Justin v Harris Scarfe & Ors No. DCCIV-02-1211

[2002] SADC 133

MARLENE JUSTIN
v
HARRIS SCARFE LTD and GEOFFREY WILLIAM FOUNTAIN
[2002] SADC 133

Judge Lunn
Civil

MINOR CIVIL ACTION REVIEW

1. Regrettably, this matter has been blighted by a number of fundamental procedural errors.  Harris Scarfe Ltd (“Harris Scarfe”) brought a minor civil action in the Adelaide Magistrates Court against Geoffrey William Fountain (“Fountain”) claiming $4,519 for goods sold and delivered.  Initially Harris Scarfe obtained judgment in default of defence, but that judgment was set aside on 19 September 2001 on an affidavit from Fountain that the goods had been purchased by Marlene Justin (“Justin”) for herself and M&G Properties Pty Ltd (“M&G”).  Fountain then filed a defence to this effect.  He also apparently issued a third party notice against both M&G and Justin, but there is no copy of it on the Magistrates Court file which has been forwarded to this Court.  Harris Scarfe did not ever join Justin or M&G as defendants to the action.  Solicitors for Justin filed a defence to the third party notice against her.

2. On 7 May 2002 a trial was conducted before a Magistrate on the claim and the third party proceedings.  At the end of the trial the Magistrate gave ex tempore reasons.  The note on the Magistrates Court file, which was signed by the Magistrate, recorded:

   “......... Judgment in favour of the Plf against Mr Fountain in the sum of $5,010; judgment against Mrs Justin in the sum of $5,010.  There is no judgment in relation to Woodman’s Hill Motor Inn.”

   The terms of the judgment are ambiguous and have been misinterpreted.  They must mean that Harris Scarfe had judgment for $5,010 against Fountain and that Fountain had judgment on the third party notice against Justin for $5,010.  There is no power for a Magistrate to enter judgment for a plaintiff against a third party.  Hence there was no judgment for Harris Scarfe against Justin.

3. On 22 August 2002 Justin purported to institute an application for review of the judgment against her under s38(6) of the Magistrates Court Act. The document contains a number of major errors. It wrongly asserts there was a joint and several judgment for $5,010 given for Harris Scarfe against Fountain and Justin. It also incorrectly states that the application to review is made by a law clerk employed by the solicitors for Justin. Fountain is not stated to be a party to the application, but he was served with it and he has taken part in it as if he was a party to it. Justin did not attend on the hearing of the review, but lodged written submissions dated 15 October 2002, which she was entitled to do under District Court Practice Direction No 7. She also purported to put additional evidence before the Court in an affidavit of her solicitor but she had no right to adduce any additional evidence. I have ignored that affidavit in conducting the review.

4. Fountain did not bring any proceedings to review the judgment against him.  However, if the review sought by Justin, which can only affect the judgment on the third party notice, is successful, Fountain would be left to meet the judgment given for Harris Scarfe against him without any right of recourse against Justin.  The primary ground of review raised by Justin would equally give Fountain a defence to the claim by Harris Scarfe against him as it gives a defence to Justin.  In order to avoid any further delays or expense the representative of Harris Scarfe agreed that if I set aside the judgment on the third party notice I should also set aside the judgment on its claim against Fountain rather than adjourning the hearing to enable Fountain to institute his own application for review and obtain an extension of time.

5. Under s38(7)(e) of the Magistrates Court Act 1991 I am to determine this review on the substantial merits of the case without regard to technicalities and legal forms. No point was taken by Harris Scarfe or Fountain about the numerous errors in the documents filed by Justin. Accordingly, I treat her application for review as being one made to challenge the judgment given against her on the third party notice.

6. The Magistrate found on the evidence before her, and it was not challenged on this review, that at the relevant time Fountain and Justin were each directors of M&G and that M&G was the proprietor of a business name “Woodman’s Hill Motor Inn”.  On 1 May 2000 Harris Scarfe received a written application to open a business credit account in the name of “Woodman’s Hill Motor Inn”.  It was signed by Fountain and Justin.  The dispute in the matter centres upon the contents and meaning of that document.  Harris Scarfe accepted the application and thereafter a credit account was conducted in the name of “Woodman’s Hill Motor Inn”.  There was no dispute that the amount claimed in the action was run up on that account for goods purchased and that it remains unpaid.  The issue was whether Fountain and Justin were personally liable to Harris Scarfe for the debt or whether it was only a debt of M&G.

7. Nothing turns on the oral evidence which was given at the trial.  The matter can be determined upon the undisputed background facts and the contents of the written documents.  I am in no less favourable position to make that determination than was the Magistrate who had heard the oral evidence.

8. The document was a proforma application in which a number of boxes were filled in in handwriting.  Against the box labelled “Name or organisation, business & ACN number” was filled in “Woodman’s Hill Motor Inn”.  No ACN number was stated.  Alongside the boxes labelled “Full name & company position of authorised officer” was filled in the names of Fountain and Justin, and each was stated to be “Director”.

9. On the balance of probabilities the proper interpretation of that document is that the application was made by M&G using its business name of “Woodman’s Hill Motor Inn” and disclosing that Fountain and Justin were the directors of M&G.  In its context in the form the designation of each of Fountain and Justin as “director” is not merely a general description of their occupations but is an answer to the request for the position of the authorised officer in the applicant.  As in law “Woodman’s Hill Motor Inn” was not a legal entity, and thus did not have directors, the legal entity of M&G was identified in part by the reference to Fountain and Justin as directors.  I cannot accept the Magistrate’s conclusion that the proper interpretation of the document is that Fountain and Justin had opened the account in their own names and had asked that the bills be sent to “Woodman’s Hill Motor Inn”.  It is clear that Fountain and Justin each executed the application as an agent for a principal.  There may be some doubt whether the principal was “Woodman’s Hill Motor Inn” or M&G but in the end result it was the same legal entity.  A person who contracts as an agent is not personally liable for the debts of the principal without some further cause of action being established, which has not occurred here: “Bowstead on Agency”, 14^th Ed, Article 111.  It is significant that Harris Scarfe must have been aware that it was dealing with some form of corporate entity, apparently with limited liability, but it did not seek personal guarantees or the like from the directors.

10. Accordingly, in law neither Fountain nor Justin are liable to Harris Scarfe for the debt.  In view of the procedural errors by Justin, and the failure of Fountain to initiate his own review, I do not intend to make any order as to the costs of the action or the review.

11. The order of the Court is:

    1.That the judgment of the Magistrates Court on 7 May 2002 against Fountain be set aside.

    2.That the judgment of the Magistrates Court on 7 May 2002 on the third party notice against Justin be set aside.

    3.That there be no order as to the costs of the action or the review.