Czernyszow v Abbott
[2019] WADC 17
•7 FEBRUARY 2019
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: CZERNYSZOW -v- ABBOTT [2019] WADC 17
CORAM: LONSDALE DCJ
HEARD: 5 OCTOBER 2018
DELIVERED : 7 FEBRUARY 2019
FILE NO/S: APP 41 of 2018
BETWEEN: TANYA CZERNYSZOW
Appellant
AND
ELIZABETH LUSIA ABBOTT
Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram: MAGISTRATE EDWARDS
File Number : ROC/GCLM/1252 of 2015
Catchwords:
Agreement for purchase of horses - Whether a lay-by agreement - Breach of contract - Vendor's claim for loss of a bargain - Alleged errors of fact
Legislation:
Competition and Consumer Act 2010 (Cth), sch 2, Australian Consumer Law, sch 2 s 96, sch 2 s 96(3), sch 2 s 99
Legal Profession (District Court Appeals) (Contentious Business) Determination 2018
Magistrates Court (Civil Proceedings) Act 2004 (WA), s 40(1), s 40(4), s 40(5), s 43(3)
Result:
Appeal dismissed
Representation:
Counsel:
| Appellant | : | Mr G M G McIntyre SC and Mr C S Silver |
| Respondent | : | In person |
Solicitors:
| Appellant | : | Chad Silver & Associates |
| Respondent | : | Not applicable |
Case(s) referred to in decision(s):
Allied Mills Ltd v Gwydir Valley Oilseeds Pty Ltd [1978] 2 NSWLR 26
Baltic Shipping Co v Dillon (1993) 176 CLR 344
Bowes v Chaleyer (1923) 32 CLR 159
Carr v JA Berriman Pty Ltd (1953) 89 CLR 327
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64
Craft Decor Pty Ltd v Oteri [2012] WASCA 46
Cristovao v John Horton & Associates [2012] WASCA 12
Hadley v Baxendale (1854) 9 Exch 341
Joseph v Constantine Steamship Line Ltd v Imperial Smelting Corp Ltd [1942] AC 154
Metwally v University of Wollongong [1985] HCA 28
Milentis v Howard I Evans as Executor of the Estate of Demetrius Mitskinis [2018] WADC 106
Mowday v Shire of Merredin [2013] WASCA 182
Pennant Hills Restaurant Pty Ltd v Barrell Insurance Pty Ltd (1981) 145 CLR 625
Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235
Shevill v Builders Licensing Board (1982) 149 CLR 620
LONSDALE DCJ:
Introduction
In August 2012, the appellant entered into an agreement to purchase three horses (one gelding and two broodmares) from the respondent for the total sum of $13,700. The purchase price included the sum of $2,000 for the cost of the respondent arranging for one of the mares to be bred to the stallion Al Khazar.
The agreement (evidenced by an invoice dated 11 August 2012) specified that the appellant was to pay a deposit of 10% of the total purchase price by 16 August 2012 and the balance by 31 August 2012.
The appellant breached the agreement by failing to pay the purchase price on time. The respondent elected not to terminate the agreement and granted the appellant a number of extensions of time to pay. From time to time up until 25 January 2013, the appellant made payments towards the agreed purchase price and costs incurred by the respondent (such as veterinary and agistment fees).
By June 2013, however, the appellant had failed to complete payment of the total purchase price, had not taken possession of the horses and had failed to communicate with the respondent for about six months. The respondent then formed the view that the appellant no longer had any intention of honouring the agreement.
On 3 June 2013, the respondent advised the appellant that she could not wait any longer for payment. She raised a further invoice for the balance of what was owed and sent it to the appellant.
In September 2013, one of the mares (named Zoya Lea) gave birth to a foal. On 24 September 2013, the respondent sold the foal because she believed that the appellant had no intention of honouring the agreement.
The next time the respondent heard from the appellant was in December 2013 when the appellant sent her a text message demanding that the respondent return all of the money that the appellant had paid to her.
The appellant's claim
The appellant commenced proceedings in the Magistrates Court seeking repayment of the sum of $14,907.25, representing a claim for the various amounts she had paid to the respondent.
The respondent's defence and counterclaim
The respondent filed a defence and counterclaim seeking damages in the sum of $44,751, representing the respondent's claim for the loss of a bargain as well as costs and other expenses incurred by her (including agistment fees) in relation to the care of the horses whilst they remained in the respondent's possession.
The hearing in the Magistrates Court
The matter came on for hearing before her Honour Magistrate Edwards in the Rockingham Magistrates Court on 31 October 2017.
At the hearing the appellant accepted that there had been an agreement for her to purchase three horses and semen from the stallion, Al Khazar, for the sum of $13,700 with a 10% deposit to be paid by 16 August 2012 and the balance to be paid by 31 August 2012. However, the appellant contended that the respondent had also agreed to vary the terms of the original agreement to allow her to pay the balance in instalments over an unspecified term.
The appellant further contended that the agreement to purchase the horses was a lay-by agreement within the meaning of sch 2, s 96 of the Australian Consumer Law[1] and she was therefore entitled to be reimbursed for the amounts she had paid towards the purchase price.
[1] Australian Consumer Law 2010 (Cth) Sch 2, s 96, s 99.
The respondent denied that the agreement was a lay-by agreement and claimed she was entitled to damages for the appellant's breach by failing to pay by the date specified in the agreement and thereafter, despite giving the appellant a number of extensions of time to pay.
The respondent's counterclaim was essentially based on a claim for expectation and reliance damages for loss of a bargain as well as damages associated with expenses incurred for the care of the horses whilst they remained in her possession.
The appellant's response to the counterclaim was that, if the agreement was not a lay-by agreement, the respondent's claim for additional costs not included in the original agreement could not be justified.
At the hearing the parties adduced evidence in the form of witness statements, documentary evidence and oral evidence. The learned magistrate largely accepted the respondent's contentions and rejected those of the appellant.[2]
[2] Magistrate's reasons ts 14.
