Smith v Asher Real Estate

[2000] NSWCA 227

NEW SOUTH WALES COURT OF APPEAL

CITATION:         SMITH v ASHER REAL ESTATE [2000]  NSWCA 227

FILE NUMBER(S):
40704/99

HEARING DATE(S):          10 August 2000

JUDGMENT DATE:           10/08/2000

PARTIES:
BRIAN DENNIS SMITH v ASHER REAL ESTATE & ANOR

JUDGMENT OF: Mason P Meagher JA Foster AJA   

LOWER COURT JURISDICTION:    Supreme Court

LOWER COURT FILE NUMBER(S):               SC 4340/88

LOWER COURT JUDICIAL OFFICER:          Hulme J

COUNSEL:
Appellant: G Downes QC
1st Respondent: No appearance
2nd Respondent: B Hocking (Sol)

SOLICITORS:
Appellant: Stewart Cuddy & Mockler
2nd Respondent: Dennis & Co

CATCHWORDS:
Contract - promise to give employee a share in the company - promisor not a party to appeal - no evidence of agency of promisor.  ND

LEGISLATION CITED:

DECISION:
Appeal dismissed with costs

JUDGMENT:

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40704/99

MASON P
MEAGHER JA
FOSTER AJA

Thursday 10 August 2000

Brian Dennis SMITH v ASHER REAL ESTATE & ANOR

JUDGMENT

1. MASON P:          Between 1976 and 1988 the appellant was employed by the first respondent Asher Real Estate Pty Limited, now in liquidation, as the manager of that respondent's licensed real estate agency at Gorokan and Toukley.

2. When the appellant was engaged, the ultimate control of that company lay with Mr Ernest Salisbury-Baker.  Hulme J found that Ernest exercised ultimate and complete control of the company at that time.

3. Ernest Salisbury-Baker has now died and there is no evidence that probate has been applied for.  We have been informed that it is not intended to apply for probate.

4. The second respondent to the appeal is Samuel Salisbury-Baker, son of Ernest.  Samuel and his brother Schofield were or became directors of Asher Real Estate Pty Limited at some stage during the currency of the appellant's employment.  However, the findings at Red Book 82 provide no basis for inferring that they had any other interest in the company at any relevant time. 

5. By some time in 1988 the appellant felt that he had been let down by Mr Salisbury-Baker and his sons and in those circumstances he left the company and set himself up in opposition.  As his Honour the trial judge said in Red Book 78, he pursued a certain degree of self help.

6. This prompted what became gargantuan proceedings that eventually came on for trial in the mid 1990s.  Judgment was given by Hulme J in November 1997.  The main part of the proceedings consisted of multifarious claims by Asher Real Estate Pty Limited against the appellant and other parties in which a variety of allegations were made against them.  The details of those claims do not matter very much.  Hulme J's reasons for finding against the appellant in a number of respects are not challenged in the appeal.

7. There was however a cross claim.  In its amended form the appellant pleaded that Ernest Salisbury-Baker had promised that he would do all things necessary to cause to be transferred to the appellant initially one quarter, subsequently one third, of the issued shares of the company.  It was pleaded that that promise was made by Ernest acting on his own behalf but also as agent of Samuel and Schofield and a family company, Salisbury-Baker Holdings Pty Limited.

8. The learned trial judge made findings that there was an agreement based upon conversations between Ernest and the appellant, being conversations that took place in 1976 or thereabouts.  His Honour set out the competing versions of those conversations and indicated that he was prepared to accept a variant of the appellant's version of the conversations based in part upon a minute of a meeting of the company that took place on 30 March 1988.  That minute was found to constitute some corroborating evidence of the alleged agreement.

9. The claim for damages in the cross claim was however dismissed because it was found to be an implied term of that agreement that the appellant would act honestly in his employment.  The findings in the main proceedings were, as his Honour said, evidence of innumerable actions that were clear breaches of such a condition.  For that reason the cross claim was dismissed.

