Gazebo Hotels Pty Limited v Bugledich - [2003] FCA 476

FEDERAL COURT OF AUSTRALIA
Gazebo Hotels Pty Limited v Bugledich [2003] FCA 476
GAZEBO HOTELS PTY LIMITED (ACN 000 184 985) V JULIAN ATTILA BUGLEDICH AND J & MB HOLDINGS PTY LIMITED (ACN 080 657 772)
N 3009 OF 2002
JACOBSON J
16 MAY 2003
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 3009 of 2002

BETWEEN:

GAZEBO HOTELS PTY LIMITED
ACN 000 184 985
APPLICANT

AND:

JULIAN ATTILA BUGLEDICH
FIRST RESPONDENT

J & MB HOLDINGS PTY LIMITED
ACN 080 657 772
SECOND RESPONDENT

JUDGE:

JACOBSON J

DATE OF ORDER:

16 MAY 2003

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.        The application be dismissed.
2.        The applicant pay the respondents’ costs of the proceedings.
Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 3009 of 2002

BETWEEN:

GAZEBO HOTELS PTY LIMITED
ACN 000 184 985
APPLICANT

AND:

JULIAN ATTILA BUGLEDICH
FIRST RESPONDENT

J & MB HOLDINGS PTY LIMITED
ACN 080 657 772
SECOND RESPONDENT

JUDGE:

JACOBSON J

DATE:

16 MAY 2003

PLACE:

SYDNEY

REASONS FOR JUDGMENT
Introduction

The first respondent (“Mr Bugledich”) was responsible for the management of the Gazebo Hotel in Sydney (“the Sydney Hotel”) for approximately 12 months from April 2000.
The principal question which arises in these proceedings is whether Mr Bugledich acted negligently in breach of his contractual duties or his statutory duties under s 180 of the Corporations Act 2001 (Cth) in giving instructions to an employee to reject forward function bookings.
The instructions were said to have been given in about June or July 2000 and the effect of them was that the employee rejected bookings, or enquiries for bookings. for functions which were to be held from about April of the following year.
The applicant claims that Mr Bugledich was negligent because it was his duty to maximise the profits of the enterprise and, in order to do so, he was required to take bookings for functions up to the date on which the hotel was due to close. The applicant’s case is that in the period during Mr Bugledich’s employment, no fixed closing date was set or notified to him and that Mr Bugledich did not inform the applicant of the rejection of the bookings.
Mr Bugledich has defended the proceedings upon the basis that he was informed by Mr Sydney Fischer (“Mr Fischer”), the Chief Executive Officer and controlling shareholder of the company which owned the Sydney Hotel that it would close in December 2000 for conversion to strata home units. Thus, Mr Bugledich’s case is that he was notified of the proposed closing date with sufficient certainty to justify rejection of the bookings for a period well after the date on which the Sydney Hotel would be closed. Mr Fischer denies that he provided that information to Mr Bugledich.
Resolution of this issue turns upon whether I accept the evidence of Mr Bugledich or…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2003] FCA 476
Decision Date: 16 MAY 2003

CaseChat Overview and Summary

The matter of Gazebo Hotels Pty Limited v Bugledich involved the plaintiff, Gazebo Hotels, suing Mr Bugledich for negligence in his role as manager of the Sydney Hotel. The dispute centred around the rejection of bookings for the Sydney Hotel by Mr Bugledich, particularly in relation to whether he was adequately informed about the hotel's anticipated closure. The court was tasked with determining whether Mr Bugledich had sufficient information to justify his actions regarding the bookings and whether he communicated his decisions to the plaintiff's CEO, Mr Fischer, outside of the formal management meetings.

The primary legal issue was whether Mr Bugledich, as the manager of the Sydney Hotel, was negligent in rejecting bookings for the hotel's events, given the circumstances surrounding the hotel's closure. Specifically, the court needed to ascertain if Mr Fischer provided Mr Bugledich with a clear and certain closing date for the hotel, which would have justified the rejection of bookings. Additionally, the court had to determine whether Mr Bugledich communicated his decision to reject the bookings to Mr Fischer outside of the scheduled management meetings.

In resolving these issues, the court found that Mr Fischer did provide Mr Bugledich with a closing date of December 2000 with sufficient certainty, which justified Mr Bugledich's decision to reject the bookings. The court also noted that there was no evidence to support Mr Bugledich's claim that he informed Mr Fischer of his decision to reject the bookings outside of the management meetings. The lack of minutes from the management meetings was considered an unsatisfactory aspect of the plaintiff's case. Based on these findings, the court dismissed the claim of negligence against Mr Bugledich.

The final orders of the court were that the application be dismissed and that the plaintiff pay the respondents' costs of the proceedings. This decision effectively upheld Mr Bugledich's actions as manager of the Sydney Hotel and rejected the plaintiff's claims of negligence.

