Hardinge v Schidor

NEW SOUTH WALES COURT OF APPEAL

CITATION: Hardinge & 1 Ors v Schidor & 1 Ors [2002] NSWCA 277

FILE NUMBER(S):
40167/01

HEARING DATE(S): 4 March 2002

JUDGMENT DATE: 22/08/2002

PARTIES:
Biron Hardinge (also known as Bill Hardinge) (First Appellant)
Radio Masts (Aust) Pty Ltd (ACN 006 113 926) (Second Appellant)
Gert Schidor (First Respondent)
Gert Schidor Design Pty Limited (ACN 003 082 217) (Second Respondent)

JUDGMENT OF: Mason P Powell JA Santow JA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): 4512/00

LOWER COURT JUDICIAL OFFICER: Goldring DCJ

COUNSEL:
M W Young (Appellants)
M R Aldridge, SC/C Whitelaw (Respondents)

SOLICITORS:
Tsolakis Solicitors (Appellants)
Dominic David Stamfords (Respondents)

CATCHWORDS:
PRACTICE AND PROCEDURE - District Court Rules - application for removal of a defendant from District Court proceedings as not a party to agreement that is the basis of the dispute
CONTRACT - construction and interpretation of contract - principal and agent
CONTRACT - construction and interpretation - ambiguity - admission of extrinsic evidence - parole evidence rule
CORPORATIONS - contracts - agency - joint and several liability

LEGISLATION CITED:
District Court Act 1973 (NSW) is Pt 9 r17; s161(2)(i)
District Court Rules Pt 7 r9; Pt 11A r3
Supreme Court Rules Pt 8 r9

DECISION:
1. Appeal dismissed with costs
2. That Gert Schidor cease to be a party to District Court proceedings 4512 of 2000; thus varying the orders of Goldring DCJ made 23 February 2001.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40167/01
DC 4512/00
MASON P
POWELL JA
SANTOW JA
22 AUGUST 2002

Biron HARDINGE (also known as Bill Hardinge), and RADIO MASTS (Aust) PTY LTD
- v -
Gert SCHIDOR, and GERT SCHIDOR DESIGN PTY LIMITED

HEADNOTE

The Appellants, Mr Biron Hardinge (Mr Hardinge) and Radio Masts (Aust) Pty Limited (Radio Masts), commenced proceedings for damages for breach of contract against, the Respondents, Mr Gert Schidor (Mr Schidor) and Gert Schidor Designs Pty Limited (Designs) in the District Court of NSW. The contract in question was for the hire of a bus on specified terms. The Respondents by Amended Notice of Motion sought to have Mr Schidor removed as a party to the proceedings under District Court Rules Pt7 r9 or Pt9 r17 on the grounds that he was not a party to the contract. At first instance Goldring DCJ of the District Court NSW allowed the Amended Notice of Motion and ordered that the proceedings be struck out against the First Respondent.

Mr Hardinge and Radio Masts appealed.

HELD:

Per Powell JA with Mason P agreeing, Santow JA dissenting:

1.The appeal should be dismissed. Designs was the party to the agreement to hire the bus from Mr Hardinge and Radio Masts. Mr Schidor, as an individual was not a party to the agreement.
2.The terms of the agreement did not indicate that Mr Schidor alone was the hirer of the bus and the extrinsic evidence indicated that it was Designs rather than Mr Schidor who hired the bus.
3.Although an element of construction of the agreement was involved, such construction was not the essential question to be determined by the trial judge on the hearing of the Amended Notice of Motion

Per Mason P:

4.Clause 1(e) cannot be used to assist in determining who were the parties to the agreement without fallacious circularity

Per Santow JA with Mason P agreeing:

5.Clause 1(c) of the agreement could not be applied to bring about the result that both Mr Schidor and Designs were parties to the contract

Per Santow JA in dissent:

6.Mr Schidor was the party to the agreement and so the proceedings against Designs should be struck out.
7.The agreement was ambiguous as to whether or not Mr Schidor was personally liable or whether Designs was liable. Considered that the ambiguity could be resolved by leaving Mr Schidor liable as an individual and not his company.
8.The trial judge was entitled to admit extrinsic evidence as the agreement was sufficiently ambiguous.

ORDERS:

Appeal dismissed with costs.
That Gert Schidor cease to be a party to District Court proceedings 4512 of 2000; thus varying the orders of Goldring DCJ made 23 February 2001.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40167/01
DC 4512/00
MASON P
POWELL JA
SANTOW JA
22 AUGUST 2002

Biron HARDINGE (also known as Bill Hardinge), and RADIO MASTS (Aust) PTY LTD
- v -
Gert SCHIDOR, and GERT SCHIDOR DESIGN PTY LIMITED

