Graf v Byrnes
[2005] QDC 122
•20/05/2005
DISTRICT COURT OF QUEENSLAND
| CITATION: | Graf - v – Byrnes [2005] QDC 122 |
| PARTIES: | GRAF, Bernhard Ernest |
Appellant
Against
BYRNES, Desmond Francis
Respondent
| FILE NO: | 93/04 |
| PROCEEDINGS: | Appeal against Magistrate’s decision. |
| DELIVERED ON: | 20 May 2005 |
| DELIVERED AT: | Townsville |
| HEARING DATES: | 6 December 2004, 9 & 19 May 2005 |
| JUDGE: | C.F Wall Q.C |
| ORDERS: | Appeal allowed. Orders made by magistrate set aside and in lieu thereof the following orders made: |
1. on plt’s claim for damages for breach of contract, judgment for plt against def for $ 7,000 together with interest at the rate applicable under the Supreme Court Act from 31 December 2000 to 20 May 2000
2. def’s counter-claim dismissed
3. order in relation to costs made by the magistrate remains
Further ordered that:
1. the respondent pay the appellant’s costs of the appeal of the 9 & 19 May 2005.
2. the appellant pay the respondent’s costs of the hearing on the 6 December 2004
I grant each of the appellant and the respondent a certificate under the Appeal Costs Fund Act in respect of the costs each has been ordered to pay in respect of the appeal.
CATCHWORDS: | APPEAL – Error of law – breach of contract – where magistrate in his decision amended plt’s reply and answer and drafted a new cause of action in conversion – departure by the magistrate from the relief claimed and the issues litigated without notice to either party - open to magistrate to make findings as to the terms of the agreement – evidence before magistrate did not establish conversion – error of law by magistrate – appeal allowed with further orders. |
| Legislation referred to: Uniform Civil Procedure Rules r. 156 & 165 Transport Operations (Marine Safety) Act 1994 s.41 Appeal Costs Fund Act Cases referred to: Leotta v Public Transport Commission of New South Wales (1976) 50 ALJR 666 (CON) Dare v Pulham (1982) 148 CLR 664 (CON) Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185 (CON) Johnson v Perez (1988) 166 CLR 351 (CON) | |
| COUNSEL: | Mr D. Morzone for the Appellant Mr L. Middleton for the Respondent |
| SOLICITORS: | William, Graham & Carmen for the Appellant Lee Turnbull & Co for the Respondent |
HIS HONOUR: This is an appeal from a decision of the Magistrates Court at the appellant for $25,000 damages for breach of contract.
There was no dispute between the parties that the respondent had sold the motor vessel, Bill Hardwick, to the appellant for $65,000.
The dispute was as to the date of the agreement, the place where it was entered into and its terms.
The respondent claimed $36,923.15 "being the balance due and owing for goods sold and delivered" by him to the appellant plus interest.
The appellant counterclaimed for $165,662.61 damages for breach of contract or negligent misrepresentation plus interest.
Who would succeed and to what extent depended upon how the Magistrate resolved the disputed issues.
The respondent alleged the agreement was entered into at Townsville on the 5th of decision of the Magistrate:
"(1) The vessel was sold for the sum of $65,000 (2) It was sold in good condition 'as is' (3) The purchase price of $65,000 was agreed to be paid as follows;
(a) A transfer of a Nissan Patrol utility, registration number 639- LUX (the Nissan) at an agreed value of $14,000
(b) A transfer of a 17 Manta cat motor vessel and trailer (Graf's vessel) for an agreed value of $15,000
(c) The balance of $36,000 to be paid within six months from the 5/4/2000 with interest at the rate of 5 per cent per annum
(d) The vessel will be collected by Graf at Townsville, where Byrnes would hand over delivery, fully fuelled for its journey to Cairns, and Graf would reimburse Byrnes for the cost of the fuel, namely the sum of $923.15."
