Case v Vitiwise Pty Ltd No. Scciv-03-532

CASE & ANOR v VITIWISE PTY LTD
[2003] SASC 273
Civil

Doyle CJ This is an appeal by two defendants against a judgment entered against the second defendant, in a civil action in the Magistrates’ Court. The judgment was for the payment of monies payable to the plaintiff company pursuant to a contract. The contract required the plaintiff to advise one or both defendants on the establishment of a vineyard.
The Magistrate who heard the case entered judgment for the plaintiff against the second defendant in the sum of $10,575.40 plus $283.94 for interest.
Facts
The second defendant (and second appellant) is the Nundroo Winery Trust Reg. (“the Trust”). It is a private corporation from Lichtenstein and is the registered proprietor of a Crown leasehold property located near Ceduna in South Australia (“the property”).
The first defendant (and first appellant) is Mr Case. He is referred to by the Magistrate as agent for the Trust in Australia. Mr Case resides in the United States of America. The Magistrate’s reasons refer to Mr Case as having conducted all relevant dealings with the plaintiff. It appears that Mr Case acted as agent or representative for the Trust. There was no suggestion to the contrary on appeal.
The Trust and Mr Case intended to establish a vineyard on the property growing high-quality cabernet sauvignon grapes.
To determine whether the land was suitable for this purpose, Mr Case engaged Mr Wetherby. During February and March 2001 Mr Wetherby conducted soil surveys on an area of the property known as Urabi Well and at other locations on the property. In his report Mr Wetherby recommended that a consultant viticulturalist assess the locations surveyed.
The plaintiff, and respondent to this appeal, is Vitiwise Pty Ltd (“Vitiwise”). It is a viticultural management company. Mr Jacobs is a viticulturalist and a director of Vitiwise.
Mr Case hired Vitiwise to carry out a feasibility study, including a land survey and soil test, with a view to identifying a 5 acre plot that was suitable for the proposed vineyard. This was to be used as a trial area.
On 5 September 2001 Mr Case met with Mr Jacobs at McLaren Vale. Mr Hardy, whom the Trust had employed to manage the property and to establish the trial vineyard, was also present. At the meeting Mr Case gave Mr Jacobs a cheque as a deposit or part payment for Vitiwise’s services. Mr Jacobs was given a copy of Mr Wetherby’s report at this meeting.
Mr Jacobs confirmed Vitiwise’s employment in a memo sent by fax to Mr Case on 6 September 2001. An invoice included in the fax stated that the balance to be paid to Vitiwise on completion of the report was $2,400 including GST. The fax included a quote for a land survey from Jeanes and Sommerville Pty Ltd (“Jeanes”). The cost of the survey was in addition to the sum payable to Vitiwise. The fax stated that the quote was for two locations, Urabi Well and a location called the Homestead block (or the Nundroo site).
Mr Case replied to Mr Jacobs by fax, authorising him to proceed.
Mr Hardy showed Mr Jacobs over the property on 1 and 2 October 2001. Mr Somerville of Jeanes later conducted a land survey of the parts of the property that were identified by Mr Jacobs. A soil report was prepared by Scholefield Robinson Horticultural Services Pty Ltd (“Scholefield”).
On 19 October 2001 Mr Jacobs completed his report (“the report”). In the report Mr Jacobs advised that a vineyard should not be developed on the Urabi Well site. The report concluded that premium wine grapes could be grown at the Nundroo site, although further work relating to water collection and quality would need to be performed before vines were planted. The report and Scholefield’s report were delivered to Mr Case.
The defendants refused to pay any part of the plaintiff’s invoice. The invoice was for $2,282.50 for the balance of Vitiwise’s account (this being less than the quoted figure), $361.90 for the soil report provided by Scholefield and $7,931 for the survey performed by Jeanes.
Vitiwise has paid the amount owed to Scholefield.
After Vitiwise issued proceedings, but before the hearing, Vitiwise and Jeanes entered into a deed of assignment relating to the money owed to Jeanes. The deed of assignment, dated 5 March 2003, assigns the debt to “Vitiwise Viticultural Management Pty Ltd”. This is not the correct name of Vitiwise.
