Antoniou v Jog Group Pty Ltd

Supreme Court of NSW|2022-06-17

Judgment

HER HONOUR: This is an appeal from a Local Court decision that relates to a replacement vehicle dispute.
By way of summons filed 20 August 2021, the plaintiff relevantly seeks: 1. Leave to appeal (to the extent that such leave is required). 2. The judgment of the Court below be set aside and a verdict be entered for the plaintiff.
The plaintiff is Andreas Antoniou. The defendant is Jog Group Pty Ltd ("Jog Group"). At the hearing, G Carolan of Counsel appeared for Mr Antoniou. W Richey of Counsel appeared for Jog Group. The parties relied on a joint court book ("CB"). Mr Antoniou relied the affidavit of Muharrem Candan Koyuncu filed 20 August 2021 which was marked as Exhibit A(1)-(2) ("Ex A(1)-(2)").

Background

The agreed facts are as follows. On 8 March 2020, the plaintiff collided with the rear of the motor vehicle, a 2015 Range Rover SVR, which was being driven by a director of Jog Group, Mr Bagga. This vehicle was owned by Jog Group, which is a small motor dealer which trades under the name "Exclusive Auto Group ". As a result of this accident, repairs were required to the Range Rover.

The pleading framework

On 3 July 2020, by way of statement of claim filed in the Local Court Jog Group relevantly plead as follows (Ex A(1), 55): PLEADINGS AND PARTICULARS … [3] On or about 09 March 2020, a collision occurred at or near the intersection of Prospect Highway and Stoddart Road, Prospect in the state of New South Wales involving the plaintiff's vehicle and the defendant's vehicle (the Collision). [4] The Collision was caused by the negligence of the defendant. … [5] As a result of the Collision, the plaintiff's vehicle was damaged and unavailable for use whilst undergoing repair. [6] As a consequence of the defendant's negligence, the plaintiff: a) suffered a loss of use of the plaintiff's vehicle; and b) needed the use of a vehicle whilst the plaintiff's vehicle was being repaired. [7] The plaintiff hired a replacement vehicle. Particulars a) The plaintiff hired a Mercedes [SUV] for the period of 10 March 2020 to 25 May 2020 at a cost of $43,668.00. [8] As a consequence of the defendant's negligence, the plaintiff has suffered loss and damage. … [9] And the plaintiff claims: (a) Special damages for the actual cost of repairing the damage to the plaintiff's vehicle and the actual hire car charges incurred in the sum of $103,772.98; (b) Alternatively, general damages for the cost of repairing the damage to the plaintiff's vehicle and the loss of use of the plaintiff's vehicle; (c) The actual cost of obtaining the assessment reports in the sum of $800.00; (d) The cost of storing the plaintiff's vehicle in the sum of $736.00 from 5 May 2020 to 5 June 2020 and ongoing until payment; (e) Interest pursuant to Section 100 of the Civil Procedure Act 2005 (NSW) from 09 March 2020 to 3 July 2020 in the sum of $1,528.77 and continuing until the date of payment or judgment; (f) Costs. …"
On 7 August 2020, by way of defence filed in the Local Court, Mr Antoniou pleads as follows (Ex A(1), 62): "PLEADING AND PARTICULARS … [4] The Defendant does not admit paragraphs 5 and 6 of the Statement of Claim. [5] The Defendant denies the assertions contained within paragraph 7 of the Statement of Claim. a) The plaintiff did not agree to pay $43,668 to be provided with a vehicle. b) The plaintiff did not incur any obligation to pay $43,668.00. [6] The defendant denies paragraphs 8 and 9 of the Statement of Claim. Particulars (a) The cost of repairs claimed is excessive and unreasonable; i. The cost of repairs claimed exceeds the market cost of repairing the damage caused in the collision; ii. The claim includes work and parts not required to repair the damage caused in the collision. (b) The hire car claim is exorbitant. i. exceeds the market rate of hiring a temporary replacement vehicle which would have satisfied the Plaintiff's need (which is not admitted), if any, for the damaged vehicle; ii. the duration of hire exceeds the reasonable period to repair the vehicle. …