The appellant alleged the agreement was entered into at Silkwood on the 15th of
March 2000 and contained the following terms:
"(1) Graf would receive an expired survey papers (sic) relating to the
vessel(2) The vessel was in seaworthy condition, but otherwise sold 'as is' (3) The vessel could easily be put into survey with minimum expense (4) The purchase price of $65,000 would be paid as follows:
(a) A transfer of a Nissan to Byrnes at a value of $20,000 (b) A transfer of Graf's vessel to Byrnes at a value of $20,000 (c)
A transfer of timber milling equipment (the sawmilling equipment) for an agreed value of $18,000 consisting of a gurney, a sawmill, a bench saw, a dog saw and four rollers
(d)
A payment of the balance of $7,000 without interest, on or before the 31/12/2000."
The appellant alleged that the vessel was not seaworthy and that, in addition to the amended defence and counterclaim):
contractual term relied upon that it be so, the respondent had also represented that it
was. He also alleged that the respondent was in breach of the agreement by failing
to take delivery of the sawmilling equipment.
(a) $42,262.61 to make the vessel seaworthy (b) $20,000 to put the vessel in survey (c) $58,000 loss of profits (d) $26,400 depreciation of equipment (e)
$18,000 being the value of the timber milling equipment that the respondent was to accept as part payment of the sum of $65,000
Because he alleged that the respondent was in breach of the agreement the
appellant admitted that the amount of $7,000 due to be paid by him to the respondent
on or before the 31st of December 2000 had not been paid.
The parties agreed that possession of the vessel was given and taken at Townsville on the 5th of April 2000 (Decision page 8; the reference to 2003 in the Decision at page 21 is clearly a mistake) and that the respondent received a Nissan motor vehicle and the appellant's smaller vessel in part payment of the purchase price.
The Magistrate (Decision page 26) found that "an agreement of sorts was struck between the parties at Silkwood on the 15/3/2000" and said:
"I find Graf agreed to buy the vessel and Byrnes agreed to sell it in its 'as is'
condition for $65,000. The purchase price was to be paid as follows:
(1) A transfer of the Nissan to Byrnes at $20,000 value (2) A transfer of Graf's vessel to Byrnes at $20,000 value (3) A transfer of sawmilling plant and equipment to Byrnes at $18,000 (4) $7,000 cash to be paid by the 31st December 2000."
I am not sure what the Magistrate intended to convey when he referred to this as "an agreement of sorts" but the fact is that this was the agreement he found had been reached by the parties.
It was clearly open to the Magistrate on the evidence to reach this conclusion. Notwithstanding that an agreement in these terms represented a departure from that relied upon by the respondent, the respondent's cause of action remained the same as did the subject matter of the dispute.
The facts found by the Magistrate established the cause of action sued upon, albeit
in different terms to those relied upon. The evidence accepted by the Magistrate
"disclosed a case in the cause of action fit to be determined" by the Magistrate. The
respondent was entitled to a "verdict on the cause of action alleged in reliance upon
the facts actually established by the evidence". See Leotta v. Public Transport
Commission of New South Wales (1976), 50 ALJR 666 at 668; and Dare v. Pulham
(1982), 148 CLR 658 at 664.
Mr Middleton for the respondent submitted that "the respondent always contended a contract that left a balance of money owed to him and the trial was largely taken up with the issue of how much. These issues were aired at trial". It was also an issue for the Magistrate to determine the terms of the contract but, subject to that, what Mr Middleton submitted is basically correct.
In my view, it was not necessary to amend the respondent's pleading to achieve this result. See also rule 156 Uniform Civil Procedure Rules which is as follows:
"156. The Court may grant general relief or relief other than that specified in
the pleading irrespective of whether general or other relief is expressly
claimed in the pleadings."
Depending on the nature and extent of any departure from the relief claimed and the (contrary to the case advanced by the appellant) that there was no term of the agreement that the vessel be seaworthy and that the respondent had made no representations in relation to the vessel.
issues litigated, notice may have to be given to the other party but, subject to a
matter I will mention later, that is not the case here.
On the appellant's pleadings and in his evidence the appellant admitted that it was a term of the agreement that the appellant pay the respondent $7,000 on or before the 31st of December 2000 and that he had not paid the $7,000 due by the 31st of
December 2000, so the respondent was entitled to recover this amount. The amount.
