Goldmate Group Pty Ltd v Ethnic Communications Pty Ltd

[2022] NSWSC 69

Supreme Court

New South Wales

Medium Neutral Citation:

Goldmate Group Pty Ltd v Ethnic Communications Pty Ltd [2022] NSWSC 69

Hearing dates:

25 November 2021

Date of orders:

7 February 2022

Decision date:

07 February 2022

Jurisdiction:

Common Law

Before:

Harrison AsJ

Decision:

The Court orders:

(1) The appeal is dismissed

(2) The summons filed 11 March 2021 is dismissed

(3) The plaintiff is to pay the defendant’s costs on an ordinary basis including the costs of defendant’s notice of motion filed 26 March 2021 seeking to dismiss the summons as being incompetent.

Catchwords:

APPEALS – Appeal as of right – Appeal seeking leave – Questions of mixed law and fact – Procedural requirements for appeal seeking leave – Objections to competency of appeal

CONTRACTS – Authority to contract on behalf of business – Actual, implied and ostensible authority – Representation to authority required to be made by person who has actual authority

Legislation Cited:

Left Bank Investments Pty Ltd v NgunyaJarjum Aboriginal Corporation [2020] NSWCA 144

Local Court Act 2007 (NSW), ss 39, 40

Uniform Civil Procedure Rules 2005 (NSW), rr 50.12, 50.16A

Cases Cited:

Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126

Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72; (1975) 7 ALR 527

Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] QB 480

R L & D Investments Pty Ltd v Bisby & Anor [2002] NSWSC 1082

Category:

Procedural rulings

Parties:

Goldmate Group Pty Ltd (Plaintiff)
Ethnic Communications Pty Ltd (Defendant)

Representation:

Counsel:
Mr M. J Davis (Plaintiff)
Mr J. Mack (Defendant)

Solicitors:
SMB Law (Plaintiff)
Von Muenster legal (Defendant)

File Number(s):

2021/69878

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Local Court of New South Wales

Jurisdiction:

General Division

Date of Decision:

17 December 2020

Before:

Magistrate Kennedy

File Number(s):

2019/388787

Judgment

1. HER HONOUR: By Notice of Motion filed 26 March 2021, the defendant seeks an order that the plaintiff’s appeal against a decision of Magistrate Kennedy (“the Magistrate” or “Her Honour”) in the Local Court of New South Wales be dismissed as incompetent.

2. The plaintiff is Goldmate Group Pty Ltd. The defendant is Ethnic Communications Pty Ltd. The plaintiff was represented by Mr M. J Davis of Counsel. The defendant was represented by Mr J. Mack of Counsel. The parties relied on a Court book comprised of four volumes (Ex A(1)-(4)).

3. I shall deal with the appeal followed by the notice of motion. To ascertain whether the appeal is incompetent, it is necessary that I first address the grounds of appeal raised. The parties agree with this approach.

4. The orders sought by the notice of motion are as follows:

1. An order under r 50.16A of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) that the appeal commenced by summons filed on 11 March 2021 be dismissed as incompetent.

2. Alternatively, an order that leave (required under s 40 of the Local Court Act 2007 (NSW)) to appeal from the judgment and orders of Magistrate Kennedy in Local Court Proceeding No. 2019/388787 be refused.

Background

5. The proceedings below arose out of a commercial dispute between the Ethnic Communications Pty Ltd (the plaintiff below) (“Etcom”) and Goldmate Group Pty Ltd (the defendant below) (“Goldmate”). In short, Etcom sued Goldmate in the General Division of the Local Court of New South Wales for a breach of contract relating to advertising services (“Agreement”).

6. The proceedings below were directed to the issues of whether a contract is formed between the parties; whether Ms Ludwell was authorised to enter into the Agreement on behalf of Goldmate; and if not authorised, whether subsequent acts of Goldmate’s employees ratified the Agreement.

7. Goldmate is a small company. The sole director and CEO of Goldmate was Mr Ni. The Magistrate found that Goldmate through its Group Marketing Manager, Ms Ludwell, contracted with Etcom. Other employees of Goldmate, namely, Mr Cai (the financial manager), Ms Shirley Sun (the marketing coordinator), and Mr Yang (the chief financial officer (“CFO”)) were also involved with the contract.

The law

8. Sections 39 and 40 of the Local Court Act 1997 (NSW) (“Local Court Act”) relevantly read:

39 Appeals as of right

(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.

40 Appeals requiring leave

(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.

9. In regards to appeals concerning findings of fact, in Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 (“Australian Gas Light”), Jordan CJ stated (at 138):

“A finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding, and there is evidence capable of supporting its inferences.

Such a finding can be disturbed only (a) if there is no evidence to support its inferences or, (b) if the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences, or (c) if it has misdirected itself in law.”

