BGC (Australia) Pty Ltd v Douglas
[2007] WADC 150
•30 AUGUST 2007
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: BGC (AUSTRALIA) PTY LTD -v- DOUGLAS [2007] WADC 150
CORAM: WAGER DCJ
HEARD: 16 AUGUST 2007
DELIVERED : 30 AUGUST 2007
FILE NO/S: CIV 2254 of 2002
BETWEEN: BGC (AUSTRALIA) PTY LTD
Plaintiff
AND
LLOYD KENNETH DOUGLAS
Defendant
Catchwords:
Contract - Written agreement - Identification of parties - Whether contract made with a proprietary limited company or with an individual
Legislation:
Business Names Act 1962 s 5(5)
Corporations Act 2001 s 1274(c)
Result:
The defendant is a party to the action
Representation:
Counsel:
Plaintiff: Mr D J Marsh
Defendant: Mr J P W Olivier
Solicitors:
Plaintiff: Hotchkin Hanly
Defendant: Talbot Olivier
Case(s) referred to in judgment(s):
Aitkin Transport Pty Ltd v Voysey [1991] 1 Qd R 510
Gadd v Houghton (1876) 1 Ex D 357
Goss v Lord Nugent (1833) 5 B & Ad 58
H J Lyons & Sando Ltd v Houlson [1963] SASR 29
Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154
WAGER DCJ: The question for this trial of a preliminary issue is whether the plaintiff, BGC (Australia) Pty Ltd, contracted with the defendant, Lloyd Kenneth Douglas or with another entity, Lobby Holdings Pty Ltd.
Although the defendant has the carriage of the preliminary issue the onus is on the plaintiff to prove on the balance of probabilities that the plaintiff had contracted with the defendant.
The plaintiff alleges that the defendant was in breach of a contract between the parties to install a metal deck, metal roofing and roof plumbing to a property in Hazelmere in 2001. It is alleged in the alternative that the defendant owed the plaintiff a duty to exercise due care and skill in carrying out the roofing work and that the defendant carried out his tasks negligently. The plaintiff thereby suffered damage. The defendant denies that he contracted with BGC (Australia) Pty Ltd to perform the task and alleges that Lobby Holdings Pty Ltd trading as Lloyd Douglas Roofing was the sole party to the contract.
The facts
The plaintiff called two witnesses, the defendant Lloyd Kenneth Douglas and Neil Reynolds.
A written agreement for the work the subject of the claim was tendered in evidence. Both witnesses identified the contract and both identified their signatures on the contract.
The substance of the contract is not relevant to this hearing. Where relevant the written contract states:
"BGC Roofing
THIS AGREEMENT is made on the 3rd day of December 2001.
BETWEEN: BGC Australia
of 2 Cook Street, CANNING VALE
AND LLOYD DOUGLAS ROOFING
of 2 Allport Close, CARINE WA 6020
…
EXECUTED by the parties
SIGNED for and on behalf of BGC Australia Pty Ltd
Neil Reynolds (signature)
by its duly authorised representative in the presence of:
(Neil Postma)
Address: c/- BGC Metal Roofing
Occupation: Canning Vale
SIGNED for and on behalf of LLOYD. K. DOUGLAS
(signature)
by its duly authorised representative in the presence of:
(blank)"
The following is not in dispute:
1.The business name Lloyd Douglas Roofing was registered by the corporation Lobby Holdings Pty Ltd on 1 June 1993. The renewal date and the cease date of the business registration was 1 June 1999. The nature of the business was roofing contractors/building. Although the business had ceased to be registered at the time when the written contract was signed it was submitted by the defendant that s 5(5) of the Business Names Act 1962 applied. Section 5(5) states:
"Notwithstanding anything in this Act, a contravention of or failure to comply with any provision of this Act does not operate to avoid any agreement, transaction act or matter."
