Currie v Simon Farms Pty Ltd

[2013] QCAT 606

CITATION: Currie v Simon Farms Pty Ltd [2013] QCAT 606

PARTIES:	Ian Currie as liquidator of Basil Harvesting Pty Ltd (in liquidation) (Applicant)
v
Simon Farms Pty Ltd (Respondent)

APPLICATION NUMBER: MCDO789/13

MATTER TYPE: Other minor civil dispute matters

HEARING DATE: 2 September 2013

HEARD AT: Brisbane

DECISION OF: Adjudicator Bertelsen

DELIVERED ON: 11 November 2013

DELIVERED AT: Brisbane

ORDERS MADE: 1.    The application is dismissed.

CATCHWORDS: Authority to transact and bind – assumption of appointment of person regularly transacting – whether such business customarily exercised by that sort of person – knowledge or suspicion of lack of authority – ostensible authority appropo statutory authority

APPEARANCES and REPRESENTATION (if any):

APPLICANT: D Cliff, solicitor of Mills Oakley Lawyers

RESPONDENT: MC Long of Counsel, instructed by Jones Leach Lawyers

REASONS FOR DECISION

Application

1. By application for minor civil dispute – minor debt filed 22 April 2013 the applicant, Mr Currie as liquidator of Basil Harvesting Pty Ltd (Basil Harvesting) seeks the sum of $21,789.98 for 2 invoices for goods and services provided issued 29 January 2012 and 3 February 2012 to the respondent Simon Farms Pty Ltd (Simon Farms).  The invoices had in fact been paid by Simon Farms to the Basil Group Account.  Mr Currie asserts that what was owing to Basil Harvesting was not satisfied by payment to Basil Group Account i.e. payment was made to the wrong entity.

Background and evidence

1. Basil Harvesting provided contract labour to Simon Farms, in this instance, to harvest shallots.  Simon Farms was invoiced weekly on the number of bins of shallots harvested.  If there was a discrepancy in the number of bins to be paid for Ms Bentley, bookkeeper/administration employee of Simon Farms would communicate with Andy bookkeeper/accounts person of Basil Harvesting.  These 2 persons were always able to resolve invoicing issues such that the relationship worked well for a period of time prior to the dispute over the 2 invoices in question and in any event at least since October 2011 and probably for a number of years prior. 

2. Some 15 pieces of correspondence passing between the parties in the period 2 December 2011 to 29 December 2011 were produced by Simon Farms.  These display the cordial nature of the relationship to determine the number of bins harvested for which payment would be due.  That enabled invoices submitted by fax by Basil Harvesting to be generally paid in a timely manner.  The entirety of correspondence between the parties was conducted in the persons of Ms Bentley and Andy bar notations on 1 piece of correspondence when Ms Bentley had a day off. 

3. 11 invoices for harvesting for the period 27 October 2011 to 18 January 2012 for some $140,000 odd were produced and all were paid without controversy.  The entirety of these dealings was conducted in the persons of Ms Bentley and Andy. 

4. On 29 January 2012 Basil Harvesting issued invoice SD-1204 for $12,590.30 and on 3 February 2012 invoice SD-1205 for $9,199.65.  In terms of quantum neither invoice is disputed.

5. On 14 February 2012 Basil Harvesting in the person of Andy faxed Simon Farms in the person of Ms Bentley (Joanna) stating:

   “To Joanna,
   
   

   Hello,

   I attached Invoice SD-1206 that we worked between 02/02/2012 to 08/02/2012.

   I could not send this invoice.  That is because Basil Harvesting’s Account has some problem.

   I attached Basil Group Account detail and I attached Basil Group’s Invoice.

   Please keep this account and transfer to this account from today.

   Please take a good consideration about this happening.

   Regards,

   Basil Harvesting P/L

   Andy”

6. According to Ms Bentley she then advised David and Barbara Simon, directors, of receipt of the fax.  Mr Simon read the fax then instructed Ms Bentley to change the account details for payment of invoices to Basil Group Account as requested.  Ms Bentley did that on 22 February 2012.  Subsequently on 27 February 2012 Ms Bentley paid both invoices SD-1204 and SD-1205 totalling $21,789.98 to Basil Group Account.

7. In the meantime on 10 February 2012 Basil Harvesting was placed in liquidation with the applicant Mr Currie appointed liquidator.  The liquidation first came to Mr Simon’s knowledge when he received a letter dated 9 November 2012 from the liquidator demanding money.

