Transpacific Business Services Pty Ltd v Woodwin Pty Ltd
[2002] VSC 442
•18 October 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 4832 of 2002
| TRANS PACIFIC BUSINESS SERVICES PTY LTD | Appellant |
| v | |
| WOODWIN PTY LTD | Respondent |
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JUDGE: | Osborn J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 29 August 2002 | |
DATE OF JUDGMENT: | 18 October 2002 | |
CASE MAY BE CITED AS: | Transpacific Business Services Pty Ltd v Woodwin Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 442 | |
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ESTOPPEL – Agency – Appeal from Magistrates' Court – Where principal paid agent in reliance on statement made by seller of goods.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr J. Searle | Rudstein Kron Lawyers |
| For the Respondent | Mr C. Hanson | Quinn & Quinn |
HIS HONOUR:
This is an appeal pursuant to s 109 of the Magistrates' Court Act from an order of the Magistrates Court at Melbourne made on 20 February 2002 whereby the appellant was ordered to pay the respondent $4,119.00 for goods sold and delivered, together with interest.
The background facts can be summarised as follows:
(a)The appellant company engaged one Rick Kraemer ("the builder") to carry out renovations at the residence of the appellant company's directors.
(b)The appellant ordered an oven from the respondent for the purposes of installation as part of such renovations.
(c)The builder as agent for the appellant attended the respondent's premises and took delivery of the oven and gave to the respondent in payment for the goods a cheque drawn on the builder's account.
(d)The builder delivered the oven to the appellant and sought reimbursement of the amount of the cheque paid to the respondent.
(e)A director of the appellant telephoned the respondent in order to confirm the builder had paid the respondent for the oven and was told the builder had paid for the goods.
(f)In reliance upon this advice the appellant paid the builder for the goods.
(g)Some time later the respondent advised the appellant that the builder's cheque had been dishonoured and sought payment from the appellant for the goods.
The learned magistrate found that the builder was acting as the appellant's agent in his dealings with the respondent.
The respondent's claim was one for less than $5,000 and accordingly when the matter came before the Magistrates' Court proceedings were conducted as an arbitration in accordance with s 102 of the Magistrates' Court Act 1989. Section 103 governs the conduct of such an arbitration, and relevantly provides that the Court is not bound by rules of evidence, is not required to conduct proceedings in a formal manner, and may accept evidence orally or in writing. Furthermore, s 103(3)(b) provides that evidence need only be given on oath or by affirmation if the Court so requires. No such requirement was made in the present case.
The transcript demonstrates that the learned magistrate regarded the critical question before him as one of privity of contract. Pages 8 and 9 of the transcript record the following exchange between the magistrate and Mr Teitelbaum a director of the appellant:
"DT: Yes but they're claiming the builder is an agent of mine.
M: Well you purchased the goods.
DT: Yes.
M: Well you've got to pay for them.
DT:I purchased the goods your honour, I ordered the goods, the builder rang them up.
M: And you've agreed they were delivered.
DT: Yes.
M: You've got to pay for them.
DT:I rang them up the next day I said have the goods been paid for, yes, I had paid for them I paid the builder $4,100.
M:-Well you haven't paid them, you've got an action against the builder.
DT:They originally . . .
M:I’m just telling you, I'm just telling you if that's what you're saying, you should've joined the builder in this case.
DT:They originally said.
M:They can still sue you.
DT:They originally sued the builder, when I asked.
M:Look I'm just telling you they can sue you and the builder and they can get their money off either of you, now they're choosing to sue your company at this stage because they don't want to sue the builder."
The magistrate did not accept that the appellant's case might raise different concerns from those arising from a strict contractual analysis by reason of questions of estoppel. The transcript at pp 10 and 11 contains the following passage:
"DT:OK the seller however may be estopped by his conduct from taking advantage of the rule if his conduct unequivocally shows that he looked to the agent for payment and thereby induced the principal after the debt became due, to settle with the agent. Resort cannot afterwards be made to the principal. That's why . . .
M:Yes but I don't agree with that. You can resort to both the principal and the agent. The fact that the principal has endeavoured to pay can be evidence at times that there was no agency, that's what that case is on about.
DT:They induced me to.
M:I don't agree with you.
DT:I asked them the next day, have you been paid and they said yes. I asked that lady have you been, because I don't trust.
M:. . . have been paid.
DT:Well because I reimbursed the builder.
M:No I'm telling you the contract was with you and the builder, the builder
DT:No the builder was not paid out of the contract.
M:But he's your agent, he's working.
DT:He's not my agent.
M:Oh I'm holding he is."
In my view the magistrate erred in law in failing to acknowledge, analyse or rule on the argument put to him by the appellant based on the question of estoppel. The principle relied upon by Mr Teitelbaum is well recognised in the law of agency.