10. In R L & D Investments Pty Ltd v Bisby & Anor [2002] NSWSC 1082, Kirby J referred to the dicta of Jordan CJ in Australian Gas Light and went on to relevantly distill the authorities into the following broad propositions at [13]:

“First, there is no error of law in simply making a wrong finding of fact (Australian Broadcasting Tribunal v Bond (supra) per Mason CJ at 341), unless there is no evidence to support that finding.

Secondly, it does not amount to an error of law if the finding of fact, or the inference (or the refusal to make a finding of fact or draw an inference) is perverse, in the sense that it is contrary to the overwhelming weight of evidence (Glass JA in Azzopardi v Tasman UEB Industried Ltd (supra at 155).

Thirdly, it is not an error of law even if the reasoning process by which the Court reaches its conclusion of fact is demonstrably unsound or illogical (Menzies J in R v District Court; Ex Parte White (1966) 116 CLR 644, at 654).”

11. It is common ground that Goldmate has not sought leave pursuant to s 40 of the Local Court Act. Goldmate’s position is that the appeal only raises questions of law and therefore pursuant to s 39 of the Local Court Act leave is not required. Etcom’s position is that the appeal raises questions of fact or alternatively it raises questions of mixed fact and law, and therefore as leave has not been sought the appeal is incompetent.

12. The defendant relies on UCPR 50.12 and 50.16A. They relevantly read:

“50.12 Leave to appeal

(1) A summons seeking leave to appeal must be filed—

(a) within 28 days after the material date, or

…

(3) The summons must be in the approved form and must contain a statement as to—

(a) whether the appeal relates to the whole or part only, and what part, of the decision of the court below, and

(b) what decision the plaintiff seeks in place of the decision of the court below.

(4) The summons must also contain a statement of—

(a) the nature of the case, and

(b) the reasons why leave should be given, and

(c) if applicable, the reasons why time to apply for leave should be extended, setting out briefly but specifically the grounds relied on in support of the appeal including, in particular, any grounds on which it is contended that there is an error of law in the decision of the court below.

50.16A Objections to competency of appeal

(1) A defendant who objects to the competency of an appeal must, by notice of motion filed and served on all other parties to the appeal within 14 days after service on the defendant of the notice of appeal, apply to the court for an order dismissing the appeal as incompetent.

(2) If the defendant fails to comply with subrule (1) and the appeal is nevertheless dismissed as incompetent--

(a) the defendant is not entitled to costs of the appeal unless the court otherwise orders, and

(b) the court may order the defendant to pay the plaintiff any costs of the appeal proving useless or unnecessary.”

The Appeal grounds

13. The grounds of appeal as set out in the summons filed 11 March 2021 are as follows:

1. the learned Magistrate erred by mis-applying the principles contained in Left Bank Investments Pty Ltd v Ngunya Jarjum Aboriginal Corporation [2020] NSWCA 144, and concluding that Ms Ludwell, a then employee of the plaintiff was clothed with ostensible and implied authority of the plaintiff to enter into an agreement;

2. the learned Magistrate erred in finding that the plaintiff and the defendant entered into a concluded agreement;

3. the learned Magistrate erred in finding that the acts or omissions on the part of the plaintiff’s employee ratified the purported agreement.

14. In Goldmate’s written submissions, the grounds of appeal were recast as:

1. The learned Magistrate erred by mis-expressing and misapplying the principles with regard to ostensible authority.

2. The learned Magistrate erred by mis-expressing and misapplying the principles with regard to implied authority.

15. On 28 July 2021, Etcom filed a notice of contention raising questions of rectification and estoppel. In the event that the appeal was not dismissed, Etcom submitted that the learned magistrate ought to have found that if there was no authority to enter the agreement, Goldmate is estopped from denying the existence of the agreement and/or Ms Ludwell (with or without Mr Cai) had no authority to bind Goldmate, and that Goldmate ratified the agreement entered into by Ms Ludwell and/or Mr Cai.

16. Goldmate’s contention is that the Magistrate did not have to make a proper determination on the question of rectification. Goldmate’s appeal is therefore limited to the two grounds set out above at [14]. Goldmate submits this amounts to an appeal on a question of law alone.

The hearing in the Local Court

17. On 17 December 2020, at the hearing in the Downing Centre Local Court before the Magistrate, Etcom relied upon the evidence of Mr Benjamin Keane, its Chief Financial Controller and Ms Richa Bulchandani, its then account director. Goldmate relied upon the evidence of Mr Ni and Mr Yang.

18. Her Honour summarised the issues in dispute at T2.18-40. As per that summary, Etcom’s claim is that it offered to provide a three-month campaign to promote Goldmate’s services to multicultural groups in Sydney for a price of $56,600, not including GST. Etcom required an upfront payment of 50%, being $28,300 not inclusive of GST, to be paid prior to commencement of the campaign. It is common ground that that sum has not been paid.