Magistrates' decision

On 23 July 2021, the Magistrate handed down his written decision. As to whether the vehicle was a 'stock-in-trade' or for 'day to day use' the Magistrate made the following findings: (T3.39-4.2) "I also find that the loss of the vehicle was both as a stock-in-trade which is not subject of a claim before the Court here and also as the use of a vehicle for the day to day use and needs of him and in line with the use of the damaged vehicle and how the damage vehicle was used originally through the plaintiff business. It is noted that in the case of Giles v Thompson [1993] it states that: "It seems to me that in the cases under consideration where plaintiffs own cars which were damaged and therefore unavailable, the burden of showing need is relatively easily discharged. The need must be assessed in the light of the fact that the particular plaintiff previously had a car available which was during the period of repair not available. It is clearly not necessary in such a case to prove that it was essential for a plaintiff to hire a replacement car. It is sufficient to so that he acted reasonably." In this particular case, I find that need has been shown by Mr Bager in his role as an agent of the plaintiff company, and that the use of the vehicle to be available are generally to him, as well as a vehicle that was used through the plaintiff company as stock-in-trade."
As to whether the plaintiff demonstrated a 'need' for the vehicle the Magistrate made the following findings: "In the case of Lee v Strelnicks; Souaid v Nahas; Cassim v Nguyen; Rixon v Arsalan being the Court of Appeal, with respect to those matters, Mr Cassim and Mr Souaid both within the cross-examination noted that they did not have any particular overriding need as to the use of a specific type of motor vehicle. Therefore, through the concessions made by each of those plaintiffs, it was taken and found quite reasonably that any motor vehicle would have been appropriate; not necessarily a motor vehicle that fell within the same particular category of the motor vehicle which had been damaged. In this particular case, one which is described by Mr Bager as a "performance SUV". Mr Bager was in cross-examination unshaken in his need for such a motor vehicle, and I find that the plaintiff then has established the need for this particular type of vehicle. No other evidence via cross-examination or otherwise put to the Court to suggest that a vehicle falling within this particular category could have been hired by the plaintiff at any lesser cost."
As to whether the plaintiff failed to mitigate his damages, the Magistrate made the following findings: "I move on then to the need to mitigate. In this particular case, the need to mitigate the damages is one which needs to be established by the defence. It is stated on some grounds that there was no conduct on the part of the plaintiff to mitigate the damages caused. These was, firstly, by way of the existence of another vehicle that may have been used by the plaintiff company, and I have already addressed that point. The second of these is that there were other vehicles available to the plaintiff, and that is by way of vehicles that may have been available to him or his family. There was significant cross-examination on this point. Once again, there was information given through cross-examination as to the unavailability of other vehicles for the general use from time to time as needs may rise within his family. Although for some part of the time, his family members, being his parents, were overseas and a vehicle was available. The vehicle upon their return was certainly in a category that was primarily for the use of his parents and not for him, and that also falls to the cars that were available to other family members. As also stated, there was the lack of mitigation of damages can be shown through the manner in which the repairs for the damaged motor vehicle were claimed, that is that the claim was made at all times by the plaintiff company through the insurance of the defendant, that is that the defendant's company was being asked to pay the repair of the damage to the motor vehicle. As indicated, it transpired that the particular insurance company of the defendant had, at least at the time of the taking of evidence, refused to pay for the damage and that the vehicle remains at this stage unrepaired. Mr Bager gave evidence that he had not previously claimed any damages on his own insurance. Him being of the mind that by claiming damages through his insurance company would somehow indicate that there was some fault on his point. Whether or not that is correct, that was his understanding and his evidence. He states that he has never ever been an at fault driver in an accident, that whenever he had been involved in an accident, he had always claimed for the damages through the other person, that is the at fault person's insurance company. In this particular case, it was put to him that he could have had the damages repair much more quickly had the claim been undertaken through his own insurance, that is the insurance company that provided insurance coverage to the damaged motor vehicle. Their response to him was that he had never done so before. He did not understand that that was the procedure that was involved. However, although I have my concerns about that, there is no evidence that is before the Court that suggests that if Mr Bager had in fact claimed through his own insurance, that there would have been a reduction in the period of time required to repair the motor vehicle that was damaged. That therefore, there would have been a lesser need for the period of time for the hire of the motor vehicle that was hired to replace the damaged vehicle, that is the period of time of 77 days. Ultimately, at the point when 77 days of hiring the motor vehicle and the damaged vehicle being unrepaired within the body repair shop, Mr Bager calls the replacement motor vehicle to be returned. It was in his words based upon the fact that the cost of hiring that vehicle was becoming quite significant, and indeed I agree on that assessment. It was replaced, and despite the fact that he no longer had a vehicle then to be used and the evidence from him is that he then undertakes the use of cars of family members, ultimately the damaged vehicle returned home and prior to that particular date, the hire vehicle was returned. In light of that, I do not accept that the defence has shown that there has been no mitigation of the damages caused, that is through the reduced time period that could have been associated with the use of the hire vehicle by way of claiming damages through a different insurance company. The use of the car, finally, as being a damaged but still driveable motor vehicle was also raised by the defence. It does not seem to me that this has much strength through the submissions. It is quite clear that the damage to the vehicle was significant and that while the car remains driveable, it is driven at this stage only for the purposes of keeping the car battery charged. Itis started up and it is driven around the block on occasion simply for the benefit of the car not becoming stale or stagnant for what of a better term. Mr Eager now uses for his own use the vehicle that is available to him through either his family, or family members, or other persons close to him. I am satisfied that Mr Eager has satisfactorily moved to mitigate the damages that have been incurred as a result of the motor vehicle accident…"
Having made these findings, the Magistrate made the following orders: "I MAKE THAT ORDER IN THE AMOUNT OF DAMAGES $40,000 WITH RESPECT TO THE HIRE OF MERCEDES-EENZ REPLACEMENT VEHICLE AWARD DAMAGES TO THE AMOUNT OF $43,668 PLUS THE INTEREST THAT HAS EEEN OCCURRED, WHICH I UNDERSTAND IS IN THE AMOUNT OF $2,579.74 FOR THE PERIOD OF TIME BETWEEN 9 MARCH 2020 AND 23 JULY 2021."

