Mader v Lim
[2016] WADC 110
•29 JULY 2016
MADER -v- LIM [2016] WADC 110
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WADC 110 | |
| Case No: | APP:122/2014 | 11 MARCH 2016 | |
| Coram: | LEVY DCJ | 29/07/16 | |
| PERTH | |||
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| PDF Version |
| Parties: | BRADLEY MADER LAUREN AMANDA BECKWITH JOYCE BEE HONG LIM |
Catchwords: | Appeal against decision of magistrate Breach of contract Agency Partnership Bankruptcy Act 1966 s 58 |
Legislation: | Bankruptcy Act 1966 (Cth) s 58(3) Magistrates Court (Civil Proceedings) Act 2004 s 40 Partnership Act 1895 s7(1) and s 7(2) |
Case References: | Fazio v Fazio [2012] WASCA 72 Petersen v Moloney (1951) 84 CLR 91 United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- First Appellant
LAUREN AMANDA BECKWITH
Second Appellant
AND
JOYCE BEE HONG LIM
Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram : MAGISTRATE GLUESTEIN
File No : JOO/GCLM 367 of 2012, JOO/GCLM 2420 of 2013
Catchwords:
Appeal against decision of magistrate - Breach of contract - Agency - Partnership - Bankruptcy Act 1966 s 58
Legislation:
Bankruptcy Act 1966 (Cth) s 58(3)
Magistrates Court (Civil Proceedings) Act 2004 s 40
Partnership Act 1895 s7(1) and s 7(2)
Result:
Appeal dismissed
Representation:
Counsel:
First Appellant : Ms N McVay
Second Appellant : Ms N McVay
Respondent : In person
Solicitors:
First Appellant : McVay Bates & Associates
Second Appellant : McVay Bates & Associates
Respondent : Not applicable
Case(s) referred to in judgment(s):
Fazio v Fazio [2012] WASCA 72
Petersen v Moloney (1951) 84 CLR 91
United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1
- LEVY DCJ:
Introduction
1 This is an appeal from a decision of Magistrate Gluestein sitting in the Magistrates Court of Western Australia at Joondalup in relation to general procedure claim 2420 of 2013.
2 Mr Bradley Mader (the first appellant) and Ms Lauren Amanda Beckwith (second appellant) appealed against the decision of Magistrate Gluestein dismissing the appellants' claim against Ms Joyce Bee Hong Lim (the respondent) being claim 2420 of 2013. The plaintiffs' claim against the respondent was for $75,000 plus costs. The claim centred around the sum of $58,000 which had been provided by the appellants to Ms Deborah O'Halloran. The appellants contended that they had lent the money to Ms O'Halloran who then, in partnership or by way of a joint venture with the respondent, had used the money to pay the deposit required to purchase a property. Ms O'Halloran claimed the money was a gift. The respondent denied that she was liable in any way.
3 It should be noted that at the time of dismissing the claim against the respondent, the learned magistrate upheld a separate claim brought by the appellants against Ms O'Halloran. That judgment, in the amount of $75,000 plus costs, was brought under general claim number 367 of 2012. The two claims were heard together.
4 In relation to the claim against the respondent, it was necessary for the plaintiffs to prove that a partnership or joint venture existed between the respondent and Ms O'Halloran when the $58,000 was paid by way of a deposit on a property.
5 The appellants' appeal on four separate grounds summarised as follows:
1. The learned magistrate erred in law in finding that the relationship between the respondent and Ms O'Halloran did not constitute a partnership and/or joint venture and as a result thereof found that Ms O'Halloran was not an agent for the respondent.
2. In determining the issue of partnership/joint venture the learned magistrate failed to take into consideration that Ms O'Halloran was an agent for an undisclosed principal (alleged to be the respondent).
3. The learned magistrate erred in law in finding that the transaction between Ms O'Halloran and the respondent was a domestic transaction between a de facto couple whereas he should have found that they were carrying on a business with a view to profit.
4. The learned magistrate's decision was against the weight of evidence.
Background
6 The first-named appellant was a self-employer glazier and was in a de facto relationship with the second-named appellant. Together they ran a business called Eagle Glass and Glazing.
7 In about 2000 the appellants were introduced to the respondent. The respondent ultimately became their bookkeeper. The respondent was involved in a business called Hidden Potential Consultancy through which she invoiced the appellants.