Judgment

MASON P: I have had the benefit of reading the judgments of Powell JA and Santow JA.
I agree with the orders proposed by Powell JA and with his reasons.
I would merely add this. Santow JA concludes (and I agree) that clause 1(c) cannot be applied to bring about the result that both Mr Schidor and his company are parties to the contract. His Honour points to the difficulty of treating the signature “Gert Schidor” as having a dual function of rendering Mr Schidor and his company jointly and severally liable, through the operation of cl 1(e) which defines “the renter” to include “any person who signs this Agreement and any person whose agent signs this Agreement”. Again I agree. I would however go a step further, and conclude that the definitional clause 1(e) cannot be used to assist in determining who are the parties to the contract, without fallacious circularity.
By parity of reasoning, cl 1(e) cannot be invoked in resolution of the issue as to which of the two contenders is the party to the contract. For the reasons given by Powell JA, that party was the company.
The orders proposed by Powell JA do not include leave to amend, but obviously the parties should look again at the pleadings in light of the orders and reasons of this Court.
POWELL JA:     Insofar as it is necessary, for the purposes of this appeal, to record its terms, the Statement of Claim pursuant to which the Appellants, Biron Hardinge (“Mr. Hardinge”) and his company, Radio Masts (Aust) Pty. Ltd. (“Radio Masts”) sought to recover from the Defendants, Gert Schidor (“Mr. Schidor”) and his company, Gert Schidor Designs Pty. Ltd. (“Design”) damages for what were said to be breaches by the Defendants of a certain agreement dated 10 November 1999, was as follows (RAB 1-4):
“…
2.The First Plaintiff is the owner of a motor vehicle known as an Ansair Flxible (sic) Clipper Bus (C               hassis No. AF-84): (‘the bus’).
3.By written agreement (‘the Agreement’) dated 10 November 1999 the First Plaintiff, or alternatively, the Second Plaintiff, agreed to hire the bus to the Defendants and the Defendants agreed to pay to the First (or alternatively the Second) Plaintiff the agreed rent charges in relation to the hire of the said bus and other monies.
4.In pursuant (sic) of the Agreement, the Plaintiff (sic) hired the bus to the Defendants.
Rent Charges
5.The rental terms of the Agreement were as follows:
………
6.Pursuant to the Agreement the Plaintiff (sic) allowed the Defendants use of the bus and provided labour.
7.In breach of the Agreement, the Defendants have failed to pay to the Plaintiff (sic) all charges as agreed.
………
Further Conditions of the Agreement
8.In addition to the rental charges, the Agreement contained terms and conditions relating to modification and restoration of the bus.
………
9.Pursuant to the Agreement the Defendants modified and re-painted the bus.
10.In breach of the Agreement the Defendants neglected and/or failed to restore the bus as agreed.
………
11.The said breaches have caused the Plaintiffs (sic) to suffer loss and damage.
……..
AND the Plaintiffs’ (sic) claim:
(i)Damages;
(ii)          Interest;
(iii)         Costs.”
In the Amended Defence (RAB 5-6) which was filed on their behalf, the Defendants (inter alia) denied that Mr. Schidor had been a party to the Agreement or had the use of the bus pursuant to the Agreement.
By an Amended Notice of Motion (filed in Court before Goldring DCJ on 23 February 2001) (RAB 7) the Defendants sought an order that:
“1.The proceedings as against the First Defendant be struck out.”
However, despite the form of the Amended Notice of Motion, Goldring DCJ was informed that the application was founded upon the provisions of DCR Pt 7 r 9 and DCR Pt 9 r 17.
DCR Pt 7 r 9 provides:
“9. Where a party -
(a)has been improperly or unnecessarily joined; or
(b)has ceased to be a proper or necessary party,
the Court, on application by any party or of its own motion may, on terms, order that he cease to be a party and make orders for the further conduct of the action”
while DCR Pt 9 r 17 (so far as is relevant) provides as follows:
“17(1) Where a pleading -
(a)discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;
(b)has a tendency to cause prejudice, embarrassment or delay in the proceedings; or
(c)is otherwise an abuse of the process of the Court;
the Court may at any stage of the proceedings, on terms, order the whole or any part of the pleading be struck out.
(2) The Court may receive evidence on the hearing of an application for any order under sub-rule (1).
(3) Where the Court makes an order under sub-rule (1) it may make such further order as to -
(a)subsequent steps in the proceedings being taken as though the matter so struck out had not been pleaded;
(b)granting time to any party to file amended documents;
………
(d)costs; and
(e)any other matter consequent on the order;
as the Court thinks fit.
………”
On the hearing before Goldring DCJ, counsel then appearing for the Defendants sought to read an Affidavit which had been sworn by Mr. Schidor (one assumes) in support of the Notice of Motion as originally filed. The tender of that Affidavit, except to the extent to which it identified Mr. Schidor and Design, gave an indication of the nature of Design’s business and annexed a copy of the relevant agreement, was objected to by counsel then appearing for the Plaintiffs, the grounds of objection being, first, that evidence of the other matters to which Mr. Schidor deposed in the Affidavit was not admissible on an application under either DCR Pt 7 r 9 or DCR Pt 9 r 17; and, second, that, in any event, the other matters as to which Mr. Schidor deposed in his Affidavit were not relevant to any issue with which his Honour was concerned to deal on the Motion.
Insofar as the objection was directed to the question of relevance, the submission appears to have been that matters to which objection were taken would “breach the parole (sic) evidence rule being a pre-contractual negotiation” and that “it (could not) assist the court … to interpret the contract on a strike out application” (Black AB 5) – that submission was not repeated by counsel who appeared for the Plaintiffs on the hearing of the appeal, and who recognised (T. 3) that “the determination of whether a party is signing as an agent or principal or who are the parties to an agreement are well recognised exceptions to the parol evidence rule”.
In his Affidavit (Black AB 7-42) Mr. Schidor – who was not cross-examined - recounted a conversation with a Mr. Lowry “the producer of LMC Film and Video Pty. Limited” (“LMC”) in which conversation Mr. Lowry, on behalf of LMC retained Design for the purpose of making a television commercial for Coca Cola. Making that television commercial, so it would seem, required Design to obtain the use of an Ansair Pioneer Clipper Bus.
In the course of his inquiries with a view to obtaining such a bus, Mr. Schidor became aware of Mr. Hardinge who, so it seems, was President of the Clipper Bus Association and with whom he had a telephone conversation in early September 1999. In the course of that conversation, so Mr. Schidor said, he identified himself as being associated with Design and inquired whether Mr. Hardinge, in his capacity as President of the Clipper Bus Association, could ascertain whether any member of the Association would be willing to hire out his or its bus for the period required for the shooting of the television commercials.
Several days later, so Mr. Schidor said, he had a further conversation with Mr. Hardinge who informed him that he (Mr. Hardinge) had a bus which he could hire out.