Ms Joanna Bentley’s evidence

1. Ms Bentley had worked for Simon Farms since April 2010 as a bookkeeper.  She settled any disputes/discrepancies over bins harvested on a regular and generally weekly basis with Andy of Basil Harvesting.  Andy was the only person from Basil Harvesting with whom she dealt.  The invoices and payments involved relatively large sums of money.  The fax of 14 February 2012 signalling change of entity to which payment was to be made was referred by her to Mr Simon, director of Simon Farms.  She considered this change unusual enough such that she should refer it to Mr Simon but not so unusual in that other companies had previously “changed accounts”.  Ms Bentley simply thought Basil Harvesting was changing banking arrangements for payments from that time on.  Ms Bentley did not consider it unusual for an accounts officer (Andy) to communicate a change of bank account by fax.

2. Ms Bentley did not consider it necessary to further enquire of Andy the reason for the change nor was any ASIC search conducted at the time.  On occasions in the past others with which Simon Farms dealt had changed accounts.  There was nothing particularly remarkable about this change.  The fax received on 14 February 2012 was on Basil Harvesting letterhead.

Mr David Simon’s evidence

1. Mr Simon was a director of Simon Farms and he had day to day running of the contract labour.  Basil Harvesting was his contract shallot harvester. 

2. Ms Bentley was Mr Simon’s trusted bookkeeper.  When she referred Basil Harvesting’s letter of 14 February 2012 to him he instructed payments to be made to Basil Group in terms of that fax correspondence.  He indicated it was not all that unusual for changes like that to occur i.e. change of entity and bank account.  He had received requests like that before from creditors.  He confirmed that he first became aware of Basil Harvesting’s liquidation by letter of 9 November 2012 received from Mr Currie as liquidator.  He stated he had no reason to suspect Basil Harvesting was in liquidation.  Simon Farms ceased contracting Basil Group in March 2012.  He thought he once met a director of Basil Harvesting and assumed Basil Harvesting and Basil Group were generally the same in that Simon Farms was dealing with the same person Andy, same phone numbers and same contacts, in short, dealing with the same people. 

3. Mr Cliff for the liquidator raised 2 issues in particular:

   (1)   That the fax of 14 February 2012 constituted a direction to pay money into a particular account; that the error here is Simon Farms.  The fax does not say pay invoices SD-1204 and SD-1205 into the Basil Group account; that the fax of 14 February 2012 is restricted to invoice SD-1206 as recited in that fax; and that what was owing to Basil Harvesting was not satisfied by payment to Basil Group.

   (2) That even though the author of the fax of 14 February 2012 was a person with whom Simon Farms regularly dealt that as such was not the dispute; rather it was that it was not within the ordinary conduct of employee Andy to direct the payment of money to an account other than the company account of Basil Harvesting; that it was “OK” for directors to do so but not for an employee such as Andy; that such change of company and account was not a duty customarily performed by an employee as distinct from a director; that the assumption pursuant to section 129(3) of the Corporations Act 2001 that might otherwise be afforded to Simon Farms did not apply. Section 129(3) of the Corporations Act 2001 states:

   Officer or agent

   (3)  A person may assume that anyone who is held out by the company to be an officer or agent of the company:

   (a)  has been duly appointed; and

   (b)       has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer or agent of a similar company.

4. Mr Cliff asserted the change of company and company account would put any ordinary person on notice that something was wrong prompting further enquiry; that such change ought to come from the directors; that in the meantime the safe option would have been to pay Basil Harvesting; that therefore Simon Farms is precluded from relying upon the statutory assumption per force of section 128(4) of the Corporations Act 2001 which states:

   (3)A person is not entitled to make an assumption in section 129 if at the time of the dealings they knew or suspected that the assumption was incorrect.

5. Mr Long of Counsel submitted that Simon Farms was entitled to rely on the authority of “Andy” to make the direction he did on 14 February 2012 on two counts, firstly his ostensible authority and secondly as company agent in terms of section 129(3) of the Corporations Act 2001; that ostensible authority was established by Andy’s prior dealings concerning issuing and payment of invoices; that such authority would include nominating the bank account into which payment of monies should be made; that there was no reason to suspect that Andy no longer had authority as at 14 February 2012 nor any reason that Simon Farms should have harboured any such suspicion; and secondly, that Simon Farms was entitled to the benefit of section 129(3) Corporations Act 2001; that Andy was a person who customarily dealt with invoices including how payment of such invoices was to be made; that such included the bank account into which payments were to be made; that the statutory exception section 128(4) Corporations Act 2001 did not apply because Simon Farms did not know nor did it have any reason to suspect that Andy’s authority was not extant or had ceased.