8 In or about 2002 the respondent introduced the appellants to her de facto partner Ms O'Halloran. Ms O'Halloran was a financial planner and mortgage broker. She traded as Hidden Potential Consultancy. In the period between 2002 and 2008 Ms O'Halloran assisted the appellants in various financial matters. This included obtaining finance for:
(a) a motor vehicle for the appellants' business;
(b) business premises;
(c) refinancing of a loan to purchase a further vehicle for the business;
(d) the purchase of a property in Narrogin;
(e) the purchase of an investment property in Melbourne; and
(f) the purchase of an investment property in Brisbane.
9 Ms O'Halloran also gave the appellants further advice and assisted them in facilitating a loan to other clients of Ms O'Halloran's.
10 At the time that the appellants purchased the Brisbane investment property they understood that Ms O'Halloran was also looking at investing in the same complex. The appellants understood that Ms O'Halloran was having difficulty in raising the finance for the deposit on the Brisbane property.
11 On or about 7 July 2008 the appellants transferred the sum of $58,000 into a Citibank account associated with Ms O'Halloran. The money was made available to Ms O'Halloran to enable her to pay a deposit in the sum of $58,325 on a unit at the Brisbane property being Unit 1406/45 Duncan Street, Westend (the Brisbane property). The unit was part of the same property in which the appellants had invested. It was not in dispute between the parties that:
• on or about 30 May 2008 Ms O'Halloran, together with the respondent, had entered into a contract to purchase the Brisbane property; and
• the money provided by the appellants and transferred into Ms O'Halloran's account was provided for the purpose of enabling Ms O'Halloran to pay the required deposit on the Brisbane property.
History of the proceedings generally
13 On 13 February 2012 the appellant commenced claim 367 of 2012 in the Magistrates Court at Joondalup against Ms O'Halloran. The claim was for the sum of $75,000 (being made up of the sum of $58,000 and interest) against Ms O'Halloran on the basis that she had failed to repay the loan made to her by the appellants.
14 The appellants subsequently became aware that the respondent was a party to the transaction to purchase the Brisbane property when they received documents obtained by way of a witness summons issued in these proceedings.
15 On 2 October 2013 the appellants commenced claim 2420 of 2013 in the Magistrates Court at Joondalup against the respondent. The claim was in the sum of $75,000 calculated on the same basis as that against Ms O'Halloran. The proceedings against the respondent were brought on the basis that Ms O'Halloran had acted as agent for the respondent as an undisclosed principle. The two claims were ultimately consolidated and heard together before the learned magistrate.
16 The matter was set down for a trial in the Magistrates Court at Joondalup commencing on 26 May 2014.
17 On 16 May 2014 Ms O'Halloran became bankrupt upon her own debtor's petition. The appellants were aware of this fact at the time of the trial before the learned magistrate.
18 Although the learned magistrate raised with the parties whether the fact that Ms O'Halloran was a bankrupt comprised an impediment to making any orders in the proceeding, no application was then made for leave pursuant to s 58(3) of the Bankruptcy Act 1966 (Cth.)to take fresh steps in the proceedings. The trial before the learned magistrate took place without such leave having been granted. Ultimately the learned magistrate gave judgment in the matter on 28 November 2014. His reasons for decision were published that day. His Honour the learned magistrate's orders were as follows:
1. Judgment for the appellants in relation to the claim (claim 367 of 2012) against Ms O'Halloran in the sum of $75,000.
2. The claim against the respondent was dismissed.
3. Ms O'Halloran was ordered to pay the appellant's costs in respect to claim 367 of 2012 to be taxed unless otherwise agreed.
4. There was no order as to costs in relation to the claim against the respondent.
19 Following the orders made by Magistrate Gluestein on 28 November 2014, the appellants filed a notice of appeal in relation to the learned magistrate's order dismissing the claim against the respondent.
20 The appeal came on for hearing before his Honour Judge Keen in the District Court of Western Australia on 22 May 2015. At that time Keen DCJ raised the issue that the appeal before him was with respect to a provable debt in respect of Ms O'Halloran's bankrupt estate and that consequently, s 58(3) of the Bankruptcy Act had application. Keen DCJ raised the issue as to whether or not leave should have been obtained prior to taking any fresh step in the proceeding, being the proceedings before the learned magistrate, since Ms O'Halloran had been declared bankrupt on or about 16 May 2014. The appeal before Keen DCJ was therefore adjourned to enable the appellants to apply for leave in the Federal Court of Australia pursuant to s 58(3) of the Bankruptcy Act (Cth).
