Catania v Samurai Schools of Sukokai Karate Pty Ltd
[2001] VSC 442
•13 November 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 6600 of 2001
| CRAIG CATANIA | Appellant |
| v | |
| SAMURAI SCHOOLS OF SUKOKAI KARATE PTY LTD (ACN 006 117 200) | Firstnamed Respondent |
| PAUL WILLIAM MITCHELL | Secondnamed Respondent |
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JUDGE: | Balmford J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 22 October 2001 | |
DATE OF JUDGMENT: | 13 November 2001 | |
CASE MAY BE CITED AS: | Catania v Samurai Schools | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 442 | Revised 16 November 2001 |
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Appeal under section 109 Magistrates’ Court Act 1989 – whether there was any evidence to support the Magistrate’s conclusion that the appellant had a personal obligation to pay rent to the respondents.
Magistrates’ Court Act 1989 – section 109
Spurling v Development Underwriting (Vic) Pty Ltd [1973] VR 1
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr M T LaPirow | Lucas Neale |
| For the Respondents | Mr M Whitten | Scarcebrook & Associates |
HER HONOUR:
This is an appeal pursuant to section 109 of the Magistrates’ Court Act 1989, which provides that a party to a civil proceeding in the Magistrates’ Court may appeal to this Court, on a question of law, from a final order of the Magistrates’ Court in that proceeding. The final order appealed from is considered further at [4] below. On 6 July 2001 Master Wheeler ordered that the question of law to be decided was:
Was there any evidence on which a reasonable Magistrate properly directing herself could have concluded on the balance of probabilities that the appellant was liable for the debt claimed?
In Spurling v Development Underwriting (Vic) Pty Ltd [1973] VR 1 at 11 Stephen J said:
In the case of decisions of magistrates the position in Victoria is well established by a line of decisions culminating in Taylor v Armour & Co. Pty. Ltd., [1962] VR 346, in which the Full Court of this State held that in the case of any question of fact the Court should treat the matter as an appeal from the verdict of a jury and should not make up its own mind upon the evidence but rather confine itself to seeing whether there was evidence upon which the magistrate might, as a reasonable man, come to the conclusion to which he did come. In saying this the Full Court stated that it was following the view of Herring, CJ, in Young v Paddle Bros. Pty. Ltd., [1956] VLR 38; [1956] ALR 301. The Chief Justice, in that case, adopted as the test whether "on any reasonable view of the evidence that decision can be supported"; a party aggrieved can thus only succeed if a decision contrary to the view of the magistrate is "the only possible decision that the evidence on any reasonable view can support" (see at VLR p. 41).
I would with respect adopt that passage as the appropriate basis on which to consider this appeal.
In the proceeding before the Magistrate, the plaintiffs were the respondents in this appeal (respectively “Samurai Schools” and “Mr Mitchell”) and the defendants were Samurai Fitness Centres Pty Ltd (“Fitness Centres”) and the appellant in this appeal (“Mr Catania”). The evidence in the appeal appears from the affidavit of Mr Catania and the exhibits thereto and the affidavits of Mr Lawson and Mr Pennell of counsel, who were briefed to attend on 8 June 2001 at the Melbourne Magistrates’ Court to hear judgment in the proceeding under appeal.
The order from which the appeal is brought is said to have been made on 8 June 2001 by the Magistrates’ Court at Melbourne, constituted by Ms Hawkins, Magistrate, in respect of a claim for payment of rental for premises at 755 Mountain Highway, Bayswater, ordering that the appellant pay $18,599.20 on the claim, $1,958.98 interest and $3,667.50 costs. The only formal order exhibited to the affidavit of Mr Catania is an order to the same effect, but made against Fitness Centres. Mr Lawson, whose affidavit was confirmed by Mr Catania, deposed that the Magistrate found the liability of the two defendants to be joint, and Mr Pennell that she found liability to be joint and several. The appeal was conducted on the basis that an order had been made against Mr Catania personally. I accept the evidence of the deponents that there was an order against Mr Catania and can only assume, although no submissions were made on this point, that the record before this Court of the decision of the Magistrate was incomplete. Whether the liability of Mr Catania was found to be joint or joint and several goes only to the amount for which judgment was entered against him and is not the concern of this Court.