2.Lobby Holdings Pty Ltd was registered as an Australian company pursuant to Corporations Law subsection 121(1) on 5 April 1993.
3.Pursuant to Corporations Act 2001 s 1274(c) Lloyd Kenneth Douglas was registered as holding the office of Director of the company Lobby Holdings Pty Ltd from 5 April 1993.
4.Correspondence sent to the plaintiff on 28 November 2001 in relation to the agreement but prior to the written contract being signed is headed to:
"BGC Constructions
Mount Street
Perth WA 6000
ATTENTION: NEIL REYNOLDS"
The letterhead refers to :
"Lloyd Douglas Roofing
Specialising in Commercial, Industrial & Residential Roofing – Zincalume or Colorbond
2 Allport Close Carine WA 6020
MOB: 0418 940 639"
The letter is signed "Lloyd K Douglas".
Given that the contract is in the form of a written agreement only objective evidence relating to the formation of the agreement and to the identity of the parties was received in evidence.
The parol evidence rule is summarised in Cross on Evidence in reliance on the judgment of Denman LJ in Goss v Lord Nugent (1833) 5 B & Ad 58 at p 64 – p 65:
"[I]f there be a contract which has been reduced into writing, verbal evidence is not allowed to be given of what passed between the parties either before the written instruction was made or during the time it was in a state of preparation, so as to add or subtract from or in any manner vary or qualify the written contract …"
Heydon JD Cross on Evidence (7th Australian Edition) 2004, Butterworths [39145].
Further, the Court cannot look to subsequent communications as an aid in the construction of the contract or to ascertain the identity of the parties to the contract (Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154 at par 59).
The plaintiff submits that the written contract must clearly identify that the agent is contracting on the principal's behalf. The plaintiff refers to the decision of Chamberlain J of the South Australian Supreme Court in H J Lyons & Sando Ltd v Houlson [1963] SASR 29 at 31:
"But what must be borne in mind in order to escape personal liability the agent must do more than disclose the identity of the principal he must make it clear that he is contracting on the principal's behalf and not on his own. No rule of law is better ascertained or stands on stronger foundation than this, that where an agent names his principal, the principal is responsible, not the agent, but for the application of the rule the agent must make his name principal as the person to be responsible."
The plaintiff refers to the key passage of Gadd v Houghton (1876) 1 Ex D 357 at 360 per Mellish LJ:
"When a man signs a contract in his own name he is prima facie a contracting party and liable and there must be something very strong on the face of the instrument to show that the liability does not attach to him."
It is submitted that Mr Lloyd failed to identify that he was contracting for any other entity. He signed the document on his own behalf and he did not disclose the name of the proprietary company nor did he list any relevant material such as an Australian Business Number or Australian Company Number. There was nothing on the face of the instrument to change the position that it is Mr Lloyd not Lobby Holdings Pty Ltd to whom liability attaches.
The defendant submits that this case is factually analogous to that of Pethybridge v Stedikas Holdings Pty Ltd (supra) and that the defendant signed on behalf of Lobby Holdings Pty Ltd and not on his own behalf. The facts of Pethybridge v Stedikas Holdings Pty Ltd need to be set out in order to consider this submission.
In Pethybridge v Stedikas Holdings Pty Ltd the respondent was the owner of a shopping centre site and a Mr Watton was the General Manager of the company engaged to manage its construction. The appellant together with his wife were director of Torpoint Investments Pty Ltd trading as C & D Asphalt Service. Mr Watton addressed correspondence relating to the contract with the respondent to:
"C & D Asphalt Service
47 Hynds Road
BOX HILL 2765".
The salutation with which the letter opened was "Dear Sir".
The response to the correspondence was typed on a page with letterhead that read:
"C & D ASPHALT SERVICE
47 HYNDS ROAD, BOX HILL NSW 2765
Specialising in
Car Parks & School Playgrounds, Red Asphalt, Hot‑Mix, Two Coat Seal, Red Gravel Driveways".