Legal Principles - Replacement vehicles

In Lee v Strelnicks; Souaid v Nahas; Cassim v Nguyen; Rixon v Arsalan [2020] NSWCA 115, collectively ("Lee and Rixon"), the Court of Appeal considered four separate matters involving motor vehicle owners who suffered damage by reason of a negligent driver and subsequently hired a replacement vehicle. The issue before the Court was whether a claimant has a "need" for a replacement vehicle and what constitutes reasonable expenditure on hiring that replacement vehicle for the purpose of determining recoverable damages. The majority of the Court granted leave in part and allowed the appeal in part (White JA and Emmett AJA agreeing, Meagher JA dissenting in part) and made the following points of principle.
Firstly, the Court of Appeal found that claimant must establish a "need" for a replacement vehicle: Meagher JA at [11], [22] [27]; White JA at [69], [80] [120]; and Emmett AJA at [131]-[132].
Secondly, in determining what "need" entailed, the majority referred to the principle of restitutio in integrum such that, where a damaged vehicle would have been used, the relevant need is for a replacement of that damaged vehicle in order to put the claimant in the position he or she would have been in but for the wrongdoing: White JA at [27], [60], [69]; and Emmett AJA at [119]-[120], [129]. Accordingly, "need" should be gauged by whether the claimant had a need for the use of their damaged vehicle, not by exclusively considering if the function of the replacement vehicle meets a claimant's inconvenience: White JA at [60], [69]; Emmett AJA at [129].
Thirdly, the next inquiry looks towards the reasonableness of the claimant's hire expenditure in light of the previous conclusion. First, this involves inquiring whether an equivalent vehicle is available such as one of the same make, model and year, or if none is available, then what is available in the market that is as close to equivalent as possible: White JA at [27]; Emmett AJA at [121] and [124]. Secondly, the claimant's cost of hiring should be no more than would be reasonably needed to hire such an equivalent vehicle in the circumstances: White JA at [27] and [68]); Emmett AJA at [125]. The cost of hiring an equivalent vehicle in the market should be the measure of damages: White JA at [27]; Emmett AJA at [128].
Finally, in dissent, Meagher JA considered at [8] and [17]-[18] that regardless of whether hire costs were regarded as expenditure in mitigation or incurred as a foreseeable consequence of the tort, the analysis converged on the reasonableness of the expenditure. The claimant could recover no more than was reasonably necessary to make good their compensable loss. The relevant loss was the uses to which the damaged vehicle was likely to have been put during the period of repair, and ordinarily satisfied by the hire of a vehicle which is sufficiently comparable to the damaged vehicle in terms of functionality and specifications to satisfy the uses to which it was capable of being and likely to have been put: Meagher JA at [18]-[21]; White JA at [31], [60] and [69]; Emmett AJA at [127] and [129].
This subject matter was further considered by the High Court in Arsalan v Rixon (2021) 395 ALR 390; [2021] HCA 40 ("Arsalan"). Here, the above-mentioned matters of Rixon v Arsalan and Nguyen v Cassim were heard together on appeal by Kiefel CJ Gageler, Keane, Edelman and Steward JJ. The legal principles for proof of loss and mitigation were set out by the High Court at [34]-[35]: "[34] Although a plaintiff must prove their loss, it will not usually be difficult for a plaintiff to establish heads of damage of physical inconvenience and loss of amenity of use consequential upon their lost ability to use their vehicle. There will, however, be exceptional cases where such loss to the plaintiff will be non-existent or so slight that the hire of a replacement vehicle will not be accepted to be a step in mitigation. Such exceptional cases might include where the plaintiff was hospitalised or abroad during the relevant period of repair, or where the damaged vehicle could have been replaced from idle stock within the plaintiff's fleet of vehicles. [35] Apart from such cases, it will usually be sufficient for a plaintiff to identify a past suite of purposes for which the damaged vehicle was used in order to justify an inference that the plaintiff would have put the vehicle to the same uses during the period of repair and would be otherwise inconvenienced. As Lord Mustill recognised in Giles v Thompson, it will not be hard to infer that a plaintiff who incurs the considerable expense of running a private vehicle does so for reasons of convenience. Similarly, it will usually be sufficient to infer that a plaintiff derives amenity from the various functions used in their vehicle, particularly an expensive, prestige vehicle in circumstances in which the plaintiff incurred significant capital or ongoing expenditure on that prestige vehicle."
As to the enquiries into the reasonableness of the hire, the High Court continued at [36]-[39]: "[36] Once a plaintiff has proved heads of damage of physical inconvenience and loss of amenity of use, it will usually be difficult for a defendant to prove that the plaintiff acted unreasonably by seeking to hire a replacement vehicle. In some cases, a defendant might instead seek to establish that the amount of the hire costs incurred was unreasonable for various reasons: the replacement vehicle hired, in light of the range of vehicles that might fairly be regarded as equivalent to the damaged vehicle; the period of hire, having regard to the reasonable period of time for repairs; or the extent of the costs included in the hire charge. But none of those matters of quantum arises on these appeals. [37] The usual ease with which a plaintiff may establish heads of damage of physical inconvenience and loss of amenity of use explains why in Dimond v Lovell and in Lagden v O'Connor their Lordships assumed that it would generally be reasonable for a plaintiff to hire an equivalent vehicle, subject to any dispute about the unreasonableness of the quantum of the hire costs. For instance, in Lagden v O'Connor, Lord Hope assumed that a plaintiff would generally be able to recover as damages the costs of hire of an equivalent vehicle, but if "a larger or more powerful car was hired although vehicles equivalent to the damaged car were reasonably available at less cost - the amount expended on the hire must be reduced to the amount that would have been needed to hire the equivalent". [38] The appellants on these appeals submitted that a different conclusion was supported by the earlier decision of the Court of Appeal of England and Wales in Watson Norie Ltd v Shaw and Nelson. Properly understood, however, that decision is consistent with the general position that it is reasonable for a plaintiff to hire an equivalent vehicle. In that case, the plaintiff company had hired a replacement prestige car for the managing director, initially a Rover 100 and then a Jaguar 3.8. The car was hired at a cost of £400 to replace the plaintiff's Jensen car which had been damaged by the defendants' negligence. The Court of Appeal held that the plaintiff could recover only £185, which was the hire costs of a Ford Zephyr. [39] The conclusion of the Court of Appeal was not due to the unreasonableness of the plaintiff in hiring the Jaguar or the Rover. To the contrary, Sellers LJ held that it would not have been unreasonable for the plaintiff to have hired those cars at a reasonable price. Instead, the finding by the County Court judge, which the Court of Appeal accepted to have been open, was that the defendants had established that the plaintiff had acted unreasonably in circumstances including: (i) the plaintiff's hire from a company that was not in the habit of hiring cars; (ii) the plaintiff's failure to make any real enquiry about price; and (iii) the plaintiff's failure to avail itself of a 20 per cent hire discount by paying cash."