The circumstances giving rise to the proceeding under appeal, so far as can be ascertained from the material before this Court, were somewhat unusual. By a lease which is not before this Court and the date of which is not apparent, premises at 753-755 Mountain Highway, Bayswater, were leased to Samurai Schools for a period of ten years, with personal guarantees of the lessee’s obligations by Mr Mitchell and others. The business of a karate school was operated on the premises by either Samurai Schools or Mr Mitchell. That business was sold in about 1995. Whether the purchaser was Russell Kempster or Unique Win Pty Ltd is not the concern of this Court. The lease was not assigned to that purchaser, but the evidence of Mr Mitchell was that it was a term of the sale of the business that the purchaser would pay the rent, and would allow Mr Mitchell, as a director of Samurai Schools, which remained the tenant, to have access to the premises.
The purchaser, Russell Kempster or Unique Win Pty Ltd, sold the business to a new owner in 1998. The new owner may have been Fitness Centres or Mr Catania or both. However, Samurai Schools continued to be the lessee of the premises, as before.
In about March 1999 the new owner defaulted in payment of the rent. On or about 27 January 2000 the premises were destroyed by fire and shortly afterwards the lessor determined the lease. The lessor brought proceedings (“the earlier proceedings”) against the plaintiffs and the other guarantors for $18,653.76 claimed as unpaid rent and outgoings and damages for losses in consequence of the termination of the lease. The plaintiffs in turn, in the proceeding under appeal, made corresponding claims against both Fitness Centres and Mr Catania. Mr Catania denied liability, claiming that he had no legal relationship with either of the plaintiffs, but the Magistrate found against him as appears from [4] above.
It appears that the tape used to record Her Worship’s decision as delivered on 8 June 2001 was defective and no recording is available. Mr Lawson, who appeared for the defendants on the delivery of judgment, deposed that, after summarising the claim and the defences, Her Worship commenced her findings by stating words to the effect of “I am satisfied that the plaintiff was dealing with Mr Catania the individual”. After dealing with other matters, she gave four reasons for finding that the liability of the first and second defendants was joint. They were:
(a)that the letter of 4 June 1998 described in [11] below contained the words “Craig Catania buyer” and that established that Mr Catania was the new owner of the business;
(b)that a letter of 23 August 1999, addressed to the lessor and relating to payment of arrears of rent, although written on the letterhead of Fitness Centres, was signed personally by Mr Catania;
(c)that offers made by Mr Catania to pay the arrears of rent were personal offers; and
(d)that she accepted the evidence of the plaintiff that an agreement was made personally with Mr Catania.
Mr Catania deposed that the matters deposed to by Mr Lawson were, to the best of his recollection, true and correct.
The affidavit of Mr Pennell, who appeared for the plaintiffs on the delivery of judgment, was generally to the same effect as that of Mr Lawson, save that he deposed that the Magistrate found the liability of Fitness Centres and Mr Catania to be joint and several (as to which see [4] above). Mr Pennell added that the Magistrate said that she was satisfied that an agreement (scilicet a written agreement) had been entered into between the plaintiffs and the defendants, which had not been produced because all relevant documents had been lost in the fire in which the premises were destroyed.
Mr Whitten, for the respondents, submitted that there was ample evidence on which the Magistrate could have come to the conclusion to which she did come.
The letter dated 4 June 1998 which is referred to in [8(a)] above was written on the letterhead of “Samurai School of Karate, Bayswater, 753 Mountain Highway, Bayswater“ and commences:
Dear Craig
this letter serves as an offer of sale for the business ‘Samurai Karate Bayswater’ 753 Mountain Hwy, Bayswater. (currently owned by Unique Win p/l a.c.n. 067 596 874)
As you have been involved in the club for 13 years as both a student and instructor, I’m sure you have a good understanding of how the business operates, and that it falls under the industry of Martial Arts/Self defence and also the health and fitness industry.
There follow proposals as to assets to be included in the sale, sale price, date of sale, liability for outstanding accounts and the like. The letter concludes:
Liabilities for your company will be $1500 being for gymnasium equipment, payable to Samurai Karate Croydon.
Acknowledgment
We the undersigned, do acknowledge and agree upon the contents of this letter as stated.
Russell Kempster (seller) Craig Catania (buyer)
(Signed) (Signed)
Unique Win p/l Samurai Fitness Centres p/l
That letter is equivocal as to who was the purchaser of the business, and in any case it does not relate to the issue of whether the obligation to pay rent to the plaintiffs was undertaken by Fitness Centres or by Mr Catania or both. It is not suggested that there was any obligation on any person to pay rent to Mr Kempster or to Unique Win Pty Ltd. Accordingly, the letter is not relevant to the issue before the Court.
It is not in issue that bank records which were in evidence indicated that all payments of rent which were made were made from the bank account of Fitness Centres and not of Mr Catania personally. I accept the submission of Mr Whitten that this does not necessarily indicate that Mr Catania had no obligation to pay the rent.