In relation to the sawmilling equipment (to which the agreement attributed a value of
$18,000) the Magistrate found (Decision page 31) that the appellant had converted
that to his own use.
The Magistrate then said (Decision pages 31-33):
"As this matter has been litigated at considerable expense to the parties for
five days, I consider on the findings of facts that I have made, and as a
means of finalising the matters between the parties, leave should be given to
the plaintiff to amend his amended reply and answer to make a claim for
damages for breach of contract.I grant leave to the plaintiff to amend his AMENDED REPLY AND ANSWER as follows:
In the event it is determined that the agreement was entered into on the 15/3/2000 at Silkwood as alleged by the defendant, the defendant is in breach of that agreement in that he has (1) converted the sawmilling equipment to his own use, and (2) failed to pay the balance of the purchase price of $7,000 on or before the 31st December 2000, and the plaintiff claims damages for breach of that contract;
(1) Conversion of sawmilling equipment $18,000 (2) Balance of purchase price $7,000 together with (3) Interest and (4) Costs.
ORDERS
1. I dismiss the plaintiff's claim for damages for breach of contract.
2. I dismiss the defendant's counterclaim.
3. I give judgment for the plaintiff for damages for breach of contract entered into at Silkwood on 15 March 2000 for the sum of $25,000.
4. I order the defendant pay interest on the judgment sum as follows:
(a) on the sum of $18,000 at the rate applicable under the Supreme Court Act from the 4/2/2003 to the date hereof, and (b) on the sum of $7,000 at the rate applicable under the Supreme Court Act from the 31/10/2000 to the date hereof.
As the plaintiff has failed in his original claim, and the defendant has failed in his counterclaim, I give the parties leave to make written submissions in relation to costs of the proceedings within 14 days from today."
Grounds 1 and 2 of the Notice of Appeal challenge the Magistrate's unilateral amendment to the amended reply and answer of the respondent and the related finding of conversion.
Grounds 3 and 4 challenge the Magistrate's findings as to the agreement and its terms in particular the findings as to seaworthiness of the vessel and representations.
I will deal firstly with the issues of seaworthiness and the alleged representations relating to the vessel. The short answer to the appellant's argument on these issues is that the Magistrate did not believe him. In my view, it was clearly open to the Magistrate to reach such a conclusion. The Magistrate made the following findings:
Decision page 12:
"Byrnes did offer to assist Graf with contact of a person he knew within the marine industry to assist with paperwork to have the vessel put into survey. But I do not accept Graf's evidence any further assurances or warranties or representations were made to him by Byrnes in relation to either (a) the
survey of the vessel, (b) the condition or seaworthiness of the vessel, other
than to confirm that it was in good condition and sold 'as is'."
Decision page 14:
"For the reasons I will detail later, I do not accept Graf's evidence in relation
to what he says were the representations by Byrnes in relation to the
condition of the vessel, other than what I have found, or to its use, prior use orto survey or any undertakings to provide survey documents."
Decision pages 19-20:
"I am satisfied on the evidence that Byrnes did not make any of the representations the plaintiff (sic) has alleged in paragraph 15 of the counterclaim. I accept and believe Byrnes' evidence on these matters and
have concluded that Graf was not telling the truth. I do accept Byrnes
indicated that, 'he did not think that it would take much to put the boat into
survey' but such expression of opinion did not contain an assertion that this
would enable the vessel 'to be easily and with minimum expense put into
survey for the purposes of chartering' as alleged. I find no such assertion
was made by the plaintiff."
These were clearly open on the evidence and, in my view, are fatal to the appellant's arguments on grounds 3 and 4.
The appellant seeks to rely on the Magistrate's finding as to the date and place of the agreement as necessarily encompassing a finding that all of the respondent's evidence should have been rejected and all of the appellant's evidence accepted. The Magistrate believed some of the evidence of each party and rejected or was not satisfied about other parts of their evidence and I am not satisfied by the argument advanced on behalf of the appellant that it was not open for him to do so. In view of the Magistrate's findings as to the appellant's credibility I am unable to accept the submission that "the weight of the evidence was overwhelmingly in support of the appellant's case". The Magistrate referred to his observations of the appellant's evidence over two days.
