Mr Bankrupt Secondhand Goods Pty Ltd v Richards No. Scgrg-99-1020

MR BANKRUPT SECONDHAND GOODS PTY LTD v RICHARDS
[2000] SASC 189

Full Court: Olsson, Wicks and Gray JJ

OLSSON J I have had the benefit of reading, in draft, the reasons published by Wicks J. I agree with the conclusion to which he has come.
WICKS J This is an appeal from a judgment of a judge of this Court obtained on 14 December 1999 on appeal from a judgment of a magistrate obtained on 12 August 1999.
The plaintiff was the proprietor of the business name C D Richards Transport and was engaged in the business of road transportation of goods. The defendant, Mr Bankrupt Secondhand Goods Pty Ltd, was a company incorporated on 8 December 1997.
In or about early May 1998, the plaintiff was contacted by an associate in the transport industry and advised of a customer who needed the services of a carrier to transport office furniture from Sydney to Adelaide. The plaintiff was given the telephone number for the customer concerned.
The plaintiff telephoned the number supplied and spoke to Mr Dean Scadding, who said that he was the manager for what he described as “Mr Bankrupt”. The plaintiff wondered about the reliability of the customer and queried the name. In response, Mr Scadding said that money for the project was guaranteed. He said that he wanted about ten semi-trailer loads of furniture loaded at Villawood in New South Wales to be delivered to Mr Bankrupt at Shop 1, 69 Port Road, Thebarton, being a warehouse used by Mr Bankrupt for sales.
Mr Scadding agreed to a delivery price of $2000 for each full load of furniture carried from Sydney to the warehouse at Thebarton. He also gave an address in Victoria to which invoices should be sent.
The plaintiff delivered all ten full loads of furniture to the Adelaide address and concluded with the tenth delivery on 16 June 1998.
On 25 June 1998, the plaintiff received part-payment in the sum of $2000, leaving a further $18000 to pay.
After the full ten loads had been delivered, the plaintiff telephoned Mr Scadding in Victoria to ascertain when the balance outstanding would be paid. The plaintiff said that initially Mr Scadding sought to reassure him that the invoices were being fixed up or that some money would be sent as soon as the sale of furniture had occurred. When no payment had eventuated after these promises from Mr Scadding, the plaintiff said that he was thereafter unable to contact Mr Scadding, who did not return his telephone calls.
The plaintiff said that he received a telephone call on 27 August 1998 from Mr Doug Clark who identified himself as a representative of Mr Bankrupt, requesting a full load of furniture to be collected from a Sydney location and delivered to Mr Bankrupt’s premises in Adelaide. In the course of the conversation, Mr Clark stated that the load of furniture in question was for “Mr Bankrupt”. The plaintiff subsequently received a facsimile transmission from Mr Clark requesting a half load delivery in lieu of the full delivery from Sydney. The plaintiff arranged for the transport of the furniture to Adelaide and rendered an invoice for the sum of $1000 in respect of the delivery to Mr Bankrupt.
In late October 1997 Mr Scadding established a business involving the purchase and sale of secondhand office furniture under the business name “Mr Bankrupt Secondhand Goods”. At that time he was the sole trustee of a trust known as the “N C Trust” and carried on the business referred to in that capacity. The name Mr Bankrupt Secondhand Goods was relinquished in early December 1997. At the same time Mr Scadding arranged the incorporation of the defendant and he himself became its sole director and secretary. The reason for the relinquishment of the business name is not clear from Mr Scadding’s affidavits, although as a matter of practice it may have been necessary to give up the business name before registration of a company with a similar name could occur.
The plaintiff commenced proceedings in the Magistrates Court in which he claimed $19000 for work done by him in connection with the transport of furniture from Sydney to Adelaide, this amount being $20000 in respect of the initial ten deliveries less $2000 paid plus an additional amount of $1000 being in respect of a further half load in June 1998.
In an amended defence filed on 18 June 1999, the defendant denied indebtedness to the plaintiff. He further pleaded that between May and August 1998 the business of “Mr Bankrupt” was carried on at Thebarton by Mr Dean Scadding as trustee of the N C Trust; that the debt alleged by the plaintiff related to secondhand furniture delivered by the plaintiff to Mr Scadding; that the defendant had no financial interest or involvement in Mr Scadding’s business and that the defendant did not commence to trade until about 30 October 1998 and did not register the business name “Mr Bankrupt” until about March 1999.
On 30 April 1999, the plaintiff made application for summary judgment in the action and on 18 June 1999, the defendant made application for the summary dismissal of the plaintiff’s claim. The application for summary dismissal was dismissed by a magistrate and the order for dismissal was not the subject matter of an appeal. The defendant appealed against the order for summary judgment in favour of the plaintiff but the appeal was dismissed by a judge of this Court. The defendant further appealed to the Full Court.
According to an affidavit sworn by Mr Scadding on behalf of the defendant on 15 June 1999, the company remained dormant from the time of its incorporation until 30 October 1998 when it was taken over by Mr Douglas Clark. At that time Mr Clark replaced Mr Scadding as the sole director and secretary of the company. According to the affidavit of Mr Scadding to which I have referred, at no time did Mr Clark have any financial interest or involvement in the business carried on by Mr Scadding prior to 30 October 1998. In the same affidavit, Mr Scadding said at par 7 (first appearing):
“7....... In or about October 1998 I walked away from the business when the premises at 69 Port Road, Thebarton 5031 were closed. I have not traded under the name ‘Mr Bankrupt Secondhand Goods’ or ‘Mr Bankrupt’ since that date.”

