Winstonu Pty Ltd v Pitson

Case [2001] FCA 541

FEDERAL COURT OF AUSTRALIA

Winstonu Pty Ltd v Pitson [2001] FCA 541

CONTRACTS – principal and agent – construction of contract – where agent enters into a contract with a third party on behalf of an undisclosed principal – whether contract enforceable against undisclosed principal

APPEALS – where appeal is allowed – whether possible for the Full Court to resolve the matter on the material before it - whether necessary to remit the matter to the Supreme Court of the Australian Capital Territory or to the Magistrates’ Court

Magistrate’s Court (Civil Jurisdiction) Act 1982 (ACT) s 391, s 393

Carberry v Gardiner (1936) 36 SR (NSW) 559 at 574-575 referred to
Danziger v Thompson [1944] KB 654 followed
Dunlop Pneumatic Tyre Co Ltd v Selfridge and Co Ltd [1915] AC 847 at 864 followed
Epps v Rothnie [1945] KB 562 at 565 referred to
Formby Bros v Formby (1910) 102 L T Rep 116 referred to
Fred Drughorn Ltd v Rederiaktiebolaget Trans-Atlantic [1919] AC 203 at 206 followed
Humble v Hunter (1848) 12 QB 310 referred to
McCormack v Federal Commissioner of Taxation (1979) 143 CLR 284 referred to
Maynegrain Pty Ltd v Compafina Bank [1982] 2 NSWLR 141 referred to
Mooney v Williams (1905) 3 CLR 1 at 8 followed
Perpetual Trustee Co v Bligh (1940) 41 SR (NSW) 33 at 40 referred to
Re Quatrovision P/L & Coys Act [1982] 1 NSWLR 95 at 105 referred to
Siu v Eastern Insurance Co Ltd [1994] 2 AC 199 at 208-209 referred to
Sportsvision Australia v Tallglen Pty Ltd (1998) 44 NSWLR 103 followed
SpunwillPty Ltd v BAB Pty Ltd (1994) 36 NSWLR 290 not followed
Superintendent of Licences v Ainsworth Nominees Pty Ltd (1987) 9 NSWLR 691 referred to
Uranerz (Aust) Pty Ltd v Hale (1980) 54 ALJR 378 referred to
Voulis v Kozary (1975) 50 ALJR 59 referred to

WINSTONU PTY LTD (ACN 003 401 367) TRADING AS HARVEY NORMAN ELECTRICS V COLIN PITSON

A 71 OF 2000

JUDGES:      BEAUMONT ACJ, GYLES & STONE JJ
DATE:           30 MAY 2001
PLACE:         SYDNEY (HEARD IN CANBERRA)


IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY

A 71 OF 2000

ON APPEAL FROM A JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN:

WINSTONU PTY LTD (ACN 003 401 367) TRADING AS HARVEY NORMAN ELECTRICS
APPELLANT

AND:

COLIN PITSON
RESPONDENT

JUDGES:

BEAUMONT ACJ, GYLES AND STONE JJ

DATE OF ORDER:

30 MAY 2001

WHERE MADE:

SYDNEY (HEARD IN CANBERRA)

THE COURT ORDERS THAT:

1.The appeal be allowed.

2.The orders of the Supreme Court be set aside and in lieu thereof the appeal to the Supreme Court be allowed.

3.The order of the Magistrate be set aside and that in lieu thereof it be ordered that the appellant have judgment for the amount claimed and interest to be calculated.

4.Unless, within twenty one days, the parties file a minute of agreed order as to the amount of interest payable, order that this part of the matter be…

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Winstonu Pty Ltd v Pitson [2001] FCA 541
Case
[2001] FCA 541
Decision Date

CaseChat Overview and Summary

Winstonu Pty Ltd, the appellant, brought an action against Pitson, the respondent, for recovery of the balance of the price of electrical goods supplied by the appellant to the respondent in 1995. The respondent contended that he was not liable for the cost of the goods, having made a payment of $30,000 only to facilitate the completion of the development. The case was initially heard in the Magistrates’ Court where the appellant claimed against the respondent as purchaser under the contract, adding as an alternative ground that the contract had been made between itself and Perryman, acting as agent for the respondent. Perryman later went into liquidation and the appellant has been unable to recover the amount owing. On appeal to the Supreme Court, the appellant relied solely on the argument that it is entitled to recover the amount outstanding from the respondent on the ground that he was the undisclosed principal of Perryman at the time of entry into the contract.

The court had to decide whether the respondent was liable for the balance of the price of the goods supplied by the appellant. The court considered whether Perryman was acting as an agent for the respondent at the time the contract was made, and whether the respondent was the undisclosed principal. The court also considered whether there were any exceptions to the rule of undisclosed principal that would prevent the appellant from recovering the balance of the price from the respondent. The court examined the evidence, including the Project Management Agreement between the respondent and Perryman, and the letters between the parties. The court found that there was a written agreement between the respondent and Perryman appointing the latter as agent for the purpose of providing the services described under the Project Management Agreement.