10. In the course of dealing with the cross claim,  his Honour as I have already indicated found that there was an express agreement based upon the conversations in the mid 1970s between Ernest Salisbury-Baker and the appellant.  Indeed, his Honour implicitly found that the agreement was with Ernest Salisbury-Baker (see Red Book 355F).

11. The appellant filed an appeal as of right.  He joined Asher Real Estate Pty Ltd and Samuel Salisbury-Baker as the respondents.  The company is now in liquidation, a fact which may or may not have some bearing upon the assessment of any damages that might flow from the breach of the alleged agreement.  I am prepared to proceed on the basis that liquidation does not necessarily establish that the promised shares were worthless at whatever turns out to be the relevant time.  But it was never asserted that the company was a party to the agreement.

12. Written submissions were filed in support of the notice of appeal as filed.  The issues propounded in those submissions were a submission based upon a proposition of law to the effect that the appellant had a vested right to enjoy the benefit of the agreement and that that vested right could not be affected or taken away by reason of the breaches that only came to light after 1998.  Nothing in the written submissions really grappled with the question of how if that proposition was correct, it would translate into any relief against the two chosen respondents.

13. Written submissions were filed on behalf of the second respondent and in various ways the point was taken that the only contracting party was Ernest Salisbury-Baker.  When the matter commenced this morning, Mr Downes QC representing the appellant sought an adjournment.  He indicated that he recognised that the logic of his case, as presented at least primarily, was that an essential party to the appeal was Ernest Salisbury-Baker.  Recognising that he had been informed that probate had not been taken out and was not going to be taken out as far as the immediate family was concerned, counsel indicated that he wished an adjournment to consider the position and if necessary amend the appeal so that it joined a party who could represent Ernest Salisbury-Baker's estate.

14. The Court indicated that it was not prepared to grant an adjournment.  The case therefore proceeded, confined in the first instance to the issue whether there was any prospect of making good the claim against Samuel.  Even assuming in the appellant's favour that there may be an arguable case covering the matters addressed in the written submissions that have been filed (and I interpolate I think that is quite a big assumption but I am prepared to make it nevertheless) I cannot see that there is anything in the material that would translate that into an order against Samuel.  There is no material that Samuel was a shareholder at any relevant time.  The primary facts as found relate to a conversation in which Ernest alone was party, at a time well prior to the time when either Schofield or Samuel were directors of the company and at a time when on the findings they appeared to play no part in the management of the affairs of the company.

15. There is no finding or evidence to which we have been taken that indicates that Samuel had shares in the company in 1975 or 1976.  But even if he did, nothing in the primary facts supporting the contract indicate that the contract was with any party other than with Ernest.  Indeed, everything points to the contrary, as the controlling patriarch of this family (Ernest) appears to have been content to have run everything his own way in the early days at least.  Nothing in the conversations relating to the contract suggests that he was acting on behalf of his sons who at that stage appear to have had no role in the company.

16. The fact that the sons who had become directors in the meantime were parties to a minute in March of 1988 which was found to have provided some corroboration for the appellant's case does not take the matter any further so far as establishing that they were agents of the promise and therefore in that sense parties to the contract.  The agency was put in issue on the pleadings, there is no finding of agency and the evidence does not support any suggestion of agency.

17. Accordingly, I would dismiss the appeal. 

18. If the appellant wishes to pursue rights of appeal against a legal representative of the estate of Ernest Salisbury-Baker then in a strictly legal sense the appellant is free to do so subject of course to limitation problems and limitation problems with respect to the bringing of an appeal out of time.  But it seems appropriate that the appeal as presently constituted, which strikes me as having no prospect of success, should be disposed of.  I therefore propose that the appeal be dismissed with costs.

19. MEAGHER JA:    I agree.

20. FOSTER AJA:    I likewise agree.

21. MASON P:  That is the order of the Court.

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LAST UPDATED:              10/10/2000