Hussain and Anor v VIP Australia Pty Ltd and Anor No. Scgrg-99-848 Judgment No. S475

[1999] SASC 475

HUSSAIN AND HUSSAIN V VIP AUSTRALIA PTY LTD AND ORS
[1999] SASC 475

Magistrate's Appeal

1 MARTIN J.         The appellants were the plaintiffs in an action in the Magistrates Court in which they sought damages from the respondents for a breach of contract comprised of alleged faulty workmanship in paving works.  The Magistrate dismissed the claim, essentially on the basis that the appellants had not established the existence of a contract with any of the respondents.  The appellant appeals on various grounds, primarily asserting that the Magistrate erred in law in finding there was no evidence of a contract with any of the respondents. 
2 Many of the essential facts were either not in dispute or were uncontested.  The appellants are husband and wife.  In September 1993 they decided to obtain quotations for renovation work to their paved driveway.  While Mr Hussain (the first named appellant) was overseas, Mrs Hussain (the second named appellant) obtained quotations to have the paving bricks on the driveway lifted, turned over and re-layed.  At that time the appellants had been utilising the services of a person to mow their lawn for in excess of 12 months.  That person was referred to by the appellants as the "VIP man".  He wore a green uniform with "VIP" written on the pocket and brought his equipment in a green trailer upon which "VIP" was written in white letters.  Mrs Hussain said that she was not aware this person was a franchisee of an organisation titled "VIP".  Generally she paid him in cash and, on the occasions when she used a cheque, she put the initials "VIP" on both the cheque and the cheque butt.  If she needed to contact him she would usually ring a number listed under VIP.  Mrs Hussain said she was happy with the lawnmowing service which, as far as she was concerned, was provided by the organisation known as VIP and not by any particular entity.
3 Early in September after her husband had left for overseas, Mrs Hussain saw an advertisement in the local newspaper known as the Messenger paper.  A copy of the advertisement is annexed to these reasons.  For ease of reference I set out the content of the advertisement:
"BRICK PAVING
V.I.P.
HOME SERVICES
BRICK PAVING
Division
PAVING FROM
$10 PER SQ METRE
FIRST SQUARE METRE
FREE
For Your Local VIP Man
FREE CALL & CONSULTATION
008 011 811".
4 Mrs Hussain called the number in the advertisement and asked to speak to someone concerning paving.  The female person who answered obtained Mrs Hussain's number and said she would arrange for the "paving man" to ring back.  Soon after the call, a Mr Rob Dovey telephoned.  He identified himself as from VIP and said he was ringing about the paving.  An appointment was made and he attended at the appellants' home within a day or so.  When he arrived he was wearing a VIP uniform similar to that worn by the person who mowed the lawns.  He brought a green trailer decorated in the same manner as the trailer used by the person who mowed the lawns.
5 Mrs Hussain explained that she wanted the old paving bricks lifted, turned over and re-layed.  She said she was prepared to pay for the material and they discussed another quote that she had obtained.  Mr Dovey paced the area and checked the underside of a brick indicating that what was proposed should be satisfactory.  He said he would match the previous quote and charge $1 000 for labour only.  Mrs Hussain indicated she had to discuss the matter with her husband.  That evening Mrs Hussain spoke with her husband about the quotations.  He took comfort from the fact that they knew the VIP organisation which had been doing a good job with the lawns and they decided the work should be offered to VIP.
6 Mrs Hussain rang the number in the advertisement and left a message that she wanted Mr Dovey to start work.  Within a few days he arrived, again in uniform and with the same trailer.  After he had been working for a short time, he showed her about three or four strips of paving that he had turned over and re-layed.  In the words of Mrs Hussain:
"   he showed me and he said he is completely unhappy but in my eyes, a layman, it looks alright but he is unhappy and he won't put his name to a job like that.  He said it will never be perfect and he wants a job that is going to be so good that, you know, nobody will notice that it has been turned over etc.    ".
7 Mrs Hussain said that when Mr Dovey referred to not putting his name to the job, she thought he was referring to VIP.
8 According to Mrs Hussain it was suggested that she purchase new paving bricks, but she was uncertain because it was not within the budget.  Mr Dovey offered to walk away without charging her anything, but he declined to put back the bricks that had been lifted out of position.  It was left that she would speak with her husband about the matter.  When she did so, Mr Hussain said he was comforted by the fact that Mr Dovey was a person who apparently took pride in his work and they agreed to purchase the new paving bricks.
9 Mrs Hussain purchased new paving bricks at a cost of $2 166 together with sand for use in the laying of the bricks.  Subsequently additional bricks were purchased for approximately $300.  Through Mr Dovey, Mrs Hussain sold the old bricks for $600.  Mr Dovey laid the new bricks over a period of five days.  At all times he was in uniform and brought the same trailer.
10 In evidence, Mrs Hussain was asked what exactly was agreed that Mr Dovey would do with the new pavers.  Her answer was:
"That he would lay them and I would get the material, whatever material he needs to lay them, and then he will lay them and they will look superb, showroom condition sort of thing."
11 The cost of laying the bricks was to be $1 000.  During the course of the work Mrs Hussain expressed dissatisfaction with the quality of the work, but was told by Mr Dovey that she was too impatient and needed to wait and see the finished result.  On the final evening when Mr Dovey indicated he had finished, Mrs Hussain pointed out deficiencies and he indicated he would come back.  When she complained that sand had not been swept into the bricks, he showed her the broom and told her that she could sweep the sand in.  He said he would not be back for a couple of days.  When Mrs Hussain indicated she would be holding money back until he returned, Mr Dovey grew aggressive and raised his voice which frightened her 18 month-old child.  She paid him $1 000 in cash.