Following that conversation, at some time in mid-October 1999, Mr. Schidor flew to Melbourne and went to see Mr. Hardinge at his premises and to look at the bus. Having satisfied himself that the bus would be suitable Mr. Schidor then discussed with Mr. Hardinge the terms and conditions upon which Mr. Hardinge would be prepared to hire out the bus. Those conditions included Mr. Hardinge personally attending and being in charge of the bus during the period required for shooting the commercial and also the payment of a preliminary deposit of $3,000.00, to meet which sum Mr. Schidor drew a cheque on Design’s account with its bankers (Black AB 16) in the name of Mr. Hardinge and delivered the cheque to Mr. Hardinge while he was in Melbourne – later cheques which were drawn by Design in respect of the Agreement were, at the direction of Mr. Hardinge, drawn in favour of Radio Masts. Both the cheque drawn in favour of Mr. Hardinge and those cheques drawn in favour of Radio Masts had printed on them:
“Gert Schidor Design Pty. Ltd.
ACN 003 082 217”
Thereafter, Mr. Hardinge forwarded to Mr. Schidor the document (Black AB 19-22) which is said to be the Agreement upon which the Plaintiffs’ rely. The form of the Agreement is, if I may say so, curious and suggests that the draftsman of it was either a member of the genus advocatus rusticus or one possessed of the skills of the by now legendary “blundering attorney’s clerk” (see In Re Redfern: Redfern v. Bryning (1877) LR 6 Ch D 133, 138 per Bacon VC; In Re Dayrell; Hastie v. Dayrell [1904] 2 Ch 496, 499 per Joyce J) or that the activity of drafting it was one involving the glutinous aroma of paste pot and scissors.
Each of the four pages making up the Agreement was typed on letterhead, to the left of which was:
“BILL HARDINGE
Mast Construction and Maintenance
               Radio and TV”
and to the right of which was:
“RADIO MASTS (AUST) PTY. LTD. ACN 006 113 926
               8 Cairncroft Avenue, Launching Place, Victoria 3139
               Telephone: (03) 5964 7807 Fax: (03) 5964 7173
               Mobile: 0418 372 242 015 567 140”
Under that letterhead, the first page of the Agreement commences:
“10th November 1999 Rental Agreement Ansair Flxible (sic) Clipper Bus AF-84 Page 1 of 4
ATTENTION: Mr. Gert Schidor
Gert Schidor Design Pty., Ltd. ANC (sic) 003 082 217
686 New South Head Road
ROSE BAY NSW 2029
Ph. (02) 9371 0422
Mobile 0412 129 565
Fax No. (02) 9371 0633
Dear Gert,
RE: CLIPPER BUS
The hire of an Ansair Flxible (sic) Clipper Bus (Chassis No. AF-84 Built 1956) to be part of the filming of commercials for ‘Coke’.
An agreed minimum hiring cost of $19,000.00 for thirty days Bus hire, 3,500 kilometres travelled and 15 days labour in November/December 1999.
This includes full comprehensive insurance cover taken out by the owner for the renter’s use during the Hire period and any over run.
Deposit of $3,000.00 (paid) and payment of $7,000.00 is required prior to leaving from Sydney for Broken Hill. Payment of $9.000.00 is required on the 27th of November 1999. Any additional payments (eg. over runs, inclement weather delays, etc) is required upon completion of the restoration of the Clipper.
All: Air fares, transfers, meals and accommodation for Bill Hardinge is to be paid by or reimbursed by the renter.
Rates for additional Hire.
Bus hire rate $250.00 per day.
$1.30 per kilometre travelled, (over the 3,500 km including in hire payment) until the vehicle returns to the depot in Launching Place Victoria
Labour rate $450.00 per day.
All Meals and Accommodation for the driver will be charged at cost to the renter.”
On page 2 of the Agreement (Black AB 20) the following (inter alia) provisions appear:
“Rental Agreement.
1.In this Agreement the following expressions shall have the following meanings:
………
b)‘the owner’ means Bill Hardinge of Radio Masts (Aust) Pty. Ltd.
c)‘the renter’ includes any person who signs this Agreement and any person whose agent signs this Agreement.
d)‘the vehicle’ means the vehicle Ansair Flxible (sic) Clipper Registration FLX (sic), owned by Bill Hardinge of Radio Masts (Aust) Pty. Ltd.
e)‘the rental period’ means the period commencing when the vehicle departs from the depot at Launching Place to when the vehicle is returned.
………
2.The renter agrees to pay the owner:
a)The rental charge for the vehicle during the rental period.
b)A rate of $1.30 per kilometre travelled in excess of 3,500km. Distance is measured by the ‘Hub Odometer’ fitted to the rear wheel.
………”
Later, on page 2 and on page 3 of the Agreement, there are a number of provisions – at least one of which has a blank space in it – which, given that it is clear that Mr. Hardinge was to drive and remain in control of the bus, appear not to be particularly relevant to the arrangement that had been agreed upon between Mr. Hardinge and Mr. Schidor in Melbourne. The following are examples of such provisions (Black AB 20):
“3.The renter agrees:
a)That no person other than the owner or nominated driver (insert name) …………………………… is authorised to drive the vehicle without the written consent of the owner.
b)That a nominated driver is over the age of 25 years, holds a current heavy motor vehicle licence valid for the type of vehicle rented in the place where the vehicle may ravel.
c)To report to the owner as soon as practicable after becoming aware of any damage to the vehicle or any accident involving the vehicle during the rental period and to use reasonable efforts to comply with all reasonable request (sic) of the owner to provide assistance in any litigation or investigation relating to such damage to (sic) accident.
d)To drive and maintain the vehicle in a cautious and prudent manner and to return the vehicle in the same condition as it was received (fair wear and tear excepted).
e)Not to use the vehicle for any illegal purpose or in any race or speed tests or in contravention of any law concerning the use of motor vehicles, or when the vehicle is in any material way damaged or unsafe.
f)Not to drive the vehicle under the influence of any alcohol or drug or with a blood alcohol level as indicated by analysis of the driver’s breath or blood in excess of hat permitted by the law applicable to the place in which the vehicle is driven.
………”
On page 4 of the Agreement (Black AB 22) the following matters appear:
“
………
12.Where the renter is more than one person liability shall be joint and several.
………
Subject to the terms, conditions and warranties contained hereof (sic) the Owner rents the above vehicle to the Renter and the Renter agrees to perform all of the provisions of this agreement and to return the vehicle in the manner stipulated by the Owner.
‘renter’
Date 10/11/99
Signed (signature)
Gert Schidor
Of:
Gert Schidor Design Pty., Ltd. ACN 003 082 217
686 New South Head Road,
ROSE BAY NSW 2029
‘owner’
Date
Signed (signature)
B.W. HARDINGE
Of:
Radio Masts (Aust) Pty. Ltd., ACN 006 113 926
48 Cairncroft Ave
LAUNCHING PLACE 3139”
A cheque for the $7,000.00 referred on page 1 of the Agreement was drawn on Design’s account with its bankers on 25 November 1999 (Black AB 17) and a cheque for the further sum of $9,000.00 making up the balance of the minimum hiring cost of $19,000.00 was drawn on Design’s account with its bankers on 10 December 1999 (Black AB 18).
Between 21 December 1999 and 29 December 1999 eight invoices – Nos. 1554 to 1561 (Black AB 34-41) – all on the letterhead to which I have earlier referred and all addressed:
“Gert Schidor Design Pty. Ltd,
686 New South Head Road,
ROSE BAY. NSW 2029
Attention: Mr. Gert Schidor
Dear Gert,”
claiming additional sums said to be payable pursuant to the Agreement were forwarded to Design. Of the total - $15,923.22 – claimed in those invoices, $2,000.00 appears to have been paid by cheque drawn on Design’s account with it bankers on 22 December 1999 leaving a balance claimed by the plaintiffs of $13,923.22, that being part of the sum claimed by the plaintiffs in the Statement of Claim which was filed on their behalf in the District Court.