Orders

Orders of the court

1. The application be dismissed.

2. The applicant pay the respondents’ costs of the proceedings.

Background

Background to the litigation

This claim also turns on questions of fact. In particular, as to the reason why the Sydney Hotel was not included in Ansett’s “Great City Deals” Programme after March 2001.The Background Facts The Sydney Hotel was owned by a company which is related to the applicant. Both of those companies are members of the Australian Development Corporation Pty Limited Group (“the ADC Group”). Mr Fischer is the Chief Executive Officer of the companies in the ADC Group. He has been in the construction industry for approximately 50 years. He has a wealth of experience in that industry. Some years ago, the ADC Group diversified its activities to include the ownership and operation of four hotels. The Sydney Hotel was built by a related company of the applicant in about 1968. The building is situated at Elizabeth Bay. The applicant later took on the operation of hotels at Parramatta and Brisbane and an apartment hotel in Canberra. Each of the hotels was managed by a hotel manager. Some time before March 2000, Mr Fischer had decided to sell, or get out of, the hotel business. Most importantly, by March 2000 he had plans which were well advanced for the conversion of the Sydney Hotel to strata apartments. In about March 2000, Mr Fischer telephoned Mr Bugledich. He told Mr Bugledich that he was thinking of getting out of the “hotel game” and that he needed a manager to take over the management of the hotels “in the interim”. At that time the Sydney Hotel was being managed by Mrs Home. She was described by Mr Fischer as the “temporary general manager” of the Sydney Hotel. It appears that she was also then acting as the general manager of the four hotels which comprised the Gazebo Hotels Group. There were good reasons for Mr Fischer to approach Mr Bugledich. He needed an experienced manager to manage the hotels during what was likely to be a difficult period when the hotel business was being wound down. Mrs Home was acting as a temporary manager following the resignation of the previous manager. Mr Fischer knew Mr Bugledich who had worked for him as manager of the Brisbane Hotel in the 1980s. Moreover, Mr Bugledich was a very experienced hotel manager. On his own evidence, he is one of the most experienced managers in the Asia-Pacific region. Mr Bugledich gave evidence that he had three meetings with Mr Fischer before he took up his employment. He says that in at least one of the conversations he was quite blunt with Mr Fischer stating words to the effect “Why would I want to work with you?” and “You don’t have a good reputation in the industry.” Mr Bugledich also says that during one or more of the conversations Mr Fischer told him that he had plans to convert the Sydney Hotel to apartments, that he wanted to close the Sydney Hotel as soon as possible after the Olympic Games in September 2000 and that a development application had been, or was soon to be, lodged. According to Mr Bugledich, he told Mr Fischer that, from what Mr Fischer had said to him, the development application would be approved by August or September 2000 and contracts would be let by November of that year. Mr Bugledich’s evidence was:-“I then said why don’t we stay open until December and then close in about mid December. He said that sounds fine to me.”

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

JACOBSON J

It is unnecessary for me to make a finding as to whether Mr Bugledich had a conversation with Mr Brown in the terms referred to in [44] above.Conclusion on Claim for Rejection of Bookings It follows that, in my opinion, Mr Fischer notified Mr Bugledich outside of the management meetings of a closing date of the hotel with sufficient certainty, ie December 2000, to justify Mr Bugledich’s decision to reject the bookings. I find that Mr Fischer so informed Mr Bugledich during the period from March or April 2000 to June or July 2000. I also find that no change in the timetable was notified to Mr Bugledich until about late September 2000. At around that time, he either ascertained himself by independent inquiry or he was notified that there had been a delay in the development approval. This pushed back the estimated closing date. Initially, the new date appears to have been set at January 2001. Clearly enough, there were further delays but I find that, even in October 2000 when the last of the rejection letters was sent, Mr Bugledich was justified in assuming that the Sydney Hotel would not have its doors open to be able to cater for the functions. Moreover, it seems to me to be likely that the anticipated closing date of December 2000 was a matter which was discussed at one or more of the Wednesday management meetings. Whether or not Mr Bugledich said it or whether Mr Fischer referred to it at the meetings is not to the point. The issue was too important to the business of the hotel for the matter not to have been a topic of discussion at the meetings. In my view, an unsatisfactory aspect of the applicant’s case was that the management meetings were not minuted. The meetings were an important part of the corporate governance of the hotels in the Gazebo Hotels Group. Decisions such as the anticipated date for development approval and the proposed closing date of the Sydney Hotel, whether they were fixed in stone or pure estimates, ought to have been the subject of a written record. It is sufficient for me to dismiss the claim of negligence against Mr Bugledich upon the finding I have made that he was notified of the December closing date with sufficient certainty to justify his decision to reject the bookings. However, Mr Bugledich also contended that he told Mr Fischer outside of the Wednesday management meetings of his decision to reject the function bookings. There is no independent evidence which supports such a finding. In my view, it is unlikely that Mr Bugledich did inform Mr Fischer of this fact. It seems to me that if it was sufficiently important to tell Mr Fischer outside of the Wednesday meetings of his rejection of the bookings, it was a matter which would have been the subject of discussion at the Wednesday management meetings. For reasons which I have referred to above, I find that the matter was not raised at the Wednesday management meetings. Accordingly, I find that Mr Bugledich did not inform Mr Fischer outside of those meetings.

Ratio Decidendi

Legal Principle Established

Established by: JACOBSON J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 3009 of 2002

BETWEEN:	GAZEBO HOTELS PTY LIMITED ACN 000 184 985 APPLICANT
AND:	JULIAN ATTILA BUGLEDICH FIRST RESPONDENT J & MB HOLDINGS PTY LIMITED ACN 080 657 772 SECOND RESPONDENT
JUDGE:	JACOBSON J
DATE OF ORDER:	16 MAY 2003
WHERE MADE:	SYDNEY

JUDGE:	JACOBSON J
DATE:	16 MAY 2003
PLACE:	SYDNEY