Walker. [39] The plaintiff has claimed $68,446 which is the amount paid by Mr Walker plus the $3,500 paid by Mrs Walker for the storage. I have found that there is no evidence to support the contention that a storage fee was charged for the vehicle or paid by Mr Williams. It was paid at the request of Mr Williams who asserted that there was agreement to the payment of storage costs. It is a loss that has been suffered as a consequence of the breach of contract and is recoverable. 13Dealing with grounds 1 and 2, Mr Williams argued that her Honour permitted Mrs Walker to present a case not supported by her pleadings over his objection. By reference to Dare v Pulham [1982] HCA 70; 148 CLR 658 it was argued that it is a fundamental principle that a party is bound by the case as pleaded, and the remedy sought, in the statement of claim. 14In her statement of claim Mrs Walker pleaded, according to the argument, that she was the principal to the contract, whatever its correct characterisation, for Mr Williams' involvement in the purchase of the car. But in exhibit 1 she swore that she and her late husband carried on the business of D & R Limousines in partnership. The objection below was the subject of an application for an adjournment which her Honour dealt with at court book 42-43. 15No ground of appeal was based upon the refusal of the adjournment per se, but Mr Gunning argues that, as a matter of law and practice, if Mrs Walker's case was that she was a party to a contract made between Mr Williams and her husband because she was her husband's business partner, that was a material fact that was required to be pleaded. Her Honour, both when the point was taken and in her reasons for judgment, pointed out that the Local Court as a matter of practice is not regarded as a court of strict pleading, although undoubtedly bound by the Uniform Civil Procedure Rules 2005 in the exercise of its civil jurisdiction. 16In any event no point had been taken by Mr Williams about Mrs Walker's title to sue on the contract, whatever it was, factually made by her husband and Mr Williams. Nor was any objection taken to the evidence of Mrs Walker upon which the case in contract was based as set out above. 17It seems to me that on her pleadings Mrs Walker's case was always that she was a party principal, if I may put it that way, to the contract. The question of how that came about was more a matter of particulars than pleading in my judgment. I accept the force of the argument advanced on behalf of Mr Williams that it would have been better practice for those particulars to be set out in the statement of claim from the outset. But it seems to me that if there was an error of law, and I must say I am not satisfied that there was, then in any event it was not material error given that Mr Williams always came to court to meet a case that Mrs Walker was a party to the contract, and did not deny a contract but rather disputed the characterisation of it in a way which I would regard as confession and avoidance. 18Moreover, the evidence, in accordance with the Local Court procedures, was exchanged by the parties prior to the date of trial and, although one is entitled to know what case one must meet without trawling through the opponent's material in an attempt to second guess it, in a relatively straightforward case like this, the exchange of this material in accordance with the practice and procedure of a trial court strongly militates against the potential for surprise. I can see no error of law or fact in her Honour permitting Mrs Walker to present her case as she did. 19I will turn now to grounds 3, 4 and 5. As I have said, very properly, Mr Gunning acknowledged that in deciding the character of the contract her Honour rejected his client's evidence and accepted Mrs Walker's evidence. Mr Gunning acknowledges that part of the decision is beyond challenge in this court. However, he argues that on the evidence the learned Magistrate accepted only one conclusion was legally open and that was the conclusion for which his client contended. In making this argument he relies upon what Glass JA said in Azzopardi at p157 in reliance upon the exposition of principle by Mason J (as his Honour then was) in Hope v Bathurst City Council (1980) 144 CLR 1 at 7-8. That is to say that on the facts found by her Honour the only conclusion legally open was that the contract between, I will say, the Walkers on the one hand and Mr Williams on the other, was that Mr Williams had been engaged as agent to act for Mr and Mrs Walker as principals upon their purchase of the Mercedes Benz in the province of Hong Kong. As I have said, on Mr Williams' evidence, which her Honour rejected, that obligation was discharged by performance in December 2008. 20Mr Gunning argues that the evidence at pp 233-4 of the court book, set out at [11] above, is consistent only with an arrangement of agency. He says this arises out of the language that: "Keith will take care of the purchase, the shipping and all the red tape. All we need to do is give him the money." And also the reference: "I've told [Keith] that we will take the E320. He is organising the purchase and shipping. I will make a part payment to him this week and the rest in January." 21Moreover, it is clear on her Honour's finding at [32] and elsewhere that her Honour accepted evidence that part of the sum she awarded was $5,030 (see judgment [28], p 11 court book) which on the plaintiff's case was described as "the fee for Mr Williams' service and completing the sale and arranging the shipping to Australia". 22Mr Gunning argues that the suggestion of payment of a fee is also only consistent with Mr Williams acting in a limited capacity as agent rather than acting as a principal to a contract in which he is the vendor of a motor vehicle and the Walkers are the purchasers. 23I think there some force in this second part of Mr Gunning's argument. On the other hand, I accept the argument of Mr Bors the matter of the fee is not, as a matter of law, decisive one way or another. 24A second factor which Mr Gunning points to - and this is also related to the argument in respect of grounds 6 and 7 - is that, assuming for the moment that the contract is one of agency, it terminated upon the death of Mr Walker even though Mrs Walker survived. In this regard counsel relies upon the decision of Young J (as his Honour then was) in Cox v Goldcrest Developments Pty Ltd [2000] NSWSC 763; 50 NSWLR 76 at 78 where his Honour referred to and adopted a statement of principle from a leading text that "where the authority of an agent is derived from joint principles who are jointly interested in its execution, the death of one of the principles generally terminates the agency, (with some omissions), except where the agency is coupled with an interest." Mr Gunning says where Mr and Mrs Walker are partners in the business they are joint principals and not individuals separately authorising the agent to act. The significance of the application of this principle, which it may be thought builds upon what was said in Drew v Nunn (1879) 4 QB 661 (another authority Mr Gunning relies on) is that it materially affects the significance of the post-contractual conduct of the parties after the death of Mr Walker which her Honour relied upon in part to resolve the contest of the nature of the contract in favour of Mrs Walker. 