The court found that the Project Management Agreement provided sufficient authority for Perryman, as agent for the respondent, to contract with the appellant for the supply of the relevant goods. The court found that the respondent, as principal, was liable for the price of those goods unless one of the exceptions to the undisclosed principal rule was established. The court found that there was not sufficient evidence to support any of the exceptions and accordingly the appeal was allowed. The court set aside the orders of the Supreme Court and in lieu thereof ordered that the appellant have judgment for the amount claimed and interest to be calculated. The court also ordered that the respondent pay the appellant’s costs of the appeal to the Supreme Court and of the appeal to the High Court.

Orders

Orders of the court

1. The appeal be allowed.

2. The orders of the Supreme Court be set aside and in lieu thereof the appeal to the Supreme Court be allowed.

3. The order of the Magistrate be set aside and that in lieu thereof it be ordered that the appellant have judgment for the amount claimed and interest to be calculated.

4. Unless, within twenty one days, the parties file a minute of agreed order as to the amount of interest payable, order that this part of the matter be remitted to the Supreme Court for determination.

5. The respondent pay the appellant’s costs of the appeal to the Supreme Court and of the appeal to this Court.

6. There be no order as to the costs before the Magistrate.

7. Any application by the respondent for a certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth), if sought, be made within fourteen days by arrangement with the ACT Registry of the Court.

Background

Background to the litigation

In 1995 the appellant, Winstonu Pty Ltd (“Winstonu”), supplied certain electrical goods to the respondent for installation in home units known as “Westridge Terrace” being developed by the respondent and his joint venturers. On 31 August 1995 the respondent, Mr Pitson (“Pitson”) made a payment of $30,000 towards the price of the goods. Despite making the payment, Pitson contended that he was not the person liable for the cost of the goods and that he made the payment only to facilitate the completion of the development. The balance of the price has not been paid. PROCEDURAL BACKGROUND Before the magistrate, Winstonu made its claim against the respondent as purchaser under the contract. Winstonu maintained this claim before Crispin J, but added, as an alternative ground for relief, that the contract had been made between itself and Playoust Building Pty Limited who had been acting as agent for the respondent. Playoust Building Pty Limited later changed its name to Perryman Building Pty Limited and will be referred to as “Perryman” in these reasons. Perryman went into in liquidation and Winstonu has been unable to recover the amount owing in the liquidation. On appeal to this Court, the appellant relied solely on the argument that it is entitled to recover the amount outstanding under the contract from Pitson on the ground that, at the time of entry into the contract, Pitson was the undisclosed principal of Perryman. At the trial before Magistrate Campbell the issues before this Court were not argued. It appears that, because there was no process of discovery and because the pleadings were not fully particularised, the appellant, at the time it commenced proceedings in the Magistrates’ Court, was not aware of any agency arrangement between Pitson and Perryman. As a result, these issues were not properly put to the witnesses and were not fully discussed in the magistrate’s judgment. It was not until the hearing before this Court that the question of an undisclosed principal was squarely addressed. These difficulties were moreover compounded by the fact that the Mr Perryman was unable to give evidence because of an illness that was variously described by witnesses and counsel as Alzheimer’s disease or Parkinson’s disease.PROJECT MANAGEMENT AGREEMENT BETWEEN PITSON AND PERRYMAN The appellant submitted that, for the purposes of the contract with Winstonu, Perryman was acting as agent for the respondent, Pitson and his joint venturers as undisclosed principal. The alleged agency was said to arise from a written agreement between Pitson and his joint venturers (the “Principal”) and Perryman (the “Project Manager”) dated 22 June 1994 and headed “Project Management Agreement”. Perryman had sent a draft of this agreement to Pitson under cover of a letter dated 17 June 1994. A letter dated 20 June 1994 from Pitson to Perryman refers to the draft agreement and to the letter of 17 June. It states:“I am pleased to confirm my oral advice to you that your proposal is accepted and that we wish to proceed to contract.We are examining the agreement … which you attached to your letter and expect to be in a position to give you our views on it within the next few days.”