Her Honour arrived at a judgement sum in favour of the respondent of $5,333.40 plus interest, after first assessing the respondent's claim for damages at $19,005 and then conducting a setting off exercise whereby she reduced the amount of the respondent's counterclaim by $11,171.60 for the amounts the appellant had paid towards the purchase price of the horses and veterinary fees for the foaling of Zoya Lea. Her Honour then made a further reduction of $2,500 for the benefit the respondent had received in the form of Zoya Lea's foal.[3]
[3] Magistrate's reasons ts 14.
The appeal notice
The appellant filed numerous grounds of appeal. At the hearing of the appeal, the appellant applied to amend grounds 5 and 8 to delete the reference to alleged typographical errors and to assert errors based on an absence of evidence. I permitted the appellant to make that amendment in relation to grounds 5 and 8.
The amended grounds are set out below:
1.The learned Magistrate erred in law in the construction he (sic) placed on Australian Consumer Law section 96(3) in determining that the buyer and seller did not enter into, or arrive at, a layby agreement.
2.The learned Magistrate erred in law and fact in concluding that the intention of the parties, expressed or otherwise, and, in particular, the intention of the Respondent, expressed or otherwise, was determinative of whether or not the agreement reached between the parties was a layby agreement.
3.The learned Magistrate erred in law and fact in determining the quantum of damages to be awarded in relation to each horse the subject of a sale agreement between the parties, given the equitable election made by the Seller.
4.The learned Magistrate erred in law and fact in determining the quantum of unliquidated damages to be awarded in relation to each horse ('The Agistment Issue').
5.The learned Magistrate erred in fact in determining the quantum of damages to be awarded in relation to Ziggy, due to there being no evidence a typographical error which was made in relation to the Purchase Price.
6.The learned Magistrate erred in law and fact in determining the quantum of damages to be award (sic) in relation to Ziggy, in relation to the death of the horse by failing to consider and conclude that any causal link between any breach of contract by the Appellant buyer and the death of the horse either had not be (sic) established or had been broken by intervening events.
7.The Magistrate erred in law and fact in determining the quantum of damages to be awarded in relation to Marais Al Saba as she failed to consider the post contract sale of the Horse and the consideration exchanged as a mitigation of the loss suffered.
8The Magistrate erred in determining the quantum of damages to be awarded in relation to Zoya Lea, due to there being no evidence a typographical error which was made in relation to the Purchase Price. (Only if Ground One Fails).
9.Appeal Ground Eight (sic): the Magistrate erred in determining the quantum of damages be awarded in relation to Zoya Lea as she failed to consider the post contract sale of the Horse and the consideration exchanged. (Only if Ground One Fails)
10.The Magistrate erred in law in failing to consider Magistrates Court (Civil Proceedings) Act section 25 (2), given the size of the judgement awarded and the significant difference between what was claimant (sic) in relation to the portion of costs awarded.” The Magistrate erred in law in failing to invite submissions prior to making an order under Magistrates Court (Civil Proceedings) Act section 25 (2).
The grounds of appeal are somewhat confusing. As best I can ascertain, they can be grouped in to three categories.
The first category challenges the learned magistrate's conclusion that the agreement was not a lay-by agreement (grounds 1 and 2).
The second category challenges the learned magistrate's findings on the counterclaim in relation to expectation and reliance damages for loss of a bargain (grounds 3, 5, 6 ,7, 8 and 9). In relation to ground 6, the issue of frustration is also raised.
The third category challenges the learned magistrate's assessment of damages specifically in relation to the damages allowed for agistment costs (ground 4).
The fourth category challenges the learned magistrate's award of costs (ground 10).
The learned magistrate preferred the evidence of the respondent
The learned magistrate found that the respondent was a reliable and credible witness. In this regard, the learned magistrate found that the documentary evidence (in the form of invoices and emails) supported the respondent's account of events.[4]
[4] Magistrates reasons, ts 3.
The grounds of appeal do not challenge the learned magistrate's finding as the credibility and reliability of the respondent. It is convenient therefore to set out the respondent's evidence in some detail in order to understand the learned magistrate's reasons.
The respondent's evidence
The respondent's evidence was that she was a self‑employed farmer who bred horses as a hobby. Under cross‑examination, she agreed that she owned a business known as Elizabeth Luisa Abbott Alphalea Arabians which had an ABN and was registered for GST.[5]
[5] ts 37.
In August 2012, the respondent said she received a telephone call from the appellant in response to an advertisement that she had placed on a website advertising for the sale of some horses. She said that she spoke with the appellant over the telephone and agreed they should meet on 11 August 2012 at the respondent's property in Brunswick. The appellant and her then partner attended and inspected a number of horses - two mares by the names of Marais Al Saba (Maisie) and Zoya Lea and a gelding by the name of Ziegfreid Lea (Ziggy).[6]
[6] ts 38.
Following the meeting, the appellant and the respondent agreed that the appellant would pay (inclusive of GST) the sum of $13,700 for the purchase of the three horses. The sum included a $2,000 stud fee for the respondent to arrange artificial insemination of Zoya Lea to the stallion Al Khazar.
The respondent prepared an invoice detailing the agreed prices for each horse being $5,500 for Marais Al Saba, $5,000 for Zoya Lea and $1,200 for Ziggy.[7] The invoice specified that the appellant would pay a 10% deposit by 16 August 2012 with the balance payable on 31 August 2012.[8]
[7] ts 40.
[8] Statement of intended evidence of the respondent dated 22 November 2016 at pars 21 and 22.
On 17 August 2012, the respondent sent an email to the appellant referring to the fact that she had not received the deposit. In that email she also enquired as to whether the appellant wished to have Zoya Lea bred to the stallion Sadiks Psyche instead of Al Khazar (for a stud fee of $1,650). On 21 August 2012, the respondent sent a further email to the appellant in which she again mentioned that the deposit had not been paid. The appellant then paid the deposit that same day.