From the affidavit of Mr Scadding to which I have just referred and a further affidavit sworn by him on 3 August 1999, it would appear that Mr Scadding did in fact trade in his personal capacity under the trade or business name of “Mr Bankrupt” after December 1997. During 1998 and before 30 October of that a year, a number of Telstra accounts were issued to Mr Scadding in the name of “Mr D F Scadding T:A Mr Bankrupt”. A letter from WorkCover dated 27 May 1998 was addressed, not to the company but rather to Mr Bankrupt 2nd Hand Goods, D F Scadding as T/tee. Records relating to the remittance of PAYE income tax instalment deductions in the period January to July 1998 were addressed to “Mr Dean F Scadding ATF, the NC Trust T/as Mr Bankrupt 2nd Hand Goods”. In his affidavit sworn 3 August 1999, Mr Scadding said that the defendant company did not trade nor was he engaged by it to act as its manager or agent in connection with the business. He said that although he was named as the director of the company, such a fact was of no consequence because the company was not operating.
The affidavits of Mr Scadding to which I have just referred were before the learned magistrate on the hearing of the application for summary judgment and no answering affidavit or other objection to the affidavits appears to have been made or taken by the plaintiff.
The learned magistrate held that Mr Scadding, in whatever capacity, had full knowledge of the registration and subsequent relinquishment of the business name “Mr Bankrupt Secondhand Goods”. He also had full knowledge of the registration of the defendant company. The business name had ceased to exist. The learned magistrate said that when Mr Scadding was referring to the “manager” of “Mr Bankrupt” he could only have been referring to the defendant company because that was the only entity in existence at the time. He said that Mr Scadding could not have been referring to “Mr Bankrupt Secondhand Goods” because he knew full well that business name did not exist. On the basis of these facts, the learned magistrate concluded that Mr Scadding did bind the defendant to a contractual arrangement with the plaintiff and that the defendant company had no defence to the plaintiff’s claim. The matter went on appeal to a judge of this Court.
On the hearing of the appeal, two further affidavits were placed before the learned judge by counsel for the defendant. The first was dated 6 October 1999 and was sworn by Mr Douglas Clark. In that affidavit, Mr Clark deposed to the fact that the defendant company did not operate a bank account until one was opened with National Australia Bank Limited on or about 11 November 1999 by Mr Clark on the company’s behalf. The second was sworn the same day by Mr Scadding who deposed to the fact that the sum of $2000 paid to the plaintiff was paid in cash by Mr Scadding and that no receipt was issued for the payment.
In dismissing the appeal, the learned judge held that at the time of the making of the contract for the delivery of office furniture, only the defendant company was in being and at that time Mr Scadding was its sole director and shareholder. He held that Mr Scadding, in referring to himself as manager, was holding himself out as speaking on behalf of the defendant company. He held that the plaintiff was entitled to accept the words referring to Mr Scadding as being the “manager” of “Mr Bankrupt” at their face value. He held the defendant company was bound by Mr Scadding’s words and concluded that there was no possible defence to the plaintiff’s claim.
Rule 8 of the Magistrates Court (Civil) Rules 1992 provide, so far as us material:
"(1) Where a party wishes to obtain:
(a).... summary judgment in, or the disposal of the whole or part of, an action; or
(b).... immediate relief,
he or she may do so on application accompanied by an affidavit specifying
(c).... why the other party does not have a good action or defence on the merits on any possible view of the facts or law; or
(d).... why such relief should be granted.
(2)... The Court may -
(a).... enter judgment accordingly;
(b).... grant the whole or part of the relief sought, and order that the action continue in relation to the part not disposed of;
(c).... make an order for an early trial; or
(d).... make any other order."