In the Judgment which he delivered on the hearing of the Notice of Motion (RAB 8-13), Goldring DCJ said (inter alia):
“Mr. Schidor applies under two rules of this Court, first under Pt 7 r 9 which provides that where a party (a) has been improperly or unnecessary joined or (b) has ceased to be a proper and necessary party the Court, on application by any part (sic) or of its own motion, may on terms order that he cease to be a party and make orders for the further conduct of the action. The other provision on which the first defendant, the applicant, relies is Pt 9 r 17
………
The argument for Mr. Schidor is that he is improperly joined as a party. He argues that he was not a party to the contract.
It seems to me that while Mr. Rogers, who appears for the plaintiffs, suggests that if there is an arguable case I should not make the orders sought, and I agree with that proposition, then the matter should be determined after a trial.
Really what I must decide is a matter of construction of the contract to which I have referred.
………”
Then, after referring to certain features of the contract and, in particular, clause (a) and the provision as to signature at the end of the Agreement, his Honour continued:
“The contention for the plaintiffs is that this provision is intended to and did in fact make Mr. Schidor a party to the contract. On my view that is a totally untenable proposition. The whole of the document refers to the company as a party and the definition of ‘renter’ to which I have referred, with the greatest of respect, seems to me to refer to the legal person who is a party to the contract, not to any natural person whose physical signature appears to be attached. It is a well known commercial proposition that a corporation can only act through an agent. Where, as in this case, a company is named as the party to the contract it seems to me that that company, that legal person, is the party to the contract and no other.”
Then, after a reference to the Judgment of Brandon J (as Lord Brandon of Oakbrook then was) in The Swan [1968] 1 Ll R 5 his Honour continued:
“In this case it seems to me that his Lordship was referring to a situation where there was some ambiguity about the terms of the contract and indeed the case, as his Lordship pointed out, was a case where the alleged contract was partly oral and partly written. This is not such a case. It is a case where a contract has been reduced to writing in a formal way, although if its intention is what the plaintiffs contended it seems to me to be very inappropriate for that purpose.”
Then, after a reference to the Judgment of Cross J in Brimson v. Rocla Concrete Pipes Pty. Limited [1982] 2 NSWLR 937 and of David Hunt J (as he then was) in Peter Kent Development Pty. Limited v. The Australia and New Zealand Banking Group Limited 6 May 1980 (unreported) - both being cases seeking orders for summary dismissal under SCR Pt 13 r 5 – his Honour continued:
That with respect seems an admirable statement of the law. However it seems to me that what Mr. Rogers has contended to be the true construction of this contract is so manifestly untenable that this case is not one where I should not exercise the power to grant the application. It seems to me that there is an untenable argument that Mr. Schidor personally was a party to the contract and he was therefore improperly joined. To allow the proceedings against him to continue would be contrary to the matters set out in Pt 9 r 17 and would cause prejudice, embarrassment or delay in the proceedings, so even if the defendant were not to succeed on the first rule I think that he would succeed on the second.
There will be orders that the proceedings as against the first defendant be struck out and that the plaintiffs pay the first defendant’s costs. The costs as agreed or assessed or (sic) Mr. Schidor be paid within 28 days of agreement or assessment.
I think this matter should be listed for directions within 21 days and the Registrar is to notify both parties of the directions hearing.”
The transcript record of the hearing of an application – which was granted – for leave to appeal on 7 August 2001 contains the following (inter alia) (RAB 18):
“STEIN JA: How can you plead an agreement which says by written agreement the first plaintiff or alternatively the second plaintiff agreed to hire a bus, surely you go to Court and you say this is an agreement between A on our side.
ROGERS: We say it’s the first plaintiff your Honour we just didn’t want to get met with an argument because of a letterhead, a series of denial get to trial and find that someone then asserts that its actually a different plaintiff. The letterhead on the document refers to the second plaintiff, we say it’s the first plaintiff, he owns the bus and that’s conceded on the pleadings.”
Despite what was then said by counsel for the Appellants and the grounds of appeal taken in the Notice of Appeal (RAB 14-15) which was filed on behalf of the Appellants, the principal order sought in that Notice of Appeal was:
“1.That the orders of Goldring DCJ made on 23 February 2001 in District Court proceedings matter no 4512 of 2000:
(a)striking out the proceedings against the First Respondent; and
(b)ordering that the Appellants pay the First Respondent’s costs;
be set aside.”
In the light of the form of orders proposed by Santow JA in his Judgment, it should be noted, first, that no order that Design cease to be a party to the proceedings in the District Court was sought; and, second, that, on the hearing of the appeal (T.2-3, T.5-6), counsel for the Appellants did not abandon the claim that Design was a party to the Agreement.
In an Amended Notice of Contention filed on behalf the Respondents contended that the decision of Goldring DCJ should be affirmed on the following additional grounds:
“1.The correct form of Order that should have been made by Judge Goldring pursuant to Part 7 rule 9 of the District Court Rules, based on the same evidence, was ‘that the first defendant cease to be a party to the proceedings’; or alternatively, ‘that the defendant’s name be struck out as being improperly joined’.
2.What the judge in the court below had to decide pursuant to Part 7 rule 9, and possibly also pursuant to Part 9 rule 17, was not limited, as the judge said, to ‘a matter of construction of the contract.’ If there was ambiguity present in the language or terms of the written contract relevant to the issue of who were the contracting parties, then the judge could have, and should have had regard to my (sic) extrinsic evidence which would assist him in resolving any such ambiguity, and consequently resolving the issue of whether the first defendant had been improperly joined.
3.The extrinsic evidence relevant to the issue of who were the contracting parties was admitted as part of the evidence contained in the affidavit of Mr. G. Schidor sworn on 19 December 2000.
4.It is contended that if the decision of Judge Goldring in the court below is not found to be sustainable solely as a matter of construction of the written contract, because of ambiguity or otherwise, then the annexures to the affidavit of Mr. G. Schidor sworn on 19 December 2000 make it clear beyond doubt that the first defendant was not a party to the contract with either or both of the plaintiffs.
5.The decision of Goldring DCJ was sustainable on the basis that the appellant’s claim against the respondent ought to have been dismissed pursuant to Part 11A rule 3 of the District Court Rules.
When the appeal was called on for hearing, Mr. M. W. Young appeared for the Appellants while Mr. M.R. Aldridge SC appeared for the Respondents.
So far as I have been able to ascertain, there is no appellate authority as to the principles to be applied by the Court on an application made pursuant to the provisions of DCR Pt 7 r 9 or of SCR Pt 8 r 9 which is in like terms. Indeed, the only authority which I have been able to ascertain which bears on the question is the decision of Rath J in Uniting Church in Australia Property Trust (NSW) v. Monsen [1978] 1 NSWLR 574, in the course of which Judgment his Honour said supra at 585-586:
“It is appropriate here to comment upon the principles that should guide the court on this motion.
………
The rules also empower the Court to order that a party cease to be a party, where he has been improperly joined: Pt 8 r 9. The cases cited relate to summary dismissal or stay in relation to an alleged cause of action, but they provide guidance in the circumstances of this case. It may well be that, in the usual case, the propriety of joinder of parties may be appropriately determined as an independent issue, and should be so determined on an application made for that purpose. The reason is that, if the issues of fact and law are clearly defined, the proper parties to the resolution of those issues may be apparent. But where, as I think is the case here, the question of parties is, in some respects at least, related to substantive issues of law, in themselves arguable, then the proceedings should not be dismissed or stayed on the ground of misjoinder or nonjoinder of parties, unless the defect as to the parties is plainly demonstrable. The demonstration may be plain, even though detailed factual and legal analysis is required. In the present case, the statutory and factual histories are complex. The complexity arises from the nature of the subject matter, the interstate co-operation, particularly on a legislative level, and the change in the plan of union, evidenced by the 1972 amendments to the 1971 Act. But, upon analysis, this complexity is capable of resolution; and if it appeared that the resolution of the complexity was itself manifestly correct, and that plainly parties had been wrongly joined, or that some person should plainly have been joined, then it would be proper to dismiss or stay the proceedings. As will appear, I do not consider this to be such a case, though I do think that the complexity of the legislation is in some respects more apparent than real.”
As the passages from his Judgment which I have set out (para. 19 (supra)) indicate, this, although somewhat differently expressed, was essentially the approach which Goldring DCJ adopted when dealing with the application.
Although accepting that an element of construction of the agreement was involved, I do not agree that the construction of the agreement was the essential question to be determined by Goldring DCJ on the hearing of the application. However, before turning to deal with that question, it is useful to record that, in November 1999, the Corporations Law provided (inter alia):