An affidavit sworn by Mr Catania in the earlier proceedings includes the following passages relating to payment of the rent:
“. . . it was my understanding that I should commence making regular payments to make up for the arrears of rental . . . “
“I had always made payments of rental to the Plaintiff . . . “
“In September 1999 I commenced making payments . . . “
It is at least arguable that those passages suggest that Mr Catania was accepting an obligation to make the payments personally.
Mr Mitchell said in evidence that a memorandum was signed between Mr Catania and Samurai Schools providing inter alia for Mr Catania’s responsibility to pay rent. However, the document was destroyed in the fire. Exhibit C in the Magistrates’ Court proceeding was a copy of what Mr Mitchell said was the standard form of rules relating to the operation of karate schools on the basis of which the document was prepared. However, Exhibit C was apparently mislaid before the hearing of the appeal, and was not available to this Court. Mr Mitchell later said that that document did not constitute the agreement for payment of rent. Be that as it may, Exhibit C was before the Magistrate and she was entitled to form her own view of it.
Mr Mitchell was asked specifically who was the person responsible to pay the rent, and he replied, “Craig [i.e. Mr Catania] was”. He said that he had no agreement with Fitness Centres, and had no knowledge of the existence of Fitness Centres at the time when Mr Catania took over the business. Asked in cross-examination questions as to who purchased the business from Kempster or Unique Way Pty Ltd, he replied, “In actual fact I don’t really mind who it is that bought the business. The agreement that I had in terms of who was in the building to which I held the lease was with Craig Catania”. He had earlier said that when Mr Kempster presented Mr Catania to him as a possible purchaser of the business:
I said to him that Mr Catania was unqualified from a technical point of view which was my concern, but that as long as he was prepared to supervise him on an ongoing basis then I had no objection because Craig had been with me since he was 10 years of age.
Mr Catania’s evidence was that he had commenced training with Mr Mitchell when he was 13, but the difference is not significant in the present context.
In response to a question as to why he had defended the earlier proceedings Mr Mitchell said, “Craig came quite willingly along to my accountant, to my barrister's offices or my solicitor's offices and undertook in fact to pay it. It was only when he did a runner and didn't pay it that I then had no option but to pay it.”
It was put to Mr Mitchell that he knew from the beginning that the payments were being made by Fitness Centres, and he replied:
My relationship was not with Samurai Fitness Centres, my relationship was with Craig Catania. My discussions regarding the money that was outstanding was with Craig Catania. I didn’t care [who was paying it]. All that I knew was that he had personally undertaken with me to maintain the fiscal responsibility and it was a personal responsibility. It had nothing to do with Samurai Fitness Centres. . . . his responsibility to me was to pay his outgoings and he made the commitment and in August he made an ongoing commitment to bring the rental up to date. He personally and he did exactly the same thing when he sat in my solicitor’s office.
It was put to him that Mr Catania did not own the business, and he said that he had no argument with that.
He said later, ”I didn’t have an agreement with any company. I had an agreement with Craig Catania” and repeated that statement later. Further on he said “we discussed our memorandum of agreement and on that basis he was allowed to use premises over which he did not have a lease”. Later again he repeated that he did not care who was making the payments of rent, “he is paying them because he owned the place and his relationship and his agreement was with me, not with his company”. He said that the agreement on which he was relying was signed by himself and Mr Catania. There were other incidental references in the evidence of Mr Mitchell to Mr Catania paying the rent.
Asked whether he had personally undertaken with Mr Mitchell to pay the rent, Mr Catania said, “At no stage did Mr Mitchell and I sit down to discuss an agreement at all”.
Mr LaPirow, for Mr Catania, submitted that the pleadings in the Magistrates’ Court proceeding demonstrated a disregard of the nature of the separate personalities of Fitness Centres and Mr Catania respectively. However, be that as it may, that submission does not go to the issue before this Court, which appears from [1] and [2] above, and which relates to the evidence which was before the Magistrate.
This appeal is not a rehearing, and it is not for this Court to decide the question which was before the Magistrate. It is trite to say, but always to be borne in mind, that the Magistrate had the opportunity of observing the witnesses, and this Court does not have that advantage. In accepting the evidence of Mr Mitchell over that of Mr Catania, Her Worship relied on a view as to the credibility of each which it was open to her to form.
For the reasons given, I find that, considering the question before me on the basis of the extract from Spurling v Development Underwriting Pty Ltd set out at [2] above, the answer to that question must be Yes. The appeal will be dismissed with costs.
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