The appellant also argued that, because the Magistrate accepted that the vessel was a "ship" as defined in the Transport Operations (Marine Safety) Act 1994, this necessarily involved a finding that it was a term of the agreement that it was seaworthy. This, though, was in the context of section 41 of the Act and really had little to do with whether it was a term of the agreement that the vessel was seaworthy or whether the alleged representations were made. Section 41(1) makes it an offence for the owner of a ship to operate the ship unless the ship is safe, and by section 41(3) a ship is safe if it is seaworthy. Whether the respondent had previously operated the vessel in breach of section 41(1) of the Act was not relevant to whether the representations alleged were made or whether it was a term of the agreement that the vessel was seaworthy.
The Magistrate found (Decision page 28) that:
"Possession of the vessel was given and taken by Byrnes and Graf at the marina in Townsville when ownership was transferred. I have found that it was sold in good condition and 'as is'.
It was for the owner, Graf, on the 5/4/2000 to ensure it was safe for himself and his friend and fellow passenger Peter Robinson to travel to Cairns by sea."
This finding was clearly open to him. In the circumstances, I am not satisfied that the appellant has made out grounds 3 and 4 of the Notice of Appeal.
Grounds 1 and 2 raise different issues. I have already said that it was open on the
pleadings and on the agreement as found by the Magistrate for the Magistrate to give
judgment for the respondent against the appellant for $7,000. It was wrong to
dismiss the respondent's claim simply because he had not in all respects proved an
agreement in the terms pleaded.
It was also wrong to include a claim in terms of the amendment drafted by the party may, in response to a pleading, plead a denial, a non-admission, an admission or another matter." "Another matter" does not encompass an alternative claim such as formulated by the Magistrate. "The reply must not contradict or depart from the statement of claim." (Bullen and Leake op cit page 107). Any inconsistent claim should be pleaded, if at all, alternatively in the statement of claim.
Magistrate in a reply. A reply is a pleading in answer to the defence of the
defendant. The proper function of a reply is precisely to raise, in answer to the
defence, any matters which must be specifically pleaded which make the defence not
maintainable or which otherwise might take the defendant by surprise or which raise
issues of fact not arising out of the defence, (Bullen and Leake 12th edition page
107).
The more important issue raised by grounds 3 and 4 relates to the Magistrate's finding that the appellant had converted to his own use the sawmilling equipment. There was no evidence to support such a conclusion and the issue had not been litigated by the parties. It was no part of the respondent's case that the appellant had converted the sawmilling equipment. On the respondent's case sawmilling equipment valued at $18,000 was not included in the agreement, did not form part of the purchase price of the vessel and was always the property of the appellant. For these reasons the respondent made no attempts to collect the sawmilling equipment from the appellant.
On the agreement as found by the Magistrate the appellant was to transfer specified sawmilling plant and equipment valued at $18,000 to the respondent in part payment of the purchase price. The appellant alleged that the respondent "failed and refused to collect the equipment and thereby breached and repudiated the agreement", being the agreement contended for by the appellant, not that found by the Magistrate.
The Magistrate's decision in relation to the sawmilling equipment is as follows
(Decision pages 29-31):
"The remaining allegation is the failure to take delivery of the sawmilling
equipment.
It is clear Byrne did not take delivery of the sawmilling equipment and left it equipment has been available and will continue to be available for your collection at your convenience." It would seem this is an acknowledgement by Graf that the property has passed to Byrne - he is holding the equipment as unpaid agent for Byrne to be collected at Byrne's convenience. On the 16/5/2000 by fax to Byrne's solicitors, Graf's then solicitor reaffirms the status of the milling equipment as follows:
with in Graf's care (sic). Graf did refer to this in his fax of the 22/5/2000
(Exhibit 7). He said item 4, approx one week after I pick up boat - you asked
me to keep advertising milling equipment - Tradepost bill $700 to date).
Clearly, Graf accepted he would do so and kept possession of the sawmilling
equipment as unpaid agent for Byrnes.'We are instructed subsequently, Mr Byrnes requested Mr Graf to
advertise the milling equipment for sale since he no longer required it.