Proceedings at trial
At trial Mr Case represented himself and the Trust. The hearing began on 10 March 2003 and concluded on 11 March 2003.
The plaintiff led evidence to show that Vitiwise was retained to undertake the feasibility study and prepare the report. There was no doubt that the work had been done.
Mr Case sought to establish in defence of Vitiwise’s claim that Mr Jacobs was not qualified to perform the work done; that he did not perform the work with the required degree of skill; and that he departed from his instructions by paying insufficient attention to the Urabi Well location and by concentrating on the Nundroo site for the trial plot, and that the work done was of no value to the Trust.
Mr Case claimed that he instructed Mr Jacobs to prepare a report on the Urabi Well site, but that Mr Jacobs’ report focussed on the Nundroo site. Mr Case argued that Mr Jacobs had disregarded Mr Case’s instructions by doing this.
These points were the focus of the defence, both in the Defence as filed and at trial.
Mr Case also disputed the entitlement of Vitiwise to include in its claim the fee payable to Jeanes. Presumably the assignment was entered into to anticipate and defeat this argument.
The Magistrate’s Judgment
The Magistrate found that Mr Case understood when entering into the contract that Vitiwise would arrange for the survey and soil test. The Magistrate further held that although Jeanes was asked to address its invoice to Mr Case, it is common business practice in South Australia for such charges in such circumstances to be paid by and claimed by the person who requested the relevant service, as Vitiwise had done: [33]. Mr Case had not specified who was to perform the tasks, and Scholefield and Jeanes were employed by Vitiwise as sub-contractors. As such they would expect payment from Vitiwise unless specifically warned that they were not entitled to look to Vitiwise for payment: [35]. Accordingly, it could not be said that Scholefield or Jeanes had to claim payment in their own right.
The Magistrate granted leave to Vitiwise in the course of the hearing to amend its pleadings to plead in the alternative that the entitlement to the money payable to Jeanes had been assigned to Vitiwise. He found that the assignment complied with section 15 of the Law of Property Act 1936 (SA) and noted that Mr Case admitted notice of the assignment at trial. The assignment did not take effect until after the proceedings had been commenced. Nevertheless, in the absence of an applicable Magistrate’s Court rule, the Magistrate granted leave to amend pursuant to rule 46A.12 of the Supreme Court Rules 1987 (SA).
The Magistrate rejected the attack on Mr Jacobs’ qualifications and on the competence of his work. He found that there was no basis for this attack.
The Magistrate rejected Mr Case’s argument that Mr Jacobs disregarded his instructions by discarding the Urabi Well site and by basing the report on the Nundroo site. The Magistrate accepted Mr Jacob’s evidence that he was directed to consider areas in addition to the Urabi Well site: [49]. Mr Hardy, called as a witness for Mr Case, gave evidence that Mr Case told Mr Jacobs at the meeting at McLaren Vale that the Nundroo site was a possible site for the test plot. Mr Wetherby’s report, of which Mr Jacobs had a copy, included for possible consideration areas outside the Urabi Well area. In the fax sent to Mr Case on 6 September 2001 Mr Jacobs wrote that both the Nundroo site and the Urabi Well site were possible sites for the report.
The Magistrate rejected the defence based on the fact that the report recommended that the proposed vineyard should not proceed at the Urabi Well site. The Magistrate said that Vitiwise raised legitimate issues in the report, and would have failed in its obligations to Mr Case and the Trust had it not done so. The report was, after all, a report on the suitability of the site for a vineyard.
Leave to amend pleadings
An issue raised on appeal is whether the Magistrate erred in allowing Vitiwise to amend its Particulars of Claim at trial to include the assignment of debt. However, the Magistrate did not base his finding for Vitiwise on the assignment. He found that Vitiwise was entitled to judgment without relying on the assignment: at [41].
