Southwick v Moore Stephens Melbourne Pty Ltd
[2008] VSC 173
•29 May 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 5252 of 2008
| KEITH JACOB SOUTHWICK & NEVILLE BRUCE SOUTHWICK | Appellants |
| v | |
| MOORE STEPHENS MELBOURNE PTY LTD | Respondent |
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JUDGE: | HANSEN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 9 May 2008 | |
DATE OF JUDGMENT: | 29 May 2008 | |
CASE MAY BE CITED AS: | Southwick v Moore Stephens Melbourne Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 173 | |
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MAGISTRATES’ COURT – Appeal – Guarantee – Whether basis of indebtedness alleged in statement of claim – Whether open to magistrate to find indebtedness – Basis on which case run and left for determination – Appeal dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellants | Mr A Herskope | Kalus Kenny |
| For the Respondent | Ms K R Campana | White Cleland Pty |
HIS HONOUR:
This is an appeal from an order of the Magistrates’ Court at Melbourne made on 20 February 2008 whereby the appellants/defendants were ordered to pay the respondent/plaintiff $71,852.70 plus interest of $4,083.79 and costs.
The appellants were sued as guarantors under written guarantees dated 29 September 1998, each guarantee being in identical terms and given in favour of the respondent[1]. The respondent conducts an accountancy practice in Melbourne. Over a number of years the respondent provided accounting services to a number of companies and individuals associated with the appellants.
[1]Although there was some difference in the name of the respondent in the Complaint and the beneficiaries named in the guarantee, the appellants accepted the respondent’s right to sue on the guarantees.
By the guarantees the appellants undertook to:
“personally guarantee to pay any outstanding fees owing by the companies and entities listed below to [the respondent].”
At the foot of each guarantee was set out the name of nine companies and one business name. One of the companies was Cedel Products (Australasia) Pty Ltd (“Cedel”). Each guarantee was expressed to be “unconditional and irrevocable to cover all debts and liabilities whether present or future, actual or contingent and including all costs, charges which may be incurred by [the respondent] including legal costs in the attempted exercise or enforcement of this guarantee”.
The respondent’s statement of claim was amended at the hearing by reducing the amount claimed to $71,852.70 and expanding the period in which professional services were rendered by the respondent. As amended, the central allegation (in para 2) was that Cedel was indebted to the respondent in the sum claimed together with interest “for professional services rendered by the [respondent] to [Cedel] at the request of and on behalf of [Cedel] between January 2001 and 2 August 2007. It was then alleged (in para 3) that pursuant to their guarantees the appellants were indebted to the respondent in that sum, and which the appellants had not paid despite demand upon them to do so.
To these allegations the appellants pleaded by an amended defence, in summary, as follows:
(a)They denied that Cedel was indebted to the respondent in any sum for work performed in the period.
(b)They denied para 3 and said that they did not admit signing the guarantees.
(c)Alternatively, there was no consideration for the guarantees which were thus unenforceable.
(d)Alternatively, if the guarantees were binding they contained terms, partly express and implied, that the respondent would invoice the entities named in the guarantees for work performed for them and the guarantees would only be called on if such an entity failed to pay an invoice. In breach of that term the respondent had sued on the guarantees without having rendered invoices to any of the entities. If the entities had been invoiced they would have paid. The respondent’s breach had deprived the appellants of the right to seek payment or reimbursement from the entities to pay the respondent’s fees. In these circumstances the guarantees were not enforceable.
It is to be noted that the effect of the non-admission of signing the guarantees was that without leave the appellants could not give evidence on that point; see the Magistrates’ Court Civil Procedure Rules 1999, r 9.02(4). When the magistrate pointed this out to the appellants’ counsel at the outset of the trial he said that he understood that as the position. He added that he was “not proposing to call either of Messrs Southwick in any event”.