12 The following day when she inspected the work in daylight, Mrs Hussain became very upset with the quality of the work.  Although it was Sunday, she rang the VIP number and a person who answered said she would have someone call back.  Subsequently Mr Dovey rang and, in a threatening way, said that if she complained he would not come back to finish the job.  He said that if she left matters as they were he would return in a couple of days.
13 When Mr Dovey had not returned within two days, Mrs Hussain asked the person who mowed her lawns who she should speak with.  He advised her to speak to Bill Vis who he described as a director of the company.  When she telephoned Mr Vis he referred her to a person called Phil Crocker who he said dealt with this sort of matter.  Mrs Hussain then spoke with a person she understood to be Mr Crocker.  He undertook to send someone out to have a look at the job and to assess it.
14 Subsequently Mrs Hussain was contacted by Mr Simon Chappell who, by pre-arrangement, attended at the appellants' home.  She explained the history of her dealings with Mr Dovey and the change in the arrangement.  She said that when she showed him the defective workmanship, Mr Chappell smiled, shook his head and said "This is really shoddy workmanship".  As to what was to happen, according to Mrs Hussain:
"I enquire what was going to happen from then on and he says he was only sent out by VIP, he's going to go back and write out a report, the best person I should contact is Phil Crocker."
15 Mrs Hussain said Mr Chappell advised her to wait for a few days so that he could write his report.  She did so and attempted to contact Mr Crocker.  Eventually she managed to speak to Mr Cocker who said he had received her message, but had been interstate.  Mr Crocker said he was not really the person with whom she should speak and suggested she speak to Mr Chappell "because he is actually one of the directors".  She understood that to mean that Mr Chappell was one of the directors of VIP.  She telephoned Mr Chappell and told him what Mr Crocker had said, but Mr Chappell did not deny or admit it.  In her words Mr Chappell seemed to shrug it off and said "yes, yes, we will do something about it, I will let you know as soon as I finalise things."  Mrs Hussain did not hear from Mr Chappell for some weeks.
16 In the interim, a day or so after Mr Chappell had attended at the appellants' home, Mr Dovey returned.  He swept some sand in and left.  Mrs Hussain said he was so quick that he had left before she could get out of the house to see him.  The present whereabouts of Mr Dovey is unknown.
17 According to Mrs Hussain, a few weeks later Mr Chappell rang and asked whether she would be in the following day because "we're sending some workmen to make good the brick paving".  Mrs Hussain said she was not ready for this and told Mr Chappell that her husband would prefer that it be done when he was home.  It was then about the end of October 1993 and Mr Hussain was due back in December.  Mr Chappell responded "that's fine". Mrs Hussain did not have any further contact with anyone about the paving problem.
18 Mr Hussain confirmed that he and Mrs Hussain decided to accept the quote from Mr Dovey because VIP were involved.  He gave evidence of the various conversations with Mrs Hussain which it is unnecessary to repeat.  When she told him that Mr Chappell was planning to send someone out the following day to attend to the work, Mr Hussain was concerned that the job could not be put right if the "setting out" was wrong.  In those circumstances he sent a letter to Mr Chappell by facsimile dated 15 November 1993 in which he said:
"I have been in communication with my wife who has informed me that you have very kindly visited in order to inspect the work carried out by one of your Licencees (sic). 
I am due in Australia approximately the first week in December and I would be obliged if you could withhold any remedial action necessary until my arrival in Australia.
Needless to say I will telephone you on my arrival to arrange a mutually convenient appointment in order to discuss and agree remedial work."
19 Upon his return, Mr Hussain telephoned Mr Chappell.  They met at the appellants' home in about the middle of December 1993.  As to the content of the meeting Mr Hussain said:
"Mr Chappell turned up and I met him on the front.  He tried for about 20 minutes, he tried to say there was nothing wrong with the paving and he then said that we should have provided specifications of the job and I looked at him and said "well, you know, specifications for the job?  You should know how it is to be done, you're the experts" and after a lengthy debate, he said "okay" and he admitted to me that it wasn't a good job, he wouldn't have it on his drive and that the company was holding a sum of money from Mr Dovey and that they would get the job done.  If I was to get two estimates and we will pick the best one and have the job done properly".
20 Asked to be more specific about what Mr Chappell said concerning the company holding money from Mr Dovey, Mr Hussain said that to the best of his recollection Mr Chappell used the words "VIP was holding the money". He also said that was the only occasion on which Mr Dovey came into the conversation.
21 Mr Hussain obtained quotations and spoke with Mr Chappell about them.  Mr Chappell told him he had passed the matter on to the in-house solicitor, Mr Stephen Haarsma.  Subsequently Mr Hussain was unable to make contact with Mr Chappell.  In a letter dated 5 February 1994 Mr Hussain raised his concerns.  This letter and the previous letter of 15 November 1993 were both addressed to Mr Chappell as a director of VIP Home Services.  The letter of 5 February 1994 referred to the previous correspondence and the meeting in December 1993 and continued:
"When we met you undertook to obtain a few estimates yourself to take up defective work and re-lay paving blocks.  As you know I telephoned your office several times over the following weeks and you told me that someone would be calling around.  Late December/Early January I obtained a few estimates upon your instructions to speed things up - the figures were given to your in-house Solicitor, Mr Steven Haarfmar (sic) upon your instructions as you were on holiday at the time."