The Magistrate allowed the plaintiff to amend pursuant to rule 46A.12 of the Supreme Court Rules. He did so because there was no rule of the Magistrates’ Court applicable to the circumstances of the case. He relied on rule 12(4) of the Magistrates Court (Civil) Rules 1992 (SA) which provides:
“Where these rules do not regulate the practice and procedure of the Court… in respect of the whole or part of any action, proceeding, act or thing, the Court… will adopt (with necessary modification) the appropriate practice and procedure of the Supreme Court.”
Rule 46A.12 of the Supreme Court Rules provides that:
“With leave of the Court a party may incorporate into a pleading facts giving rise to a cause of action or any matter which have arisen after the institution of the proceedings where that is not unjust to any party.”
The defendants argue that the Magistrate did not have power to grant leave to amend the pleadings. I consider that there is no reason why r 12(4) should not be read as extending to this situation. The ability to raise a cause of action that arises after the institution of proceedings is a matter of procedure.
It was open to the Magistrate to adopt and apply rule 46A.12 of the Supreme Court Rules.
Mr Sallis next submitted that the Magistrate did not fairly explain to Mr Case, when considering whether to grant leave, the nature and significance of the application for leave to amend.
The Magistrate did raise the issue with Mr Case, although it is fair to say that he did not explain to Mr Case in any detail the nature of the application, or the issues relevant to the application. Being unrepresented, Mr Case was at a disadvantage.
I consider, with respect, that the Magistrate should have explained the situation more fully than he did. The transcript suggests that Mr Case did not understand the issues that arose. However, I would not allow this appeal on that basis. First, because, as will appear, Vitiwise was entitled to judgment in any event. Second, because it was not shown that either defendant had an arguable defence to a claim based on the assignment. That issue has not been fully explored.
Vitiwise failed to amend its particulars of claim, despite obtaining leave to do so: cf rule 77 of the Magistrates’ Court (Civil) Rules. The Magistrate recorded in his reasons that he would “accept the incorporation into the pleadings of the proposed amendment.” It may be that he took the view that no more was required, but it may be that the leave has now lapsed. Mr Keen applied for leave, on appeal, to re-institute the amendment, should that be necessary.
The defendants argue that to allow the amendment now would prejudice the defendants as Mr Case was not given sufficient notice of the assignment at trial.
It appears that Mr Case was given a copy of the deed of assignment shortly before the trial commenced. He was given the opportunity to argue against the amendment by the Magistrate when leave was granted at trial, but did not do so. But, as I have said, it is doubtful whether he understood what was involved.
Under the circumstances, I am not satisfied that the Magistrate’s failure to explain the position has resulted in error or injustice. It seems to me that because the judgment does not depend on this matter, that issue can be left there. It is unnecessary to investigate whether fairness requires that the issue of the effectiveness of the assignment (apart from the point below) be re-opened on the appeal.
Validity of the deed of assignment
Mr Sallis, counsel for the defendants, submitted that the deed of assignment contains a misdescription of the plaintiff company and that the assignment is therefore ineffective. The deed assigns the debt from Jeanes to Vitiwise Viticultural Management Pty Ltd, not to Vitiwise Pty Ltd, which is the correct company name.
This issue was not pleaded nor was it raised at trial, although in a general way Mr Case disputed Vitiwise’s reliance on the assignment.
A court of appeal deals with a case on the basis on which that the case was fought at trial. If the misdescription was raised at trial, it may well be that the difficulty could have been cured by proof that the misdescription was a simple mistake. It would be unfair to uphold the appeal on the basis that the assignment was ineffective because of the misdescription.
I reject this ground of appeal, insofar as it raises a complaint separate from the ground just dealt with. Once again, as the judgment for the plaintiff does not turn on the assignment, the point does not affect the outcome of the appeal.
Mr Jacobs’ authority
The Magistrate found that Mr Jacobs was given the authority to arrange for soil tests and a survey. This was not disputed on appeal.
As stated above, the defendants based much of their defence at trial on the argument that Mr Jacobs was told by Mr Case to prepare report on the Urabi Well site, but disregarded these instructions and selected the Nundroo site. The Magistrate held that Mr Case did not so instruct Mr Jacobs, and that it was open to Mr Jacobs to select the Nundroo site.