On about 21 August 2012, the appellant advised the respondent that she did want the horse Zoya Lea bred with Sadiks Psyche. The appellant and respondent then discussed varying the initial agreement to have Marais Al Saba also bred with Sadiks Psyche for the same stud fee as for Zoya Lea ($1,650). The respondent advised the appellant that (with the additional stud fee) this would make the new purchase price $15,350. The appellant agreed to the respondent's proposal.
On 9 September 2012, the appellant visited the respondent at her property and paid her $3,000 in cash. The respondent provided the appellant with a new tax invoice[9] which showed the original purchase price of $13,700 and receipts of $1,320 for the deposit and the $3,000 payment. The invoice showed a balance of $9,380 owing. The respondent mailed the invoice to the appellant at the appellant's address.[10]
[9] Exhibit ELA5.
[10] Statement of intended evidence of the respondent at par 34.
On 27 September 2012, the respondent sent an email to the appellant following up on the appellant's failure to pay the balance of the purchase price. In that email, the respondent said:
I'm sorry to hassle you but I really need you to complete payment of these horses by 4 October when they are 14 days tested for pregnant [sic].[11]
[11] Statement of evidence of the respondent at par 41.
In that email, the respondent also advised the appellant that the balance owed now totalled $11,000 and asked the appellant to provide her with her new address (the appellant having previously advised the respondent of her intention to move).
The respondent gave evidence that she had arranged for the semen of Sadiks Psyche to be transported from New South Wales to the Baldivis Vet Hospital at a cost of $700. This was on the understanding that she had agreed to arrange for the artificial insemination of the two mares at the request of the appellant.
The respondent said she incurred costs for the mares to undergo genetic testing for a fee of $85 each plus the cost of transporting the mares to the Baldivis Vet Hospital. She said that after the mares had been delivered to the vet hospital she tried to contact the appellant (using the contact details the appellant had given her) but was unsuccessful. The respondent said she thereafter made several attempts to contact the appellant but again was unsuccessful.
The respondent said that she had formed an expectation that the horses would be paid for and would have left her property by the end of September 2012 (despite the due date in the original agreement being 31 August 2012). The respondent said that she advised the appellant that she wanted to be fully paid by 4 October 2012.[12]
[12] Statement of evidence of the respondent at par 35.
It was not in dispute that the original agreement specified that payment was to be made by 31 August 2012 and that when the appellant failed to make payment on time, the respondent granted her further time to pay. She communicated this to the appellant in an email dated 27 September 2012 in which she requested payment by no later than 4 October 2012.
By 4 October 2012, payment was not forthcoming and the horses remained in the possession of the respondent. On 15 October 2012, the horse Ziggy suffered a life‑threatening injury through no fault of the respondent and had to be euthanized.
The respondent said that she emailed the appellant to advise her of what had happened to Ziggy. Sometime thereafter, she spoke to the appellant over the telephone who told her that she was not in a position to pay the balance at that time because the proposed sale of some property had fallen through. The appellant did not advise the respondent that she wished to repudiate the contract; nor did the respondent then advise the appellant that she intended to exercise her right to terminate the agreement and pursue a claim for damages. At this stage it seems that both parties intended to honour their respective obligations under the agreement.
On 21 October 2012, the respondent sent a further email to the appellant asking her when she intended to complete payment and advised her that she intended to begin charging the appellant agistment fees and other costs associated with the care of the remaining two horses.[13]
[13] Statement of evidence of respondent at par 48.
On 22 October 2012, the respondent again emailed the appellant and asked her when she intended to complete payment for the mares and again advised her of her intention to charge her for agistment and other expenses.
On 23 October 2012, the appellant made a payment of $1,700 to the respondent.[14]
[14] Statement of evidence of respondent at pars 49 and 50.
On 2 November 2012, the respondent collected the two mares from the Baldivis Veterinary Hospital (where she had taken them to be inseminated as the appellant had instructed). The respondent then arranged for them to be transported back to the respondent's property at a cost of $440. The respondent was shortly thereafter advised by the veterinary hospital that Zoya Lea was pregnant but that Marais Al Saba had not fallen pregnant.
After collecting the two mares, the respondent made several unsuccessful attempts to contact the appellant.[15] On 5 November 2012, however, the appellant paid a further $1,300 into the respondent's bank account towards the purchase price of the mares. The respondent recorded the further payments on an invoice which showed the balance brought forward as $9,380 plus transport of $440, a breeding fee for Zoya Lea of $650, genetic testing of $170 and 50% of the cost of freight on the semen of $350. The invoice also recorded the appellant's payments in the sum of $1,700 on 23 October 2012 and $1,300 on 5 November 2012 and showed a balance of $8,990 owing.[16]
[15] Statement of evidence of respondent at pars 53 and 54.
[16] Number 396540.
On 6 November 2012 the respondent issued an updated invoice which recorded the balance brought forward from the previous invoice of $8,990 plus agistment for the two mares at $12.00 each per day for 28 days (a total of $739). The invoice noted that fees for agistment and transport were due immediately and recorded the sum of $10,169 still owing.[17]
[17] Statement of evidence of respondent at pars 56 and 57.
In early December 2012, the appellant spoke to the respondent over the telephone. The respondent offered to release the appellant of the obligation of purchasing one of the mares providing that the outstanding amounts were paid immediately. The appellant advised the respondent that she wished to take the pregnant mare, Zoya Lea. The respondent then completed a new invoice which recorded that, with respect to Zoya Lea, the total owing was $1,674 (which included the costs of transport, genetic testing, freight and agistment).[18] The appellant failed to pay the balance of that invoice.
[18] Statement of evidence of respondent at par 60.
The respondent thereafter made a number of unsuccessful attempts to contact the appellant.
On 4 January 2013 the respondent sent a further invoice to the appellant which recorded the amount brought forward from the previous invoice of $1,674. It also included a claim for further agistment costs, farrier costs, and worming costs (a total of $2,016.10). Again, the respondent attempted to contact the appellant but was unsuccessful.