19. Goldmate alleges that shortly after the end of the campaign, Ms Ludwell’s employment was terminated. It submits that there was no written contract between the parties, and that Ms Ludwell, who allegedly contracted on behalf of Goldmate, had no authority to bind Goldmate and Etcom was aware she no authority to bind Goldmate. Goldmate admitted that some services were requested by Ms Ludwell and otherwise denies that a final agreement on all terms was reached (T2.25-40):

“The plaintiffs claim, then, is that it did provide the services, that it had an ongoing relationship, and the two individuals that were mostly involved were Ms Bulchandani, that was the employee for the plaintiff. It engaged with a Ms Ludwell from the defendant to have these negotiations and then to commence the work. The plaintiffs claim is that the work was conducted, that there was ongoing and very regular communication between someone from the plaintiff and someone from the defendant during the course of it, and that ultimately, they issued the invoices and nothing has been paid.

The defence, through its amended defence, claims that, certainly at about the time or shortly after the end of the campaign, Ms Ludwell was terminated by the defendant. It is said that there was no written contract Ms Ludwell had no authority to bind the defendant, the plaintiff was aware that Ms Ludwell had no authority to bind the defendant. Certainly though, the defendant did admit that some services were requested by Ms Ludwell and otherwise denies that a final agreement on all terms was reached.”

20. At the hearing of this appeal, the Goldmate referred to a highpoint in its case in the Local Court. It is an email dated 27 August 2018 between Ms Ludwell of Goldmate and Ms Loretta of Etcom where Ms Ludwell stated (Ex A(2) p 312):

“My boss James Tetley and our CFO Yuchen has signed, I am just waiting on our CEO Kim’s signature. He is currently in Hong Kong returning this Thursday – I hope this doesn’t hold us up?” (“the email”)

21. The Magistrate, in her decision, referred to this document in her judgment. I have highlighted where it appears in bold.

The Magistrate’s reasons for decision dated 17 December 2020

22. In the Magistrate’s decision, Her Honour stated (T5.19-47):

“… The defendant's evidence was through Mr Yang as the CFO. His evidence was that Ms Ludwell did not have the authority to bind the company. He adduced evidence of the delegation document that provided that her supervisor, Mr Tetley, only had authority to sign off on expenditure of this nature in the amount of $10,000 or less. He said that on 27 August 2018 Ms Ludwell sent to her supervisor the proposal from the plaintiff saying "Happy to take you through everything".

However, it appears apparent from the evidence that this was forward[ed] to Mr Yang himself also by Mr Tetley. It appears the attachments to that email were the Goldmate Group proposal, Etcom PDF and tax invoice XXX. When looking at the evidence this appears to be the same description of the invoice that was sent by Etcom on the email from Ms Bulchandani dated 18 June 2020, and the proposal attached appears to be the same description as that was sent in the email of 9 August 2018.

Mr Ni also gave evidence. He is the director of Goldmate. He said that he knew nothing about this, in effect, until February 2019. He said that there was no delegation. He said in his evidence that any amount over a few hundred dollars, that he would have to sign off within his own company. He later changed that in evidence to, I think, around $1,000 he would need to sign off. He says in his evidence that he would not have approved this agreement.

I now turn to my findings and assessment on the evidence. The documentation supported largely the evidence of Ms Bulchandani. Her honesty and reliability was borne out through the contemporaneous nature of the emails. She was a very compelling witness who relayed a credible and sensible version of the introduction to and engagement with Ms Ludwell.”

23. Her Honour continued (T6.34-T7.13):

“Turning to the evidence of the defendants. I have to say that in relation to reliability I had concerns with Mr Yang's evidence. His evidence seemed to be that he really recalled little, if anything, about the project, and yet it was clear from the documentary evidence that he had received the proposal and the invoice prior to and on the very same day that Ms Ludwell indicated that he had signed off. He produced a document that he said was a delegation of 40 authorities. It is an undated document that purports to prevent even himself signing up for this very consultancy agreement.

When Mr Ni, the director of the company, was shown that document, he simply was unaware of it. His evidence conflicted with Mr Yang's in several significant respects, and this was certainly one of them. Mr Ni remained very firm that anything over a few hundred dollars would need to be signed off by himself. As I said, he later changed that to a higher amount of around $1,000.

Mr Yang's initial reaction when he was sent the invoice when Ms Bulchandani went directly to Mr Yang because Ms Ludwell had been terminated, his reaction was very inconsistent with the evidence that he knew nothing about this project. He did not respond in that manner. At no time does he say "I know nothing about this". Instead, he sought to distance himself from having knowledge of the agreement at all, but it is clear from the documentation that he did.