As noted, para 2 of the statement of claim alleged that professional services were rendered to Cedel. None of the other entities named in the guarantees was referred to. In fact, however, the plaintiff’s case, and that which the magistrate upheld, was that under an agreement made prior to the guarantees Cedel undertook responsibility to pay the fees for services provided by the respondent to a number of entities and persons including but not limited to those listed in the guarantees. In fact the evidence did not establish that any part of the amount claimed was owed in respect of accounting services invoiced to Cedel in respect of its business. However, the magistrate found that there was an agreement as alleged by the respondent, that the appellants had signed their guarantees and were bound by them, rejected all defences and concluded that the amount claimed was payable under the guarantees.
In now seeking the setting aside of the orders and in lieu thereof an order that the proceeding be dismissed, the appellants submit that neither on the pleadings nor on the evidence was it open to the magistrate to find that there was an agreement between the respondent and Cedel that Cedel would pay for work performed for it and for others by the respondent. It is to be noted that the critical words in this submission are “for others”. If those words had appeared in the statement of claim the present issue would not have arisen.
While some other grounds – grounds 7, 8 and 9 - were set out in the Notice of Appeal they were not relied upon, correctly in my view.
The appellants’ submission requires reference to the way in which the case was conducted at the trial.
At the outset each counsel succinctly stated their case. Counsel for the respondent said that the claim was for monies pursuant to a guarantee of all debts and liabilities of several entities including Cedel. She then said that the debts the subject of the complaint “were incurred by Cedel by reason of the raising of accountancy services through the plaintiff over a period of time from 2003 through to 2007. And there’s been an ongoing relationship between the plaintiff and Cedel since … 1992”. She then stated that the guarantors were directors of Cedel and other entities. Counsel then referred to the defences at which stage the magistrate called on counsel for the appellants to state the issues taken up by them.
In response, the appellants’ counsel identified the following as defences. First, the respondent had to prove the guarantees. Secondly, the further and better particulars of the claim made it clear that the claim was for fees in respect of work done for entities other than Cedel. As, therefore, the debt was not Cedel’s debt the claim must fail. Thirdly, in breach of the guarantee the respondent had not invoiced the entities for whom the work was performed. Fourthly, GST could not be recovered as there had not been a taxable supply of services to Cedel. Counsel concluded with the advice, referred to above, that he did not propose to call the appellants in any event.
Counsel for the respondent called two witnesses, Colin Douglas Stewart, an associate director of the respondent, and David O’Brien, the credit manager of the respondent. O’Brien had prepared copies of the relevant invoices and produced a reconciliation of the accounts which was tendered. The invoices were tendered during Stewart’s evidence. It was therefore Stewart who gave evidence that the appellants had signed the guarantees and of the agreement under which Cedel was liable to pay the claimed debt.
Stewart said in evidence in chief that a firm for which he worked, Hughes Fincher, merged with another firm, Priestley and Morris, in 1992. Cedel and other companies associated with it had been clients of Priestley and Morris and continued as clients of the new firm. At the time of the merger David Pitt had looked after the work, and thereafter he had a continuing involvement. Stewart said that he had been involved in Cedel’s work from around 1994. He said that he first had knowledge or came into contact with Keith Southwick, the first appellant, “probably around 1994/95”, in his (Stewart’s) capacity as the manager who had to “review the job, get the queries answered, whatever it might have been at the time. So I suspect I would have spoken to him throughout those years and certainly from probably 1997/98, somewhere in that vicinity, I would have had probably a more formal relationship in discussing with him all the time and he used to ring me all the time”.
Stewart was then asked “What was the arrangement in place in relation to how you would do the work and how the work would be invoiced”, and he answered:
“OK. Keith Southwick and/or Keith Famen who was another employee at Southwicks – or at Cedel rather, would bring in the documents or send them in, which would be accounting books, bank statements, whatever, for the whole family and we were engaged to do the accounting work, preparing accounts, tax returns, etc, for all the entities within the group and all the family members within the group.”
Stewart was then asked who were the entities and family members. In answer he gave a number of names which in total were greater than but did not include every name listed in the guarantees. They are set out in the magistrate’s judgment.
Stewart was then asked who was responsible for the payment of all of the work and he answered “Cedel”[2]. Stewart was then asked what arrangements were in place in relation to invoicing and payment, and he answered:
[2]The question was not objected to although a little later when the same question was asked and Stewart gave the same answer an objection thereto was upheld on the basis the evidence was an opinion.