On 22 January 2013, the respondent decided to arrange for Zoya Lea to be delivered to the appellant, despite not having received full payment. The respondent tried to contact the appellant to obtain an address for the delivery of Zoya Lea. The respondent received no response from the appellant so she cancelled the transport.[19]
[19] Statement of evidence of respondent at par 65.
On 25 January 2013, the respondent received a further $1,700 payment from the appellant. That was the last time the appellant made any payment to the respondent.[20]
[20] Statement of evidence of respondent at par 66.
Over the next six months, the respondent tried on a number of occasions to contact the appellant without success.[21]
[21] Statement of evidence of respondent at pars 67 and 69.
On 3 June 2013, the respondent sent a text message to the appellant advising her that she could no longer wait for payment. The respondent then raised a final invoice (recording receipt of a payment of $1,700 on 25 January 2013, further agistment costs to 3 June 2013, farrier costs and worming costs a – a total of $2,524.80). The appellant made no further payments pursuant to the agreement and made no attempt to communicate with the respondent.[22]
[22] Statement of evidence of respondent at pars 70 and 71.
In September 2013, Zoya Lea gave birth to a foal. On 24 September 2013, the respondent sold the foal to an unrelated party for $2,500. The respondent gave evidence that, by the time that she sold the foal, she had formed the belief that the appellant no longer had any intention of honouring the agreement.[23]
[23] Statement of evidence of respondent at pars 72 and 73.
The next time that the respondent heard from the appellant was in mid‑December 2013 when she received a text message from her. In that message the appellant demanded the respondent repay the amounts the appellant had paid to her towards the purchase price. The respondent declined to do so.
The appellant's evidence
The appellant did not really challenge the account of events given by the respondent except in two material respects.
Firstly, the appellant asserted that the respondent had agreed that she could pay for the horses in instalments over an unspecified period.
Secondly, the appellant did not accept that she had ever discussed or agreed with the respondent that there would be additional charges such as fees for agistment.
The learned magistrate's findings on the appellant's claim
The learned magistrate preferred the evidence of the respondent that there had been no discussion or understanding between the parties that the agreement was to be a lay-by or instalment agreement.[24] Her Honour found that there was an agreement that a deposit of 10% was to be paid by 16 August 2012 with the balance to be paid by 31 August 2012 but when the appellant had not made payment by that date, the appellant had granted the respondent an extension of time to pay by 4.00 pm on 4 October 2012.[25]
[24] Magistrate's reasons, ts 9, 10.
[25] Magistrate's reasons, ts 8.
In arriving at a conclusion, the learned magistrate said:[26]
[t]he email correspondence between the appellant and respondent dated 27 September 2012 made it clear in it's terms that [the respondent] was requesting final payment for the horses by 4 October 2012. A further email of 21 October 2012 also refers to the completion of payment for the horses. That email was followed by an email of 22 October 2012, which repeated the content of the email of 21 October. Further, the tax invoices completed by [the respondent] record the balance due, and in a number of invoices, they set out the bank details for [the respondent].
[26] Magistrate's reasons, ts 9.
Her Honour rejected the appellant's contention that the agreement was intended to be a lay-by agreement because the respondent had continued to accept payments from the appellant after the last day for payment on 31 August 2012. Her Honour found that the respondent's repeated requests that the appellant pay the balance was strong evidence to the contrary.
The learned magistrate found that, between January and June 2013, the respondent had sent the appellant what was described as a 'final notice' for the amount outstanding on the basis that the appellant intended only to take the mare Zoya Lea but had received no response from the appellant until mid‑December 2013 (when she received a text message from the appellant demanding return of all amounts paid).[27]
[27] Magistrates reasons, ts 10.
Her Honour appeared to be fortified in her view that the agreement was not a lay-by agreement by the fact that none of the invoices rendered by the respondent had made any reference to payments by instalments.
Her Honour found the appellant's text message in December 2013 demanding repayment to amount to a repudiation of the agreement.[28]
[28] Magistrates reasons, ts 11.
In this regard, her Honour said:[29]
In my view, [the appellant] was the author of her own misfortune in that she failed to maintain regular contact with [the respondent] and failed to let her know of her contact details, especially after she [and her partner] separated. In conclusion, I make the following findings on the balance of probabilities, and in so doing, answer the questions that were posed previously. I find that the agreement between the parties was not a layby or instalment agreement. It was an agreement that the [appellant] pay an amount, an agreed sum, to the [respondent] by way of a deposit, followed by payment of the balance.
The [respondent] effectively gave to the [appellant] an extension of time in which to pay the deposit and then to pay the balance. I find that the [appellant] repudiated the agreement by reason of her demand in the text message of mid-December 2013. As a result of these findings, I find that the [appellant] breached the agreement and her claim is therefore dismissed.
[29] Magistrates reasons, ts 11.
The learned magistrate's finding on the respondent's counterclaim
After rejecting the appellant's claim that the agreement was a lay‑by agreement, her Honour went on to consider the respondent's counterclaim for expectation and reliance damages for the loss of a bargain as well as damages for costs incurred by the appellant in relation to the care of the horses.[30]
[30] Magistrate's reasons, ts 12.
The claim for the loss of a bargain – the reduction in value of Marais Al Saba and Zoya Lea
The learned magistrate accepted that the respondent should receive damages for the loss in the value of the horses that remained in her possession. Her Honour assessed the loss in respect of Marais Al Saba at $2,000, the loss in respect of Zoya Lea at $5,000 and the loss in respect of Ziggy at $1,200.
In respect of Marais Al Saba, the respondent had given evidence that she had purchased her when she was 6 years old. At the time of the hearing she was 10 years old. She said that during 2014 and 2015, she had sustained an injury to her hind legs resulting in scarring. The respondent said that she would be lucky to be able to sell Marais Al Saba for $3,500.
The learned magistrate found that the respondent had done all she could to mitigate her loss in attempting to sell Marais Al Saba and assessed the loss at $2,000 (being half of the agreed purchase price).[31]
[31] Magistrate's reasons, ts 13 and 14.