22 The letter continued with reference to the knowledge possessed by Mr Chappell and Mr Haarsma that Mr Hussain had to leave Australia on 16 January 1994. It expressed the view that he had been given the "run-around" and indicated that if he did not have a response within a short time he had left instructions with his solicitors to issue proceedings.
23 In the alternative to their primary claim based on a breach of the original contract, on the basis of the meetings and discussions with Mr Chappell, the appellants pleaded that the defendants, by their agent Mr Chappell, subsequently agreed to make good the faulty paving.  As a consequence it was pleaded that the defendants are estopped from denying that they were parties to the original contract for the paving work and, in the alternative, that "there was a new agreement and/or collateral contract whereby the defendants agree to make good the faulty paving."  It is necessary, therefore, to refer to the evidence of Mr Chappell.  He disagreed with the evidence of the appellants in a number of respects.
24 At the relevant time Mr Chappell was a director of the VIP Corporation Pty Ltd, the third defendant.  He holds a full builder's licence in South Australia, Victoria and New South Wales.  He said he attended at the home of the appellants to meet with Mrs Hussain because it was thought that he was the most appropriate person.  He was the only person with a builder's licence.  Mr Chappell said that Mrs Hussain told him her side of the story and expressed her dissatisfaction with the work.  By this time, Mr Chappell understood Mr Dovey was in Western Australia.  Mrs Hussain explained the problem experienced with the old paving bricks and that Mr Dovey had recommended the change to new paving bricks.  Mr Chappell maintained that he did not use the expression "this is really shoddy workmanship".  He said it was unlikely that he would have used that expression because he was there to resolve the issue and not to inflame it.  He agreed that, in his opinion, the work was unsatisfactory in some respects and that he expressed that view to Mrs Hussain.  He said he made a considerable effort to explain to her that because of the change in the scope of the work, the base had not been prepared properly and he believed this was the cause of the problem.  He pointed out to her that preparation of the base was the most important issue.
25 Mr Chappell agreed that at the end of the meeting Mrs Hussain may have asked him what was going to happen.  He denied that he said words to the effect that he was sent out by VIP to have a look and that he was going to return to VIP and make a report.  According to Mr Chappell:
"My recollection is that I told her that we would send some people out to do some minor rectification work or a person to lift, straighten, turn over cracked, chipped bricks, etc. and I think that's reinforced by the letter that you have given to me here."
26 Mr Chappell said he did not think he suggested she should contact Mr Crocker because he was at the premises attempting to resolve the issue.  He maintained that he said "We'll send somebody out to do some minor rectification work" and that was the way in which the meeting concluded.
27 As to the scope of the work that Mr Chappell indicated could be done, the following answer is of significance:
"I pointed out to her that the project wasn't a total re-build, and a total re-build of her driveway certainly wouldn't be done for that sort of value, but the scope of the works defined didn't involve the removal of the pavers and the recompaction and re-levelling of the base.  It only involved the removal and the replacement of the bricks.  She suggested that there were areas where some of the bricks along the boundaries of the driveway didn't appear to be properly bedded and may be loose, and I agreed with her and said "Well, those few bricks there, we would be happy to send someone out and do a couple of hours work", just to replace those loose ones, or re-bed them to her satisfaction, as a gesture of goodwill."
28 Mr Chappell said he had no memory of subsequently speaking with Mrs Hussain and asking whether she would be in the following day because he was sending two workmen to carry out the rectification.  He agreed, however, that as he was dealing with the issue and it was his intention to send someone out, it was possible that the conversation took place.  He agreed it was possible that he was told Mr Hussain requested that any remedial work be held over until he returned.
29 As to the meeting with Mr Hussain, according to Mr Chappell they had discussions in connection with the quality of the paving  similar to those that occurred with Mrs Hussain.  Reference was made to the fact that the person who performed the work had left VIP and was now residing in Perth.  Mr Hussain expressed the view that they were expecting a much better job because of the new bricks and Mr Chappell pointed out the problem of using the old base.  He explained that the base should have been dug out and replaced in total with proper levelling and compacting.  Mr Chappell agreed he may eventually have admitted to Mr Hussain that it was not a good job.  He agreed he said to Mr Hussain that he would not have accepted work of that quality on his own drive, but he stressed that he was in the process of explaining to Mr Hussain that if he, Mr Chappell, was doing the job he would have done it properly with specifications and by replacing the base.
30 Mr Chappell said he did not believe he told Mr Hussain that VIP was holding money back from Mr Dovey.  It was his recollection that Mr Dovey owed a considerable amount of money to VIP and, in those circumstances, he did not believe he would have made a statement about VIP holding back money from Mr Dovey.
31 Mr Chappell said he explained to Mr Hussain that he had made the offer to Mrs Hussain that he would send workmen out to do some work in an attempt to satisfy them as a goodwill gesture.  Mr Hussain was not interested in that proposition.  Mr Chappell was positive in his evidence that all he had agreed with Mr and Mrs Hussain was that he would send someone to carry out some remedial works in an attempt to satisfy them as a goodwill gesture.  Mr Hussain was interested in having the work totally re-done and Mr Chappell was not in the position to agree to anything like that.  No agreement was reached and Mr Hussain remained dissatisfied.  Mr Chappell denied he said to Mr Hussain that Mr Hussain should obtain two estimates for fixing the work and that VIP would pick the best one and have the job done properly.  Mr Chappell made the pertinent observation that Mr Hussain's assessment of making good the works and Mr Chappell's assessment were clearly different and that was why the matter was in court.