“OK. The arrangements were that we would invoice Cedel and/or Keith Southwick so that all of it was addressed to Keith Southwick being the managing director and the person that basically ran the family affairs.
His Honour: So it was arranged that the plaintiff would invoice Cedel or –––? ––– Well, Keith Southwick was the address of the invoices and Cedel was basically invoiced. It was certainly all the work was put on a Cedel code and that’s my understanding going all the way back prior to when I was involved.
I’m not understanding. It was arranged that the plaintiff would invoice Cedel? ––– Yes.
And sent it [sic] a particular address? ––– It was sent to Keith Southwick who was the managing director of Cedel.
Ms Campana: And to your knowledge over those years who made the payments on those accounts? ––– Cedel made all payments as far as I’m aware and Wick Industries may have got an audit fee at various points throughout when we audited it and possibly paid that. But as far as I’m aware they were all paid by Cedel.
The Wick audit fees that you’ve just referred to, were any of the figures included in the complaint, are [there] any Wick audit fees? ––– No.
And over that period of time that you’ve talked about this ongoing relationship were there any defaults in payments by Cedel during that period of time? ––– No, we put several fee payment arrangements in place which would last for a couple of months and then payment would cease.
If I can hand to you a series of documents, if you could tell the court what those documents that I’ve just handed you are? ––– OK. These are invoices that we’ve issued for work performed through 1993 for performing compliance work, tax returns, financial accounts, other work as requested by Keith Southwick throughout that period and also invoices for the 2005 accounting work and other work requested by Keith Southwick.”
Finally, in evidence in chief, Stewart explained that the reference CE or CED, one or other of which appeared on each invoice, was the Cedel code on the respondent’s internal coding system for charging work on the computer to the clients.
In cross-examination Stewart agreed that he could not give evidence about any payment arrangements that were instituted before the merger of the firms which had occurred on 15 November 1992. He said that as far as he was aware “nothing will have changed. We’ve had the arrangement going back certainly to 1992 that I’m aware of”.
Then, after being taken through the invoices, Stewart agreed that he could not identify in any of them any amount that was owing by Cedel. I interpolate that what Stewart meant was that no amount was owing in respect of work performed for Cedel in its own right alone.
Consistently with his earlier statement to the magistrate, counsel for the appellants called no evidence.
Each counsel then addressed final submissions to the magistrate.
Confining attention to that part of his submissions which is relevant to the grounds of appeal, the appellants’ counsel submitted that the claim must fail because Cedel was not indebted to the respondent, as Stewart had stated. Counsel described the claim as misconceived, that it should have been made against numerous defendants. He submitted that there was “no evidence at all that Cedel would be responsible for payment of other people’s bills. That’s the other problem they’ve got, which I apologise I’ve overlooked. Mr Stewart’s evidence, and I pressed him twice and Your Honour heard the evidence, he wasn’t able to say what the position was. He came from the Hughes Fincher side of the merger, not the Priestley and Morris side of the merger, and I put to him that all of the retainers and the agreements, etc, had all been arranged before his time and he agreed with that and I put it to him that as far as he was aware nothing had changed and he didn’t demur from that either”.
In the course of the submissions of the respondent’s counsel which then followed, the magistrate raised the appellants’ submission that the claim must fail because the fees claimed were not a Cedel debt. In answer counsel referred to the evidence of Stewart “of the arrangement and agreements that were in place over a number of years … being that Cedel instructed them to provide services on behalf of themselves and a series of companies”. The respondent would invoice Cedel and send the invoices to Keith Southwick, the managing director of Cedel, and Cedel made all payments except in the one instance of Wick. Counsel submitted that it should be inferred from the evidence that there was an agreement between Cedel and the respondent that all work was done on behalf of Cedel, even though it was for other entities. Counsel for the appellants interjected that that was not the defended case. The respondent’s counsel continued, submitting that it was a separate agreement between Cedel and the respondent that Cedel would be responsible for all the fees for a number of entities including individuals and that Cedel, being listed on the guarantees, any debts and liabilities that it owed the respondent was the responsibility of the guarantors. It did not matter that there were entities or individuals not named in the guarantees. Counsel submitted that Cedel had entered into an agreement with the plaintiff under which it would provide instructions from time to time that work be done for a series of companies and entities, and be responsible for the fees.