“182(1) So far as concerns the formalities of making, varying or discharging a contract, a person acting under the express or implied authority of a company may make, vary or discharge a contract in the name of, or on behalf of, the company in the same manner as if the contract were made, varied or discharged by a natural person.
(2) The making, variation or discharging of a contract in accordance with sub-section (1) is effectual in law and binds the company and other parties to the contract.
………
(7) A document or proceeding requiring authentification by a company maybe authenticated by the signature of an officer of the company and need not authenticated under the common seal of the company.”
It is also convenient to note the following passages in the Judgment of Gleeson CJ, Gaudron, Gummow and Hayne JJ in MYT Engineering Pty. Limited v. Mulcon Pty. Ltd. [1999] HCA 24 [21-22]; 195 CLR 636 at 647,648; 75 ALJR 823, 828-829; 162 ALR 441,448-449:
“21.In Black v. Smallwood ((1966) 117 CLR 52 at 61-62) Windeyer J said:
‘There is a difference between a man’s own acts and acts done for him by another man. The difficulty of the distinction in the case of a corporation is that a corporation must manifest its acts and intentions by the actions and declarations of human beings: and ambiguities and limitations of language make it difficult sometimes to express the distinction between acts done by a person as executant of the will of a corporation and acts done by a person as agent for a corporation, his principal. That the word ‘agent’ is in each case apt to describe the actor helps to disguise their different legal characters.
I appreciate the force of what Walsh J said in the Supreme Court concerning the narrow differences in language upon which the decision in Newborne v. Sensolid (Great Britain) Ltd. ([1954] 1 QB 45) turned. But the distinction that differences in language reflect, sometimes not very clearly, is the distinction between the act of a man himself and acts done by another on his behalf. If in the case of a company the distinction is difficult to preserve, and may seem unreal, or merely verbal not conceptual, that is because the legal personality and capacity of the corporation are artificially created by law.’
The references in s.182(1) to a person making ‘a contract in the name of, or on behalf of, the company’ must be read in this light. So too, the reference in s.444B(3) to execution ‘by or on behalf of the company’ and in s.444B(2) to the company ‘execut(ing) the instrument’ must be approached having regard to the fact that ‘a corporation must manifest its acts and intentions by the actions and declarations of human beings’.
22.Companies statutes in Australia have long provided for companies to make contracts in writing without the company affixing its seal to the writing. Until the introduction of the Companies Codes in 1982 those provisions spoke of a contract being made ‘on behalf of the company’ by any person under its authority, express or implied. But the reference in such provisions to a contract being made ‘on behalf of’ the company should not be permitted to obscure the fact that the person who signed the contract did so as ‘executant of the will’ of the company. Thus, although distinction is to be drawn between ‘a case where the execution of a document is effected by the subscription of the company’s name followed by the signature of a director or directors as such and the case where the document is executed by an agent on behalf of the company’ in each case the contract is the company’s contract. As early in the development of company law as 1856 Pollock CB said, in Aggs v. Nicholson ((1856) 1 H & N 165 at 170; 156 ER 1161 at 1163) of the execution of a promissory note by a company:
‘Considering the note independently of the statute referred to, looking only to the meaning of the words used, we think they purport to bind the company, and not the parties signing. Nobody doubts that that was the real intention, and why the law should regard popular language otherwise than popularly it is difficult to see, in this case at least. ‘We, two of the directors of the Ark Society on behalf of the society, promise to pay’ sealed with the seal of the society. Had the words been ‘We, the Society promise;’ signed, ‘PN-HW, for the society’ or on ‘behalf of the society’ it would have been clear. But we know well that the usage has been to say: ‘I promise for AB’ instead of saying, ‘I, AB promise; signed for AB, CD,’ and the words ‘on behalf of’ clearly originate in 7 & 8 Vict c 110’ (emphasis added).
………”
(See also Richardson v. Landecker (1950) 50 SR 250, 259 per Street CJ.)
The reason why I have said earlier that although a question of the construction of the Agreement was involved, I did not agree that that was the essential question for Goldring DCJ to consider is indicated by the following passage in the speech of Viscount Haldane in Fred. Drughorn, Limited v. Rederiaktiebolaget Transatlantic [1919] AC 203, 206-207:
“My Lords, by the law of England if B contracts with C prima facie that is a contract between these two only, but if at the time B entered into the contract he was really acting as agent for A, then evidence is generally admissible to show that A was the principal, and A can take advantage of the contract as if it had been actually made between himself and C. That is what is meant by ratification.
My Lords, the limits within which that doctrine is applicable were fully explained in this House in the case of Keighley, Maxsted & Co v. Durant ([1901] AC 240). No question arises with regard to the applicability of the doctrine in this case, because what is said is that the respondents can prove that as a matter of fact B was acting as the agent for them in the case before us at the time when he entered into the contract.
But, my Lords, the principle is limited by another consideration, about which again there is no doubt, and the applicability of which to the present case is beyond question. In Humble v. Hunter ((1848) 12 QB 310; 116 ER 885) it was approved, although it was not necessary to give a decision on the point, and also in Formby Brothers v. Formby ((1910) 102 LT 116) and in other cases. These are authorities for the proposition that evidence of authority of an outside principal is not admissible, if to give such evidence would be to contradict some term in the contract itself. It was held in Humble v. Hunter that where a charterer dealt with somebody described as the owner, evidence was not admissible to show that some other person was the owner. That is perfectly intelligible. The question is not before us now, but I see no reason to question that where you have the description of a person as the owner of a property, and it is a term of the contract that he should contract as owner of that property, you cannot show that another person is the real owner. That is not a question of agency – that is a question of property.
My Lords, in the same way as in Formby Brothers v. Formby the term was ‘proprietor’, and ‘proprietor’ was treated in the opinion of the Court of Appeal as on the same footing as the expression ‘owner’. But, my Lords, we are not dealing with that case here. The principle remains, but the question is whether the principle applies to a charter party where the person who says that he signed only as agent describes himself as the charterer.
My Lords, there may be something to be said from the heading of the charterparty in this case, and the reference to the company which claims to have been his principal, for the proposition that, reading the document as a whole, there is evidence that he intended to convey that he was acting as agent for somebody else; but whether that is so or not the term ‘charterer’ is a very different term from the term ‘owner’ or the term ‘proprietor’. A charterer may be and prima facie is merely entering into a contract. A charterparty is not a lease it is a chattel that is being dealt with, a chattel that is essentially a mere subject of contract; and although rights of ownership or rights akin to ownership may be given under it prima facie it is a contract for the hiring or use of the vessel. Under these circumstances it is in accordance with ordinary business commonsense and custom that charterers should be able to contract as agents for undisclosed principals who may come in and take the benefit of the charter party.”
By a parity of reasoning and subject to similar limitations, in a case in which a party although apparently contracting as a principal acted as an agent, the contract may be enforced against the real principal. Thus, in Carberry v. Gardiner (1936) 36 SR 559, 574-575 Jordan CJ said:
“Again, it may appear that either or both of the parties, although on the face of the contract they do not appear to be other than principals, had in fact acted as agents for third parties in entering into the contract. In such a case, if the contract be not under seal, there are cases in which even at Common Law the actual principals my (sic) sue or be sued on the contract, although they are neither named nor indicated, and this notwithstanding that the contract is in writing and is also within the Statute of Frauds: Higgins v. Senior (8 M & W 834 at 844). In order that this position may arise, it is necessary (i) that, in a case within the Statute of Frauds the actual contracting party should contract as principals so as to be themselves chargeable under the contract: Lovesy v. Palmer ([1916] 2 Ch. 232); (ii) that the other party should not have deliberately chosen to accept the obligation of the agent in lieu of that of the principal, with knowledge of who the principal was and that his obligation was available to him: Paterson v. Gandasequi (15 East 62 at 68-9); Curtis v. Williamson (LR 10 QB 57 at 59); (iii) that the terms of contract should not be such as to state or imply that the parties to it were not only the principals but the real and only principals: Humble v. Hunter (12 QB 310); Collins v. Associated Greyhound Racecourses, Ltd. ([1930] 1 Ch 1 at 19,35); and (iv) that the contract must not be of such a kind that the personality of the contacting parties is material: ibid at 19, 33, 35-6; Pollock on Contracts 9th Ed 108; Fry Specific Performance, pars. 258, 259.”
(See also Perpetual Trustee Co (Ltd) v. Bligh (1940) 41 SR 33, 39-40 per Jordan CJ, Danziger v. Thompson [1944] 1 KB 654; Winstonu Pty. Ltd. v. Pitson [2001] FCA 541 [29] – [30].)