Conclusions

1. Simon Farms and Basil Harvesting had dealt with each other for some time.  The working relationship was good.  Mr Simon trusted Ms Bentley as bookkeeper/administration employee such that settling accounts payable and attending to payment was left to her alone while he was off managing the farms.

2. Ms Bentley dealt with Andy. In terms of dealing with each other they settled, invoiced and paid in the period of October 2011 through January 2012 some $140,000.00 worth of goods and services. The practicality of these day to day commercial dealings over a considerable length of time would indicate that Andy did possess the requisite authority, that he was the agent of Basil Harvesting for the purpose of dealings between the parties. It is clear that the parties customarily dealt with each other through these two persons. In these circumstances it was reasonable for Simon Farms to assume Andy was an agent of Basil Harvesting. The converse would be that every time a dealing took place it would be incumbent on Simon Farms to ascertain whether Andy had (or retained) authority to conduct business on behalf of Basil Harvesting. That seems to be the point of section 129(3) Corporations Act 2001; that Simon Farms was entitled to assume Andy an agent of Basil Harvesting and that the entitlement only ceased if there was knowledge or suspicion that the assumption was incorrect i.e. some matter or thing that would dislodge the assumption in the mind of a reasonable person.

3. With respect to the fax of 14 February 2012 the same two persons were involved i.e. the fax was sent by Andy on Basil Harvesting letterhead to Ms Bentley. It was asserted that Andy did not have authority to direct invoice payments to a different company and account “that such was the prerogative of the directors not employees”. Section 129(3) Corporations Act 2001 does not restrict agents of a company to directors; nor was there any evidence produced to convince the Tribunal that the duties performed in this instance could not be exercised or performed by the person Andy or that these duties were not customarily in other companies exercised or performed by the kind of agent that Andy was. In the absence of knowledge or suspicion Simon Farms was entitled to assume Andy to be the agent of Basil Holdings.

4. The history of dealings between Ms Bentley and Andy is more than enough for Simon Farms to assume Andy to be an agent of Basil Harvesting; that he had been appointed and had authority to perform the duties usually performed by the sort of agent he was.  Additionally that history of dealings in the Tribunal’s view grounds Andy’s ostensible authority.  There were numerous dealings of a serious monetary nature effected by both parties in the normal course of business.  The Tribunal finds Andy was a proper agent with authority to send the fax of 14 February 2012. 

5. It was asserted that the fax of 14 February 2012 was restricted to invoice SD-1206; that it did not direct payment of invoices SD-1204 and SD-1205 into the Basil Group account.

6. The mere fact that invoice SD-1206 is referred to in the opening line of the 14 February 2012 fax does not mean that the direction, and that essentially is what this fax was, was restricted to invoice SD-1206.  In the context of the recent past, the correspondence and the invoices the two persons in control of the significant monetary relationship were Ms Bentley and Andy.  On the evidence no other persons featured significantly.  The crucial line of that fax is “please keep this account and transfer to this account from today”.  The words “from today” strongly suggest payments that were going to be made from and after today i.e. 14 February 2012 were to be paid to the Basil Group account.  If the fax is to be interpreted as referring to only invoice SD-1206 then it must be assumed that Basil Harvesting was still directing payment of invoices SD-1204 and SD-1205 to its account which was as at 14 February 2012 having “some problem”.  The Tribunal considers that would be highly unlikely.

7. The Tribunal considers that whilst the fax is not the most grammatically precise piece of correspondence ever written it was clear enough and that the subsequent change of account made by Ms Bentley on 22 February 2012 and payment of invoices after was a reasonable and common sense interpretation of the 14 February 2012 fax by Ms Bentley and/or Mr Simon.  The argument of payment to incorrect account fails.

Summary

1. Simon Farms was entitled to assume that Andy was Basil Harvestings agent; that Andy’s authority extended to directing the payment of invoices to Basil Group Account; that the direction of 14 February 2012 was a direction or included a direction to pay invoices SD-1204 and SD-1205 to Basil Group Account; that Simon Farms has discharged its obligation to pay invoices SD-1204 and SD-1205.

Order

1. The application is dismissed.