21 On 15 July 2015 the appellants appeared before Justice Siopis in the Federal Court of Australia seeking leave nunc pro tunc pursuant to s 58(3) of the Bankruptcy Act to (a) take fresh steps after 16 May 2014 in relation to the appellants' claim against the first respondent which was consolidated with the appellants' claim against the second respondent in the Magistrates Court of Western Australia and (b) to commence the appeal being appeal 122 of 2014 in the District Court of Western Australia and thereafter to take such fresh steps in that appeal proceeding as may be necessary. On 21 December 2015 Justice Siopis granted the appellants leave pursuant to s 58(3) of the Bankruptcy Act. The order for leave was granted retrospectively to apply to the proceedings in the Magistrates Court.
The findings of the learned magistrate
22 It should also be noted that the learned magistrate had prior to the hearing, made orders requiring the parties to file statements of evidence of any witness whom it was proposed would give evidence at the trial. Neither Ms O'Halloran nor the respondent filed a witness statement. Neither Ms O'Halloran nor the respondent gave evidence at the trial.
23 Both the appellants filed statements of their intended evidence and subsequently gave sworn evidence in the hearing before the learned magistrate. The learned magistrate consequently made findings that:
1. Ms O'Halloran had borrowed the sum of $58,000 from the appellants and had verbally agreed to repay the loan at an interest rate of 10% per annum.
2. The sum of $58,000 provided by the appellants to Ms O'Halloran for the purpose of purchasing the Brisbane property was paid as a deposit on or about 7 July 2008.
3. Ms O'Halloran and the respondent subsequently defaulted on the contract and therefore forfeited their deposit.
4. The appellants subsequently made a demand upon Ms O'Halloran for repayment of the loan and interest.
5. Ms O'Halloran failed to repay the loan. The total amount of the loan together with interest exceeded the sum of $75,000.
6. By proceeding in the Magistrates Court, the appellants limited their claim to the sum of $75,000.
7. There was no evidence capable of proving that Ms O’Halloran and the respondent had used the money pursuant to either a partnership or joint venture agreement.
The hearing of the appeal on 11 March 2016
24 The appellant's appeal against the learned magistrate's decision was brought pursuant to s 40 of the Magistrates Court (Civil Proceedings) Act 2004. On an appeal to the District Court, pursuant to s 40(4) of the Magistrates Court (Civil Proceedings) Act the court must determine the appeal on the material and evidence that was before the Magistrates Court unless the court gives leave to a party to admit other evidence.
25 No application was made for leave to introduce any further evidence on the appeal. Consequently the appeal lies to be determined on the material and evidence that were before the Magistrates Court. The documentary evidence comprised:
• statement of Bradley Mader dated 30 April 2014 (exhibit 1);
• various documents attached to Mr Mader's statement (exhibits 2 - 21) including exhibit 17 which was an email from Bradley Mader to Deborah O'Halloran dated 27 April 2011 demanding the repayment of the sum of $58,000 without delay;
• statement of Lauren Amanda Beckwith dated 30 April 2014 (exhibit 22); a letter from Kailis Kenny lawyers dated 26 August 2009 (exhibit 23).
27 The learned magistrate, on the available evidence found that the sum of $58,000 was a loan not a gift. The learned magistrate found that the terms of the loan included that it was to attract interest at the rate of 10% per annum and that the loan was to be repaid to the appellants as an unspecified time. The learned magistrate found that the principal together with interest which exceeded $20,000, took the total claim to both the jurisdictional limit for the Magistrates Court which was $75,000.
28 In order to succeed in their claim against the respondent, the appellants needed to prove, on the balance of probabilities, that the nature of the relationship between the respondent and Ms O'Halloran was such that it constituted a partnership and/or joint venture in relation to the contract for the purchase of the Brisbane property. Consequently, the appellants alleged that Ms O'Halloran was the agent for the respondent who was the undisclosed principal.
29 All four grounds of appeal ultimately go to the same issues, namely whether the evidence properly analysed could sustain findings that the respondent and Ms O'Halloran had used the money for the purposes of either a partnership or joint venture in purchasing a property, and whether Ms O'Halloran in obtaining the loan was acting as agent for the respondent who was said by the appellants to be an undisclosed principal. Nonetheless, I will deal with each ground of appeal separately.