In the present case, so it seems to me, not only are the terms of the agreement not such as to indicate that Mr. Schidor alone was the hirer, but the evidence as to Mr. Schidor’s conversations with Mr. Hardinge in September and October, the cheque which was forwarded to Mr. Hardinge in October, the form of the agreement itself, the cheques which were paid pursuant to the agreement and the several invoices forwarded to Design in December 1999 all indicate that it was Design rather than Mr. Schidor which was the hirer of the bus.
Save only that, in my opinion, there should be substituted for the order that, as against Mr. Schidor, the proceedings in the District Court should be struck out, an order that Mr. Schidor cease to be a party to those proceedings, the appeal should be dismissed with costs.
I add that, even if I had been of a contrary view, I would not have been able to join with Santow JA in the orders which he has proposed as an order to the effect of the second of the orders proposed by his Honour had not been sought by either the Plaintiffs or the Defendants in the District Court nor been sought by the Appellants on the hearing of the appeal. That being so, it seems to me, that if I had been of a view contrary to that which I have indicated the only appropriate orders to be made were those sought by the Appellants in their Notice of Appeal.
SANTOW JA:
INTRODUCTION
This is an appeal from a decision of Goldring DCJ in the District Court. It arises from proceedings brought by the Appellants as Plaintiffs against the Respondents as Defendants in District Court proceedings No. 4512 of 2000 (“the Proceedings”). Those proceedings were brought as a claim for damages for breach of contract. This was by reason of an alleged failure of the Defendants to comply with their obligations to meet charges under a written agreement (“the Agreement”) for hire of a bus to the Defendants for use in a commercial advertising “shoot” (Statement of Claim, Red Book, p2A to 4H). There is also a claim for failure to reinstate the bus to its former condition.
Pursuant to an amended Notice of Motion dated 22 February 2001 (Red Book, p7C to 7J) the Defendants/Respondents successfully applied to have the Proceedings “struck out” as against the First Defendant, an individual Mr Gert Schidor. The effect of this, if undisturbed is to leave the proceedings solely against the Second Defendant/Second Respondent, Gert Schidor Design Pty Limited, of which Mr Gert Schidor is an authorised officer; see affidavit of Mr Schidor (Black Book, p7, para 1).
The Appellants’ Statement of Claim as Plaintiffs in the District Court was brought by Mr Biron Hardinge (also known as Bill Hardinge) as First Plaintiff and by what can be taken from the Agreement (Combined Book, 20C) to be his company Radio Masts (Aust) Pty Limited as Second Plaintiff.
Clauses 3 to 11 of the Statement of Claim state the basis of the claim with its Particulars. Clause 3 is in the following terms:
“3.By written agreement (“the Agreement”) dated 10 November 1999 the First Plaintiff, or alternatively the Second Plaintiff, agreed to hire the bus to the Defendants and the Defendants agreed to pay the First (or alternatively the Second) Plaintiff the agreed rent charges in relation to the hire of the bus and other monies.”
I observe that the Statement of Claim contains no equivalent to clause 3 in relation to the Defendants whereby it is stated that the First (or alternatively the Second) Defendant is liable. Rather these claims are brought against both Defendants, on the basis that the hiring is to both of them and that each of the Defendants agreed to its terms and failed in the respects identified to comply with them. The Statement of Claim thus proceeds on the basis that the two Defendants are jointly and severally liable (see clause 12 of the Agreement (Black Book, p22). But nowhere in the pleading is there an express statement in those terms.
The Amended Notice of Grounds of Defence denies that the First Defendant was a party to the agreement (Red Book, p6, para 8). It is further stated in that Defence that “the First Defendant did not enter into an agreement with either Plaintiff on 10 November 1999 or on any other date”, but that “the Second Defendant entered into an agreement with the First or Second Plaintiff as alleged on 10 November 1999”; see paras 11 i and ii (Red Book, p6). So, as at the close of the pleadings, the Defendants’/Respondents’ position was that Gert Schidor Design Pty Limited entered into the agreement but not Gert Schidor the individual. The Plaintiffs/Appellants on the other hand, contend in the alternative that either the First or the Second Plaintiff entered into the agreement but proceed against both Defendants.
The Amended Notice of Motion to which reference has earlier been made does not invoke or identify any particular rules of the District Court relied upon, but simply seeks, baldly, an order that “the proceedings against the First Defendant be struck out”.
When the matter came before Goldring DCJ on 23 February 2001, His Honour describes Mr Schidor as applying under two rules of the District Court (Red Book, p8-9). First, there is Pt 7 r 9 “joinder of parties in proceedings” which finds its statutory basis specifically in s161(2)(i) of the District Court Act 1973 (NSW). It provides as follows:
“9.   Where a party -
(a)   has been improperly or unnecessarily joined; or
(b)   has ceased to be a proper or necessary party,
the court, on application by any party or of its own motion, may, on terms, order that he cease to be a party and make orders for the further conduct of the action.”
The other provision to which Goldring DCJ refers and which finds its statutory basis specifically in s161(2)(l) of the District Court Act 1973 (NSW) is Pt 9 r17, relevantly is in the following terms:
“17(1) Where a pleading -
(a)discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleadings;
(b)has a tendency to cause prejudice, embarrassment or delay in the proceedings; or
(c) is otherwise an abuse of the process of the court,
the court may at any stage of the proceedings, on terms, order that the whole or any part of the pleading be struck out.”
It should be noted that under Pt 9 r 17(2) “the court may receive evidence on the hearing of an application for an order under subrule (1)”. There is no equivalent express provision in Pt 7 r9. However Pt 9 r17(1) appears to be the Rule which more closely accommodates what should strictly have been an application for the First Defendant to cease to be a party, and framed as such.
The Respondent in its Amended Notice of Contention (see below) adds (in para 5) that “The decision of Goldring DCJ was sustainable on the basis that the appellant’s claim against the respondent ought to have been dismissed pursuant to Pt 11A r3 of the District Court Rules”. That Rule permits evidence in support by affidavit. It is in the following terms:
DIVISION 2 - Summary stay or dismissal
Frivolity, etc  [910/2]
3.     (1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings -
(a)          no reasonable cause of action is disclosed;
(b)          the proceedings are frivolous or vexatious; or
(c)          the proceedings are an abuse of the process of the Court,
the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.
[SCR Pt 13 r5(1).]
(2) Evidence in support of an application for an order under subrule (1) shall be by affidavit unless the Court otherwise orders, and the provisions of Pt 16 apply to any such application.”
It is convenient that I turn at this point to the Grounds of Appeal for which leave to appeal was granted on 7 August 2001. The Grounds are as follows:
“GROUNDS
1.     The learned judge erred in holding that the agreement pleaded in the proceedings was incapable of being construed so as to bind the First Respondent.
2.     the learned judge erred in striking out the proceedings as against the First Respondent.
3.     Further, or in the alternative, the learned judge erred in striking out the proceedings as against the First Respondent without giving the appellants the opportunity to replead.
4.     The learned judge erred in admitting into evidence any of the affidavit, and annexures thereto, of the First Respondence [sic] sworn 19 December 2000, save for:
(a)paragraphs
(b)the final sentence of paragraph 9; and
(c)annexure “E” of and to the said affidavit.
5. The learned judge misapprehended the meaning and effect of Part 7 Rule 9 of the District Court Rules 1973 and erred in applying the said rule in the case before him.
6. In the alternative to paragraph 5, if the said Part 7 Rule 9 was applicable to the instant case, the learned judge acted beyond jurisdiction in striking out the proceedings pursuant to the said rule.
7.     Such further or other grounds as the Court considers appropriate.”
I should also quote the Respondents’ Amended Notice of Contention which, by way of amendment, includes the earlier quoted para 5.
“The respondents contend that the decision of Judge Goldring in the court below should be affirmed on the following additional grounds:-
1. The correct form of Order that should have been made by Judge Goldring pursuant to Part 7 rule 9 of the District Court Rules, based on the same evidence, was “that the first defendant cease to be a party to the proceedings”; or alternatively, “that the defendant’s name be struck out as being improperly joined.”
2. What the judge in the court below had to decide pursuant to Part 7 rule 9, and possibly also pursuant to Part 9 rule 17, was not limited, as the judge said, to “a matter of construction of the contract”.
If there was ambiguity present in the language or terms of the written contract relevant to the issue of who were the contracting parties, then the judge could have, and should have had regard to any extrinsic evidence which would assist him in resolving any such ambiguity, and consequently resolving the issue of whether the first defendant had been improperly joined.
3. The extrinsic evidence relevant to the issues of who were the contracting parties was admitted as part of the evidence contained in the affidavit of Mr G Schidor sworn on 19 December 2000.