[Mr Yang] agreed that he knew in that communication about several of the events that were actually occurring. Then his initial reaction is to try to undermine the costing and find error with the plaintiffs work. I found the evidence in the defence case generally wanting. There were the internal inconsistencies within each witness's evidence. The conflict between that evidence and the actual contemporaneous documentation. As I said, I just found the evidence generally unreliable.”

24. Her Honour discussed whether an agreement had been reached stating (T10.24-35):

“Now turning to the question was there an agreement reached. Applying legal principles to the current facts, I am of the opinion that looking at the circumstances surrounding the agreement and the words used, it is the case that a contract in this matter was, in fact, formed. The use of a term "I got it over the line" together with "Woo-hoo" are very clear indications that the proposal, as pitched by the plaintiff, was to go ahead. At that point it seems clear that Ms Ludwell, the marketing manager, was engaging the plaintiff on clear terms. She was accepting their offer to provide a service at costs. The terms are clearly set out in the proposal. There was later a variation in part of that agreement by consent. As Ms Bulchandani said in her evidence that the service was a fluid on.and that it did and could change depending on how the campaign was progressing.”

25. After the Magistrate determined that an agreement had been reached, she turned her attention as to whether Ms Ludwell had authority to bind Goldmate. Her Honour stated (T10.37-12.25)

“Ms Ludwell was the group marketing manager. That was her title. She made contact with the plaintiff, attended at their premises, listened to a pitch and then she sought approval. She communicated to the plaintiff through her words "I got it over the line". Looking at the correspondence, she, at times in various correspondence, had access to and used the letterhead of the defendant. She had a fixed line with the defendant. She had a mobile number and an email that was connected to the company identifying her as so connected.

In relation to the role as group marketing manager it was fairly open to the plaintiff to believe that Ms Ludwell would have authority to make agreements in relation to the provision of marketing services. She was able to articulate the needs of the business and appeared to go through a process of having the pitch considered by her company over the following week. By giving her the title it's not unexpected that when she seeks marketing services out it would seem that other people seeing her acting in this role would be entitled to assume that she had the usual authority of the marketing manager. Ms Bulchandani gave evidence that in her lengthy experience it was usual for such a person to be able to bind a company for the provision of services.

I could not be satisfied that the document purporting to be the delegation's document was an active document within the company. That was on the defendant's own evidence. Mr Yang says it was but it was undated. Mr Ni did not seem to even be aware, as the CEO of the company, of the document. His evidence was contrary to that document in any event. There was no clear evidence of where or how it came to be in existence or when. There was no process disclosed about how employees such as Ms Ludwell were made aware of that document. I could place little weight on that document.

The email had indicated Ms Ludwell was waiting on a further sign off by the CEO when he returned on Thursday. It was relied upon as notice being given to the plaintiff that authority had not been given. At that point the plaintiff had already entered into a contract. The fact that Ms Ludwell raised an issue of internal procedure that needed to be followed did not amount to her raising an issue of lack of authority on her part. Indeed, I accept that Mr Yang was aware of the agreement. He did ratify the agreement in some form, which was later communicated to the plaintiff as signing off. He, by his own admission, was aware that the project was on foot. At no time did he, Mr Cai, or Ms Ludwell's immediate supervisor contact the plaintiff and inform them that there was no consent to the agreement. [my emphasis]

…

All of these matters would lead to an assumption that Ms Ludwell did indeed have the authority to engage the plaintiff. The defendant's evidence was silent on many issues, such as the terms of engagement of Ms Ludwell, the description of her role, her manager's account of what happened, Ms Sun's account of what occurred. The evidence of Mr Ni was implausible as to the suggestion that he must sign off on financial matters in a company of a few hundred dollars, and, as I said, was in contrast to his own CFO's evidence.

There is a reference in the evidence to Mr Ni being overseas at various times, to Mr Ni also not being known to check his own email. If Mr Ni was that hands on in the business it would seem, as he purported, unlikely that he did not know anything about the campaign. It was his account, I seem to recall, that the office was not a large office and he was regularly present.

The plausibility of the defendant's case is further compromised by the fact that what is ultimately being suggested is that several employees went off on a frolic. Ms Sun participated. Mr Cai participated. Mr Tetley and Mr Yang are also somehow involved in this. I am of the opinion, on the evidence that is available, on 27 August 2018 Ms Ludwell sought and obtained the sign off from both her manager and CFO; that it was an internal process that strengthened the plaintiffs claim that, in fact, she did have authority. She had the sign off from two senior office holders. For all intents and purposes, the plaintiff was put on notice that these office holders were well aware of the agreement.

…

Objectively, those dealings indicate a consensus as to the terms of the agreement and also an intention to conclude a binding agreement. It is further my opinion that Ms Ludwell was acting in her designated role and that, consistent with the evidence, the plaintiff entitled through her conduct and engagement and her position and title to infer that she had authority to enter into the agreement. It is clear that there was ostensible authority. It might also be said that there was a further authority implied in the vesting of the role of Ms Ludwell in her actions, in the actions of other members of the defendant in participating and in fact ratifying her work. No attempt was made by anyone to identify or inform any person within the plaintiff otherwise.”