Thus, in Bowstead and Reynolds on Agency there is a "general rule" stated that "in general the right of a third party is not affected by the fact that the principal has paid or otherwise adjusted his accounts with the agent."[1] However there are exceptions to this rule, which the text divides into two categories – estoppel and prejudice to principal. In relation to estoppel the text states:
"The first view, a form of estoppel, is more generally accepted. Thus the principal is discharged from liability by paying the agent where the third party requests payment by the agent, or leads the principal to believe that the agent has paid, or that he looks to the agent alone for payment."(Citations omitted).[2]
[1]FMB Reynolds Bowstead and Reynolds on Agency (2001, 17th ed) p 364.
[2]Ibid p 365. See also GE Dal Pont Law of Agency 2001 p 485; GHL Fridman The Law of Agency (1996, 7th ed) p 222.
There is a long standing line of authority which supports the view that an estoppel may arise in the circumstances which the appellant asserts in the current case. See Wyatt v The Marquis of Hertford (1802) 3 East 147; Thomson v Davenport (1829) 9B & C 78; Horsfall v Fauntleroy (1830) 10 CB 21; Smyth v Anderson (1849) 7 CB 21; Heald & Others v Kenworthy (1855) 10 Exch. 739 and Davidson v Donaldson (1882) 9 QBD 623. The principle is most authoritatively stated in the last two cases referred to. In Heald v Kenworthy Parke B said:
"If the conduct of the seller would make it unjust for him to call upon the buyer for the money; as for example, where the principal is induced by the conduct of the seller to pay his agent the money on the basis that the agent and seller have come to a settlement on the matter, or if any representation to that effect is made by the seller either by words or conduct, the seller cannot afterwards throw off the mask and sue the principal. It would be unjust for him to do so. But I think that there is no case of this kind where the plaintiff has been precluded from recovering, unless he has in some way contributed either to deceive the defendant or to induce him to alter his position."[3]
[3]P 746.
In Davidson v Donaldson Jessell MR stated:
"No doubt there is a well known principal of equity which has been long acted on, sometimes by the Courts of Equity and sometimes by the Courts of Common Law, for the equity is the same in both courts, that if the defendant has been mislead by the plaintiff, either by his words or by his conduct, to believe that which is not true, so that his position is altered, the plaintiff cannot be heard to deny the truth of what he has thus led the defendant to believe."[4]
[4]P 627.
Counsel for the respondent submitted to me that this line of authority should be understood in the light of more recent decisions with respect to the doctrine of estoppel. In particular he submitted to me that such decisions require that the making of a statement giving rise to an estoppel should itself be unconscionable. I reject this submission. The doctrine of estoppel arising by reason of a statement requires that it would be unconscionable for the maker of the statement to resile from that statement, not that the statement itself necessarily be made in bad faith. See eg Commonwealth of Australia v Verwayen (1990) 1 70 CLR 394. As Parke B said in Heald v Kenworthy a plaintiff may be precluded from recovery if "he has in some way contributed either to deceive the defendant or to induce him to alter his position." In the present case if the court were satisfied of the facts for which the appellant contends an estoppel might be said to arise either because the respondent was estopped from denying that payment to it had in fact been made, or because it was in all the circumstances estopped from relying upon the pre-existing contract.
Despite the above conclusions however I am not prepared to finally resolve this matter. The consequence of proceeding by way of arbitration is that the hearing before the Magistrate did not result in evidence upon which this court could properly act to finally resolve the matter. In particular the precise terms of the conversation upon which the allegation of estoppel is founded were not properly established before the Magistrates' Court. Further, although the point was squarely raised on behalf of the appellant at the hearing it was not properly foreshadowed in the notice of defence filed on behalf of the appellant in the Magistrates' Court proceedings. The matter must be remitted to the Magistrates' Court in consequence both because the evidentiary material before me does not permit the final resolution of the matter and because as a matter of procedural fairness it cannot be said that the course of proceedings before the Magistrates' Court enabled the respondent plaintiff to fully contest the case with respect to the issue of estoppel. That situation arose by reason of the inadequacy of the appellant's notice of defence and more fundamentally by reason of the view the learned Magistrate took as to what matters were relevant during the course of the arbitration.
I propose to order that the order of the Melbourne Magistrates' Court made on 20 February 2002 that the appellant pay the respondent the sum of $4,119.00 and interest of $425.00 together with costs of $1,477.00 be set aside and that the matter be remitted for re-hearing in accordance with law.
It may be that upon the re-hearing of the matter that having regard to the articulation of the issues identified in this judgment the Court will decline to proceed by way of arbitration pursuant to s 102(3) of the Magistrates' Court Act 1989. But that is a matter for the Magistrates' Court to determine in the exercise of its own discretion.
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