Mr Graf's complied with Mr Byrnes' request.The milling equipment has been available and will continue to be available for Mr Byrnes' collection at his convenience.'
I have no other exhibits which detail the current status of this equipment, except paragraph 9(e) which I repeat here.
(e) The defendant/cross-claimant claims the sum of $18,000 being the value of the timber milling equipment that the plaintiff/cross-defendant was to accept as part payment of the agreed $65,000.
This pleading dated 4th February 2000 binds the defendant and cross- claimant in my view, to a cash value of $18,000 for the current (4/2/2003) value of the sawmilling equipment as he seeks to claim the equipment as compensation for loss of bargain. He did in his evidence indicate he had disposed of some of that equipment.
I find in the absence of evidence to the contrary, up until 4/2/03, the sawmilling equipment was in accordance with Graf's notification and those of his solicitors available for collection by Byrnes. No claim has been made for storage or expense of sale, apart by implication, the $700 Trading Post costs referred to in Exhibit 7.
I accept that initially Byrnes did not take delivery of the sawmilling equipment, but effectively it was held by Graf on his behalf until the 4/2/2003, when it was converted to Graf's use. I further consider there has been a breach of the
agreement by Graf in failing to pay the sum of $7,000 due on the 31/12/2000
and in converting the sawmilling plant to his own use."
On his case the respondent did not take delivery of the equipment because it played
no part in the agreement. On the Magistrate's findings it was, to the knowledge of
the respondent, his equipment which was in the possession of the appellant either for
sale by the appellant on behalf of the respondent or for collection by the respondent.
Paragraph 9(e) referred to by the Magistrate is paragraph 9(e) of the defence and counterclaim filed on the 18th of May 2001 and the amended defence and counterclaim dated the 13th of March 2003 filed on the 14th of March 2003. In each pleading paragraph 9(e) is in the same terms and in each case it is part of the counterclaim of the appellant. The pleading claims "$18,000, being the value of the timber milling equipment that the plaintiff (the respondent) was to accept as part payment of the agreed $65,000" as loss and damage suffered as a consequence of the respondent's breach of contract. The Magistrate said (decision, page 30) that the pleading is dated the 4th of February 2000. That is obviously a mistake. The agreement was not entered into until the 15th of March 2000. It is not necessary for me to express any view as to the efficacy of this claim. I am at a loss though to understand its significance to the alleged conversion of the equipment by the appellant. The agreement as found by the Magistrate itself attributed a value of $18,000 to the equipment. Likewise, neither myself nor counsel are able to ascertain the source of the date, 4th of February 2003, relied on by the Magistrate which also appears in the four orders made by him and on page 27 of his decision, as being the date of the amended defence and counterclaim. That pleading, as I have said, is dated the 13th of March 2003 and was filed on the 14th of March 2003. On page 30 of his decision the Magistrate said this pleading was dated the 4th of February 2000.
Both dates, 4th of February 2000 and 4th of February 2003, counsel agree, are
clearly wrong and the Magistrate has obviously made a mistake. Counsel agree that
he probably intended to say and meant the 14th of March 2003, which is the date the
amended defence and counterclaim was filed. It would appear to follow from this that
the Magistrate has used the date this pleading was filed as the date the sawmilling
equipment was converted by the appellant to his own use. He seems to have
concluded that the claim made in paragraph 9(e) somehow amounts to a conversion
when it clearly does not, even when coupled with the passage at T405 from the
appellant's evidence, which I will set out shortly. Somehow, by reference to
paragraph 9(e), the Magistrate seems to have constructed a conversion in the
absence of any other evidence bar that relating to the gurney. When properly
analysed, paragraph 9(e) does not and cannot have that effect.
The appellant's outline of argument before me on this issue is as follows:
"14. It is trite law that a party should be afforded the basic tenors of natural
justice, including reasonable notice of allegations against him and an
opportunity to be heard and cross-examine.15.
Without any application or notice to the parties, the trial magistrate unilaterally drafted an alternative pleading in the respondent's favour and immediately proceeded to grant leave to the respondent to amend his Amended Reply and Answer).