Ground 1 – the learned magistrate erred in law in concluding that the relationship between Ms O'Halloran and the respondent did not constitute a partnership and/or joint venture and that therefore Ms O'Halloran was not an agent for the respondent
30 As the appellants correctly point out, the notions of a 'partnership' and 'agency' are legal concepts.
31 The starting point for consideration of whether or not the respondent and Ms O'Halloran were in partnership is s 7(1) and s 7(2) of the Partnership Act 1895 which defines a partnership as 'the relationship which subsists between persons carrying on in business in common with the view of profit'. Section 7(2) requires a court, in deciding whether a partnership does or does not exist in any particular case, to have regard to the true contract and intention of the partners as appearing from a whole of the facts of the case (see Fazio v Fazio [2012] WASCA 72 [53] (per Murphy JA) where the law of partnership in Western Australia was summarised).
32 As to the legal concept of 'joint venture', in United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1, 10 per Mason, Brennan and Deane JJ, the High Court said:
That the term 'joint venture' connotes 'an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing, money, property or skill. Such a joint venture will often be a partnership. The term is, however, apposite to refer to a joint undertaking or activity carried on through a medium other than a partnership: such as a company, a trust, an agency or joint ownership. The borderline between what can properly be described as a 'joint venture' and what should more probably be seen as more than a simple contractual relationship may on occasion be blurred. Thus, where one party contributes only money or other property, it may sometimes be difficult to determine whether a relationship is a joint venture in which both parties are entitled to a share of profits or a simple contract of loan or a lease under which the interest or rent payable to the party providing the money or property is determined by reference to profits made by the other.
33 The appellants submit that the partnership that existed between Ms O'Halloran and the respondent can be inferred from all of the circumstances. In that regard the appellants submit that the respondent and Ms O'Halloran were:
(a) carrying on a business together;
(b) in common; and
(c) with a view to profit.
34 The appellants point to a series of facts from which they submit the ultimate conclusion can be drawn, namely that Ms O'Halloran and the respondent were in partnership together. These facts include:
(i) in addition to being in a de facto relationship they traded under the business name 'Hidden Potential Consultancy';
(ii) that the respondent invoiced the appellants through Hidden Potential Consultancy;
(iii) that exhibit 4, being an ASIC Financial Services Licensing Extract, detailed the trading name Hidden Potential Consultancy as having the representative namely Deborah O'Halloran;
(iv) that the owner of Hidden Potential Consultancy was Deborah O'Halloran (exhibit 5);
(v) that the respondent charged the appellants for bookkeeping work through Hidden Potential Consultancy;
(vi) that the appellants had previously purchased investment properties through the services of Hidden Potential Consultancy;
(vii) that the appellants had previously loaned money to third parties through Hidden Potential Consultancy (see exhibit 13);
(viii) that exhibit 21 was the contract for the purchase of the Brisbane property which was in joint names of both the respondent and Ms O'Halloran;
(ix) that the $58,000 transferred by the appellants to Ms O'Halloran was to Ms O'Halloran's Citibank account. Ten days later, Citibank issued a Banker's Guarantee for $58,326 in the names of s O'Halloran and the; and
(ix) that the $58,326 was used for the purchase of the Brisbane property in their joint names.
35 The appellants also point to other documents tendered in the proceedings which they submit point to a conclusion that the money was used by Ms O'Halloran and the respondent to purchase an investment property as part of a partnership or joint venture. This included a letter apparently authored by Ms O'Halloran addressed to 'Ms Violet Codreanu, Case Manager, Credit Ombudsman Service Limited'. The letter was unsigned and dated 22 August 2011 (exhibit 20).
36 No objection was taken by either the respondent or Ms O'Halloran to the unsigned letter. Whether it was capable of proving anything is questionable. However, whilst the letter does suggest that the Brisbane property was for investment purposes, it makes no mention whatsoever of anything said or done by the respondent. It does not support any inference that the property, even if it was intended to be an investment, was to be purchased pursuant to a partnership or joint venture between Ms O'Halloran and the respondent.
37 Exhibit 21 included various documents confirming that the Brisbane property was to be purchased in the names of Ms O'Halloran and the respondent. This included a sale contract and correspondence addressed to both Ms O'Halloran and the respondent. Consequently the evidence supported the conclusion that the Brisbane property was to be purchased in joint names by both Ms O'Halloran and the respondent.
38 Neither of the appellants gave any evidence that directly went to the nature of the relationship between Ms O'Halloran and the respondent save for the fact that they believed that Ms O’Halloran and Ms Lim partners (were in de facto relationship) and both involved in the business called Hidden Potential Consultancy.