The respondent's evidence was that Zoya Lea was 14 years old at the time that the agreement was entered into and 18 years old at the date of the hearing. Her Honour accepted the evidence of the respondent that she had attempted to mitigate her loss by selling Zoya Lea. Her Honour also accepted the respondent's evidence that Zoya Lea would be unlikely to realise more than $500.
The learned magistrate found that, had the appellant abided by the terms of the agreement, the horse Ziggy would have left the respondent's property two months previously and would not therefore have suffered the injury requiring him to be euthanized. Accordingly, her Honour found in respect of Ziggy that the respondent had suffered a loss of $1,320.
Claim for damages for losses associated with the care of the horses
Her Honour found that there was an implied term in the agreement that, pending removal of the horses from the respondent's property, the appellant would do what was necessary to care for them. Her Honour accepted the respondent's evidence that there had been a conversation in which the respondent had advised the appellant of her intention to charge for agistment and other costs.[32] Consequently, her Honour found that the appellant was liable for costs and fees associated with the care of the horses from 31 August 2012 (when the balance of the purchase price was first due) and until the repudiation of the contract by the appellant in December 2013.
[32] Magistrate's reasons, ts 11.
The learned magistrate assessed damages associated with the cost of caring for the horses as follows: agistment costs of $9,642, $169 for worming, $315 for trimming, $120 for dental, $440 for transport ‑ a total of $19,005.
The learned magistrate calculated the claim for agistment for the two remaining mares for the period from the end of August 2012 (when the balance of the payment was due) until the date of repudiation of the agreement in mid‑December 2013 to be $9,642 (a daily rate of $12 per horse).[33] Her Honour accepted the respondent's evidence as to the agistment rates.
[33] Magistrate's reasons, ts 12.
Summary of award of damages on the counterclaim
It is convenient to reproduce the items allowed by the learned magistrate on the counterclaim below:
Agistment $9,642 Worming $169 Trimming $315 Dental $120 Transport $440 Loss (Marais Al Saba) $2,000 Loss (Zoya Lea) $5,000 Loss (Ziggy) $1,320 Total $19,005 Less amount paid by the appellant $9,020 Less Baldivis Veterinary Fee (Zoya Lea) $2,151.60 Less Zoya Lea foal $2,500 Total $13,671.60
Principles in relation to appeals to the District Court from the Magistrates Court
Section 40(1) of the Magistrates Court (Civil Proceedings) Act 2004 (WA) (MCCP Act) provides as follows:
40.Appeal from Magistrates Court to District Court
(1)A party to a case that is not a minor case may appeal to the District Court against —
(a)any order made by the Magistrates Court in the course of proceedings in the case; or
(b)the judgment of the Magistrates Court in the case.
The principles relating to appeals from the Magistrates Court to the District Court was set out by his Honour Bowden DCJ in Milentis v Howard I Evans as Executor of the Estate of Demetrius Mitskinis [2018] WADC 106 where his Honour said:
6.An appeal from the Magistrates Court is by way of a 'reconsideration of the evidence' before the Magistrates Court (District Court Rules 2004 (WA) (DCR) r 50(1), Magistrates Court (Civil Proceedings) Act 2004 (WA) (MCCPA)) and is therefore an appeal in the nature of a rehearing.
7.The court has a discretion to grant leave to admit additional evidence (MCCPA, s 40(4), s 40(5), DCR, r 50(2), r 50(3)). However, leave may only be given in 'exceptional circumstances': Shenton v Touchstone Farms Pty Ltd [2015] WASCA 252.
8.To succeed on an appeal, the applicant must demonstrate a legal, factual or discretionary error by the magistrate: Allesch v Maunz [2000] HCA 40 [14], [23]. Where an appellant appeals against findings of fact, they must do more than merely show that an alternate finding was available on the facts. They must show that a factual error was made by the primary judge: Minister for Immigration, Local Government and Ethnic Affairs v Hamsher [1992] FCA 184; (1992) 35 FCR 359, 369; Leeder v The State of Western Australia [2008] WASCA 192 [84].
9.If upon the facts a decision is found to be unreasonable or plainly unjust, an appellate court may infer that in some way there has been a failure to properly exercise the discretion which the law reposes in the magistrate: House v The King [1936] HCA 40; (1936) 55 CLR 499.
10.A finding of fact by a magistrate, based on the credibility of a witness, is not to be set aside because an appellant court thinks that the probabilities of the case are against – even strongly against – that finding of fact. If the magistrate's finding depends to any substantial degree on the credibility of a witness, the finding must stand unless it can be shown that the magistrate 'has failed to use or has palpably misused his advantage', or has acted on evidence which was 'inconsistent with the facts incontrovertibly established by the evidence' or which was, 'glaringly improbable', or contrary to compelling inferences: Devries v Australian National Railways Commission (1993) 177 CLR 472, 479; CSR Ltd v Della Maddalena [2006] HCA 1; (2006) 224 ALR 1 [21].
Application by appellant for leave to adduce additional evidence
At the hearing of the appeal, the appellant sought leave to adduce additional evidence which was available, but not tendered, at the hearing, namely:
1.an extract from the AHSA Stud Book of Arabian and Arabian Derivative Horses which is said to establish that the respondent's horse, Zoya Lea was sold on 13 September 2013; and
2.Notes of the respondent contained in a notepad which it is said establishes that on 15 March 2013 the horse Marais Al Saba was sold for $6,600.
Section 40(4) and (5) of the MCCP provides as follows:
(4)The District Court must decide the appeal on —
(a)the material and evidence that were before the Magistrates Court; and
(b)any other evidence that it gives leave to be admitted.
(5)Leave may only be given under subsection (4)(b) in exceptional circumstances.
It is relevant that both parties were represented at the hearing in the Magistrates Court.
The appellant did not seek to adduce evidence at the appeal explaining why the documentation was not tendered and why it is now important.