Evidence

Evidence Before The Court

Because of the amount involved, there was an appeal as of right to the Supreme Court from the decision in the Magistrate’s Court. The relevant sections of the Magistrate’s Court (Civil Jurisdiction) Act 1982 (ACT) include the following:“Evidence on appeal391.In an appeal, the Supreme Court shall have regard to the evidence given in the proceedings out of which the appeal arose, and has power to draw inferences of fact and, in its discretion, to receive further evidence.Effect of appeal on execution of judgment393(1)On an appeal, the Supreme Court may –(a)affirm, reverse or vary the judgment or order appealed from;(b)give such judgment, or make such order, as, in all the circumstances, it thinks fit, or refuse to make an order;(c)set aside the judgment or order appealed from, in whole or in part, and remit the proceedings to the Magistrates Court for further hearing and determination, subject to such directions as the Supreme Court thinks fit; or(d)award execution from the Supreme Court or remit the proceedings to the Magistrates Court for the execution of the judgment or order of the Supreme Court.(2)A judgment or order of the Supreme Court made in proceedings remitted under paragraph (1)(d) shall have effect as if it were a judgment or order of the Magistrates Court and may be enforced by the Magistrates Court accordingly.”The appeal is thus a full appeal on fact and law, but not a de novo rehearing. The grounds of appeal to the Supreme Court were as follows:i)“The Magistrate’s Court erred in finding that the relationship between the respondent and the project manager (Perryman Pty Limited) was governed by an oral agreement, and not the written agreement signed by both parties and dated 22 June 1994.ii)The Magistrate’s Court erred in not finding that at all material times Perryman Pty Limited acted as the respondent’s agent in relation to the transactions with the appellant the subject of the litigation.iii)The Magistrate’s Court erred in not finding that each transaction the subject of the litigation was between the respondent as principal and the appellant.iv)The Magistrate’s Court erred in not finding that the respondent was liable to the appellant for the transactions the subject of the litigation.” It was common ground before the Supreme Court that if it was found that the Magistrate had not adequately addressed the issue of agency then that issue was to be resolved by the Supreme Court rather than by remitting the matter to the Magistrate’s Court for further hearing. Neither side sought to lead further evidence pursuant to s 391. The Supreme Court proceeded to consider the appeal having regard to the Magistrate’s reasons and the evidence before the Magistrate. That involved the Supreme Court considering factual issues for the first time. The problems occasioned by that course (in varying contexts) are discussed in cases such as Voulis v Kozary (1975) 180 CLR 177, McCormack v Federal Commissioner of Taxation (1979) 143 CLR 284, Uranerz (Australia) Pty Ltd v Hale (1980) 30 ALR 193 and Superintendent of Licences v Ainsworth Nominees Pty Ltd (1987) 9 NSWLR 691. It was inherent in the course taken that, whilst the Supreme Court was invited to make de novo findings of fact, it could not differ from those findings of the Magistrate which depended upon the advantage which she had in seeing the witnesses. On the issue of agency, this meant that the manner in which the evidence of Mr Pitson was dealt with was crucial.

Decision

Reasons for decision

There are two exceptions to this rule. First, where the express or implied terms of a contract provide that the actual parties are the real and only principals, evidence tending to prove that another person is also liable as principal is not admissible; Humble v Hunter (1848) 12 QB 310, Formby Brothers v Formby (1910) 102 LT Rep 116. This exception has been doubted (see, for example, Epps v Rothnie [1945] KB 562 at 565 per Scott LJ) but has been upheld in more recent cases, including Re Quatrovision P/L & Coys Act [1982] 1 NSWLR 95 at 105, Carberry v Gardiner (supra) at 574 and Perpetual Trustee Co v Bligh (supra) at 40. The circumstances in which such a term will be implied include those where the agent has been referred to as the “owner” or “proprietor” of certain property; Humble v Hunter (supra), Formby Bros v Formby (supra). Secondly, the contract must not be of such a kind that the personality of the contracting parties is material; see, for example, Carberry v Gardiner (supra) at 574-575.CONCLUSION There is a written agreement between Pitson and Perryman appointing the latter as agent for the purpose of providing the services described under the Project Management Agreement. In my opinion this agreement provides sufficient authority for Perryman, as agent for Pitson, to contract with Winstonu for the supply of the relevant goods. As principal Pitson is liable for the price of those goods unless:(a)if Pitson’s status as principal was not disclosed in the contract for the supply of the goods, one of the exceptions to the undisclosed principal rule discussed in [14] was established;(b)the Project Management Agreement had been varied by the parties before Perryman entered into the contract for the supply of the goods; or(c)the Project Management Agreement was not the complete repository of the parties’ agreement There is not sufficient evidence to support any of these grounds. Unfortunately, as mentioned in par [4] above, Mr Perryman was unable to give evidence because of illness. Nevertheless, some insight into his understanding of his relationship with Mr Pitson can be gleaned from his letter to Mr Pitson dated 10 July 1995, in which he states “You are aware under the contract that Perryman Building is merely your agent for the purposes of this development”. Although there was some suggestion in Mr Pitson’s evidence that the contract had been varied, it is clear that the magistrate did not attach much weight to this evidence and was not convinced that Pitson was an entirely reliable witness:“it seems most likely that all of the witnesses have over time rationalised their recollections and are now firmly of the view that their evidence reflects what actually happened, whereas the reality may be, at least in part, quite different…It is likely that [Mr Pitson’s] view of himself as an injured party too may have coloured his recollection of conversations and circumstances. In my opinion the evidence does not support any of the exceptions set out in [15] and accordingly the appeal must be allowed. I agree with the orders proposed by Gyles J.

Ratio Decidendi

Legal Principle Established

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