Elliotts v Cross

[1994] QCA 360

IN THE COURT OF APPEAL	[1994] QCA 360
SUPREME COURT OF QUEENSLAND

Appeal No. 50 of 1994

[Elliotts v. Cross and Morton]

BETWEEN:

ELLIOTTS

(First Plaintiff/First Respondent)

AND:

ELLIOTTS MGW PTY

(Second Plaintiff/Second Respondent)

AND:

B.J. CROSS

(First Defendant/First Appellant)

AND:

I.R. MORTON

(Second Defendant/Second Appellant)

Davies JA
McPherson JA

Mackenzie J

Judgment delivered 16/09/1994

Judgment of the Court

APPEAL DISMISSED WITH COSTS TO BE TAXED

CATCHWORDS: APPEAL - S.92 DISTRICT COURTS ACT - Appeal against decisio n of Distric t Court in

appella
te
jurisdi
ction -
whether
appella
nts
persona
lly
liable
for
work
done by
respond
ents

Counsel:	P. McMurdo QC for first appellant No appearance by second appellant P. Dunning for respondent
Solicitors:	Watkins Stokes Templeton for first appellant Davidson & Sullivan for respondents

Hearing date: 8 September 1994
IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 50 of 1994

Brisbane

Before Davies JA

McPherson JA

Mackenzie J

[Elliotts v. Cross and Morton]

BETWEEN:

ELLIOTTS

(First Plaintiff/First Respondent)

AND:

ELLIOTTS MGW PTY

(Second Plaintiff/Second Respondent)

AND:

B.J. CROSS

(First Defendant/First Appellant)

AND:

I.R. MORTON

(Second Defendant/Second Appellant)

JUDGMENT OF THE COURT

Judgment delivered 16/09/1994

This is an appeal under s.92 of the District Courts Act 1967 from a decision of the District Court Judge in which he dismissed an appeal against a decision of a Stipendiary Magistrate at Toowoomba that the appellants were indebted to the respondents in the sums of $2,500 and $15,690.84 respectively for accountancy fees. The fees were for the period between August 1988 and November 1989. It is convenient to refer to Messrs Cross and Morton as "the appellants" although at the commencement of the hearing Mr McMurdo announced that he appeared only for Mr Cross and that he had no instructions from Mr Morton. It was conceded that because of the sum involved the appeal is not by way of rehearing.

In 1982 the appellants had engaged the first respondent to provide accountancy services. In 1983 the first respondent gave advice to the appellants which resulted in the establishment of family trusts and the acquisition of a shelf company which was called The Ad Shop Pty Ltd ("the company") for the purposes of tax minimisation and the limitation of liability of the principals of the partnership. Prior to these events, the appellants were jointly and severally liable for fees for services. (Section 2 Partnership Act 1891). By the time of the trial The Ad Shop Pty Ltd was in liquidation. The issue before the Magistrate and the District Court Judge was whether the first and second appellants were liable for the work done by the respondents in 1988-9. The Magistrate found that the bulk of the work was done in respect of company tax and an audit relating to the company, with some work being the preparation of financial statements for the family trusts. The Magistrate held that subsequent to incorporation of the company, work was done by the respondents on behalf of both the appellants and the company, and accounts rendered were paid without complaint. The invoices in evidence are variously addressed to B.J. Cross and I.R. Morton c/- The Ad Shop or to B.J. Cross and I.R. Morton and The Ad Shop Pty. Ltd c/- The Ad Shop. The Magistrate found that other accounts that had been previously sent were addressed in a similar manner to those tendered in the proceedings. The evidence of the appellants was that those accounts were paid from company funds.

Because Mr McMurdo's argument is based on the proposition that the learned District Court Judge had simply endorsed the Magistrate's reasons and embodied them in his own, it is necessary to summarise those reasons. Before the Magistrate the appellants' case was that once the corporate structures were established the liability ceased to be that of the appellants. Rejecting this, the Magistrate said that the submission ignored the history of the relationship between the parties before the structures were put in place.

The appellants had been clients of the respondents for both their personal work and the work pertaining to their business partnership. The submission ignored what had occurred between the parties in the period of almost five years after the company was formed and before the accounts which were the subject of the proceedings came into being. Up to December 1988, accounts rendered to the appellants personally for company work were paid, albeit with company funds. She observed that had no accounts ever been paid by them the argument may have been stronger.

She found that those matters went to show a course of conduct between the parties prior to the disputed accounts being rendered. She noted that the respondents had acted in the incorporation of the company and that therefore that may be "some suggestion of notice". She found that the appellants were aware that the accounts were still being addressed to them personally and that the appellants had not adequately explained the absence of any action on their part to deny personal liability for the accounts. She rejected the argument that because the accountants had recorded their fees as company expenses in the statements prepared for the company they regarded the company as being liable for the fees. She accepted the proposition that that did not of itself affect the question of liability as between the appellants and the respondents. She was ultimately satisfied that the respondents had discharged their onus of proof and that the appellants were liable for the accounts.

The learned District Court Judge's brief decision isolated the issue on appeal as whether the appellants were liable for the work done by the respondents or whether that liability was that of the company. He accepted that liability depended on the intention of the relevant parties and that that intention was to be ascertained upon an examination of the relevant facts and circumstances. He held that it was open to the Magistrate to take the view that the dealings between the parties, involving as they did the sending of invoices in the names of the first and second appellants without protest by them, were critical. He held not only that the view that the appellants were liable was open to the Magistrate but that in the circumstances her conclusion was correct.

Before us, the issue was said to be whether the appellants requested that the work be done for the benefit of their companies on the basis that they would be personally liable for the fees. The argument was put that the starting point should be that the work was clearly for the benefit of the companies and, in the ordinary case, directors would not be personally liable to pay for such work. The accounts showed the respondents' fees as company expenses during the relevant period and accounts for like work in previous periods were paid with company funds. It was submitted that, therefore, the respondents had to prove that the directors agreed to be personally liable for the payment of the company's accounting fees.

It was submitted that all that had been proved was that invoices had been sent in the names of the appellants without protest by them and that the mere fact that the respondents had wrongly addressed their invoices was insufficient to oblige the directors to pay the company's accounting fees personally.

The intention of the parties is ultimately a question of fact. Cases such as The Committee of Direction of Fruit Marketing v. Urquhart (unreported, 2013 of 1983, 10 October 1984, McPherson J) and Aitken Transport Pty. Ltd. v. Voysey (1990) 1 Qd.R. 510 which were referred to before us and below are examples of the application of settled principles to particular facts. Because of the nature of the appeal it must be demonstrated that the finding below could not reasonably have been reached or is vitiated by some misdirection which has occasioned some substantial wrong or miscarriage. We are satisfied that no errors of these kinds have been demonstrated. The conclusion was open, on the evidence of the relationship and course of dealing between the parties, that the services were at all times being provided on the basis that the appellants personally remained jointly and severally liable for fees incurred. In the circumstances, the appeal must be dismissed with costs.