The expression “summary judgment” is not defined in the Magistrates Court Rules. However, in Battiste v Mulvaney (Unreported Judgment No S6419, delivered 7 November 1997) Doyle CJ at p 4 held that “summary judgment” refers to the well known way of dealing with cases which are so clear that they should not be permitted as a matter of convenience and justice to go to trial. If the defendant has an arguable defence on the merits, it cannot be said that it cannot succeed in the action on any view of the facts or law.
There is evidence, not contradicted by the plaintiff, to the effect that the defendant company was dormant from December 1997 to 30 October 1998 and that the business of the purchase and sale of secondhand furniture was conducted by Mr Scadding in his capacity as trustee of the N C Trust. It seems to me that the best the plaintiff can say about the fact that Mr Scadding told the plaintiff that he was the manager of “Mr Bankrupt” is that it is equivocal. On the one hand, Mr Scadding as sole director of the defendant company and on the company’s behalf entered into the contract with the plaintiffs for the delivery of secondhand furniture. On the other hand, in referring to “Mr Bankrupt”, Mr Scadding was referring to himself trading as Mr Bankrupt. The fact that Mr Scadding used the term “manager” may not mean “manager” in the strict sense but is simply a reference to himself as conducting the business referred to.
It would appear that Mr Scadding carried on his business under the business name “Mr Bankrupt” or “Mr Bankrupt Secondhand Goods” without registering the business name concerned under the Business Names Act 1996. It is an offence to do so: Business Names Act 1996, s 7, although a contravention of the Act does not of itself operate to avoid an agreement, transaction, act or matter: Business Names Act 1996, s 5.
The learned magistrate and the learned judge on appeal were in error in failing to accept that there was an alternative version of the facts which, if accepted at trial, would require the plaintiff’s claim against the defendant to be dismissed. Such alternative version would require the following findings of fact:

(a)that the defendant company remained dormant from December 1997 to 30 October 1998;
(b)that from December 1997 to 30 October 1998, the business of buying and selling secondhand furniture was conducted by Mr Scadding, not on behalf of the defendant company, but as trustee of the N C Trust; and

(c) that in the period from December 1997 to 30 October 1998 the above business was conducted either in the name of “Mr Bankrupt” or “Mr Bankrupt Secondhand Goods”.
It is open to the Court to find that in referring to the “manager” of Mr Bankrupt, Mr Scadding was referring to himself and that at no stage in the relevant negotiations was Mr Scadding referring to the dormant defendant company as a contracting party.
In the circumstances I would:

(a) allow the appeal,

(b)set aside the orders made by the learned magistrate on 12 August 1999 (except the order dismissing the defendant’s application to dismiss the plaintiff’s claim);
(c)set aside the orders made by the learned judge on appeal on 14 December 1999, and
(d)order that the trial of the action be heard by another magistrate.

GRAY J I agree.

[2000] SASC 189

30 June 2000