16. The conversion and breach alleged in the trial magistrate's amendment was never an issue in the proceedings. So much is evident from his worship's initiative to make it an issue by his amendment.
17. The course taken by the trial magistrate ignores the role of pleadings and strikes at the heart of the basic tenors of natural justice. The appellant was not notified nor given an opportunity to adduce evidence and
make submissions in respect of the proposed amendment, for
example that:1. The saw milling equipment comprised of several components;
2. At all material times the equipment has been available for the collection by the respondent;
3. The respondent has failed and refused to collect the equipment, and thereby breached and repudiated the agreement;
4. In order to mitigate his loss the appellant has sold the gerni, being one component of the saw milling equipment;
5. The appellant has not converted the saw milling equipment to his own use.
21. The respondent always denied any agreement at Silkwood and denied all the terms contended by the appellant, including the values of the appellant's goods and the transfer of the sawmilling equipment, at all. This is why he could never have satisfied the onus to prove a case in terms of the trial magistrate's amendment.
22. It is true that evidence was adduced about the sawmilling equipment, but it was adduced for the relevant discrete purpose of showing the respondent's failure and refusal to collect the sawmilling amounting of breach of contract. Because of the width of that issue, it was inappropriate and dangerous for his worship to make inference and findings on that discrete evidence for issues never canvassed during the hearing. His worship seemed to be aware that the evidence was not fully explored and remained incomplete for the wider and different case proposed by him, for example:
1.
His discussion of the evidence was in relation to - The remaining allegation is the failure to take delivery of the sawmilling equipment. Yet he used the evidence for a wider purpose.
2.
There was no other exhibits which detail the current status of this equipment, except paragraph 9(e) of the Amended Defence and Counter-claim as to value. This is so, because such evidence was utterly irrelevant to the pleaded case;
3.
He sort (sic) to bind the appellant to his pleading (9(e)) of the cash value of $18,000 for the current (4/2/2003) value of the sawmilling equipment even though it was pleaded for a
completely different purpose.
4. He proceeded to make findings on the available evidence, in the absence of evidence to the contrary.
23. There was no evidence to support a finding that the sawmilling equipment was converted. So far as was relevant to the pleaded issues, the appellant sold the gerni (part of the equipment), well after the respondent rejected the agreement and refused to collect it, as he was entitled to do in the face of the respondent's repudiatory conduct of denying such an agreement from the beginning (and he continues to do so).
24. This was not a specific performance case. The respondent only ever claimed the balance purchase price payable - he was always content that he got the equipment he had bargained for. He never intended to
buy or collect the sawmilling equipment.
25. The respondent did not claim for, and he is not entitled to, the judgment flowing from the amendment drafted and granted by the trial magistrate without notice."
The respondent's outline of argument did not challenge the factual statements made in the appellant's outline, but submitted in part:
"26. In any event there wasn't any error or any error that warrants a reversal
of the decision because:
(ix) The decision was based on the appellant's failure to pay the balance of $7,000.00 owing to the respondent, selling part of the saw milling equipment and converting the remainder to his
own use, it being worth $18,000.00)."
Ground 5 of the notice of appeal is related to these matters and is in the following terms:
"5.
If the magistrates' amendment is allowed, on the hearing of the Appeal the Appellant will seek to adduce fresh evidence to the following effect:
(a) The saw milling equipment comprised of several components; (b)
At all material times the equipment has been available for the collection by the respondent;
(c)
The respondent has failed and refused to collect the equipment, and thereby breached and repudiated the agreement;
(d)
In order to mitigate his loss the appellant has sold the gerni, being one component of the saw milling equipment;
(e)
The appellant has not converted the saw milling equipment to his own use."
After hearing argument on the 6th of December 2004 I refused the appellant's application to adduce fresh evidence. Ground 5 does, however, encapsulate the evidentiary vacuum which existed in relation to conversion.
In the appellant's evidence before the magistrate on the fourth day of the hearing, 27th of November 2003, there is the following passage in relation to the sawmilling equipment (T405):
"Did you sell those items?-- Only - I've only sold the gurney.
