MAHA-ASHI Pty Ltd v Innes - [2011] SASCFC 72

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
MAHA-ASHI PTY LTD v INNES
[2011] SASCFC 72
Judgment of The Full Court
(The Honourable Justice Gray, The Honourable Justice Vanstone and The Honourable Justice Peek)
29 July 2011
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS - GENERALLY
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH JUDGE'S FINDINGS OF FACT - PROOF AND EVIDENCE - OTHER MATTERS
Appellant sued the respondent for monies said to be owed pursuant to an oral agreement - the statement of claim averred that no price was settled upon and claimed that the Court should imply a term of reasonable remuneration - trial judge found that agreement was for respondent to use appellant's facilities without payment pending another arrangement being struck - whether judge erred in so finding - whether judge overlooked relevant evidence.
Held: appeal dismissed.

PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - ORDER FOR COSTS ON INDEMNITY BASIS
Trial judge awarded costs against the appellant on an indemnity basis in relation to part of the action - whether trial judge erred in exercise of her discretion.
Held: appeal dismissed.
Sands v Channel Seven Adelaide Pty Ltd [2009] SASC 365; Olivaylle Pty Ltd v Flottweg GMBH & Co, KGAA (No 5) [2009] FCA 571; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Seven Network Ltd v News Ltd (2007) 244 ALR 374, applied.

MAHA-ASHI PTY LTD v INNES
[2011] SASCFC 72
Full Court: Gray, Vanstone and Peek JJ

GRAY J: I would dismiss the appeal. I agree with the reasons of Vanstone J.

VANSTONE J:
Introduction

Pursuant to an oral agreement, the defendant used the plaintiff’s gymnasium facilities. The plaintiff sued for monies said to be due for that use. It claimed that a term should be implied into the agreement to the effect that reasonable payment would be made. The claim was dismissed in the District Court and the judge ordered that the plaintiff pay the defendant’s costs on an indemnity basis from the date that a particular offer from the defendant was rejected. This appeal challenges both orders. While the plaintiff was represented by counsel at trial, its sole director appeared for the company upon the appeal hearing.
Background
The appellant company operated a gymnasium at Mount Barker from about March 2003. The director of the appellant, and its principal, was Mr Mark Mahanets. He represented the company in its negotiations with the previous owner, Mr Wegener, and with the defendant, and he also operated the gymnasium. The plant and equipment was purchased from Mr Wegener. The defendant and respondent, Ms Annette Innes, worked as a physiotherapist in the adjacent rooms. She had been encouraged to lease that space and to bring clients to the gymnasium by Mr Wegener as he had seen it as advantageous to his business.
There had been an agreement between Ms Innes and Mr Wegener allowing clients of the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2011] SASCFC 72
Decision Date: 29 July 2011

CaseChat Overview and Summary

The appellant, MAHA-ASHI Pty Ltd, sued the respondent, Ms Annette Innes, for monies allegedly owed for the use of the appellant's gymnasium facilities. The appellant contended that an oral agreement existed for Ms Innes to use the facilities, but no specific price was settled. Consequently, the appellant sought to have a term of reasonable remuneration implied into the agreement. The trial judge found that the agreement was for Ms Innes to use the facilities without payment pending a further arrangement. The appeal to the Full Court of the Supreme Court of South Australia concerned whether the trial judge erred in this finding and whether relevant evidence was overlooked.

The legal issues before the Full Court were whether the trial judge made an error in finding that the agreement between the parties was for the respondent to use the appellant's facilities without payment, pending a further arrangement, and whether the judge overlooked relevant evidence in reaching that conclusion. Additionally, the appeal challenged the trial judge's exercise of discretion in ordering the appellant to pay the respondent's costs on an indemnity basis from the date a particular offer was rejected.