As there is no evidence as to the reasons of the failure of counsel to tender the evidence at the hearing, the appellant has failed to establish that there are circumstances – let alone the exceptional circumstances which are required – to warrant me granting leave for that evidence to be adduced at the appeal. I would decline the application.
As I have concluded that the additional evidence cannot be led, it follows that grounds 7 and 9 (being grounds which rely on the evidence for which leave is sought) must fail.
The respondent's application to strike out the appeal
The respondent did not file a cross‑appeal but filed an application to have the appeal struck out.
At the hearing of the appeal, the respondent was not represented. However, the respondent relied on an outline of submissions her former solicitors had filed.
The outline of submissions purported to make an application pursuant to s 43(3) of the MCCP Act which provides:
43.Appeal court's powers
...
(3)The appeal court may strike out the appeal if the likely costs of the appeal to the parties would be disproportionate to the amount of the claim in, or the nature of, the case which is the subject of the appeal.
Section 43(3) permits the court to exercise its discretion to dismiss an appeal if the costs of the appeal are disproportionate to the nature of the case.[34] The evident purpose of this section is to prevent disproportionate costs being incurred on appeals from proceedings in the Magistrates Court.
[34] Mowday v Shire of Merredin [2013] WASCA 182 [19].
In Cristovao v John Horton & Associates [2012] WASCA 12 [22] the court said:
… Section 43(3) is concerned to prevent disproportionate costs being incurred by the parties on appeals from proceedings in the Magistrates Court. It is not concerned with proportionality in any other respect, such as the court resources required for the determination of the appeal. It is evident that the requirement of proportionality under s 43(3) is intended to enable a party to litigate a modest claim in the Magistrates Court without the risk that an opponent who (for whatever reason) is unconcerned with costs might pursue appeals of disproportionate and even crippling expense. That intention would be defeated if, so long as the costs of the appeal were not disproportionate to the nature or amount of the substantive proceedings, a party unconcerned with costs could pursue with impunity an appeal against any (or even, every) adverse interlocutory decision, even where the issue on the appeal was of a minor or trifling nature.
The respondent produced a schedule of likely costs for the hearing of the appeal pursuant to the relevant cost scale, namely the Legal Profession (District Court Appeals) (Contentious Business) Determination 2018. The total estimate of costs was approximately $15,000 for each party.
The respondent submitted that, even if successful, the appellant's position could only improve by approximately $19,000.
Whilst the amount of the claim in the present case is small, I am not persuaded that it is so insignificant that it is disproportionate to the expense to be incurred, or that the issue is of such a minor or trifling nature that I should decline to determine the case on its merits.
I would make the observation that, whilst the factual circumstances were not altogether straightforward, the issue to be determined was ultimately a narrow one.
I would decline to strike out the appeal on this basis alone.
Grounds 1 and 2 – was the agreement a lay‑by agreement?
It is convenient to deal with grounds 1 and 2 together.
Grounds 1 and 2 assert that the learned magistrate erred in finding that the agreement between the appellant and the respondent was not a lay‑by agreement and that her Honour erred in law by misconstruing s 96(3) of sch 2 of the Australian Consumer Law which provides that:
…
(3)A lay‑by agreement is an agreement between a supplier of goods and a consumer for the supply, in trade or commerce, of the goods on terms (whether express or implied) which provide that:
(a)the goods will not be delivered to the consumer until the total price of the goods has been paid; and
(b)the price of the goods is to be paid by:
(i)3 or more instalments; or
(ii)if the agreement specifies that it is a lay‑by agreement—2 or more instalments.
(4)For the purposes of subsection (3)(b), any deposit paid by the consumer for the goods is taken to be an instalment.
At the hearing of the appeal, senior counsel for the appellant conceded that when the agreement was first made, it could not have been a lay-by agreement because it was not specified to be a lay-by agreement and repayment was specified to be by only two instalments.[35] However, senior counsel submitted that the agreement 'becomes a lay-by agreement by progressive events.'[36]
[35] ts appeal 7.
[36] ts appeal 8.
In support of that contention, senior counsel submitted that the contract was varied by the respondent permitting the appellant further time to pay the deposit and then, by inquiring of the appellant when she intended to complete payment, or at least make further payments. It is submitted that this evinced an intention on the part of the respondent to permit the appellant to pay by instalments. The appellant also submitted that it is relevant that the appellant then went on to make a number of part payments between 21 August 2012 and 5 November 2012 which the respondent accepted without terminating the agreement.[37]
[37] Exhibit ELA 8, ts appeal 8.
There was no evidence to support the appellant's contention that the parties had agreed to a variation of the original agreement: any discussion about the appellant being granted further time to pay came after the appellant had breached the agreement by failing to pay both the deposit and the balance by the due date. In these circumstances the respondent's decision to grant the appellant further time to pay must be seen in that light.
Clearly the respondent hoped to receive the benefit of the agreement (to which she was entitled) by granting the respondent further time to pay. Merely granting the appellant time within which to pay could not have amounted to a variation of the original agreement in the absence of her having expressly stated that that was what was intended.
The appellant has not demonstrated that the learned magistrate erred in fact or law by failing to characterise the agreement as a lay-by agreement.
Grounds 1 and 2 have no merit.
Grounds 3 and 4 – whether the learned magistrate erred in her assessment of damage for losses in value of horses and in relation to agistment
Grounds 3 and 4 are argued in the alternative to grounds 1 and 2.
In ground 3, the appellant asserts that the respondent made an 'equitable election' following the appellant's initial breach of the agreement to affirm the agreement rather than terminate the agreement and sue for damages.
As I understand the appellant's argument, it is said that the learned magistrate erred in assessing expectation and reliance damages for the loss of a bargain. It is submitted that, because the respondent could have terminated the contract at an earlier stage, she was not entitled to such damages.
Ground 4 is based on a similar argument. Here, the appellant submits that the respondent was not entitled to claim agistment fees because any claim for agistment came after the respondent was obliged to have terminated the contract.