And the rest remain in your possession?-- Yes."
Counsel assure me - and I have not been able myself to find any - that there was no evidence before the Magistrate as to when and for how much the gurney was sold.
Mr Morzone, for the appellant, who also appeared for the appellant at the trial, sold. By selling the gurney the appellant put it out of his power to make delivery to the respondent but it was another issue whether that sale was wrongful and as to that the evidence was silent.
submitted to the Magistrate (T510) that if he failed on his submission in support of the
counterclaim then the sawmilling equipment, "as Mr Graf has maintained, is Mr
Byrnes'."
I am unable to find any evidence at all to support the Magistrates finding that the
appellant converted the sawmilling equipment. He sold the gurney but at the same
time contended the appellant owed him money for advertising the equipment for sale.
Paragraph 9(e) does not in my view amount to evidence of conversion. In relation to this whole issue the fact is that neither party were given the opportunity to argue any matters relating to conversion or adduce evidence directly relating to the issue
including damages and how and when they should be quantified.
A brief discussion about damages will indicate how wrong and unfair it was of the Magistrate to introduce, after the hearing had concluded, an issue about which the parties had not directed their attention to or led evidence about. By the time of the alleged conversion the equipment, which had remained uncollected by the respondent for some time, may have deteriorated in condition and value.
In the appellant's note, Exhibit 11, he seems to have attributed a value of $3,000 to
the gurney in early 2000. The same value was placed on it by him on the 26th of
February 2001 (see Exhibit 36A, paragraph 8). There was no evidence as to its
value at the date it was sold, when it was sold or for how much it was sold. Values
were also placed on some other items of sawmilling equipment as at the 26th of
February 2001 (see again Exhibit 36A, paragraph 8). There was no evidence of the
value of the sawmilling equipment - excluding the gurney - as at either the 14th of
March 2003 or the date of trial. $18,000 was referred to in paragraph 9(e) as the
contract value, not the value at the date of an alleged conversion, which was not then
or afterwards in the mind of the pleader.
Mr Morzone has referred me to two cases bearing on the assessment of damages for
conversion. In Butler v. Egg and Egg Pulp Marketing Board (1966) 114 CLR 185 at
191, Taylor and Owen JJ said:
"Hence the statement which appears so often in the books that the general
rule is that the plaintiff in an action of conversion is entitled to recover the full
value of the goods converted, but this statement should not be allowed to
obscure the broad principle that damages are awarded by way ofcompensation."
Menzies J said at page 192:
"There is no hard and fast rule that the value of the goods at the time of a conversion is always the measure of the damages to be assessed for the conversion...
The true rule is that the plaintiff is entitled to recover no more than the real damage he has sustained."
In Johnson v. Perez (1988) 166 CLR 351, Wilson, Toohey and Gaudron JJ said at page 367:
"As a general rule, 'damages for tort or for breach of contract are assessed as
at the date of the breach'. The rule will yield if, in the particular
circumstances, some other date is necessary to provide adequatecompensation."
Brennan J said at page 371:
"The general rule as to the date at which damages are to be assessed is
subject to the principle governing the measure of damages. A plaintiff who
has suffered damage as a result of a defendant's tort or breach of contract is
entitled to such a sum as will, so far as possible put him in the same position
as he would have been in but for the tort or breach of contract.""The time at which damages are assessed must be so fixed as to give effect to the governing principle. In giving effect to that principle, matters occurring after the tort or breach may be excluded from consideration by selecting the date of the tort or breach of contract as the date for assessment; conversely, such matters may be included by selecting the date of the trial as the date for assessment. In either case, it is the governing principle rather than the
temporal rule which determines what is to be taken into consideration and
what is not."
The parties were entitled to address these issues and lead evidence about them. Mr Middleton submitted that the sawmilling equipment was part of the agreement "package" and the respondent did not get the benefit of that component valued at $18,000 and that should be regarded as his loss. That, with respect, overlooks the finding of the Magistrate that property in the equipment had passed to the respondent, that he had not collected it and the unilateral way in which conversion was introduced into the damages equation by the Magistrate without notice to the parties and without affording them any opportunity to deal with issues - legal and evidentiary - relating to such a claim or cause of action. The only evidence before the Magistrate was that of the appellant on the 27th of November 2003 to the effect that the equipment was still then in his possession, excluding the gurney. There was no evidence that that was as a result of conversion. On the contrary, it was consistent with the arrangement as found by the Magistrate.