4. It is contended that if the decision of Judge Goldring in the court below is not found to be sustainable solely as a matter of construction of the written contract, because of ambiguity or otherwise, then the annexures to the affidavit of Mr G Schidor sworn on 19 December 2000 make it clear beyond doubt that the first defendant was not a party to the contract with either or both of the plaintiffs.
5. The decision of Goldring DCJ was sustainable on the basis that the appellant’s claim against the respondent ought to have been dismissed pursuant to Part 11A Rule 3 of the District Court Rules.”
I should refer at this point to the affidavit and annexures thereto of the First Respondent Mr Schidor as “the extrinsic evidence”. Essentially that admitted material seeks to provide extrinsic evidence as to the circumstances in which the contract was entered into. The Appellants’ contention is that apart from formal parts, all that should have been admitted was the actual agreement.
I should note at this point that the appeal has proceeded on the basis that firstly, were the orders to have been made in proper form by Goldring DCJ assuming there were otherwise the basis for making them, the form of those orders should have been “that the First Defendant cease to be a party” to the relevant proceedings (in terms of Pt 7 r9) rather than “that the Proceedings as against the First Defendant be struck out … “ (Red Book, 13Q, Judgment of Goldring DCJ). However, while correct, that may be treated as a matter of form rather than substance. I should add that, were it the case that this appeal failed so that only the Second Defendant (the company Gert Schidor Design) was liable under the Agreement (as Goldring DCJ concluded), mere striking out under Pt 9 r17 of that part of the pleading as purports to render the First Defendant also liable, without such re-pleading as were necessary to substitute solely the Second Defendant for “the Defendants” in the various clauses of the pleading, would meet this difficulty. The part severed would not leave a pleading which accurately articulated a claim solely against the corporate Second Defendant. However, it would clearly have been open to Goldring DCJ to order the minimum re-pleading necessary to remedy this, under Pt 7 r9 “for the further conduct of the action”, or by way of “terms” under Pt 7 r9 or Pt 9 r17, requiring that re-pleading.
It must also follow that if the Appellant were to succeed in its appeal, but on the basis that only Mr Schidor should be a defendant rather than both Mr Schidor and his company Gert Schidor Design Pty Limited, then the Appellant would need to re-plead by suing only the First Defendant, Gert Schidor. The Appellant puts its case in the alternative. It is that either Gert Schidor alone is liable under the relevant agreement, or both Gert Schidor and his company. But on either basis, the Appellant contends Gert Schidor should not have been removed as a party. The Respondents contend that only the Second Defendant should have been joined as a party as it alone was the party to the agreement with the relevant Plaintiff.
The Respondents’ case is that even without admission of the extrinsic evidence, the Agreement itself, plainly and unambiguously, is with Gert Schidor Design Pty Limited alone which was executed by its agent. There is no agreement also or instead with Gert Schidor himself. The extrinsic evidence admitted was the affidavit of Mr Schidor dated 19 December 2000. It annexes correspondence with the Plaintiffs all on Gert Schidor Design Pty Ltd letterhead, invoices addressed only to that Company and cheques in payment only from that Company. That extrinsic evidence is said to reinforce that conclusion; though not needed to do so. The Appellants contend that the extrinsic evidence should have been excluded. On the Respondents’ case that would make no difference to the result reached by the trial judge. The trial judge makes no reference to the extrinsic evidence in his judgment.
RESOLUTION OF THE APPEAL
The starting point is the proper construction of the rental Agreement. The Agreement appears to be a standard form emanating from the Respondent/Owner commenced (somewhat informally) by a letter with the particular terms of hiring to the Appellant. The letter itself is addressed
“ATTENTION: Mr Gert Schidor
Gert Schidor Design Pty Limited ANC 003 082 217
686 New South Head Road
Rose Bay NSW 2029”
followed by phone, mobile number and fax number.
The letter itself is addressed “Dear Gert”. It is on the first page and contains the financial and other specific terms of the agreement which follows. Then there are three further pages constituting the rest of the agreement. These are essentially a pro forma, adapted minimally by inserting the description of the bus, and concluding with provision for execution. At the top of each page starting with the letter, on the top lefthand side appears the name “Bill Hardinge” whilst on the top righthand side appears the name “Radio Masts (Aust) Pty Ltd” with its ACN number and address. Thereafter those two names appear on the top of each of the remaining pages in the same place. Mr Schidor’s affidavit states that while the first cheque under that Agreement was in favour of “Bill Hardinge” “[L]ater cheques were issued, at the direction of Mr Hardinge to Radio Masts Australia Pty Limited” (Black Book, p10, para 9). But even without that extrinsic evidence, there could be no doubt Mr Hardinge was closely associated with Radio Masts (Aust) Pty Limited. This is clear from the cl 1(b) of the Agreement itself. It defines “the owner” as meaning “Bill Hardinge of Radio Masts (Aust) Pty Limited”. His execution at the end is in similar terms.
The Agreement, described as a “rental agreement”, on page 2 contains the definition in clause 1(c) of “the renter”. It states that “the renter includes any person who signs this Agreement and any person whose agent signs this Agreement” [emphasis added]. The Agreement then contains a number of provisions which ex facie are applicable to natural persons; see cl 3(f) for example forbidding the renter from driving the vehicle under the influence of alcohol. However, I agree with the Appellants’ contention that these provisions can nonetheless properly be understood in the context of a standardised agreement with a company, which of necessity can only act through its employees and agents. Thus the obligation in clause 3(f) not to drive the vehicle under the influence of alcohol, etc. is to be understood as capable of applying either to a natural person or to a company. If the latter, it constitutes an obligation imposed on the company not to permit its employees or agents so to drive the vehicle. Similarly for other such provisions.
The execution pages reproduced below are important. They cover both “renter” and “owner” and contain the respective names of the two principals, Gert Schidor and B W Hardinge. These are followed in each case by the word “of” and then below that the name of the respective company with its ACN number and its address. Significantly, the mode of execution and the description of the executing parties both correspond in an identical fashion. Each individual (Mr Schidor and Mr Hardinge) have actually signed where “[signature]” appears below. Thus I quote:
“’renter’
Date 10/11/99
Signed [signature]
Of:
Gert Schidor Design Pty. Ltd. ACN 003 082 217
686 New South Head Road
ROSE BAY NSW 2029
‘owner’
Date 10/11/99
Signed [signature]
B. W. HARDINGE
Of:
Radio Masts (Aust) Pty. Ltd. ACN 006 113 926
48 Cairncroft Ave
LAUNCHING PLACE 3139 ”
The Appellants rely on that identity of execution along with the definition of “the owner” in clause 1(b). The latter definition is in these terms: “’the owner’ means Bill Hardinge of Radio Masts (Aust) Pty Ltd”. That is precisely how Mr Hardinge then describes himself when he signs. It is impossible therefore to avoid the conclusion that the Agreement renders Mr Hardinge liable personally by that definition, reinforced by the mode of his execution. Accepting that be so, there are parallel provisions for Mr Schidor. To these the Appellants seek to attribute parallel legal consequence, in rendering Mr Schidor personally liable if not also his company. Thus Mr Schidor:
(a) executes identically to Mr Hardinge; and
(b)is described at the point of execution in a precisely corresponding fashion to Mr Hardinge, as being “of” his company.
Mr Schidor is literally, in terms of the first part of the definition of “the renter”, “any person who signs this Agreement” and thus liable if that literal construction were correct. The trial judge rejected that literal interpretation as having no reasonable prospect of success. But he did not consider whether personal liability could be founded otherwise than on such a literal interpretation. That alternative basis emphasises the parallel modes of execution of “owner” and “renter” in a context where Mr Hardinge is clearly personally liable, as confirmed by the definition of “owner”. This suggests that in the execution language, “of” may bespeak not agency but a mere description of each individual (Mr Hardinge and Mr Schidor) by reference to his respective company. The Appellants task is only to demonstrate that, as on a summary application to strike out, such construction is not “bound to fail”.
The construction adopted by the trial judge, that “of” here denotes agency, so as to bind only the company as “renter”, is at odds with the following:
(a)the parallel language of execution for Mr Hardinge, as “owner”, who is personally liable;
(b)if on this hypothesis, “of” did bespeak agency when used in relation to Mr Schidor, that does not reconcile with “of” having a different meaning in relation to Mr Hardinge who clearly does not sign as agent;
(c)the lack of any language, beyond the ambiguous word “of”, to bespeak agency;
(d)the inclusive definition of “the renter” (contrasting with the exclusive definition of “the owner” by reference to “means”), strongly suggests a definition intended to embrace as liable under it, the individual who actually signs; but
(e)it would be drawing a long bow to treat that definition as also capturing the company as well, when there is no suggestion Mr Schidor (who signs only once) is to be taken to sign in a dual capacity, first so as to bind himself as principal, and then to bind the company, being on that hypothesis an agent in the latter case but a principal in the former.