Grounds of Appeal

The grounds of appeal set out in the summons are as follows: 1. The Court below erred in law or as a matter of mixed fact and law in holding that: 1. Jog had suffered any loss; 2. Jog had established a need for a replacement vehicle; 3. the reasonable period of need was 77 days, when the vehicle was: 1. part of the stock in trade of the company; 2. able to be driven; 3. used almost entirely for the social convenience and image of a director of the company 1. Jog was entitled to recover credit hire charges not incurred or paid by it.

Leave to appeal

Leave to appeal from a Local Court decision to the Supreme Court is governed by s 40(1) of the Local Court Act 2007 (NSW). It reads: 40 Appeals requiring leave (1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.
In Lee v New South Wales Crime Commission (2012) 224 A Crim R 94; [2012] NSWCA 262 ("Lee"), Bathurst CJ restated the principles relevant to the granting of leave at [12]: "[12] The principles upon which leave to appeal is granted are well established. Ordinarily it is only appropriate to grant leave concerning matters that involve issues of principle, questions of general public importance or where it is reasonably clear there has been an injustice in the sense of going beyond it being reasonably arguable that the primary judge was in error: Carolan v AMF Bowling Pty Ltd [1995] NSWCA 69; Zelden v Sewell [2011] NSWCA 56 at [22]; Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46]; GKD v Director of Department of Family & Community Service [2012] NSWCA 219 at [10]; Be Financial Pty Ltd v Das [2012] NSWCA 164 at [32]-[34]."