This issue was not pursued in the oral argument on appeal. In any event the Magistrate was correct. On the finding made, and in light of the evidence there is no merit at all in this point.
Competence of Mr Jacobs, and competence of the advice
Not much was said about this on appeal. On the evidence and findings the Magistrate rightly rejected the defence based on these grounds.
The contracting parties
Mr Case, the Magistrate, found was agent for the Trust in Australia. As such the Trust is liable for debts incurred by Mr Case acting in his capacity as agent.
The defendants argued on appeal that the Magistrate erred in this finding, arguing that the plaintiff did not plead that the Trust was liable as principal of Mr Case. The pleadings, it was argued, sought recovery of the money only from Mr Case.
I do not accept this argument. Although not well expressed, it is clear enough, when reading the pleadings as a whole, that the plaintiff sought recovery of the money from Mr Case as agent for the Trust, and in the alternative from the Trust as principal.
Mr Sallis submitted that Mr Case alone owed the debts to Scholefield and Jeanes and that he incurred the debts in his individual capacity, not as agent for the Trust. Accordingly, if Mr Case is liable to pay the debts in his individual capacity, judgment could not be entered against the Trust.
The argument that Mr Case alone was liable for the debt was neither pleaded nor raised at trial. It would be unfair to allow it to be raised now. In any event, on the evidence before the Magistrate it is not difficult to conclude that Mr Case acted on behalf of the Trust, as a disclosed agent, and that any liability is that of the Trust. That is the natural reading of the events.
Mr Sallis argued in particular that Mr Jacobs directed Jeanes to address its invoice to Mr Case, not to Vitiwise. Mr Somerville, who performed the survey, gave evidence at trial that he often worked for Mr Jacobs and that Mr Jacobs always arranged for Jeanes to bill the client directly. The appellants contend that the above facts indicate that Jeanes’ contract was with Mr Case, not Vitiwise. Bearing in mind this point was not ventilated at trial, I do not find this a sufficient basis to indicate that the parties intended the contract to be with Mr Case. There are various reasons why Mr Jacobs might wish the invoice be directed to Mr Case although Vitiwise remained liable for the fee payable.
The defendant’s argument in support of the claim that Scholefield entered into a contract with Mr Case is less persuasive than that put forward in support of the claim relating to Jeanes. Scholefield addressed the invoice directly to Vitiwise, not to Mr Case, and Vitiwise has paid the invoice sent by Scholefield.
Mr Sallis submitted that after being introduced to Jeanes and Scholefield by Mr Jacobs, Mr Case had dealings in person with these companies. I do not accept this argument. There was no evidence at trial that Mr Case had dealings with the companies other than through Mr Jacobs.
Mr Keen argued that the contracts were between Vitiwise and Jeanes or Scholefield on a sub-contract basis, and Vitiwise was liable to pay its subcontractors and was entitled to include these debts as disbursements on its invoice to Mr Case. The evidence shows that Mr Case left the choice of surveyor and soil report company to Mr Jacobs, and Mr Jacobs handled all dealings with the companies. The original quote from Jeanes was addressed to Vitiwise, and all correspondence with Scholefield was addressed to Vitiwise.
The fact that this issue was not raised at trial is significant, even if I were to permit this point to be raised on appeal. In those circumstances the evidence does not show that the parties intended that Mr Case enter into the contracts with Jeanes and Scholefield, neither Vitiwise nor the Trust being liable for these fees.
The Deposit
On appeal the defendants argued that the Magistrate erred by failing to take into account the deposit paid to Vitiwise by Mr Case.
Mr Keen pointed out that the plaintiff sued only for the balance due to it, as set out on an invoice dated 22 October 2001. This balance was $2,282.50, and was less than the balance of $2,400 originally estimated by Vitiwise. The Magistrate did not fail to take into account the deposit. Mr Sallis did not press this ground of appeal.
Conclusion
1. I dismiss the appeal.
2. I will hear the parties as to costs.

[2003] SASC 273

19 August 2003