The appellant submits that the respondent was obliged to mitigate her losses by declining to affirm the agreement and by selling the horses to a third party - or at least by transferring possession of them to the appellant even before the appellant had completed payment for them.
The appellant does not say how in reality the respondent could have mitigated her loss by this suggested course of action. The damages claimed by the respondent on the counterclaim included expectation and reliance damages for the loss of the benefit of the bargain.[38] If the respondent had terminated the agreement immediately following the appellant's default – or had transferred possession of the horses to the appellant - the respondent would have lost any benefit of the bargain she had entered into.
[38] See Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64.
As best I can understand the appellant's submission, it is said that the respondent's remedy was to terminate the contract, deliver the horses to the appellant and then pursue a claim for liquidated damages for the loss of the purchase price. However, the agreement did not specify that time was to be of the essence so the failure of the appellant to pay on time would not have entitled the respondent to terminate the agreement in the absence of a clear repudiation.[39]
[39] Carr v JA Berriman Pty Ltd (1953) 89 CLR 327, 348 – 9.
There was no clear repudiation until December 2013. On the evidence before the learned magistrate it was apparent that the appellant initially made genuine attempts to perform her obligations under the contract by making payments in instalments. The appellant's efforts to make partial payments, albeit when pressed to do so, suggested that she had not repudiated the contract.[40] In those circumstances (despite the respondent undoubtedly retaining a right to claim damages for the appellant's breach) it is doubtful that the respondent could have claimed a right to terminate the contract.
[40] Shevill v Builders Licensing Board (1982) 149 CLR 620, 633-634.
In any event, the respondent was entitled to affirm the contract and insist on its performance by giving the appellant a reasonable amount of time within which to pay.[41] Regardless of her election to affirm the contract, the respondent retained a right to sue for any damages occasioned by the appellant's breach.[42]
[41] Carr v JA Berriman, 348, Bowes vChaleyer (1923) 32 CLR 159, 169; 190, 197 and Joseph v Constantine Steamship Line Ltd v Imperial Smelting Corp Ltd [1942] AC 154, 170.
[42] Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235 [250 ‑ 251].
It follows that the appellant's submission that the value of the horses ought to have been calculated at the time after the appellant's first breach and not at the end of 2013 cannot be sustained. Nor can I accept the appellant's submission[43] that the respondent was not entitled to the benefit of an election to affirm the agreement and also seek damages in contradiction of that election.
[43] Appellant's submissions at pars 60 – 61.
To have required the respondent to do what is being suggested would be wholly inconsistent with her rights to insist on being paid prior to passing possession of the horses to the respondent. Moreover, the appellant's submissions in this regard ignore the evidence of attempts made by the respondent to have the mare Zoya Lea delivered to the appellant in early 2013.
By reason of the foregoing, the appellant's argument about the so‑called 'equitable election' has no merit. If I am wrong about this then there is a more fundamental issue of concern.
At the hearing of the appeal, senior counsel for the appellant frankly acknowledged that the issue of 'equitable election' had not been raised at the hearing. He conceded that there was an issue as to whether that can now be raised on this appeal.
The appellant's position on this point is fundamentally different to the position she had adopted in the Magistrate's Court.
A party is bound by the conduct of his case. Except in exceptional circumstances a party is not, after a case has been decided against him, permitted to raise a new argument where there is a failure to put that argument at the hearing when there was an opportunity to do so. This is whether he failed to do so deliberately or by inadvertence.[44] In the circumstances, I am not persuaded that this is an argument which the appellant should now be permitted to raise. If I am wrong about this, I have concluded in any event that that the argument about the so‑called 'equitable election' has no merit.
[44] Metwally v University of Wollongong [1985] HCA 28 [8].
At the hearing of the appeal, senior counsel submitted that in relation to the quantum of damages allowed for agistment the subject of ground 4, there were reasons other than those related to the so‑called 'equitable election' why her Honour had incorrectly assessed damages. It was submitted that agistment fees could only have been claimed if property in the horses had been transferred from the respondent to the appellant. Otherwise it is submitted there is no proper basis for the respondent to charge agistment fees.
The appellant's submissions are primarily based on the premise that the agreement contained no express or implied term entitling the respondent to charge agistment fees.
It is true that there was no express term entitling the respondent to charge the appellant agistment fees. However, the claim for agistment was arguably based not on the terms of the contract itself, expressed or implied. Rather, it was based on a claim for damages representing costs associated with the care of the horses and occasioned by the appellant's failure to complete the purchase.
In this regard, however, her Honour found that there was an implied term in the agreement that, pending removal of the horses from the respondent's property, the respondent would do what was necessary to care for them.
I can find no error in her Honour's approach: unlike for inanimate objects, there are various costs associated with the care of horses, the costs of agistment undoubtedly being one of them.
The appellant submitted that damages should have been assessed on the basis of 'out‑of‑pocket expenses' rather than the 'metaphoric bailee contract purportedly entered into between the parties.'
I have been unable to make sense of that submission except to the extent that I understand the appellant to be submitting that the only correct measure of damages is that of out‑of‑pocket expenses.
In my view, there is no basis either in law or logic to conclude that the only correct measure of damages is 'out‑of‑pocket expenses'.
The cost of agistment is a cost which a reasonable person would anticipate would result in a loss flowing from directly from the appellant's breaches because of the nature of the subject matter of the sale.[45]
[45] Hadley v Baxendale (1854) 9 Exch 341, 354.
Ground 4 has no merit.
Grounds 5 and 8 – loss related to Ziggy and Zoya Lea
Grounds 5 and 8 can conveniently be dealt with together.
Grounds 5 and 8 assert that the learned magistrate erred in fact in determining the quantum of damages to be awarded in relation to Ziggy because there was no evidence about the purchase price.
The appellant submits that the price for Ziggy (as specified in the invoice) was $1,200 and not $1,320 as found by the learned magistrate. (The latter amount apparently including a component for GST).