Mr Antoniou's submissions

Mr Antoniou submitted its reasons for why leave to appeal should be granted in the summons. They are as follows.
The questions of law or mixed fact and law that are identified in the appeal grounds are questions that turn on the application of the correct legal principles for quantification of damages for temporary loss of use of a non-income producing asset.
It would be contrary to the interests of justice for the Court to determine that the Court below had misdirected itself in law as to the correct legal test, and yet leave uncorrected factual findings that were reached pursuant to that misdirection.
But for the factual findings that raise the questions of mixed law and fact that are identified in the appeal grounds below, Jog Group would not have recovered as damages a sum that was sufficient to enliven the application for indemnity costs on which Jog Group succeeded.
It would be contrary to the interests of justice to leave uncorrected factual findings that were reached pursuant to a misdirection of law, in circumstances where those findings provided the basis upon which the Court below ordered Mr Antoniou to pay a substantial portion of the Jog Group's costs on the indemnity basis.

Jog Group's submissions

Mr Antoniou has not identified whether leave to appeal is required. On their face, the proposed appeal grounds are simply an attempt to disturb findings of fact without precisely identifying any concomitant error of law. At best, the appeal grounds amount to questions of mixed law and fact, save for a "no evidence" argument introduced in written submissions and dealt with below.
The amount in dispute is only around $43,000. In fact, the amount in issue is likely to be less. Mr Antoniou is wrong to contend that Jog Group suffered "no loss." Irrespective of whether Jog Group was entitled to the hire car charges it sought, it still suffered a real loss for which general damages called to be awarded.
Ordinarily, the Court is hesitant to grant leave to appeal where small sums are involved. That approach conforms with s 60 of the Civil Procedure Act 2005 (NSW) which requires this Court to consider the proportionality of costs to the subject matter in dispute. Notably, Mr Antoniou's arguments about why leave should be granted mainly concern dissatisfaction with the outcome on costs, rather than any issue of principle.
Mr Antoniou has not challenged the exercise of the Local Court's discretion on costs. Instead, he says an "injustice" arose because the learned Magistrate's decision permitted the plaintiff to then make an application for indemnity costs on the basis that an offer of compromise was beaten. That contention should not be accepted as a basis for a grant of leave to appeal. It is tantamount to merely expressing dissatisfaction about the end-result of a case. Unless a costs decision is directly under challenge, the issue of costs should remain collateral to the determination of whether a decision below has manifested a clear injustice. To reason otherwise would subvert the ability of this Court to control its workload by means of granting or denying leave to appeal in appropriate cases.
Even if Mr Antoniou's contentions on costs were taken at their highest - they would still be insufficient to warrant leave to appeal. It could not be said that the errors below resulted in an unusual or harsh outcome on costs. The indemnity costs order complained of stemmed from an offer of compromise made by the plaintiff on 11 May 2021.
Although Mr Antoniou had made offers during the proceedings, none of those offers exceeded even the value of the repair claim as settled on the day of the hearing for $40,000. Thus, even if Mr Antoniou's arguments about the hire-car component of the case were accepted below, it is unlikely a drastically different outcome on costs would have eventuated. The learned Magistrate's findings on the hire-car component of the case did not cause costs to entirely "go the other way." The presence of an indemnity costs order for only part of a case cannot, without more, sound a sufficient injustice to warrant leave to appeal.

No Issues of Principle

The questions identified in the proposed appeal grounds are heavily steeped in the unique facts of this case. They involve no principles of general application or public importance. Mr Antoniou has not demonstrated anything more than the learned Magistrate was arguably wrong in conclusions drawn from the facts of this case.
Although Mr Antoniou contends that the appeal grounds involve legal principles for the quantification of damages for loss of use, he does not articulate what those broader principles are. The main argument by Mr. Antoniou (both here and below) was that Jog Group was not a contracting party to a particular hire agreement. Even if those arguments were accepted, they are tightly coupled to the facts of this case. It is notable that Mr Antoniou's submissions contain many complaints about the inferences the Local Court 'should have' drawn from the evidence. That rather serves to highlight that no issue of principle transcending the facts of this case are involved in the appeal.
Given the small amount in issue, the lack of any obvious injustice or issue of broader principle. Leave to appeal should be refused.

Resolution - Whether leave to appeal should be granted

Mr Antoniou brings this appeal on this basis that the Court below erred in matters of mixed fact and law. Pursuant to s 40 of the Local Court, leave of the Court is required to proceed on this basis, except so far as the 'no evidence' argument is concerned, I shall refer to it in more detail later in this Judgment.
The principles upon which leave to appeal is granted are well established. Ordinarily it is only appropriate to grant leave concerning matters that involve issues of principle, questions of general public importance or where it is reasonably clear there has been an injustice in the sense of going beyond it being reasonably arguable that the primary judge was in error: See Lee at [12].
Mr Antoniou has not specifically addressed whether this matter involves issues of principle, questions of general public importance or whether it is reasonably clear that there has been an injustice in the sense of going beyond it being reasonably arguable that the primary judge was in error, other than to say that it would be contrary to the interests of justice to leave incorrect factual findings undisturbed that led to misdirection and ultimately indemnity costs. The principles of replacement vehicles have been well settled in Arsalan. It is my view that as set out earlier in this Judgment, the findings on the issues of whether Jog Group suffered any loss, their "need" for the replacement vehicle and the reasonableness of the hire are well explained and it was open on the evidence.
At best these grounds of appeal raise issues of mixed fact and law which require leave to appeal. In my view these grounds do to raise any issues of principle, questions of general public importance or an injustice in the sense of going beyond it being reasonably arguable that the Magistrate was in error. On these issues, it is my view that leave should not be granted.
The only ground that merits consideration is that the Magistrate erred in making findings regarding the construction of the hire contract and the authority of Mr Bagga as a director based on 'no evidence'. This argument arises circumspectly out of Ground 1(d) As conceded by Counsel for Mr Antoniou, this ground constitutes an error of law and therefore Mr Antoniou may appeal as of right.