26. Goldmate relied upon two authorities, Left Bank Investments Pty Ltd v Ngunya Jarjum Aboriginal Corporation [2020] NSWCA 144 (“Left Bank”) and Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] QB 480 (referred to in Left Bank) at [58]-[60],[64].

27. In Left Bank, Gleeson JA (with whom Bathurst CJ and Bell P agreed) set out the law in relation actual, implied and ostensible to authority at [55]-[68]:

“Authority

[55]   In Northside Developments at 171-172, Brennan J said of the capacity of a person’s acts or omissions to bind a company:

A company, being a corporation, is a legal fiction. Its existence, capacities and activities are only such as the law attributes to it. The acts and omissions attributed to a company are perforce the acts and omissions of natural persons. A company is bound by an act done when the person who does it purports thereby to bind the company and that person is authorized to do so or the doing of the act is subsequently ratified. … Authority for the purpose is derived either directly from the constitution of the company or from some antecedent act (typically, a resolution of the governing body) which is itself binding on the company.

[56]   Brennan J then addressed the concepts of actual and ostensible authority in conventional terms at 172:

As between a company and a party who deals with it, a company is bound by an act purporting to bind it not only when the person who does the act has the company's authority to bind it by that act but also when that person is held out by the company as having that authority and the party dealing with the company relies on that person's ostensible authority.

[57]   His Honour continued at 172 observing that the foundation of ostensible authority is estoppel, as Diplock LJ pointed out in Freeman & Lockyer v Buckhurst Park Properties at 503, and that these principles equally apply to authority to bind a company by acts done purportedly on behalf of a company, citing Armagas Ltd v Mundogas SA at 732.

[58]   Earlier in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72 at 78; [1975] HCA 49, the High Court accepted the principles stated by Diplock LJ in Freeman & Lockyer v Buckhurst Park Properties at 503:

An ‘apparent’ or ‘ostensible’ authority, on the other hand, is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the ‘apparent’ authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract.

[59]   Diplock LJ also observed at 503 that the commonest form of representation by a principal was by permitting the agent to act in the management or conduct of the principal’s business.

[60]   It is well-established that the representation as to authority which creates the apparent or ostensible authority must be made by some person who has actual authority from the corporation to make such a representation: Freeman & Lockyer v Buckhurst Park Properties at 505; Crabtree-Vickers at 78; Northside Developments at 160 (Mason CJ), 172 and 174 (Brennan J), 198-199 (Dawson J).

…

(a) Implied actual authority

…

[63]   Implied authority is an aspect of actual authority. Actual authority requires a consensual agreement between the principal and agent and arises where a principal grants, and an agent accepts, authority for the agent to perform specific tasks on behalf of the principal: Equitcorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 at 132 (Clarke and Cripps JJA). Notwithstanding the absence of an express agreement, the parties “may conduct themselves in such a way that it is proper to infer that the relevant authority has been conferred on the agent”: Equiticorp Finance at 132; Gerard Cassegrain & Co Pty Ltd v Cassegrain (2013) 87 NSWLR 284; [2013] NSWCA 453 at [32] (Beazley P).

[64]   The authority impliedly granted by the principal to the agent must be such as could be validly granted by express agreement, and in the context of a company, must be an authority whose existence is contemplated by the company’s memorandum and articles of association: Equiticorp Finance at 133. As Brennan J noted in Northside Developments at 173, this latter point was made by Diplock LJ in Freeman & Lockyer v Buckhurst Park Properties at 504-505.

[65]   In Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549, Lord Wilberforce said at 586-587 that the implication of authority does not stop with the mere fact of the person holding the office, such as in that case director and chairman of the company, and that it is legitimate to consider what the actual circumstances of the relationship between the person and the board of directors may show.

[66]   Clarke and Cripps JJA similarly remarked in Equiticorp Finance at 134 that whether authority is to be implied and, if so, the scope of such authority, is to be found in a close analysis of the evidence upon which the case for implication relies.

[67]   There is an anterior question which needs to be addressed in a case like the present. An agent cannot have implied actual authority to inform an offeror that an offer has been accepted when no decision has been made by the principal to accept that offer: Crabtree-Vickers Pty Ltd at 77-78. There, the question was whether Peter McWilliam, who had authority to obtain quotations for the purchase of certain printing machines, had implied authority to communicate to those who gave quotes whether their quotes were accepted or not accepted. In rejecting the argument that it was only necessary to show that Peter McWilliam had actual authority to communicate decisions Gibbs, Mason and Jacobs JJ explained at 77:

This argument, so far as it relates to actual authority, is self-contradictory. Such a person may impliedly have such actual authority when the decision to purchase has been properly made but he can have no actual authority to inform an offeror that the offer has been accepted when no decision has been made by the principal to accept that offer. At the most, such a person might have ostensible authority and the submission should be considered under that question.