32 From Mr Chappell's perspective, after the unsuccessful meeting it began to turn into a "legal battle".  Mr Haarsma began dealing with the issue.  The letter of 5 February 1994 was referred to Mr Haarsma as the company solicitor to deal with the problem and that was the end of Mr Chappell's involvement. 
33 During cross-examination, Mr Chappell's attention was drawn to a letter of 28 June 1994 written by solicitors for the appellants to Mr Haarsma.  As to an allegation in the letter that Mr Chappell by words and actions accepted it was VIP's responsibility to remedy the defects, Mr Chappell responded:

"   My visit to Mr Hussain's site was one of reconciliation, "Let's try and resolve the issues".  Mr Hussain has interpreted our discussions to his benefit.  It was there in a friendly way to discuss the issue, to point out what I believed to be fact, and Mr Hussain is saying "You offered to re-lay the driveway, that is totally and absolutely untrue."
34 Proceedings were not issued until 14 August 1995.  Mr Hussain said the issuing of proceedings was delayed while they exhausted all avenues to try and resolve the matter by negotiation.  The initial claim was a minor civil action for $3 750 and was instituted against VIP Australia Pty Ltd (Paving Division).  By a defence filed 6 September 1995, the defendant asserted it was not the proper defendant and the pleadings stated "the proper defendant is Robert Dovey who was a franchisee of VIP Home Services Brick Paving Division Pty Ltd".  That plea in defence has been maintained throughout with respect to all respondents.  This was the critical issue that confronted the Magistrate.  Although the respondents also denied that the work performed was defective, without conceding the issue, counsel for the respondents on this appeal did not seriously contest that the evidence before the Magistrate established that the work was defective. 
35 In view of the defence that the contract for the work had been reached between the appellants and Mr Dovey, the appellants could only succeed if they were able to establish the existence of a contract with one or more of the respondents.  According to the Magistrate, they failed to do so.  He found that the appellants were aware that Mr Dovey was an independent contractor, "albeit one who used for promotional and administrative purposes, the VIP logo".  His Honour found:
"I cannot find evidence that the Plaintiffs entered into any contractual relations with any of the Defendants joined in this action.  The evidence is quite to the contrary."
36 The Magistrate reserved his decision.  In his short reasons, his Honour referred to the agreement between Mrs Hussain and Mr Dovey and the absence of specifications.  He found that such an omission was "alarming in the extreme given that the male Plaintiff purports to be a consultant in the area of construction and civil engineering.  There does not appear to be any basis in the evidence for such "alarm" and it was unnecessary to suggest that Mr Hussain "purports" to be a consultant.  The evidence of Mr Hussain that he was a consultant in the area of construction and civil engineering was not challenged and Mr Hussain possesses qualifications as a surveyor and construction technician.  The negotiations for the work were carried out while Mr Hussain was overseas.  Although his Honour's remarks do not appear to have assumed any significance in his decision, they may reflect an adverse view that his Honour took of Mr Hussain.
37 His Honour canvassed limited parts of the evidence briefly.  As to the assertion that Mr Dovey was a franchisee, his Honour referred to three pieces of evidence given by the appellants as supporting that assertion.  The first was the evidence of Mrs Hussain that Mr Chappell said something about Mr Dovey being a franchisee or a licensee.  In my opinion, his Honour fell into error in that regard.  The fact that Mr Chappell made that statement to Mrs Hussain is not evidence of the fact that Mr Dovey was a franchisee. 
38 Secondly, his Honour referred to the evidence of Mrs Hussain that she told her husband that Mr Chappell had said something to the effect that Mr Dovey was a franchisee or licensee.  The third piece of the evidence was the evidence of Mr Hussain that Mrs Hussain told him that Mr Chappell had said Mr Dovey was a licensee or something to that effect.  Again, in my opinion his Honour fell into error.  The evidence of the conversation between Mrs Hussain and Mr Hussain is not evidence tending to prove that Mr Dovey was a franchisee. 
39 Having referred to those passages of evidence, his Honour then discussed what he called a "curious response" from Mr Hussain that the first time that he was aware of the defence assertion that Mr Dovey was a franchisee was when the defence was filed in the legal proceedings in 1995.  He said that response was inconsistent with the evidence of Mr Hussain concerning the information conveyed to him by his wife in 1993 and with Mr Hussain's letter to Mr Chappell dated 15 November 1993 in which he referred to Mr Dovey as a licensee.  Unfortunately, his Honour has misunderstood the evidence of Mr Hussain concerning the knowledge he gained from the defence filed in September 1995.  Mr Hussain said it was his reading of the defence that gave him his first knowledge that the respondents were asserting that the proper defendant was Mr Dovey.  He did not say that his first knowledge that Mr Dovey was a franchisee came from the defence filed in September 1995.  Shortly after the answer in which he referred to the defence of September 1995, Mr Hussain confirmed his earlier evidence that he had previously been told something about Mr Dovey being a licensee. 
40 Immediately following the errors to which I have referred, his Honour made the following finding:
"I find that throughout, the Plaintiffs were appraised of the fact that Mr Dovey was an independent contractor, albeit one who used for promotional and administrative purposes, the VIP logo."