On the evidence before the Magistrate the sawmilling equipment, other than the gurney, was at all times available to be collected by the respondent but he did not collect it. It remained in the possession of the appellant. A failure to deliver absent an obligation to do so does not amount to conversion. A conversion is a deprivation of possession to such an extent as to be inconsistent with the right of the owner evidencing an intention to deprive the owner of that right. The evidence did not establish conversion. For the gurney the appellant may have been able to set off the costs of advertising.
The reason the respondent did not collect the equipment was because he did not
consider he had to. According to him it was no part of the agreement. See
paragraph 7(b), 20(c) and 21(e) of the amended reply and answer. In his evidence,
(T116) he was asked if the equipment remained in the possession of Graf and he
said, "I don't know. I never intended to collect it."
Mr Morzone submitted to me, by reference to the evidence before the Magistrate,
that the appellant retained the equipment on the basis that the respondent no longer
wished to have it. He said that the appellant retained possession of the equipment
on the basis that the respondent would collect it later and then subsequent to that the
respondent requested the appellant to continue advertising it and selling it because
he no longer wanted it. He confirmed that the respondent never collected the
equipment and refused to do so and disavowed any agreement to purchase the
equipment throughout the proceedings. That seems to be the case. Mr Middleton
did not disagree.
On the evidence before the Magistrate and on his findings, property in the sawmilling equipment had, pursuant to the agreement as found by him, been transferred by the appellant to the respondent but, absent the gurney, it had not by the time of the
hearing before the Magistrate been collected by the respondent. That was a matter
for the respondent and his failure to collect it did not establish conversion by the
appellant.
In my view the Magistrate was in error in finding that it did. If the respondent did not or does not want to collect the equipment that is a matter for him.
Having found what the terms of the agreement were, the Magistrate's task was then to consider whether the plaintiff had established an entitlement to judgment in accordance with those terms and the evidence and issues as litigated. His task was not to unilaterally construct a new cause of action with a view to further accommodating the plaintiff's claim in circumstances where to do so involved an interpretation of the pleadings and evidence which neither were capable of bearing and into which neither party had any input. I do not intend here to disparage the motives of the Magistrate. He was undoubtedly well intentioned in his attempts to finally resolve what he thought were outstanding matters between the parties. Unfortunately he overlooked the fact that he had done just that in the findings he made immediately before his excursion into conversion.
The respondent is entitled to retain the judgment in his favour for $7,000 but not on an amendment to his reply and answer. He is not entitled to retain the judgment for $18,000 based on the appellant's conversion of the sawmilling equipment. The
evidence before the Magistrate did not establish any such conversion.
For these reasons the appeal will be allowed and the orders made by the Magistrate will be set aside and in lieu thereof the following orders will be made:
1. On the plaintiff's claim for damages for breach of contract there will be judgment for the plaintiff against the defendant for $7,000, together with interest at the rate applicable under the Supreme Court Act from the 31st of December 2000 to the 20th of May 2005.
2. The defendant's counterclaim is dismissed.
The order in relation to submissions about costs made by the Magistrate is to remain.
The appellant has succeeded on the appeal and is entitled to his costs. I order that the respondent pay the appellant's costs of the appeal of the 9th and 19th of May 2005. So far as the hearing on the 6th of December 2004 in relation to adducing fresh evidence is concerned, that was an application by the appellant which failed. I order that the appellant pay the respondent's costs of the hearing on the 6th of December 2004.
The appeal has succeeded because of an error of law on the part of the Magistrate which was not encouraged by either party. The hearing on the 6th of December 2004 was also related to that error. In these circumstances I grant each of the appellant and the respondent a certificate under the Appeal Costs Fund Act in respect of the costs each has been ordered to pay in respect of the appeal.
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