39 The combination of the evidence clearly supported the conclusion that Ms O'Halloran and the respondent were going to jointly purchase the Brisbane property. However, on the evidence the learned magistrate found that it was open to conclude that the purchase by them was on the basis of them purchasing property as a de facto couple for investment purposes. The learned magistrate found that the evidence went no further than to prove the following:
1. Deborah Anne O'Halloran and the respondent were in a de facto relationship;
2. Ms O'Halloran was a financial planner or a mortgage broker;
3. Ms O'Halloran was an investor in real estate;
4. Ms O'Halloran and the respondent signed a contract to jointly purchase a property in Brisbane.
40 In my view, the learned magistrate correctly found (at [24] of his reasons) as follows:
Put more bluntly, neither Bradley nor Lauren gave evidence as to 'partnership' or 'agency' at the trial. Their statements of evidence are silent on this as was their evidence-in-chief and cross-examination. [Ms O'Halloran and the respondent] did not give evidence and of course were not the subject of any cross-examination.
41 Contrary to the appellants' submissions, none of the facts either alone or in combination could give rise to a finding on the balance of probabilities that the respondent and Ms O'Halloran were in a partnership or joint venture as opposed to the learned magistrate's finding that on the available evidence they were a de facto couple intending to purchase the Brisbane property for investment purposes. There was no evidence capable of sustaining a conclusion that the purchase of the Brisbane property by Ms O'Halloran and the respondent was intended to be either a partnership or joint venture. There was no evidence capable of proving that Ms O'Halloran was acting as an agent for the respondent.
42 Ground 1 fails.
Ground 2 - the learned magistrate failed to take into consideration that Ms O'Halloran was an agent for the respondent who was an undisclosed principal
43 As to the second ground of appeal, in order to find that Ms O'Halloran was acting as agent for the undisclosed principal being the respondent, it would first require a finding that the respondent and Ms O'Halloran were in a partnership or joint venture together. I have already concluded that there was no evidence before the learned Magistrate upon which a court could properly form the view that the respondent and Ms O'Halloran were involved in a joint venture or partnership as opposed to a de facto couple investing in property.
44 Whilst it may be the case that a de facto couple could obtain a loan that would make them jointly and severally liable for its repayment, in this case there is no evidence that the respondent was at any time a party to the loan made between the appellants and Ms O'Halloran.
45 If the effect of ground 2 is really to argue that the learned magistrate erred in failing to find that an agency relationship existed as between Ms O'Halloran and the respondent, then this ground of appeal would also fail. In order for a person to be an agent of another, that other person must confer upon the agent authority to create or effect legal rights and duties as between another person, called the principal, and third parties: see Petersen v Moloney (1951) 84 CLR 91, 94 per Dixon CJ, Fullagher and Kitto JJ. Since neither the respondent nor Ms O'Halloran gave evidence at the trial, the only way that such authority could be construed is by way of inference from the available facts. In my view, none of the evidence at trial could, taken at its highest, lead to the conclusion that such an authority had been conferred upon Ms O'Halloran by the respondent.
46 Ground 2 must also fail.
Ground 3 - the learned magistrate erred in law in finding that the 'transaction between the respondent and Ms O'Halloran was a domestic transaction between a de facto couple, whereas he should have found that they were carrying on a business with a view to profit
47 For the reasons already stated, the evidence was not capable of sustaining such a conclusion. At best, it could only support a conclusion that the respondent and Ms O'Halloran were hoping to purchase the Brisbane property for investment purposes as a de facto couple. There was no evidence that by purchasing the property, they were carrying on a business, with a view for profit.
48 Ground 3 fails.
Ground 4 - the learned magistrate's decision was against the weight of evidence
49 It was the case that neither the respondent nor Ms O'Halloran tendered any evidence, verbal or documentary, at the trial. In that sense the appellants' case was uncontested. However, that did not and could not lead automatically to the conclusion that on the appellants' case the intended purchase of the Brisbane property by Ms O'Halloran and the respondent was pursuant to a partnership or joint venture and that Ms O'Halloran was acting as agent for the undisclosed principal being the respondent.
50 For the reasons already stated, the evidence at the trial was incapable of sustaining the propositions critical to the case against the respondent.
51 Ground 4 must also fail.
Conclusion
52 The appellants have failed to satisfy me that there is any merit in any of the grounds of appeal. Consequently the appeal will be dismissed. There will be no order for costs.
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