41 In my opinion, his Honour's finding is contrary to the evidence.  It appears to have arisen because of his misinterpretation of the evidence.  There is no evidence to suggest that either of the appellants were told at the time of entry into the original contract that Mr Dovey was an "independent contractor" whether it be in the form of a franchisee or a licensee.  The only evidence that could have been used in an attempt to support that assertion was the evidence of the previous business relationship with the person who mowed the lawns.
42 His Honour then made the critical finding that he was unable to find evidence that the appellants entered into any contractual relations with any of the defendants.  He said the evidence was quite to the contrary.  He then said that the only evidence relied upon by the appellants was the repetitious assertion by Mrs Hussain that it was just with VIP.  Unfortunately, his Honour's reasons do not identify whether he considered the substantial amount of evidence directed to this topic or the manner in which he used that evidence. He did not address the combination of circumstances established by the evidence that had to be carefully weighed and considered.  The reasons do not explain whether his Honour arrived at a view as to the credit of the witnesses.
43 The duty of a Magistrate to give adequate reasons for a decision in a contested matter was recently examined by Duggan J in Harwood v Police (1998) 71 SASR 300 at 304-306. The adequacy of the reasons will obviously depend upon the circumstances of each case, but it is essential that the reasons disclose the reasoning upon which the decision is based. In this matter, if his Honour considered the evidence to which I have referred, his reasons fail to disclose what use he made of the evidence and his processes of reasoning in arriving at his decision. If he failed to consider the evidence, in my opinion he was in error in not doing so.
44 In my opinion the reasons were inadequate.  The judgment would usually be set aside, but notwithstanding the errors and inadequacy of reasons to which I have referred, the respondents opposed that course.  They submitted that even on the most favourable view of the evidence from the appellants' point of view, the appellants failed to produce evidence that was capable of establishing any aspect of their case on the balance of probabilities.  In those circumstances, this Court is required to consider the evidence afresh, untroubled by the usual constraints associated with interfering with the findings of a trial court based on considerations of credit, and mindful of the need to assess the evidence at its highest from the point of view of the appellants.  For this purpose, the Court must assume that issues of credit are resolved in favour of the appellants.
45 As to the relationship between Mr Dovey and the respondents, the appellants set out to establish the identity of the entities behind the VIP Home Services public face through a number of formal Corporations records and the evidence of Mr Chappell.  In summary, the formal records establish the following:
"1.  First respondent:
     VIP Management Pty Ltd commenced on 29 June 1998 and changed its name to VIP Australia Pty Ltd on 2 February 1993.  The principal activity is listed as management services.  At the relevant time the directors were Willem Wouter Vis, who was also Principal Executive Officer, Rosalie Anne Vis and Stephen John Haarsma.

1. Second respondent:
        VIP Home Services (Western Australia) Pty Ltd commenced on 29 June 1998.  On 30 July 1993 it changed its name to VIP Home Services Brick Paving Division Pty Ltd.  On 23 March 1995 a further change of name occurred to VIP Home Services (Western Australia) Lawnmowing Division Pty Ltd.  In the extract dated 28 June 1995, the principal activity is listed as franchisor of lawnmowing rounds.  At the relevant time the directors were Willem and Rosalie Vis and Mr Haarsma.  Mr Vis ceased on 15 November 1993.  VIP Australia Pty Ltd is described as the ultimate holding company.

2. Third respondent:
        VIP Corporation Pty Ltd commenced on 10 September 1993.  On 20 April 1995 it changed its name to VIP Home Services Landscaping Division Pty Ltd and a further change of name occurred on 29 January 1997 to VIP Home Services Mobile Video Division Pty Ltd.  Directors at the relevant time were Willem and Rosalie Vis, Jay Goodger, Stephen Haarsma and Simon Chappell, all of whom were appointed on 13 October 1993.  Mr Vis ceased on 15 November 1993.  Shirley Haarsma was appointed on 10 September 1993 and ceased on 13 October 1993.  In the extract dated 22 December 1998, VIP Australia Pty Ltd is listed as a shareholder."
   46 Not surprisingly, the records disclose a connection between the entities by reason of common directors and shareholdings.  The first respondent, VIP Australia Pty Ltd, is described as the ultimate holding company of the second respondent and the annual return of the second respondent for the 1997 year recorded the first respondent as the sole shareholder.  The first respondent is also a shareholder in the third respondent.  The expected connection between the entities does not, however, assist in establishing the relationship between any of those entities and Mr Dovey.  In their defence, all respondents asserted that Mr Dovey was the franchisee of the second respondent which was, at the relevant time, operating under the name VIP Home Services Brick Paving Division Pty Ltd.  The name had changed to the brick paving entity on 30 July 1993.
   47 The parties did not lead any evidence from a person who could speak on behalf of the second respondent as to the relationship between the second respondent and Mr Dovey.  No documents were tendered as evidence of that relationship.  Mr Chappell, who was a director and shareholder of the third respondent, gave evidence of his belief as to the relationship between the entities and Mr Dovey's relationship with the entities.  He was asked whether the third respondent, VIP Corporation Pty Ltd as it was originally known, was the primary or main company that ran what might be called the VIP business.  He gave the following answer:
   "Well, it's - I mean - I don't fully understand this, I must be honest, but I'll try and explain it as I recall it.  There was a chain of companies, in that Ros Vis, and her husband, who was the founding member, but I believe no longer a director at that time, owned VIP Australia.  VIP Corporation was a subsidiary group to that company, and VIP, the home services group, were managed by a master franchisee company that was called VIP Home Services, which was fitted in, somehow, between VIP Corp, and VIP Australia.  It was quite a complex structure, but my only involvement was in VIP Corporation."