The Full Court, comprising Gray, Vanstone, and Peek JJ, dismissed the appeal. The Court agreed with the trial judge's finding that the agreement was for the respondent to use the facilities without payment, pending a further arrangement. The Court found no basis to interfere with this finding of fact, nor with the trial judge's exercise of discretion regarding indemnity costs, which was considered to be correctly identified and applied. The Court concluded that the arguments advanced by the appellant were not made good.

Orders

Orders of the court

Appeal dismissed

Background

Background to the litigation

Pursuant to an oral agreement, the defendant used the plaintiff’s gymnasium facilities. The plaintiff sued for monies said to be due for that use. It claimed that a term should be implied into the agreement to the effect that reasonable payment would be made. The claim was dismissed in the District Court and the judge ordered that the plaintiff pay the defendant’s costs on an indemnity basis from the date that a particular offer from the defendant was rejected. This appeal challenges both orders. While the plaintiff was represented by counsel at trial, its sole director appeared for the company upon the appeal hearing.Background The appellant company operated a gymnasium at Mount Barker from about March 2003. The director of the appellant, and its principal, was Mr Mark Mahanets. He represented the company in its negotiations with the previous owner, Mr Wegener, and with the defendant, and he also operated the gymnasium. The plant and equipment was purchased from Mr Wegener. The defendant and respondent, Ms Annette Innes, worked as a physiotherapist in the adjacent rooms. She had been encouraged to lease that space and to bring clients to the gymnasium by Mr Wegener as he had seen it as advantageous to his business. There had been an agreement between Ms Innes and Mr Wegener allowing clients of the physiotherapy business to use the gymnasium facilities for the nominal amount of $10 per annum. A licence agreement dated 2002 reflecting that and other terms was tendered in evidence, D22, as part of the defendant’s case. It was common ground that from the time when the appellant took over the gymnasium to early 2004 Ms Innes and her clients used the facilities of the gymnasium, including swimming pool and hydro-pool, for classes and exercise programs. There was no payment by Ms Innes for that use until she paid the sum of $550 (including GST) by cheque dated 3 April 2004. No further or other payment was made. The plaintiff initially took proceedings in the Magistrates Court claiming the sum of $6,930. In the particulars of claim it was asserted that in about February 2003 the plaintiff and defendant entered into an oral agreement pursuant to which the defendant could continue her use of the swimming pool and hydro-pool in the plaintiff’s gymnasium and for that use she would pay $550 per month, commencing in February 2003, as well as $6.60 for any casual visits by Ms Innes or her associates for the rehabilitation of their clients. It was claimed that there were 50 such casual visits, amounting to $330 and the sum of $6,600 was due for the period February 2003 to January 2004 inclusive. The claim was later removed to the District Court where the sum of $47,088 was claimed. In its further amended statement of claim filed on 21 December 2007 the plaintiff now claimed that while there was an oral agreement pursuant to which the defendant could continue to use the plaintiff’s gymnasium, including the swimming pool, hydro-pool, aerobics room and other facilities for the use of her professional clients, there was no express agreement as to the amount of remuneration which was to be paid. It was asserted that the common law would imply a term into that agreement to the effect that the defendant would pay a “reasonable remuneration”. Annexed to the statement of claim were schedules showing the defendant’s usage of the gymnasium for “smart ball classes”, “aerobic classes”, as well as use of the swimming pool and hydro-pool. The total of the sums claimed in relation to that usage was $47,308. A further claim was made for “50 casual visits for rehabilitation” during the period February 2003 to February 2004. The sum of $330 was sought for those casual visits. After giving credit for the payment of $550 already made, the claim was for $47,088.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

In my view, the judge correctly identified the principles governing an exercise of discretion to award indemnity costs. I agree with her finding that the plaintiff’s decision to proceed in the face of being alerted to D13 was imprudent and unreasonable. The plaintiff has demonstrated no basis on which this Court should interfere with that exercise of discretion.Conclusion None of the arguments advanced has been made good. I would dismiss the appeal. PEEK J: I would dismiss the appeal. I agree with the reasons of Vanstone J.

Ratio Decidendi

Legal Principle Established

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