In his reply counsel for the appellants submitted that the respondent had sought to recast the agreement as one under which Cedel would be responsible for all of the obligations of all of the parties. He objected that that was not the pleaded case which the appellants had come to meet. The alleged agreement had not been pleaded. Furthermore, Stewart’s evidence was that he could not say what the terms of the initial retainer were. Even if the magistrate was attracted to the argument advanced, the alleged agreement was not pleaded and was contrary to the pleading.
In some further brief submissions in reply, the respondent’s counsel submitted that the evidence established that Cedel required services and that whether they were for Cedel itself or other entities or the managing director the services were still, in effect, for Cedel. Therefore Cedel owed the money and there was “no problem with the pleading as it stands”. She submitted that the pleading, (that is, the statement of claim) mirrored the agreement that was in place.
The magistrate reserved his decision and gave judgment two weeks later. He found Stewart to have been a truthful witness. It is plain from his reasons that he accepted Stewart’s evidence. Stewart, the magistrate stated, understood that the “arrangement” was that Cedel was responsible for paying for the work performed by the plaintiff. He noted that Stewart was unaware of the nature of the arrangement between Priestley and Morris and Cedel prior to the merger and that he considered nothing apparently changed in that arrangement following the merger. There were three elements to Stewart’s understanding of the arrangement, namely that Cedel was responsible for paying for the work performed, that the respondent would invoice Cedel, and send the invoice to Keith Southwick at his address. After referring to the invoices and noting to whom they were addressed and that most inadequately described the entity for whom the work was performed, the magistrate noted that the claim was brought upon the appellants’ guarantees which cast an obligation upon them in respect of named entities. The magistrate then said:
“The question remains whether there was an agreement between the [respondent] and Cedel whereby the latter was chargeable with any debt incurred by all entities associated with the Southwicks whether listed in the guarantee or not.
Over many years, the practice was that invoices were sent for work performed for various persons to Keith Southwick and were paid by Cedel. The practice continued without alteration after the execution of the guarantees. Additionally, there were other arrangements for the payment by Cedel of outstanding accounts when it fell behind in its payments. These practices are strong evidence of an agreement between the [respondent] and Cedel for the latter to pay for the work performed for it and for others by the [respondent]. It remains satisfactory evidence of such an agreement even though the guarantees specify a group of entities (including Cedel) rather than Cedel alone. Accordingly, the defendants are liable under their respective guarantees in relation to the indebtedness of Cedel to the [respondent] and its does not matter whether the invoices identify the person in respect of whom an item of work was performed.”
The magistrate then went on to deal with other matters which need not be mentioned.
Before me the appellants’ counsel submitted that it was not open to the magistrate to conclude as he did. That was because the case found was not the case pleaded and which the appellants had sought to defend, and for the further reason that Stewart’s evidence of his understanding of the arrangement was insufficient to establish the alleged agreement. On the first point, which concerns the fairness of the finding in the circumstances, the respondent’s counsel had neither opened the alleged agreement nor sought to amend the statement of claim to allege it, and the case had been fashioned in final address. Put simply, the case found against the appellants had not been “in the ring” for determination. Counsel referred in support of his submissions to Water Board v Moustakas[3]; Banque Commerciale SA (in liq) v Akhill Holdings Ltd[4]; and Nescor Industries Group Pty Ltd v MIBA Pty Ltd[5].
[3](1988) 180 CLR 491, 497.
[4](1990) 169 CLR 279, 286-287.
[5](1997) 150 ALR 633, 639-640.
Counsel for the respondent submitted that the agreement that Cedel would pay for work it requested was within the pleading. Alternatively, the agreement was deposed to by Stewart whose evidence in chief was neither objected to, nor cross-examined upon. Stewart’s evidence was based on his working knowledge of the practice of the agreement over a period of ten or more years. The invoices themselves bore a notation which identified Cedel as the client. Further, the fact that other entities and individuals in respect of whom the work was provided had not been invoiced was consistent with the alleged agreement. In short, the issue of the agreement had been litigated and left for determination. Counsel referred to Gould v The Mount Oxide Mines Ltd (in liq)[6]; Ron Hodgson (Trading) Pty Ltd v Belvedere Motors (Hurstville) Pty Ltd[7]; Banque Commerciale SA (in liq) v Akhill Holdings Ltd[8]; State Government Insurance Comm v Sharpe[9].