   48 He was also asked whether he believed that VIP Australia was the primary or lead company in the group with VIP Corporation being a subsidiary and he replied:
   "Not necessarily.  My understanding is that VIP Australia held totally the lawnmowing operations of VIP, apart from the remaining home services, or the newer services, so VIP Australia was set apart in that it actually retained the original franchise system, and the lawnmowing franchisees that were currently operating in Australia.  VIP Corporation and VIP Home Services, in fact, controlled the other franchise services independently, if you like, with some shareholding from VIP Australia.  I stress I am not an expert on this.  This was all only my recollection."
   49 Mr Chappell said he was not sure on whether VIP Home Services was the same as VIP Home Services Pty Ltd.  He said there was a master franchise operation in every State and all traded under the name VIP Home Services Pty Ltd.  He added, that he was not even sure that it was Pty Ltd.  He did not know whether the master franchisees in each State had the right to operate under licence and use the name VIP Home Services or whether they actually had the rights to that name in each State.  He repeated that it was certainly not his area of expertise.  Mr Chappell explained that his only involvement in the VIP structure was through the third respondent which was involved in the home services side of the business.
   50 As to the role of VIP Australia Pty Ltd, the first respondent, Mr Chappell said that there was a common director throughout the group and the first respondent controlled the lawnmowing which was the initial franchise system.  As to the intricacies of the structure, however, he suggested it would be better to speak with the company solicitor, Mr Haarsma.
   51 Mr Chappell described the VIP signage as a logo.  He said it was his understanding that, at the time of giving evidence, the first respondent, VIP Australia Pty Ltd, effectively owned the right to that logo.  He acceded to the proposition that a person would only be allowed to operate a business using that logo by arrangement or with the permission of the head of the VIP organisation which he believed to be VIP Australia Pty Ltd.  It was suggested to him that Mr Dovey was permitted, therefore, to hold himself out as part of the VIP organisation as a whole.  Mr Chappell responded, "Yes, as part of the franchise system, yes."  According to documents tendered by the respondents, on 13 and 21 December 1993 the third respondent applied for registration of those logos as trademarks.  The application identified the third respondent as the proprietor of the trademarks and the applications were in respect of:
   "Domestic and commercial property maintenance services included in this class, including domestic cleaning, carpet cleaning, car washing, pest control, ironing services, brick paving services, electrical services, commercial cleaning services, window cleaning, plumbing, pool cleaning services, handyman services, mobile mechanic services, rubbish removal services, tree care services, garden maintenance services including gardening, landscape gardening, rubbish clearing and all other services in this class."
   52 No evidence was led as to who owned the trademark prior to 13 December, 1993.  The application dated 13 December 1993 stated that the third respondent owned it. A Deed of Assignment dated 23 July 1996 was tendered by the respondents as evidence that the third respondent assigned and transferred ownership to VIP International Pty Ltd together with the "goodwill of the business relations to the services specified with respect to the Trade Marks   ".  No records concerning VIP International Pty Ltd were tendered and Mr Chappell did not give any evidence about that entity.
   53 In the context of the fact that the third respondent owned the trademarks from December 1993, it should not be overlooked that the original contract was entered into early in September 1993 and probably before the third respondent existed.  The company extracts identify 10 September 1993 as the commencement of the third respondent. 
   54 As to the relationship between Mr Dovey and the respondents, Mr Chappell said he thought Mr Dovey was introduced by Mr Vis and passed on to Mr Crocker.  He could only assume that Mr Crocker may have had a major involvement with Mr Dovey in terms of what he did during the short time that Mr Dovey was associated with VIP.  As far as Mr Chappell was concerned, Mr Dovey was a franchisee, but he did not give evidence of the entity that was the franchisor.  He said he had no idea whether a franchise document existed between any VIP company and Mr Dovey.  He was aware that franchise contracts and agreements existed between some franchisees and VIP.  Counsel for the appellants called for production of any written franchise document between Mr Dovey and VIP, but no document was produced.  Mr Chappell said he knew Mr Dovey "because he was associated with VIP and he was the only brick paver in the franchise system   ".  He said that Mr Dovey had only recently come to the organisation at the time he carried out the work for the appellants.  As to Mr Dovey's role, he said:
   "He was the only brick paving person and he was surviving out of the funds that he made from brick paving so, I don't know you define an employee, but that was the situation as I am aware."
   55 In the context of Mr Chappell's evidence that Mr Dovey had recently joined the VIP organisation and was the only brick paver in the system, I note that the second respondent began as VIP Home Services (Western Australia) Pty Ltd, but changed its name to VIP Home Services Brick Paving Division Pty Ltd on 30 July 1993.  The change of name a few months before the first contact was made between Mrs Hussain and Mr Dovey tends to fit with the evidence of Mr Chappell concerning the length of time that Mr Dovey had been with the organisation at the time he carried out the work in question and concerning his role within the organisation. 
