Appeal Dismissed: Plaintiff Liable for Fees

The court dismissed an appeal challenging a lower court's decision that the plaintiff was liable for certain fees. The lower court ruled that the plaintiff was liable because the relevant documentation did not disclose a principal liable to pay the fees.

New South Wales Supreme Court

CITATION : [COMPANY] v [COMPANY] [2005] NSWSC 726

HEARING DATE(S) : 20 July 2005

JUDGMENT DATE : 27 July 2005

JURISDICTION : Common Law Division

JUDGMENT OF : Associate Justice Malpass at 1

DECISION : The summons is dismissed; the plaintiff is to pay the costs of the summons; the exhibit may be returned.

CATCHWORDS : Contract - party liable to pay fees - did the relevant documentation disclose a principal liable to pay the fees - no error.

CASES CITED : HJ Lyon & Sando Ltd v Houlson [1963] SASR 29

[COMPANY] (Plaintiff) PARTIES : [COMPANY] (Defendant)

FILE NUMBER(S) : SC 11820/05

[NAME] (Plaintiff) COUNSEL : [redacted]

[NAME] (Plaintiff) SOLICITORS : [redacted]

LOWER COURT JURISDICTION : [ADDRESS] COURT FILE NUMBER(S) : 9653/02

LOWER COURT JUDICIAL OFFICER : [NAME]

- 5 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

Associate Justice Malpass

27 July 2005

11820 of 2005 [COMPANY] v [COMPANY]

JUDGMENT 1 His Honour: [COMPANY] ([NAME]) was the builder involved in the construction of a container park at Port Botany. The plaintiff (formerly known as [COMPANY]) was the design engineer. The works failed shortly after completion. 2 Rectification work followed thereafter. The defendant performed the role of geotechnical advisers and carried out, inter alia, testing work. It rendered fees for that work. Certain of the fees were unpaid. 3 The defendant commenced proceedings in the [ADDRESS] against the plaintiff to recover those fees. The proceedings were defended on the basis that the contract under which the fees were to be paid was made with [NAME] and not the plaintiff. 4 The proceedings were heard and determined by [NAME] on 22 April 2005. 5 The Magistrate took the view that there was a change in the contractual relationships during the period that the work was being done. He divided what he described as the term of the contract into three periods. The first was described as post-31 March 2000. The second was described as investigation work. The third was described as rectification work to 31 March 2000. 6 The first period involved a sum of $6,738.60. The Magistrate found that [NAME] was liable for the payment of that sum. 7 The second period involved a sum of $21,570. The Magistrate found that the plaintiff was liable to pay that sum. He said that he was not satisfied that the plaintiff was doing so as agent for [NAME] so as not to be personally liable for such costs. In reaching that decision, the Magistrate regarded as crucial a letter dated 14 September 1999 and the reply thereto from the plaintiff dated 17 September 1999. 8 The third period concerned the sum of $18,039. The Magistrate found that the plaintiff was also liable to pay that sum. In reaching that decision, he said that he was not satisfied that anything occurred between 1 November 1999 and 31 December 1999 which would change the view that he had come to in relation to the second period. 9 On 6 May 2005, the plaintiff filed a summons in this court. It seeks to bring a challenge to the decisions made in respect of the second and third periods. The decision reached as to the first period is accepted by the parties. It was not argued that the Magistrate erred in finding that there was a change in the contractual relationships during the period that the work was being done. 10 In the circumstances of this case, there is an appeal as of right where there is error in point of law. Leave may be granted where there is a question of mixed law and fact. An onus is borne by the plaintiff to demonstrate that the subject decisions ought to be disturbed. 11 There is issue between the parties as to whether or not the subject matter of this appeal gives rise to any error in point of law. This appeal can be disposed of without the need to address that question. It might be added that if no error in point of law is involved, it seems to me that this is not a case in which leave would be granted (see, inter alia, [COMPANY] & Anor v [COMPANY] & Anor [2005] NSWSC 656). 12 The material before the Magistrate consisted of witness statements and relevant documentation. There was no cross-examination. The Magistrate's task was to make determinations on the written material. 13 The subject matter of the appeal falls within a short compass. It concerns the reasoning process that led to the decision concerning the second period. There is no dispute that nothing occurred during the third period to change the view that the Magistrate had come to in relation to the second period. 14 The plaintiff had prepared a draft specification for the rectification works. It provided for the cost of testing to be borne by the contractor. The defendant suggested alterations to this document. One suggestion was to insert the name of [NAME] in lieu of "Contractor". This brought about no change in the contractual intent of the document (as [NAME] was indeed the contractor). The specification in its final form incorporated that proposed alteration. 15 I now turn to what are regarded as the crucial documents. Firstly, there is the letter dated 14 September 1999. It contained the following:- 1. Our Commission and Payment Based on your facsimile of 10 September 1999 we presume that it is [COMPANY] who have commissioned us to undertake this work. However we also note that you make reference to the insurer regarding payment. Given the past problems in terms of delayed payment for our work on this project we request that it be clarified as to who is commissioning us and agreement that all invoices will be paid within a 28 day period of submission. As you would be aware the previous invoices were not paid for many months and we do not wish to experience the same cash flow difficulties. 16 Secondly, there was the letter dated 17 September 1999. It contained the following:- 3. Paragraph 3. [COMPANY] has been given an estimate of $20,000 for your fees. [COMPANY] will be paying those monies. Those monies will be paid to you via [NAME]. We can assure you that there will be no delays incurred with regard to payment.

The matter of the identity of the party that was liable for the payment of the fees was not further pursued between the parties. 17 The first letter was written in the context that the defendant had been told that the moneys for payment of the fees would be coming from the insurer. It was intended to be the source of funds. The presumption posed by the defendant that the plaintiff was the party commissioning the defendant to undertake the work was neither rebutted nor addressed in any way. It was directed to the question of the party that was liable to pay the fees. In the second letter, the plaintiff did no more than affirm that the moneys would be paid by [COMPANY]. The statement that those moneys would be paid via [NAME] takes the matter no further (as [NAME] was the insured and presumably the initial recipient of any moneys paid by [COMPANY]). 18 I am not satisfied that there was any error on the part of the Magistrate. I do not consider that the plaintiff in the relevant correspondence made it clear that it was contracting on behalf of a principal ([NAME]) and not on its own behalf. It seems to me that it did not name [NAME] as the entity to be responsible for the fees. There is no dispute that the authority the Magistrate relied on (HJ Lyon & Sando Ltd v Houlson [1963] SASR 29) correctly stated the applicable law. 19 The appeal fails. The summons is dismissed. The plaintiff is to pay the costs of the summons. The exhibit may be returned. **********

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