[6](1916) 22 CLR 490, 517-518.
[7](1971) 1 NSWLR 473, 477.
[8](1990) 169 CLR 279, 297.
[9](1996) 126 FLR 341, 344.
Two areas of contention are raised by these submissions. The first concerns the scope of para 2 of the statement of claim and, depending on the view taken as to that, the fairness to the appellants of the magistrate deciding the case on the basis of the antecedent agreement that Cedel pay all fees. The second concerns the sufficiency of the evidence to establish that agreement. More accurately, the question is whether on the evidence it was open to the magistrate to find an agreement as he did.
I can say at once that in my view Stewart’s evidence, considered in the light of all of the evidence, provided sufficient foundation for the finding of an agreement between the respondent and Cedel for Cedel to pay for work performed for it and others by the respondent. This was of course in respect of work requested to be performed in the manner and as referred to by Stewart in his evidence. The question on this appeal on error of law is not concerned with degrees of sufficiency of the evidence in terms of warranting a finding of fact. Rather, the question is whether the impugned finding was open to be made. In my view it was.
It is then necessary to consider whether in deciding the case on the basis of the impugned agreement (which led to liability under the guarantees) the appellants were denied a fair trial. This raises for consideration the scope of para 2 of the statement of claim and the conduct of the trial.
In his reasons the magistrate did not refer to the objection that the alleged agreement could not be considered because it was not referred to in the statement of claim and was not the case run. It may be that the magistrate considered that para 2 was broad enough to comprehend the case based on the agreement. On that basis the appellants’ objection did not arise for consideration. On the other hand it may be that he considered that the case based on the agreement was not comprehended by para 2 but that the issue of the agreement had been run at the trial and left for his determination. Whichever view the magistrate took and acted upon, it would have been preferable if he had expressed his view. Nevertheless, the same objections as were made to him are now made to me on appeal and I must accordingly consider the matter for myself.
I have read the authorities to which I was referred. They emphasise the purpose and importance of pleadings in defining the issues for determination and providing the basis for testing the admissibility of evidence. However, as Dawson J observed in Banque Commerciale[10]:
“… modern pleadings have never imposed so rigid a framework that if evidence which raises fresh issues is admitted without objection at trial, the case is to be decided upon a basis which does not embrace the real controversy between the parties. Special procedures apart, cases are determined on the evidence, not the pleadings. It is incumbent upon the trial judge to see that the pleadings or particulars are amended so that the record reflects the proceedings as they have been conducted, but his failure to do so will not result in the invalidity of those proceedings.”
[10](1990) 169 CLR 279, 296-297.
There were a number of relevant factors in the circumstances. They commence with the terms of para 2 of the statement of claim which suggested but did not unequivocally state that the professional services were provided to Cedel in respect of its own business and affairs.
The next point is that the appellants went to the trial well aware that the amount claimed was for accounting services provided to entities other than Cedel and that Cedel had not rendered invoices to those entities. This awareness is apparent from the initial defence dated 28 September 2007 and the amended defence dated 16 January 2008. In addition to denying Cedel was indebted in any amount, each defence sought positively to confront the situation that the claim was in respect of accounting services performed for entities other than Cedel. This was done by the pleading of the implied term of the guarantees that the respondent would invoice the entities named in the guarantees “for accounting work performed for those entities” who would be liable to pay the fees invoiced. In the initial defence it was alleged that in breach of the implied term the respondent performed accounting services for entities other than Cedel “but did not render invoices to those entities and continues by this proceeding, to hold Cedel liable for all of its fees, therefore asserting the right to call on the [appellants] to pay the alleged debt pursuant to the alleged guarantee because Cedel is in liquidation”.