25Her Honour dealt with this matter at pages 7-8 of the court book, in [10] to [15] of her judgment. In essence she relied upon the analysis of Ball J in Colyer Fehr Tallow Pty Ltd v KNZ Australia Pty Ltd [2011] NSWSC 457, that post-contractual conduct can be relied upon to determine the existence and terms of an oral contract as opposed to its interpretation. The correctness of the primary judge's decision in that regard is not called into question on this appeal. 26Mr Gunning makes a strong case in regard to these matters. However, in my judgment, the points essentially come down to what was at trial a contested question of fact which her Honour resolved in favour of Mrs Walker. I am not convinced that the second point taken together with the first brings the matter into that line of territory where only one answer to the question posed by the issues was legally open. Moreover, in deciding that question on appeal, I think it important to bear in mind, as her Honour found, that as the matter was put forward as one by way of confession and avoidance, Mr Williams carried at least an evidential onus to show that the contract for which he contended had been fully discharged by performance, or terminated by the death of Mr Walker; see Currie v Dempsey [1967] 2 NSWR 532; 69 SR (NSW) 116 per Walsh J. 27The relevance of that consideration is that in accordance with the analysis of Glass JA in Azzopardi at page 156, it is not open to the party who bears a relevant onus in respect of a matter to rely upon an alleged insufficiency of evidence to prove the facts as raising a question of law. I reject grounds 3, 4 and 5. 28I turn then to grounds 6 and 7. From [33] and [37] of her Honour's judgment set out above, it can be seen that her Honour stated - I acknowledge I am taking it out of context - that Mr Williams "never asserted that he was [continuing in his efforts to have the car brought to Australia] as a favour to [Mrs Walker]". 29Mr Gunning points to the evidence at court book 152.46 and 153.7, and to his written submissions at page 322, paragraphs 14 to 17 below to demonstrate that is exactly what Mr Williams said in evidence. He argues that her Honour clearly overlooked this significant point. The significance of the argument is that if Mr Williams' evidence in that regard was accepted, it would dilute the reliance placed upon his conduct after the death of Mr Walker as evidence allowing her Honour to draw inferences about the existence and terms of the contract favouring Mrs Walker. 30In advancing the argument reliance is placed upon Dennis Wilcox Pty Ltd v Federal Commissioner of Taxation (1988) 79 ALR 267 at 276-7 where the Full Federal Court (Jenkinson, Woodward and Forster JJ agreeing) held that a failure by a court or tribunal to mention a contention or, indeed, to misunderstand a contention worthy of serious consideration and seriously advanced by a party will generally be regarded as an error of law. This is an exemplification of the judicial duty of a court to give reasons, breach of which is almost invariably understood to be an error of law; see Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247. 31I do not understand Mr Williams' argument to criticise her Honour's discharge of her duty generally. If I may be permitted to say so, I think her Honour's reasons are admirable, both succinct and appropriately comprehensive. However, Mr Gunning's point is different. His point is, as I have stated it, that the failure to appreciate the significance of the argument seriously advanced supported by a body of evidence, and to deal with it in the reasons is of itself an error of law justifying remitter and retrial. 32In answer to this, Mr Bors says that her Honour's decision, and her Honour's impugned observation, should not be read out of context. From [19] to [31] her Honour dealt with Mr Williams' evidence in quite some detail and reviewed it in the light of what might be referred to as the contemporaneous documents, the probabilities and her own experience of life. As a result of that process fully disclosed in her reasons her Honour arrived at the conclusion expressed at the end of [32] (page 12 of the court book) set out above and to which I have already made reference. The passage complained of appears in the next succeeding paragraph. Mr Bors argues that, properly understood, her Honour was referring to the contemporaneous documents and Mr Williams did not assert in any of the lengthy correspondence between him, Mrs Walker, Mrs Walker's son and her then solicitor that he was acting out of friendship and not out of consciousness of an obligation to bring the Mercedes Benz to Australia and deliver it to Mrs Walker. 33It is a well settled principle that in evaluating an argument that a Court's reasons are inadequate, to discharge a judicial officer's legal duty one is required to read those reasons fairly, in context, as a whole and with an eye not too finely attuned to the detection of legal error. Approaching her Honour's reasons in the light of that principle I find that grounds 6 and 7 are not made out. 34What I have so far is sufficient to dispose of the appeal. I think it important to point out, however, from the conclusions stated at [37] to [39] of her Honour's reasons (court book p13 and 14), it is clear that her Honour was granting what might be referred to as a restitutionary remedy because of the total failure of the consideration proffered by Mr and Mrs Walker for the purchase, importation and delivery of the car. In this regard her Honour relied upon the principle discussed in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32, a decision which had been properly drawn to her attention by Mr Gunning at trial. It seems to me that this decision is an example of a wider principle than its factual context suggests, dealing only with the frustration of a contract for the sale of goods. It is clear from their Lordships' speeches that the question posed for determination in that case was resolved by amplification by a more general principle. I raised with counsel in the course of argument the question of whether, had grounds 3, 4 and 5 been made good, in any event by application of the same principle, the same judgment would have ensued by reason of her Honour's finding that she was not satisfied, in effect, that Mr Walker "even carried out his admitted obligation to buy the motor vehicle". Diverting as that question may be, given the decision I have made in relation to the grounds advanced, no occasion arises for its determination. For these reasons I order: (1)Appeal and summons dismissed; (2)The plaintiff to pay the defendant's costs on the ordinary basis after they have been 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: 31 July 2013