The letter is signed:
"Thanking you,
Yours sincerely,
CHRIS PETHYBRIDGE".
The Australian company ("ACN") number for Torpoint Investments Pty Ltd is written on the bottom right hand corner of the letter.
Subsequent correspondence to Mr Watton is written on the same letterhead using the same details however the letters "pp DP" are written above the printed name of Chris Pethybridge.
Mr Watton subsequently issued a written order to C & D Asphalt Service at the Box Hill address. The correspondence is headed "Attention: Dennis Pethybridge".
Subsequent communications are in a similar form however the invoice sent to Mr Watton claiming payment for work done as part of the contract has the ACN number of Torpoint Investments Pty Ltd on its face and has the words "this company Torpoint Investments Pty Ltd" stamped at the foot of the document.
It was only on receipt of this invoice after the contract had commenced that Mr Watton heard of Torpoint Investments Pty Ltd. At no time had Mr Watton conducted any searches or made any enquiries in relation to the ownership of the name C & D Asphalt Services.
In his judgment in Pethybridge v Stedikas Holdings Pty Ltd Campbell AJ refers to cases where the registered business name is a different name from the identity who is carrying on the business. At par 39 he said:
"These cases establish that, in circumstances where the registered proprietor of a business name is not in fact carrying on the business that is carried on under that name, and has not conferred an actual or ostensible authority on the person who is actually conducting the business to act on his behalf, a person who enters a contract with whoever it might be that is carrying on business under the business name does not contract with the registered proprietor of the business name. In the present case, it is established that the Appellant was not carrying on business under the registered business name. Nor is there evidence that he conferred any actual authority on Torpoint to act on his behalf in connection with the business. Nor did he represent to Mr Watton that C & D Asphalt Service was a name under which he carried on business. Both quotations from C & D were made on stationery that bore the business name, and the ACN, of Torpoint, and purported to be signed by Chris Pethybridge. None of those attributes of the quotation suggest that it is the Appellant who was carrying on business under the business name. Though the second quotation was probably initialled by the Appellant, it was initialled in what was expressly stated to be a "p p" capacity – something which usually conveys that the person who so initials is acting on behalf of someone else, not on his own behalf. (The initials stand for per procurationem, Latin for "by proxy" or "by the agency of".) Though it was the Appellant who saw Mr Watton on 11 March, nothing transpired on that occasion in which it was expressly said, or from which the inference could properly be drawn, that it was the Appellant who was carrying on the business of C & D Asphalt Service, rather than in some fashion working for it. In those circumstances, the proper conclusion is that it was not the Appellant who entered the contract with the Respondent."
Campbell JA also considered the decision of Aitkin Transport Pty Ltd v Voysey [1991] 1 Qd R 510. His Honour notes at 43:
"There is a difficulty in identifying any precise proposition of law that was adopted by the Full Court in Aitkin. At 514‑516 Kelly SPJ said:
…
'The intention for which the Court looks is an objective intention of both parties, based on what two reasonable businessmen making a contract of that nature, in those terms and in those surrounding circumstances, must be taken to have intended."
(The Swan) [1968] 1 Lloyd's Rep 5 at 12.
In his analysis of Aitken Campbell JA further states:
"The Chief Justice also referred to the judgment of Chamberlain J in H J Lyons & Sando Ltd v Houlson (supra) which contained the passage to which the learned trial judge had also referred and is to this effect:
'The prima facie position is that when a man orders work to be done he impliedly undertakes to pay for it, and if he desires to avoid the liability so undertaken by setting up that he was acting purely as agent for another person, he must have made that position clear to the other contracting party.'