[68]   Applying this principle, Left Bank accepted, correctly, that it must demonstrate two matters: first, the Corporation in fact agreed to accept the offer of a new agreement for lease on the terms of the March emails; and secondly, the Corporation conferred on Ms Marlowe authority to communicate that acceptance to Left Bank. The material terms of the new agreement for lease as found by the primary judge at [63] and [67], were that it was for a term of five years, commencing on 1 May 2017, the current rent of $134,983 would apply to the final year of the 2012 lease and the first year of the new lease, and otherwise the rent would be subject to review in accordance with the existing rent review provisions in the 2012 lease.”

Goldmate’s submissions on appeal

28. In its submissions Goldmate noted that in the course of the decision below, her Honour concluded that Ms Ludwell was clothed by Goldmate with ostensible authority to enter into the Agreement. Her Honour also concluded that it might also be said that Ms Ludwell’s authority to enter into the Agreement was implied. Goldmate referred the following passage from the decision below (T12.17-12.74):

“…It is my further opinion that Ms Ludwell was acting in her designated role and that, consistent with the evidence, the plaintiff was entitled through her conduct and engagement and her position and title to infer that she had authority to enter into the agreement. It is clear that there was ostensible authority. It might also be said that there was a further authority implied in the vesting of the role of Ms Ludwell in her actions, in the actions of other members of the defendant in participating and in fact ratifying her work…”

29. Goldmate submitted that her Honour’s factual findings, which gave rise to the above conclusions, may be found at T10.37-12.5 and its appeal would not necessitate the disturbance of those facts.

Ostensible Authority

30. Goldmate submitted that pursuant to Left Bank at [60], a representation as to authority which creates apparent or ostensible authority, is required to be made by a person who has actual authority to make such a representation.

31. Accordingly Goldmate contended that, the question as to whether such a representation as to authority has been made is anterior to the question of whether a third party has relied upon a person’s ostensible authority.

32. Goldmate submitted that the factual findings critical to the anterior question, as opposed to the question of Etcom’s reliance may be found at T10.38-10.44 (as set out earlier in this judgment at [25]). The factual findings, to which Goldmate refers, other than Ms Ludwell’s appointment to the position of “marketing manager”, concern acts or representations of Ms Ludwell, as opposed to representations made by Goldmate.

33. Goldmate submitted that the Magistrate did not deal with the question as to whether Goldmate, or a person acting with its actual authority, represented to Etcom that Ms Ludwell had the authority to bind Goldmate to the agreement. Rather, the decision below incorrectly concentrated on the question as to whether Etcom had relied upon Ms Ludwell’s ostensible authority.

34. Goldmate submitted that Her Honour’s failure to apply the principles contained in Left Bank amounted to a misdirection in, or error of law, and accordingly, their appeal falls within the ambit of a “question of law” for the purpose of s 39(1) of the Local Court Act.

Implied authority

35. In relation to implied authority, Goldmate submitted that in Left Bank, after considering the relevant authorities, the Court of Appeal determined that in order to find implied actual authority two questions need to be answered: first whether a principal had in fact agreed to accept an offer made by a third party; and second whether a principal had conferred on its officer, agent or employee, authority to communicate that acceptance to a third party.

36. Goldmate submitted that the Court of Appeal came to that conclusion based on the principle expressed in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72; (1975) 7 ALR 527 at 531, that an agent cannot have implied actual authority to inform an offeror that an offer has been accepted when no decision has been made by the principal to accept the offer. Further, Goldmate submitted that pursuant to Left Bank at [65] the implication of authority does not stop with the mere fact of a person holding a particular office.

37. Goldmate submitted that the Magistrate’s decision as to implied authority to enter into an agreement appears to have been based upon the “vesting of the role of Ms Ludwell in her actions, in the actions of other members of the defendant in participating and in fact ratifying her work” (T12.20-25). While Her Honour was seized with evidence demonstrating that Mr Ni was the sole director of Goldmate she did not deal with or determine the anterior question, namely whether Goldmate had in fact agreed to accept an offer made by Etcom.

38. Goldmate submitted that Her Honour’s failure to apply the principle contained in Left Bank amounted to a misdirection in law as contemplated by Jordan CJ in Australian Gas Light, and accordingly falls within the ambit of a “question of law” for the purpose of s 39(1) of the Local Court Act.

Etcom’s submissions

39. Etcom submitted that the Her Honour made three key findings as to the quality of the evidence which were all against Goldmate. These were:

1. “The documentation supported largely the evidence of Ms Bulchandani. Her honesty and reliability was borne out through the contemporaneous nature of the emails. She was a very compelling witness who relayed a credible and sensible version of the introduction to and engagement with Ms Ludwell”: T5.43-48.