Appeal ground 1(d) - Jog was entitled to recover credit hire charges not incurred or paid by it ("no evidence argument")

Mr Antoniou's submissions

Mr Bagga is one of two directors of Jog Group. Mr Bagga said at [16] of his affidavit (CB 112): "On 10 March 2020, I hired a replacement car from "unique Car Hire " on the Plaintiff's behalf. "
Objection was taken to the form of that evidence and the Magistrate made ruling on the objection: "It seems to me that the paragraphs raise exactly on what basis what Mr Bagga undertook the hiring of that motor vehicle is a matter for evidence so I propose to allow those two paragraphs over objection on that basis and certainly weight can be appropriately given on depending on further evidence that may be proffered-with respect to cross-examination."
Mr Bagga repeated his assertion about signing the hire agreement in his capacity as a director in the course of cross-examination, but provided no better evidence of authority (T35.18-36.12).
His Honour found at T3.31-38 of his judgment: "I do not find that when Mr Bagga entered into the rental agreement that he necessarily was of a mind or an understanding that he was entering into that in anything other than the role as an agent of the plaintiff company. There was no intention or understanding that what he was doing was entering into the contract in anything other than the capacity as the vehicle 's owner, that is the owner of the vehicle that was in need of replacement that is in the name of the plaintiff company. "
His Honour erred in making the finding for the following reasons: 1. The rental agreement was a commercial contract. The task of construing it is an objective one and there was no evidence that Jog Group was a party to the contract or was intended to be bound to it, given: 1. The repair estimate was issued to Mr Bagga and addressed to his home address; 2. The alleged rental agreement was issued to Mr Bagga and addressed to his home address (see below); 3. The Tax Invoice for the hire charge was issued to Mr Bagga personally; 1. Jog Group did not adduce any evidence that it had accepted liability for the debt or that it had ratified the terms of the alleged hire agreement; 2. No evidence was called from the other director of the company to establish acceptance of liability and no records of the company were tendered to establish that Mr Bagga had been authorised to enter into a contract on behalf of the company.
The Magistrate observed on T.15-18 of the Judgment "that the plaintiff company was in fact a small concern and it was not sophisticated in its organisation or management". That observation was made without any evidential foundation and points to error in the Magistrate's understanding of how the contract should be interpreted.
The fact that the contract was made by Mr Bagga personally and given the lack of evidence that the company accepted liability for any hire charges, that should have been enough for the Magistrate to dispose of the claim.
It was clear from Mr Bagga's evidence that the replacement vehicle was provided to him on a credit hire basis and that he believed that the car repairer would recover the hire car cost from the defendant's insurer. Jog Group was never a party to any hire arrangement and has no obligations in relation to payment to Unique Wedding Cars.
Leaving aside hire car expenses, the plaintiff did not establish any other loss associated with damage to the Range Rover. There was no evidence of loss of use of the car as a chattel employed in Jog Group's business.
The Magistrate found that Mr Bagga signed the rental agreement in his name, using his residential address, rather than the company's trading address and without "recording as to whether or not this was in his capacity as an agent of the plaintiff company".
The Magistrate then said, without identifying the facts upon which the following was founded: "It is clear throughout the evidence that was given by Mr Eager (sic) that the plaintiff company was in fact a small concern and it was not sophisticated in its organisation or management. Mr Eager's role within the plaintiff company was such that the vehicle, it would appear, that was for his own use was also identical as the vehicle that was used personally by him and also the stock-in trade of his company that was profit for trade or sale at any given time, so there is somewhat a blurring of that line. It was very clear throughout the evidence that was given by Mr Bager that the mechanisms and intricacies of the functioning of his business and his role within the business was somewhat uncertain and unclear at least in his mind or understanding. ... I do not find then that when Mr Bager entered into the rental agreement, that he necessarily was of the mind or an understanding that he was entering into that in anything other than the role as an agent of the plaintiff company. There was no intention or understanding that what he was doing was entering into the contract in anything other than capacity as the vehicle's owner, that is the owner of the vehicle that was in need of replacement that is in the name of the plaintiff company."
That finding constituted an error by the Magistrate. It failed to deal with the obligation to objectively construe the contract and ignored the distinction between the affairs of the corporation and the individual director.
An individual director does not have authority by reason of that office to bind the company in contract: Northside Developments Pty Ltd v Registrar General & Ors [1989]-[1990] 170 CLR 146 ("Northside Developments") at 205 per Dawson J; Brick & Pipe Industries Ltd v Occidental Life Nominees Pty Ltd [1992] 2 VR 279 at 303, appealed at 361. An individual director has only a power to join in the collective exercise of corporate power by the board of directors. As Dawson J said in Northside Developments at 205: " ...[T]he position of director does not carry with it any ostensible authority to act on behalf of the company. Directors can act only collectively as a board and the function of an individual director is to participate in decisions of the board. In the absence of some representation made by the company, a director has no ostensible authority to bind it. "
Jog Group provided no evidence of authority and the finding by his Honour that the contract was entered into by Mr Bagga as an agent for the company is an error of law.