   56 The evidence of Mr Chappell as to his understanding and belief with respect to the VIP group of companies and Mr Dovey's relationship with that group was elicited during cross-examination without objection. There does not appear to have been any discussion about the use to which the Magistrate should put the evidence, but the parties sought to rely upon his evidence on those topics. In Hughes v National Trustees, Executors and Agency Co. of Australasia Ltd (1979) 143 CLR 134, the High Court considered the use to be made of evidence concerning statements by a testatrix that were admissible to provide some evidence of the reason why the testatrix had disposed of her estate in a particular way. The court held that the evidence was not admissible, however, to prove the truth of what the testatrix said or believed was true. Gibbs J said (p 153):
   "There are no doubt some cases in which inadmissible evidence, having been admitted, may be treated as evidence for all purposes;  for example, where one party by his conduct at the trial has led the other to believe that evidence, although hearsay, may be treated as evidence of the facts stated, and the other in reliance on that belief has refrained from adducing proper evidence, the former party is precluded from objecting to the use of the evidence to prove the facts stated.  However, in general it is the duty of a judge to reach his decision on evidence that is legally admissible, and to put evidence only to those uses which the law allows.  When a statement is admitted, not as evidence of its truth but simply as original evidence, the mere fact of its admission cannot enable it to be given an additional probative value which the law denies it."
   57 Mr Chappell was called by the respondents.  It cannot be said, therefore, that the appellants refrained from adducing other evidence because the respondents led the appellants to believe that the evidence of Mr Chappell, although hearsay, could be treated as evidence of the facts stated.  However, the parties conducted the trial on the basis that his evidence as to his beliefs or understanding concerning the VIP group and Mr Dovey's relationship with the group was evidence of those facts that he asserted.  No point was taken in this Court that the use of his evidence should have been limited by the Magistrate or should be limited by this Court.  In those circumstances, in my opinion this Court should proceed on the same basis as the trial was conducted.
   58 The weight to be given to Mr Chappell's evidence as evidence of the facts was a matter to be assessed by the Magistrate.  As to the organisation, Mr Chappell qualified his answers heavily when expressing his belief concerning the various entities involved within the organisation and their interrelationship.  He was a director of the third respondent and did not suggest he was authorised to speak on behalf of the other respondents.  There was no exploration as to the source of his knowledge concerning Mr Dovey's relationship with the VIP organisation.  As to ownership of the VIP logo,  the basis of his belief was not tested.  In addition, Mr Chappell was not asked about ownership in September 1993.  His evidence concerned ownership at the time that he was giving evidence in 1998.  Similarly, his evidence that a person is only permitted to operate with the logo with the permission of the head organisation of VIP, which he believed to be VIP Australia, related to the time of giving evidence.  That evidence is of no assistance in determining who owned the trademark in September 1993. 
   59 Notwithstanding those limitations, for the reasons previously discussed, in determining the fate of this appeal I have proceeded on the basis that Mr Chappell's evidence concerning the VIP group and Mr Dovey's relationship with that group is worthy of some weight.  On that basis the preponderance of the evidence favoured the view that Mr Dovey was a franchisee of the second respondent.  That was the fact pleaded in the defence.  The effect of Mr Chappell's evidence was to favour the view that Mr Dovey was a franchisee.  According to Mr Chappell Mr Dovey had recently joined the organisation and was the only brick paver in the franchise system.  The second respondent changed its name to VIP Home Services Brick Paving Division Pty Ltd on 30 July 1993.  Mrs Hussain rang a general free call number seeking a person to carry out brick paving and the only brick paver within the organisation was the person who ultimately responded.  He wore the VIP uniform and was in possession of a trailer bearing the VIP logo.  Subsequent negotiations were conducted with persons from the VIP organisation. 
   60 In my opinion, the evidence could not have led to a conclusion that Mr Dovey was probably an employee of an entity within the VIP organisation.  The cumulative effect of the evidence tended to establish that Mr Dovey was more likely to be a franchisee than an employee.  In addition, the evidence could have supported a conclusion that Mr Dovey was probably a franchisee of the second respondent.
   61 Mrs Hussain said that she was unaware that Mr Dovey was a franchisee.  As far as she was concerned he came from the organisation known as VIP.  She had made contact through the general telephone number in the advertisement for the brick paving division of VIP.  Nothing was said to her by Mr Dovey to indicate that he was anything other than an employee of an organisation known as VIP.  In those circumstances, it was the appellant's case that the first defendant was in control of the organisation and permitted Mr Dovey to be held out as its agent for the purposes of entering into the contract.  The court was asked to infer that the advertisement could not have been placed without the permission of the first respondent and Mr Dovey would not have been permitted to use the uniform and the logo without the permission of the first respondent.
   62 In my opinion, the evidence was not capable of establishing, on balance, the link between the conduct of Mr Dovey and the first respondent upon which the appellants seek to rely.  The facts that there are common directors and that the first respondent is the sole shareholder in the second respondent and a shareholder in the third respondent, do not establish that the first respondent was involved in placing the advertisement or permitting Mr Dovey to operate under the auspices of the VIP organisation.  While Mr Chappell may have believed that the first respondent owned the rights to the logo in December 1998, the documents tend to establish that the third respondent was the proprietor before and after 13 December 1993.  There is no evidence as to any ownership of the logo prior to that date early in September 1993 when the contract was entered into.  In these circumstances, and taking the evidence at its best from the point of view of the appellants, the case against the first respondent failed.
   63 As to the second respondent, the appellants relied upon the content of the advertisement and the fact that it was Mr Dovey, the paving franchisee, who responded to Mrs Hussain's telephone call to the advertised number.  They submitted that the combination of circumstances established that the second respondent held Mr Dovey out as its agent. 