2. “I have to say that in relation to reliability I had concerns with Mr Yan[g]’s evidence. His evidence seemed to be that he really recalled little, if anything, about the project, and yet it was clear from the documentary evidence that he had received the proposal and the invoice prior to and on the very same day that Ms Ludwell indicated that he had signed off. He produced a document that he said was a delegation of authorities. It is an undated document that purports to prevent even himself signing up for this very consultancy agreement.”: T6.35-42.

3. “I found the evidence in the defence [Goldmate’s] case generally wanting. There were the internal inconsistencies within each witness’s evidence. The conflict between that evidence and the actual contemporaneous documentation. As I said, I just found the evidence generally unrealiable”:T7.8-14

Appeal grounds 1 and 2 factual findings and the Authority Issue

40. Etcom submitted that the findings in the decision relevant to Ground 1 and the authority issue include the following:

1. the above credit findings;

2. “The next major issue in the case is did Ms Ludwell have authority. Ms Ludwell was the group marketing manager. That was her title. She made contact with the plaintiff, attended at their premises, listened to a pitch and then she sought approval. She communicated to the plaintiff through her words “I got it over the line”. Looking at the correspondence, she, at times in various correspondence, had access to and used the letterhead of the defendant. She had a fixed line with the defendant. She had a mobile number and an email that was connected to the company identifying her as so connected”: T10.37-44;

3. “In relation to the role as group marketing manager it was fairly open to the plaintiff [Etcom] to believe that Ms Ludwell would have authority to make agreements in relation to the provision of marketing services. She was able to articulate the needs of the business and appeared to go through a process of having the pitch considered by her company over the following week. By giving her the title it’s not unexpected that when she seeks marketing services out it would seem that other people seeing her acting in this role would be entitled to assume that she had the usual authority of the marketing manager. Ms Bulchandani gave evidence that in her lengthy experience it was usual for such a person to be able to bind a company for the provision of services”: T10.46-T11.5;

4. “I could not be satisfied that the document purporting to be the delegation’s document was an active document within the company. That was on the defendant’s own evidence, Mr Yang says it was but it was undated. Mr Ni did not seem to even be aware, as the CEO of [Goldmate], of the document. His evidence was contrary to that document in any event. There was no clear evidence of where or how it came to be in existence or when. There was no process disclosed about how employees such as Ms Ludwell were made aware of that document. I could place little weight on that document.”: T11.7-14;

5. “The email had indicated Ms Ludwell was waiting on a further sign off by the CEO when he returned on Thursday. It was relied upon as notice being given to the plaintiff that authority had not been given. At that point the plaintiff had already entered into a contract. The fact that Ms Ludwell raised an issue of internal procedure that needed to be followed did not amount to her raising an issue of lack of authority on her part. Indeed, I accept that Mr Yang was aware of the agreement.” T11.16-26.

6. “Further employees [of Goldmate] were involved than Ms Ludwell. Mr Cai, the financial officer, signed the new client contract form. Ms Sun engaged with the plaintiff in the running of the campaign. Certainly, Ms Ludwell’s manager, through email correspondence, was aware of this campaign. All of these matters would lead to an assumption that Ms Ludwell did indeed have the authority to engage the plaintiff. The defendant’s evidence was silent on many issues, such as the terms of engagement of Ms Ludwell, the description of her role, her manager’s account of what happened, Ms Sun’s account of what occurred. The evidence of Mr Ni was implausible as to the suggestion that he must sign off on financial matters in a company of a few hundred dollars, and, as I said, was in contrast to his own CFO's evidence”: T11. 27-38;

7. “The plausibility of the defendant’s case is further compromised by the fact that what is ultimately being suggested is that several employees [of Goldmate] went off on a frolic. Ms Sun participated. Mr Cai participated. Mr Tetley and Mr Yang are also somehow involved in this. I am of the opinion, on the evidence that is available, on 27 August 2018 Ms Ludwell sought and obtained the sign off from both her manager and CFO: that it was an internal process that strengthened the plaintiff’s claim that, in fact, she did have authority. She had the sign off from two senior office holders. For all intents and purposes, the plaintiff was put on notice that these office holders were well aware of the agreement”. T11.46 to T12. 5.

41. Etcom submitted that given these factual findings it is not clear how Goldmate can surmount the conclusion that “Ms Ludwell was acting in her designated role and that, consistent with the evidence, the plaintiff was entitled through her conduct and engagement and her position and title to infer that she had authority to enter into the agreement”: T12.18-20. Any attempt to do so must necessarily involve a challenge to the above factual findings and therefore appeal ground 1 is incompetent.