Jog Group's submissions

The primary argument advanced by Mr Antoniou below was that Jog Group was not the contracting party to the hire car agreement. Instead, Mr Antoniou argued that Mr Bagga entered into the hire contract in his personal capacity, and not in any way as the controlling mind or agent of the company.
The learned Magistrate rejected this argument, accepting that the company had hired the replacement. The thrust of Mr Antoniou's argument is that the learned Magistrate wrongly applied a subjective analysis to the question: "Who hired the car?"
There can be no doubt that the resolution of a dispute about the identity of the parties to contract must adhere to the objective theory of contract. But the proceedings below did not involve a dispute between any alleged party to the hire contract. The plaintiff below did not seek to escape liability under that agreement. Mr Bagga did not seek to secure the benefit of the hire car for himself over the opposition of Jog Group. Nor was there any suggestion the hire company took issue with the identity of the contracting party.
As a stranger to the contract, Mr Antoniou's attempts to vitiate that agreement by arguments about its proper construction are redolent of a kind of tertius foreign to the common law. Properly understood, the defendant's complaint is simply one of evidence and fact-finding. Part of the plaintiff's case on damages was that it had incurred an expense. Although dressed-up in the language of privity of contract, Mr Antoniou's argument was that the plaintiff did not actually incur that expense as a matter of fact.
So far as this 'no evidence' argument is concerned, it was raised in the defence, albeit circumspectly. The pleadings simply put the plaintiff to proof on the assertion that it incurred hire fees. The case summary of the defendant below did not expressly reveal the argument to be advanced by Mr Antoniou on this topic.
Mr Antoniou called no evidence to advance this argument (for example, he did not subpoena the records of the hire business to establish whether it relied on any representations about who it was contracting with, which would have been relevant). Mr Antoniou was entitled to adopt this strategy. However, the upshot was that when it came to determining whether Jog Group had incurred the expense as claimed, the only evidence before the learned Magistrate was from a director of the company. Mr Bagga gave evidence that when he hired the car he was doing so on behalf of the company. He was unshaken on that point in cross-examination. That was particularly significant given the lack of prior notice Mr Antoniou provided in relation to this argument.
Despite this, Mr Antoniou now contends in written submissions that there was "no evidence that Jog Group was a party to the contract or was intended to be bound to it". Although not raised as a discrete ground of appeal, it is conceded that a finding made in the absence of evidence would amount to error of law (for which leave is not required). Nevertheless, it has often been said that a "no evidence" error will not arise simply because a finding based on the evidence might be described as illogical, or even contrary to the overwhelming weight of evidence in a case.
Mr Antoniou points to the fact that the rental documents did not expressly mention Jog Group by name. The rental invoice, for example, was issued only in the name of Mr Bagga. The document contained no reference to the fact that he was a director of the company (although his status as director was not disputed). Mr Antoniou thus urged the learned Magistrate below to conclude from this that Mr Bagga had in fact hired the replacement in his personal capacity.
It was open for the Magistrate to accept this argument. The documents alone did not make it clear one way or the other who the hiring party was. However, his Honour was not bound to reach a conclusion. The fact that the documents only mentioned Mr Bagga did not exclude the conclusion that Jog Group was the contracting party. For one, the doctrine of undisclosed principal would leave open the real possibility that Jog Group was the contracting entity irrespective of whose name was on the documents. There was also ample evidence to support a finding that the company in fact hired the replacement: 1. Ownership: The vehicle involved in the accident was owned by Jog Group, and not Mr Bagga personally. The evidence showed that the Range Rover was purchased by the company and registered in the name of Jog Group. Ownership of the chattel was a significant surrounding circumstance in the determination of who hired the replacement. In Bridges & Salmon Ltd v The Swan [1968] 1 Lloyd's Rep 5 a director of a company owned a vessel. He engaged the plaintiffs to repair it. There was a dispute about whether he did so in a personal capacity, or on behalf of the company. Brandon J held that the main surrounding circumstance in deciding that issue was the fact that the company was the owner of the vessel, and it had the interest in the repairs. 2. Replacement: The Mercedes was hired on the same day the damaged Range Rover was taken in for repairs. The obvious conclusion was that the Mercedes was acquired to temporarily replace the Range Rover owned by Jog Group. The hire car was not obtained to serve some specific purpose of Mr Bagga personally that happened to coincide with the time of the accident. 3. Directorship: Mr Antoniou complains that Mr Bagga provided insufficient evidence of his authority to hire the car on behalf of Jog Group. Mr Bagga was a director of the company. Jog Group manifested its actions and intentions through him. This was not a situation in which a low-level employee of a large company sought to bind the organisation to an unusual transaction without any evidence of authority to do so. 4. Rejection of Personal Liability: In cross-examination, it was twice put to Mr Bagga that he was not personally liable to pay the hire car invoice. Unsurprisingly, Mr Bagga embraced that proposition.
It could not be said that there was no evidence to support the finding that Jog Group hired the car.
Although the Magistrate remarked upon Mr Bagga's state of mind when signing the rental contract, his Honour was not adopting a wholly subjective analysis of that question. A fair reading of decision below is that the Court was principally focused on the fact that it was the company who owned the vehicle, and it was therefore the company who required the replacement. It was in that context that the Court remarked that Mr Bagga did not turn his mind to acting "in anything other than [in a] capacity as the vehicle's owner." That is, as a director of the entity whose chattel was damaged and who had reason to replace it.