The appellant submits, in relation to grounds 5 and 8 that 'a dispute remains as to whether the contract was a job lot'.[46] The appellant, however, does not submit how the 'dispute' should be resolved or why the learned magistrate fell into error other than to assert that her Honour got the numbers wrong.
[46] Appellant's submissions par 14.
In my view this submission goes nowhere and does not support any ground in the appeal.
The contract entered into was one agreement (rather than three separate agreements) for the purchase of the three horses, despite the invoices separating out the respective values of the horses - $5,500 for Marais Al Saba, $5,000 for Zoya Lea and $1,200 for Ziggy. If there was indeed an error made by the learned magistrate in assessing damages in relation to Ziggy at $1,320, then it was a mere slip, and not an error justifying a complete review of her Honour's decision.
The law of damages for breach is said to have had a 'surface gloss of high technicality but an underlying attitude of flexibility and realism' and that the assessment of damages involves 'no more than an approximation lacking in mathematical or conclusive evidence or sufficiency'.[47] In other words, the assessment of damages is not an exact science.
[47] Pennant Hills Restaurant Pty Ltd v BarrellInsurance Pty Ltd (1981) 145 CLR 625 [636]. See also Commonwealth v Amann Aviation Pty Ltd (138) (Toohey J).
The appellant's asserted factual error in relation to the price of Ziggy has a nit-picking quality inconsistent with the notion that damages in the present context can be no more than an approximation.
In relation to the mare, Zoya Lea, the appellant asserts that the learned magistrate erred in concluding that the respondent had attempted to mitigate her loss by trying to sell Zoya Lea. In support of that submission, the appellant seeks to rely on evidence not before the Magistrates Court. As I have ruled that the appellant ought not be permitted to adduce evidence on this appeal, there is no merit to this submission.
Grounds 5 and 8 have no merit and must fail.
Grounds 6 – was the agreement frustrated due to the death of Ziggy?
Ground 6 appears to assert that the death of Ziggy (being no fault of the appellant) resulted in a frustration of the contract.
I do not accept that the issue of frustration arises on this appeal for the following reasons.
The issue of frustration was not raised at the hearing in the Magistrates Court. In those circumstances, the appellant should not now be permitted to raise that as an issue on this appeal.[48]
[48] Metwally v University of Wollongong [8].
If I am wrong about that then I would observe that doctrine of frustration operates prospectively and not retrospectively. At the time that the appellant says the contract was frustrated, neither party was relieved of their respective rights, obligations and liabilities accrued up to the point of frustration.[49] In this case, the rights that we are concerned with include the respondent's right to have been paid the amount of the contract price by a certain date and the appellant's corresponding obligation to pay. The respondent's right to sue for damages for the appellant's breach is not affected.[50]
[49] Joseph v Constantine Steamship Line Ltd v Imperial Smelting Corp Ltd (170).
[50] Baltic Shipping Co v Dillon (1993) 176 CLR 344 (355 – 356) (Mason CJ).
The appellant had owed the respondent the balance of the purchase price (including the $1,320 for the cost of Ziggy) since 31 August 2012 (at the earliest) and 4 October 2012 (at the latest). Ziggy was euthanized on 15 October 2012. By that date, the appellant's obligations to make payment had already accrued.
The appellant's submission that the respondent ought to have avoided loss by transferring the rights to Ziggy earlier is misconceived. This would have required the respondent to act in a way inconsistent with her rights under the agreement by relinquishing possession of Ziggy prior to receiving payment for him. There is no basis for the submission that the respondent should have acted in this way.[51]
[51] Allied Mills Ltd v Gwydir Valley Oilseeds Pty Ltd [1978] 2 NSWLR 26, 29 – 30.
The delivery of Ziggy was delayed due to fault on the part of the appellant. Consequently, the appellant must be taken to have assumed the risk of any loss which might occur but for such fault. The death of Ziggy did not frustrate the contract. Rather, the appellant simply did not fulfil her promise to pay for the horses and accept delivery of them by 4 October 2012.
Ground 6 fails.
Grounds 7 and 9
Grounds 7 and 9 rely on evidence which was not before the learned magistrate. As I have found that there are no exceptional circumstances justifying the additional evidence being adduced, grounds 7 and 9 also fail.
Grounds 10 and 11
Grounds are 10 and 11 assert that the learned magistrate erred in making an award of costs to the respondent without inviting the parties to make any submissions.
The appellant submits that there was no basis to make a full award of costs to the respondent and that partial costs should have been awarded. In support of that proposition, the appellant cites Craft Decor Pty Ltd v Oteri [2012] WASCA 46. However, that case does not support the proposition advanced by the appellant. That case concerned circumstances where a claim which should have been commenced in the minor cases jurisdiction was artificially inflated so that it could be dealt with in the general procedure jurisdiction of the Magistrates Court, thus enabling the court to award costs.
In the present case, the appellant commenced the claim in excess of $10,000 in the general procedure jurisdiction of the Magistrates Court. The respondent then filed a defence and counterclaim.
The appellant's submissions ignore the fact that the learned magistrate's award of costs was in relation to the respondent's defence and counterclaim. The appellant does not seek to distinguish between the two. It must be taken that the appellant seeks to impugn the entirety of the costs order and not just the aspect of the order that relates to the counterclaim. The appellant, however, does not submit how costs should be apportioned.
I also accept the respondent's submission that there is no principle consistent with the value of a costs order being proportionate to a judgement sum.
The appellant claims that she was denied natural justice because the learned magistrate failed to invite submissions from her counsel in relation to the issue of costs. This is not correct. It is apparent from the transcript that her counsel was invited to make submissions on the issue of costs.[52]
[52] Magistrate's reasons, ts 14, 15.
The appellant's counsel did not ask to be heard.
Grounds 10 and 11 have no merit.
Orders
The appeal is dismissed.
The judgement of her Honour Magistrate Edwards is affirmed.
I will hear the parties as to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
IG
Associate to Judge Lonsdale11 FEBRUARY 2019
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