42. Etcom further submitted that even if it could be said that the Authority Issue can be maintained with the present factual findings, such as to give rise to an appeal which involves a question of mixed law and fact, leave would be required. Given the Summons does not seek leave it is therefore incompetent.

Resolution

43. In order to ascertain whether there was implied or ostensible authority when Ms Ludwell of Goldmate entered into an agreement with Etcom, the Magistrate was required to make factual findings. In essence, Goldmate relied upon one email from Ms Ludwell of Goldmate to Ms Loretta of Etcom dated 27 August 2018 to assert that Ms Ludwell did not have either implied or ostensible authority as agent to act for Goldmate. That email is reproduced earlier in this judgment at [20]. The Magistrate stated that the email had indicated Ms Ludwell was waiting on a further sign off by the CEO when he returned on Thursday. Her Honour noted that email was relied upon as notice being given to Etcom that authority had not yet been given.

44. Her Honour’s factual findings were as follows; at the time of the email the plaintiff had already entered into a contract. The fact that Ms Ludwell raised an issue of internal procedure that needed to be followed did not amount to her raising an issue of lack of authority on her part. The Magistrate accepted that Mr Yang was aware of the agreement. Mr Yang did ratify the agreement in some form, and this ratification was later communicated to Etcom as signing off. He, by his own admission, was aware that the project was on foot. At no time did he, Mr Cai, or Ms Ludwell's immediate supervisor contact the plaintiff and inform them that there was no consent to the agreement.

45. Goldmate submitted that a representation as to authority, which creates the apparent or ostensible authority is required to be made by a person who has actual authority from a principal to make such a representation (Left Bank at [60]) and there is an anterior question which needs to be addressed in a case like the present. Relying on the email, Goldmate submitted that an agent cannot have implied actual authority to inform an offeror that an offer has been accepted when no decision has been made by the principal to accept that offer (Left Bank at [67]).

46. The Magistrate made adverse findings in relation to the evidence of Goldmate’s two witnesses, Mr Yang and Mr Ni. She made findings regarding Mr Yang’s evidence that he recalled very little of anything about the project and yet it was clear from the documentary evidence that he had received the proposal and the invoice prior to and on the very same day that Ms Ludwell indicated that he had signed off. Mr Yang produced a document that he said was a delegation of 40 authorities. The Magistrate noted that this document purportedly prevented even Mr Yang from signing up for the Agreement.

47. So far as Mr Ni is concerned, the Magistrate records that Mr Ni was shown this document, and was unaware of it. His evidence conflicted with Mr Yang’s in several significant respects, and this was certainly one of them. Mr Ni remained very firm that anything over a few hundred dollars would need to be signed off by himself. He later changed that to a higher amount of around $1000. Mr Yang agreed that he knew about several of the events that were actually occurring. The Magistrate found that evidence in Goldmate’s case “generally wanting” and “unreliable” and that there were the internal inconsistencies within each witness’s evidence. In other words, Her Honour did not accept their evidence.

48. The Magistrate did not believe Mr Ni’s evidence that anything over a few hundred dollars (or later $1000) would need to be signed off by himself. Nor did Her Honour accept Mr Yang’s list of delegation of authority. The Magistrate made a finding that actual authority was given to Ms Ludwell. The Magistrate was entitled to make these factual findings.

49. Her Honour made critical findings that, on the evidence available, on 27 August 2018 Ms Ludwell sought and obtained the sign off from both her manager and CFO and that it was an internal process that strengthened the plaintiff’s claim that, in fact, she did have authority. The Magistrate made findings that Ms Ludwell was acting in her designated role and that, consistent with the evidence, the plaintiff was entitled through her conduct, engagement, position and title to infer that she had authority to enter into the agreement. Her Honour found that there was ostensible authority and that there was implied authority in the vesting of the role of Ms Ludwell in her actions, in the actions of other members of the defendant in participating and in fact ratifying her work. No attempt was made by anyone to identify or inform any person within the plaintiff otherwise.

50. It is my view that the Magistrate correctly decided that Ms Ludwell did have the actual, implied and ostensible authority of Mr Ni to sign the agreement on behalf of Goldmate.

51. Even if I am incorrect on the question of authority, the grounds of appeal involve questions of mixed fact and law. Goldmate did not seek leave under s 40 of the Local Court Act for leave to raise such questions and accordingly the appeal is incompetent.

Result

52. The result is that the appeal fails.

Costs

53. Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant’s costs on an ordinary basis including the costs of defendant’s notice of motion filed 26 March 2021 seeking to dismiss the summons as being incompetent.

The Court orders:

1. The appeal is dismissed.

2. The summons filed 11 March 2021 is dismissed.

3. The plaintiff is to pay the defendant’s costs on an ordinary basis including the costs of defendant’s notice of motion filed 26 March 2021 seeking to dismiss the summons as being incompetent.

**********

Decision last updated: 07 February 2022