Resolution

In this ground of appeal, Mr Antoniou submits that the Magistrate made findings relating to Mr Bagga's authority to bind Jog Group to the hire contract and subsequently that Jog Group was a party to the hire contract based upon no evidence.
The Magistrate, at T3.31-38 of his judgment, made the following findings: "I do not find that when Mr Bagga entered into the rental agreement that he necessarily was of a mind or an understanding that he was entering into that in anything other than the role as an agent of the plaintiff company. There was no intention or understanding that what he was doing was entering into the contract in anything other than the capacity as the vehicle 's owner, that is the owner of the vehicle that was in need of replacement that is in the name of the plaintiff company. "
From a fair reading of this excerpt, it is clear that the Magistrate applied a subjective construction of the commercial contract, considering what was in the 'mind' of Mr Bagga when he entered the contact and his own understanding of his actions. In my view, this amounts to an error of law. As conceded by Jog Group, the identification of the parties to a contract must be made in accordance with the objective theory of contract. The objective theory of contract was described in the High Court decision of Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 105-106 by Gaudron, McHugh, Hayne and Callinan JJ. As to the requisite intention to create contractual relations, their Honours said that although the word 'intention' is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties: see also Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 348-353 per Mason J.
Jog Group submitted that despite this subjective construction of the contact, the Magistrate's decision that Jog Group was a party to the hire contract was not based wholly on no evidence. It is submitted that, firstly, the vehicle involved in the accident was purchased and registered in the name of Jog Group. Secondly, the replacement vehicle was hired on the same day that the vehicle involved in the accident was taken for repairs. Thirdly, the evidence of Mr Bagga, who hired the vehicle, was one of two directors of Jog Group and his authority to act on Jog Group's behalf was not challenged before the Magistrate. Finally, Mr Bagga was cross-examined and the Magistrate who accepted his evidence that he entered the hire agreement on behalf of Jog Group.
However, it is my view that this evidence alone would not be sufficient to entitle the Magistrate to make a finding that Jog Group was in fact a party to the contact when the objective theory of contract is considered. As submitted by Mr Antoniou, there was no objective evidence before the Court below of the communications between Mr Bagga and Unique Wedding Cars in which the Magistrate could have based the conclusion that Mr Bagga was acting as an agent of Jog Group and therefore had bound them to the contract. In my view, the necessary evidentiary nexus between Jog Group and the hire contract was simply not there. The Magistrate's erred in law when he analysed whether Jog Group was a party to the contract through a subjective lens rather than an objective one. This error of law infected the rest of his decision.

Result

The Magistrate's decision dated 23 July 2021, in proceeding Jog Group Pty Ltd v Antoniou 2020/197219, is set aside. The matter is remitted to the Local Court for determination according to law.

Costs

Costs are discretionary. Costs normally follow the event. The defendant is to pay the plaintiff's costs.

The Court Orders: 1. The Magistrate's decision dated 23 July 2021, in proceeding Jog Group Pty Ltd v Antoniou 2020/197219, is set aside. 2. The matter is remitted to the Local Court for determination according to law. 3. The defendant is to pay the plaintiff's costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 September 2022

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