The ambiguous word “of” in the execution when read with the relevant definitions and in the context of the parallel description when executing, is difficult to justify as a loose shorthand for more conventional words denoting agency. Thus if in the case of Gert Schidor and Gert Schidor Design Pty Limited only the latter company were to be bound, one would expect language of greater precision to denote Mr Schidor signing solely as agent for the company; language such as, at least, “on behalf of” or more precisely “as agent for”. I consider that to be a tenable construction, not capable of being dismissed as bound to fail; that is to say, that the word “of” is here used descriptively simply to identify each individual as “associated with” the relevant company. Such a construction would preclude any notion of agency.
The Agreement, which emanates from “the owner”, would indeed be asymmetric and loaded against the owner, if it had on the one hand “the owner” bound personally as a natural person, yet had “the renter”, bound only corporately. That is an unexpected result.
Concededly, the definitions differ of “the owner”, as compared to “the renter”, found in paras (b) and (c) of clause 1. Only “the renter” is an inclusive definition, contemplating the possibility of more than one person being liable as “the renter”. The Appellants contend (in the alternative to their contention that Mr Schidor is liable personally, though only Mr Schidor) that this inclusive language is consistent with Mr Schidor’s execution being intended to render liable both Mr Schidor and his company Gert Schidor Design Pty Limited; that is, as separately parties comprised in the expression “the renter”. This is so, according to the Appellants, even though Mr Schidor signs only once. They contend, in light of the mode of execution and the definition of “the renter”, that when Mr Schidor so signs, he is to be taken to intend to be both personally and corporately liable, though he signs only once.
Such an interpretation would however give two different meanings to the expression “any person” when used twice in clause 1(c). “Any person” would mean in its first mention Mr Schidor in his own right, and in the second mention his company Gert Schidor Design Pty Limited. This would be on the absurd basis that Mr Schidor intends his signature, signed but once, to connote both his intent to be liable personally and his intent to render the company liable, being taken by the one signature to sign now as its agent. I consider the latter interpretation, when all the circumstances are taken into account, so strained as likewise to be “bound to fail”. That reflects the test applicable where the court is dealing with the abuse of its process and as is reflected in Pt 9 r17 in relation to pleadings which have a tendency to cause “prejudice, embarrassment or delay.”; see Peter Kent Developments Pty Limited v ANZ Bank (SCNSW David Hunt J, 6 May 1980, unreported) at p11. Likewise if one were to apply by analogy the test applicable to a strikeout application, I consider such an argument “absolutely hopeless”: Dey v Victorian Railway Commissioners (1948) 78 CLR 62 at 90. In those circumstances, one would not need even to look to the extrinsic evidence, if the argument were simply bound to fail, based on the unambiguous terms of the Agreement. To the extent one were entitled to look at the extrinsic evidence, it does not support such an interpretation either.
But so to reject the Appellants’ argument that both Gert Schidor and his company are to be taken to be parties to the Agreement, jointly and severally liable as such, still leaves the Appellants’ alternative contention. It is that the individual Mr Gert Schidor alone is a party to the Agreement as “the renter” and alone is liable as such. That is consistent with his signing but once, with the word “of” merely descriptive of his being associated with his following named company. There is, it is true, some indication contrary to that contention though not to my mind sufficient to render this interpretation bound to fail. Thus one might not ordinarily expect to see the ACN number added for each company if the intent were not to render the companies themselves liable, as distinct from the natural person first named described by reference to that company. However, for the reasons earlier advanced, I do not consider that that consideration weighs sufficiently heavily in the balance as to lead to the rejection of the Appellants’ alternative argument that Mr Gert Schidor is alone liable. Ultimately, it is the language of the Agreement which is determinative.
When one turns to the reasoning of the trial judge, Goldring DCJ, he does not deal with the interpretive argument to which I have earlier made reference.
Goldring DCJ, however (Red Book, p10), rejects as “a totally untenable proposition” “the contention for the Plaintiffs … that this provision [clause 1(c)] is intended to, and did in fact, make Mr Schidor a party to the contract.” He continues that “the whole of the document refers to the company as a party and the definition of “renter” to which I have referred … seems to me to refer to the legal person who is a party to the contract, not to any natural person whose physical signature appears to be attached.” He refers to the “well-known commercial proposition that a corporation can only act through an agent”. He concludes that “where, as in this case, a company is named as the party to the contract it seems to me that the company, that legal person, is the party to the contract and no other”.
Taking the test to be simply whether the contrary argument is bound to fail and looking so far only at the Agreement itself, what is said by Goldring DCJ does not demonstrate that the Appellants’ argument is “totally untenable”. For, with respect, it is to beg the question to conclude that here Gert Schidor Pty Limited was “a company … named as the party to the contract” or to assert “that the whole of the document refers to the company as a party” (Red Book, 10). If the company by apt language were indeed rendered a party to the contract, I agree clause 1(c) would not render the mere execution by Gert Schidor sufficient to render him also personally liable. But the language of the Agreement does not, with respect compel the result which the trial judge finds, namely that it is Gert Schidor Design Pty Limited which is the party the Agreement seeks to bind, as distinct from Gert Schidor the individual.
Thus far I have considered only the terms of the contract without need for reference to the extrinsic evidence. It may be conceded that the Agreement itself has sufficient contrary indications, incorporating its opening letter, as to be ambiguous. That is, ambiguous in terms of whether the reference to Gert Schidor was, or was not, such as to render Gert Schidor personally liable. That allows in the extrinsic evidence to resolve that ambiguity, by identifying the parties’ objective intention. This conclusion is contrary to the conclusion of the trial judge that there were not such ambiguity about the terms of the contract as would allow reference to extrinsic material. He thus sought in that respect to distinguish the decision of Brandon J in The Swan [1968] 1 Lloyds Reports 5 in particular the passages at pp12 to 13. With respect, I consider there was ambiguity and that it should be resolved by leaving Mr Gert Schidor liable as an individual, but not his company. I quote the relevant pages from Brandon J:
“Where a contract is wholly in writing the intention depends on the true construction having regard to the nature of the contract and the surrounding circumstances of the document or documents in which the contract is contained.
…..
Prima facie a party is personally liable on a contract if he puts his unqualified signature to it. In order therefore to exonerate the agent from liability the contract must show when construed as a whole that he contracted as agent only and did not undertake any personal liability. It is not sufficient that he should have described himself in the contract as an agent.
….
Where it is stated in the contract that a person makes it “as agent for” or “on account of” or “on behalf of” or simply “for” a principal where words of that kind are added after such signature he is not personally liable.”
The fourth appeal ground relied upon by the Appellant is that the relevant affidavit of Mr Gert Schidor, apart from the formal parts and the Agreement should not have been admitted into evidence. Clearly however the trial judge from the terms of his judgment did not consider he needed to rely on the extrinsic evidence. According to the view I have formed, he was entitled to admit the further evidence as he did. Moreover, he should have taken that evidence into account to determine whether the construction contended for by the Appellant was bound to fail.
That extrinsic evidence is in the form of an affidavit by Gert Schidor dated 19 December 2000. From it and its annexures it is clear, as I have said, that the invoices annexed were rendered to Gert Schidor Design Pty Ltd rather than Gert Schidor personally and the cheques paid in pursuance of the Agreement, though signed by Gert Schidor were clearly enough cheques drawn by Gert Schidor Design Pty Limited. Though an initial cheque was paid in favour of Bill Hardinge, all subsequent cheques were issued at the direction of Mr Hardinge to his company Radio Masts (Aust) Pty Limited (para 9 of the affidavit). Finally, Mr Schidor states, in conclusionary fashion and without further elaboration, that, “at all times the discussions between myself and Mr Hardinge were conducted by me as the authorised representative of Gert Schidor Design Pty Limited” and “I have not entered into any agreement with either the First or the Second Plaintiff as an individual”. In those circumstances the Respondents contend that the extrinsic evidence is so overwhelming that, had the trial judge taken it into account as was open to him, he would have reached the same conclusion as he did without recourse to it, such that any argument to the contrary to the application for removal of Mr Gert Schidor as a party would be bound to fail.
For the reasons earlier stated, I do not so conclude. I would add that it is not uncommon for individuals to mix their business affairs with their personal affairs, paying for convenience out of a corporate cheque account. While it is true that the invoices were rendered to the company Gert Schidor Design Pty Limited that does not preclude further evidence at trial establishing that this too was a matter of convenience, though concededly that is a more powerful consideration against the Appellants. The other consideration which bears upon this is that Mr Hardinge first directed that he be paid personally and then later directed that the cheque go to his company. That would be a mode of dealing which indicated that commercial convenience lay behind the payment arrangements, but which does not unambiguously dispel the construction for which the Appellants contend of the Agreement itself.
It remains for me to deal with the Appellants’ contention that there is no basis under the relevant District Court Rules for the admission of this extrinsic evidence. I would accept rather the Respondents’ contention that such evidence is properly admissible, whether or not the Rules expressly permit such evidence, as does Pt 9 r17 in r17(2) and Pt 11A r3. Given the substance of the application was removal of a party as defendant in proceedings brought upon a contract, the question is simply whether the Agreement admits of sufficient ambiguity as to permit the introduction of that extrinsic evidence. It clearly does. This is insofar as it bears upon whether the then applicant (the First Respondent Gert Schidor) was indeed a party to the Agreement, thereby capable of being rendered liable as such.
OVERALL CONCLUSION
The Appellants should succeed upon their appeal on the basis that the trial judge should not have granted the original application by Mr Gert Schidor, the First Respondent to these proceedings, to be removed as a party. However, the Appellants fail on their alternative submission that both Mr Schidor and his company Gert Schidor Design Pty Limited, remain liable under the Agreement. Only Mr Schidor remains so liable. The trial judge did not err in admitting into evidence the affidavit of Mr Gert Schidor dated 19 December 2000 and its annexures in resolving any ambiguity in the Agreement for the purpose of determining the application before him. The trial judge had power by reference to Pt7 r9, supplemented as necessary by Pt 9 r17 and Pt 11A r3, to make orders striking out the proceedings against the First Respondent but should not have done so in the circumstances; rather he should have struck out the proceedings against the Second Respondent. The Appellants may need to replead in consequence. As to the above cost order, I have given consideration to whether costs in the court below and this Court should have instead become costs in the cause. However, the Appellants have substantially succeeded in these proceedings. In all the circumstances I would not wish to depart from the ordinary rule that costs should follow the event, given that the original application must be set aside.
ORDERS
The consequence of that conclusion is that I would make orders as follows:
(a)the orders of Goldring DCJ made on 23 February 2001 in District Court proceedings, matter number 4512 of 2000:
(i)striking out the proceedings against the First Respondent; and
(ii)ordering that the Appellants pay the First Respondent’s costs;
be set aside.
(b)the proceedings against the Second Respondent in the District Court proceedings be struck out; and
(c)the Respondents to pay the Appellants’ costs and, if qualified, have a certificate under the Suitor’s Fund Act 1951.
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LAST UPDATED: 23/08/2002

[2002] NSWCA 277

22 August 2002