By a request also dated 28 September 2007 the appellants sought particulars of the amount claimed. The respondent was required to state the usual calculations of how the sum claimed had been calculated or arrived at. The respondent was requested to “identify, in respect to each and every fee, the entity for which the accounting services were performed”. In response the respondent provided documentary analysis which referred to a number of entities in respect of whom services had been provided. Those entities included some who were not named in the guarantees.
It would seem that the detail thus provided led to amendments to the defence. In the amended defence the implied term was now alleged to be partly express (based on the guarantees only referring to liability for fees owing by the entities named therein) and partly implied, and that the respondent did not render invoices to “any of” the entities named in the guarantees.
In these circumstances the appellants must have approached the trial considering how would the respondent put its case against Cedel? That is, how would the respondent establish that Cedel was liable to it for services provided to other entities in respect of the business and affairs of those entities? To not have given consideration to this in preparation would have been foolhardy, and it is hardly to be accounted as the fact. The obvious step would have been to ask the guarantors, and in particular Keith Southwick who had been managing director of Cedel, for instructions as to why it would be that the respondent regarded Cedel as liable as distinct from the other entities.
As to this, I note that the request for particulars did not include a request for the acts, facts, matters and circumstances by reason of which it was alleged that Cedel was indebted to the respondent.
I now refer to events at the trial.
I commence with the brief opening remarks of the respondent’s counsel which I have set out at [11] above. In those remarks counsel identified that the guarantee was called up in respect of debts “incurred by Cedel by reason of the raising of accountancy services through” the respondent. The critical word here was “through”. It was doubtless the use of that word that led the magistrate immediately to ask if Cedel was a company in a group of companies controlled by the Southwicks, to which counsel responded that they were directors of Cedel and other entities. The magistrate then said that he could guess what the defence was going to be and asked what are the issues as counsel saw them. In response counsel referred to the appellants’ defences at which stage the magistrate called on the appellants’ counsel. It is evident from a later statement of the magistrate that what he immediately apprehended was a defence that Cedel was not liable for work performed for other companies in the group. This, of course, is the point that I referred to above as being an obvious point readily able to be anticipated.
In summary then, counsel opened the case with the cryptic use of the word “through”, and without stating how the case was to be put. If she had done so the present issue would not have arisen. The basis upon which Cedel’s indebtedness arose being made clear the case would have proceeded on that footing with or without amendment and with or without an adjournment to allow the appellants to consider their position. It was obviously desirable for the respondent’s counsel to have developed how the case was put on the basis of the alleged agreement, particularly in light of the magistrate’s reaction, but also in order to indicate for the benefit of the magistrate and her opponent how the case was to be put.
The case proceeded, but in circumstances in which the word “through” should have alerted the appellants’ counsel just as it registered with the magistrate.
Then, when Stewart gave his evidence in chief he was led directly and immediately to the historical evidence of the dealings between the parties which established the agreement found by the magistrate. The evidence was given without objection save at the end of it when Stewart was asked for the second time who was responsible for all of the invoices. Furthermore, the appellants’ counsel engaged in some cross-examination on the matter. In that respect the cross-examination was concerned to establish that Stewart could not give evidence of the agreement on the payment arrangement when the initial retainer was made in 1992. Stewart having conceded that, counsel then suggested that when the firms merged “nothing changed” in respect of the payment arrangements, to which Stewart responded that nothing had changed as far as he was aware. The cross-examiner stopped at that point, stopping short therefore of questioning Stewart upon his evidence as to the conduct of the account over the years since the merger. A little later the cross-examiner took Stewart through the invoices but he did not return to Stewart’s evidence as to the practice in the conduct of the account. Clearly his decision not to cross-examine on this aspect was deliberate. As to that it is to be noted that he ultimately submitted that Stewart’s evidence was not sufficient to establish the agreement contended for by the appellants. It is consistent with this submission that counsel took the forensic view that the evidence was likely insufficient and best left it as it was. Of course the submission was to be considered in the light of the limited cross-examination.
Then, as mentioned, the appellants elected not to give, or call, evidence in defence.