McPherson J relying on Ingram v Little [1961] 1 QB 31, 66, and Lewis v Averay [1972] 1 QB 199, 207, 208, referred to the presumption that a person is intending to contract with the person to whom he is addressing the words of the contract and went on to say:
'The presumption is one of fact and so may be displaced by evidence of a contrary intention. Such an intention may be ascertained by an objective assessment of the words and deeds of the parties in the light of all the evidence, as well as the actual knowledge of the parties seeking to enforce the promise against the individual. He cannot of course insist upon a contract with the individual if he in fact knows that the individual was acting as the representative of another, whether or not that other is a corporate entity or natural person or firm. But it lies with the person seeking to avoid that liability to show that there are circumstances, including such knowledge, sufficient to displace the prima facie inference that he is the one liable on the contract.' "
In conclusion Campbell JA states at par 56:
"[56]In the present case, as well as there being clear (indeed undisputed) evidence that it was Torpoint that carried on business under the business name, there were objective indications, in the statement of the ACN numbers on each of the quotations that the contract was one with a corporation. Whether Mr Watton actually observed the ACNs stated on the two quotations is irrelevant to whether those ACNs are matters properly to be taken into account in deciding who were the parties to the contract. What matters is that the ACNs were part of the communications that led to the contract, and hence are properly to be taken into consideration as one of the matters relevant to identification of the identity of the contracting parties.
[57]Other evidentiary material appropriate to be taken into account in that respect is that all of the communications were addressed to or came from, 'C & D Asphalt Service'. Such a business name is equally consistent with the entity that carries on business under that name being a corporation, or being a natural person. It is also relevant that both parties knew that C & D Asphalt Service was a local organisation … that it advertised 'pretty well', and I infer from the evidence that Torpoint was the only entity that had so advertised."
Accordingly Campbell JA reached the view that the trial Judge in that case was in error in giving insufficient weight to the matters relating to the company and, in accordance with the objective theory of contract, allowed the appeal and made orders in favour of the appellant.
Factually Pethybridge v Stedikas Holdings Pty Ltd can be distinguished from the present case because:
(a)The contract is contained in one signed agreement.
(b)The correspondence is signed by the defendant in the defendant's name.
(c)There is no reference to Lobby Holdings Pty Ltd, an Australian Company Number or an Australian Business Number in the letterhead set in any of the correspondence.
(d)The name Lloyd Douglas Roofing could apply to an individual or to a corporation. There is no subsequent reference to Lloyd Douglas Roofing in the agreement nor to Lobby Holdings Pty Ltd.
(e)There is no mention of Lobby Holdings Pty Ltd in any correspondence between the parties. Lloyd K Douglas is the only entity referred to.
(f)The written agreement itself is signed by Lloyd K Douglas for and on behalf of Lloyd K Douglas. This can be contrasted with the identification of BGC (Australia) Pty Ltd's agent Neil Reynolds who has signed the written agreement as agent for and on behalf of BGC (Australia) Pty Ltd.
Although s 5(5) Business Names Act 1962 applies it is still relevant that at the time of signing the agreement the business name of Lloyd Douglas Roofing had ceased so that a search of the Business Names Register at the relevant time would not positively disclose that Lloyd Douglas Roofing was the business name for Lobby Holdings Pty Ltd. The only evidence consistent with Mr Douglas signing as an agent or in some other capacity including as a director for Lloyd Douglas Roofing is contained in Mr Reynolds answer in cross‑examination in relation to his subjective belief of the role played by Mr Lloyd in the business dealings.
In Pethybridge and Stedikas Holdings Pty Ltd Campbell JA said:
"Whether Mr Watton actually observed the ACN stated on the two quotations is irrelevant as to whether those ACNs are matters properly to be taken into account and deciding who were the parties to the contract."
There was nothing disclosed on any of the documents to indicate that Mr Douglas was not signing in his personal capacity.
Mr Reynolds' subjective opinion does not identify who the parties to the contract were when, on objective assessment, Mr Douglas was a party in his own right.
I find that the plaintiff has proven on the balance of probabilities that the plaintiff contracted with the defendant, Lloyd Kenneth Douglas.
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