Mr Bankrupt Secondhand Goods Pty Ltd v Richards No. Scgrg-99-1020 Judgment No. S439 Summary

Mr BANKRUPT SECONDHAND GOODS PTY LTD v RICHARDS

[1999] SASC 439

Magistrates Appeal

1 MILLHOUSE J. The facts in relation to this matter are quite complex. During argument Mr Ian Robertson, counsel for the appellant gave me the following chronology:
Twenty third of October 1997, Dean Francis Scadding registered Mr Bankrupt Secondhand Goods as a business name.

First of December 1997, the business name Mr Bankrupt Secondhand Goods was deregistered and the name Mr Bankrupt reserved.

Eighth of December 1997, Mr Bankrupt Secondhand Goods Pty Ltd incorporated with Scadding shewn as the sole shareholder and director.

May 1998, orders placed by Scadding with Christopher Douglas Richards. Scadding identifying himself as manager for "Mr Bankrupt."

Eleventh of May to the 16th of June 1998, several invoices from Richards addressed variously to "Dean", "Mr Bankrupt", "Cash Converters": most went to 69 Port Road, Thebarton, the place of business of Cash Converters: from May 1998, also the place of business of Scadding.

[The registered office of Mr Bankrupt Secondhand Goods Pty Ltd was 139 Burbridge Road, Adelaide, but in January 1999 it was changed to 69 Port Road, Thebarton.]

[There was no financial relationship between Cash Converters and Scadding, "Mr Bankrupt", or the company.]

On 30 October 1998, Douglas John Clarke began operating Mr Bankrupt Secondhand Goods Pty Ltd as a business.

Sixteenth of March 1999, Clarke registered the name "Mr Bankrupt" until then merely reserved: the company, the owner of the business name.

2 Unfortunately for the respondent, only $2,000 of $20,000 he claims is owing to him for cartage of furniture, for which the invoices were sent, has been paid. He sued for $19,000, but $18,000 is the relevant amount for the purposes of this appeal. The learned special magistrate hearing an application for summary judgment for the whole $19,000 allowed the application in respect of $18,000 and put the action down for hearing as a minor civil action in respect of the balance $1,000. The magistrate decided the matter on affidavit evidence, none of which, I was told by counsel, is contested. The crucial piece of evidence, uncontested, is in paragraph 3 of the affidavit of Christopher Douglas Richards, the respondent, sworn 29 April 1999:
"I telephoned the supplied number and spoke to a Mr Dean Scatting (it is conceded the name should be Scadding), who told me he was manager for 'Mr Bankrupt'."
3 That was in early May 1998.
4 At that time, only the company, Mr Bankrupt Secondhand Goods Pty Ltd was in being, and at that time Scadding was the sole shareholder and director of it. The plain meaning of the words which Scadding must have used, (putting the words in paragraph 3 into direct speech) is, "I am manager for Mr Bankrupt." Scadding was holding himself out as speaking on behalf of the company. That he used the words 'Mr Bankrupt' was I suggest, merely a shorthand way of describing the company, the full name of which is rather a mouthful.
5 The respondent was entitled to accept those words, as he obviously did, at face value. There was no need for him to go behind them and make any other enquiries about the identity of his customer. That being so, the company was bound by Scadding's words. Like the learned special magistrate I can see no possible way for the appellant round those words, no possible defence to the claim. I may say that on this occasion at least the law and fairness coincide. On the facts as I have them Richards is entitled to his money.
6 The appeal is dismissed.

The case of Mr Bankrupt Secondhand Goods Pty Ltd v Richards revolves around a dispute where the respondent, Christopher Douglas Richards, is claiming $19,000 for services rendered to the appellant, Mr Bankrupt Secondhand Goods Pty Ltd. Richards asserts that he provided cartage services for furniture, and despite only $2,000 of the total amount being paid, he is owed $18,000. The matter was initially heard by a special magistrate who granted a summary judgment for $18,000 and scheduled the remaining $1,000 for a minor civil action hearing. The appellant has appealed against the summary judgment, which is now being reviewed by the court.

The primary legal issue before the court was whether the appellant company was bound by the actions and representations of its sole director and manager, Dean Francis Scadding. Specifically, the court needed to determine whether Scadding's statement, when he identified himself as the manager for "Mr Bankrupt" during a conversation with Richards, constituted an effective representation that the company was liable for the services provided. This determination hinged on the principles of agency and whether Scadding's words could be construed as an authorisation that bound the company.

The court found that Scadding, acting as the sole director and manager, had the authority to bind the company when he represented himself as the manager for "Mr Bankrupt." The court concluded that Scadding's statement, made in early May 1998, when only the company existed and he was its sole shareholder and director, was a clear representation that he was speaking on behalf of the company. Given that Richards reasonably relied on Scadding's representation and there was no indication that Richards should have conducted further inquiries, the company was held liable for the services provided. The court dismissed the appeal, affirming the magistrate's decision that Richards was entitled to recover the $18,000 owed for the services rendered.

Mr Bankrupt Secondhand Goods Pty Ltd v Richards No. Scgrg-99-1020 Judgment No. S439

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established