   64 The appellants face difficulties in attempting to connect the second respondent with the advertisement.  They did not seek to lead evidence from the Messenger as to who placed or paid for the advertisement. There was no evidence from the records of any respondent that any respondent paid for the advertisement.  Mrs Hussain was not sure which advertisement she saw, but thought it was probably the advertisement of 1 September 1993 which referred to brick paving and VIP Home Services Brick Paving Division.  A page from the Messenger of 25 August 1993 contains two advertisements, both apparently under the auspices of VIP Home Services.  One is for brick paving in identical terms to the advertisement of 1 September 1993, while the other is a larger advertisement under the heading of VIP Home Services, Lawn Mowing Division, which refers to other home services such as gardening and rubbish removals.  The same free call number is provided together with a number of suburban localities and individual telephone numbers for those localities.  Unlike the advertisement of 1 September 1993 which refers to "for your local VIP man", the larger advertisement states:
   "For same
   day response
   phone your local
   owner/operator."
   65 The appellants relied upon the content of the advertisement as establishing that it was likely that the advertisement was placed with the Messenger by the second respondent.  The use of the advertisement in that manner involves an assumption that it would not have appeared in the Messenger unless at the instigation of or with the permission of the second respondent.  The advertisement was admitted by consent.  There does not appear to have been any discussion as to the use to which the advertisement could be put.  All advertisements were headed "VIP Home Services".  Each referred to a different division.  In the absence of evidence from the Messenger concerning the placement of the advertisements, I have reached the view that the evidence is incapable of establishing that the second respondent placed the advertisement.
   66 Even if the evidence established that the second respondent placed the advertisements, the critical question is whether evidence was capable of supporting an inference on the balance of probabilities that the second respondent held Mr Dovey out as its agent for the purposes of entering into the contract for the paving work.  In all the circumstances to which I have referred, in my opinion the evidence was not capable of establishing that fact.  There is no evidence that the second respondent represented or permitted it to be represented that Mr Dovey had authority to act on behalf of the second respondent.  Similarly, there is no evidence that the second respondent acted in a manner to make it appear that it had conferred upon Mr Dovey authority to enter into the contract for the paving work.  The evidence was insufficient to establish which entity authorised Mr Dovey to wear the uniform and to use a trailer decorated in the manner described.  The preponderance of the evidence favoured the view that the VIP organisation was not putting forward persons such as Mr Dovey as agents, but was providing access to various independent persons commonly known as franchisees who could provide the services sought by the customer.  The appellants failed to make out their claim against the second respondent.
   67 The third respondent came into existence on 13 September 1993.  Counsel for the appellants conceded that the contract was probably entered into before that date.  There is no evidence from which it could be inferred that the respondent was a party to the original contract or in some way became party to it.
   68 In my opinion, therefore, the appellants failed to establish the existence of a contract with any respondent.  As mentioned earlier in these reasons, in the alternative the appellants sought to make out a case that the respondents were estopped from denying that they were parties to the agreement.  In addition, in the further alternative it was pleaded that there was a new agreement or a collateral contract whereby the respondents agreed to make good the faulty paving.  Unfortunately, having dismissed the claim based on the original contract, the Magistrate did not deal with these alternatives.  It is necessary, therefore, to consider the state of the evidence bearing upon each alternative.
   69 The pleas were in the following terms:
   "1.4 Further or in the alternative the defendants by their agent Simon Chappell subsequently agreed to make good the faulty paving and thereby; 
   1.4.1 The defendants are estopped from denying that they and each of them were parties to the agreement to carry out the paving work as pleaded in the Further Further Amended Particulars of Claim."
   70 In my view there is no evidence from which it could be inferred that Mr Chappell was the agent of any entity other than the third respondent.  The only evidence was that of Mr Chappell who made it clear that his only involvement in the matter was on behalf of the entity of which he was a director, namely, the third respondent.  He gave the following evidence:
   "Q.  Isn't it, at the very least, fair to say that when you went out to see this work, you went out as a representative, an agent, of VIP, the VIP group of companies, and any of them.
   A.   Well, my only involvement in the VIP structure was through VIP Corporation, and VIP Corporation certainly was involved in the home services side of the business being in a related way through the master franchisee in South Australia.  I went out there as a representative in my position as VIP - a director of VIP Corporation to - on a problem solving mission, but I certainly - I mean, I wasn't formally appointed by any other company.  That was my position."
   71 In my opinion, therefore, is no basis in the evidence that could sustain a finding that Mr Chappell attended at the appellants' premises on behalf of the first and second respondents or that those entities held him out as representing them.  Even if all the elements are made out, the claims could not succeed against the first and second respondents.
   72 The next difficulty facing the appellants relates to the conduct which it is said gives rise to the new agreement and to estoppel.  In the absence of specific findings by the Magistrate, it is appropriate for the purposes of considering the appellants' appeal to proceed on the assumption that the appellants' version is accepted.  At its highest, the evidence of the appellants was that Mr Chappell promised to get the job done properly.  It was merely a promise to rectify the faulty workmanship of Mr Dovey.  The making of such a promise does not establish the existence of a new agreement or of the estoppel pleaded by the appellants.  Counsel for the appellants was unable to identify any consideration or how the appellants acted to their detriment in reliance upon the conduct that is said to have given rise to the estoppel.
   73 For the reasons discussed the appellants' claim could not have succeeded before the Magistrate.  In those circumstances the appeal is dismissed.

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