Then followed counsel’s final addresses. Counsel for the appellants addressed first. Near the end of his submissions, after saying that the claim was misconceived, he submitted that there was “no evidence at all that Cedel would be responsible for payment of other people’s bills”. Stewart, counsel said, “wasn’t able to say what the position was”. Counsel said that Stewart had agreed in answer to his questions that all of the retainers and agreements had been arranged before the merger and that as far as he (Stewart) was aware nothing had changed. Counsel did not refer to the balance of Stewart’s evidence as to the conduct of the account. It is clear that in so submitting counsel was directly addressing the issue of Stewart’s evidence of the agreement. The submission reflects an awareness of the importance of the evidence that Cedel was responsible for the payment of other people’s bills. Counsel’s submission was that the evidence did not establish such a liability, but the submission was selective in not referring to Stewart’s evidence as to the conduct of the account over the years. This was consistent with the failure to cross-examine upon that evidence. What is revealed, in my view, is a forensic decision to deal with the evidence by relying on a point to cut the ground from under it. It was a forensic decision to handle the issue in that way.
In her address that then followed the respondent’s counsel developed the case of the agreement, as referred to above. As mentioned above, the appellants’ counsel interjected that this was “not the defended case”.
Both counsel had addressed by lunchtime but the hearing was adjourned until 2.00 pm for consideration of a Jones v Dunkel point. On the resumption the appellants’ counsel addressed what I have referred to earlier as a reply, and in the course of which he submitted that the alleged agreement was not the case pleaded and was contrary to Stewart’s evidence. That was followed by some brief submissions by the respondent’s counsel in which she said that the agreement was within the pleading.
The magistrate then reserved his decision.
It is to be noted that at no time did the appellants’ counsel deflect from the course of running the case without calling the appellants. Before cross-examining Stewart he did not seek time, let alone an adjournment, to seek instructions on Stewart’s evidence. Then, on the respondent’s case being closed the appellants’ counsel, without seeking any time to consider the position, said he would not call any evidence and commenced his final address. He then addressed on his defences including the submission as to Stewart’s evidence referred to above. Then, following the luncheon adjournment he replied as mentioned above. There was no suggestion that he needed time to obtain instructions and consider the respondent’s case of an antecedent agreement, let alone that the trial be adjourned to enable the appellants to give evidence. Nor did he say to the magistrate that he should not find the agreement established without first allowing the appellants an opportunity to respond thereto as they may be advised.
It is trite to observe that if a party relies upon a new point not contained in that party’s existing pleading, the pleading should be amended to allege it. That removes doubt as to the issues for determination. But sometimes, as Dawson J pointed out, that does not happen yet it can be seen that the point was run and left for adjudication. In the present case the expression of para 2 of the statement of claim might arguably have been regarded as broad enough to comprehend Cedel’s indebtedness arising by virtue of the alleged agreement, particularly when considered in light of the relevant facts and circumstances. Apart from that, however, is the way in which the case was conducted, considered overall. As to that, while the appellants’ counsel objected that the case based on the alleged agreement was not pleaded, both that issue and the issue of the existence of the agreement, were left as issues for the magistrate to determine. The magistrate might have considered that in the circumstances the agreement case was within the cover of para 2. Whether or not he did he must have considered that the issue of Cedel’s indebtedness arising under the agreement was run and left for his determination upon the evidence. Because he did not state his view on these matters it is not clear on what basis he proceeded. It is sufficient that I conclude, as I do, that in the circumstances the parties are to be taken as having run, and left for determination, the issue of the agreement. In that circumstance, and having regard to the evidence, para 2 may be regarded as broad enough to comprehend the agreement relied upon and certainly in light of the fact that the parties ran the issue.
These reasons lead to the conclusion that the appeal must fail. I add only that if I had concluded that the appeal should succeed on account of a lack of fairness in the trial to the appellants I would have set the orders aside and remitted the matter to the Magistrates’ Court for rehearing. That would have been the overwhelming justice of the case considering all the circumstances including in particular the nature of the defences and the acceptance of Stewart’s evidence. In that situation the respondent would no doubt amend the statement of claim to state how Cedel’s indebtedness arose, thus removing doubt on the issue.
The appeal will be dismissed with costs including reserved costs.
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