Brush Park v The Leasing Centre

Brush Park v The Leasing Centre - [2006] NSWSC 1385 - NSWSC 2006 case summary — Zoe

[12]

JUDGMENT (Appeal decision of Local Court Magistrate - alleged overpayment for poker machines) 1 HER HONOUR: By summons filed 23 March 2006 the plaintiff seeks firstly, to appeal the decision of His Honour Magistrate James E Garbett LCM dated 27 February 2005 in proceedings 1367/05 and secondly, an order that the judgment in favour of the defendant on 27 February 2005 be set aside and in lieu thereof verdict and judgment be entered for the plaintiff. 2 Brush Park Bowling Club Limited (Brush Park) is the plaintiff in this Court as well as in the Local Court. The Leasing Centre (Aust) Pty Limited (The Leasing Centre) is the defendant in this Court as well as in the Local Court. Brush Park relied on the affidavit of Belinda Kenneally sworn 17 May 2006 and an affidavit of Terence Sperber dated 28 August 2006. 3 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 73 of the Local Courts Act 1982 (NSW) (the Act) permits a party who is dissatisfied with a judgment as being erroneous in point of law to appeal to this Court. The onus lies on the plaintiff to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered, inter alia, in Allen v Kerr & Anor (1995) Aust Torts Reports 81-354; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156; Carr v Neill [1999] NSWSC 1263 and R L & D Investments Pty Ltd v Bisby [2002] NSWSC 1082. It cannot be said that the judicial officer acted on evidence inconsistent with facts incontrovertibly established by the evidence - see Devries v Australian National Railways Commission (1993) 177 CLR 472 per Brennan, Gaudron and McHugh JJ at 479 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588. 4 Section 74 permits an appeal against the judgment or order on the ground that involves a mixed question of law and fact, only by leave. The plaintiff seeks leave in accordance with s 74. 5 In Swain v Waverley Municipal Council [2005] HCA 4, the Chief Justice at [2] reiterated that, in the common law system of civil justice, the issues between the parties are determined by the trial process. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal. 6 Section 75 of the Act provides that the Court may determine an appeal either by (a) varying the terms of the judgment or order, (b) setting the judgment or order aside, (c) setting the judgment or order aside and remitting the matter for determination in accordance with the Court's directions ,or (d) by dismissing the appeal.

[16]

The second agreement 15 In about April 1999 Brush Park decided to buy a further three poker machines. Mr Richardson contacted Mr Ian Benson of The Leasing Centre requesting a quote. The quote (Aff, Richardson 18/2005, p 134 of bundle) reads: "John, Rates on 3 machines @ $13,400 Cost Price $40,200 "Rental" Residual value $1.00 Period 36Mths Monthly Rental $1325.14 The Above Rental includes Stamp Duty &F.I.D." 16 Mr Richardson deposed [Aff, 18/11/2005, para 29-30] "29. In reliance upon the contents of the fax sent by the Defendant to the Plaintiff dated 30 April 1999, and the discussions I had with Ian Benson prior to the entry into of the second agreement, I understood that after the expiry of 36 months, and the payment of the residual, ownership of the machines would vest in the Plaintiff and the second agreement would accordingly come to an end. 30. The three machines were delivered to the Plaintiff some time in or about June 1999, and, pursuant to the direct debit authority, the Defendant commenced debiting the sum of $1,367.27, rather than $1,325.14, from the Plaintiff's Westpac bank account." 17 Mr Richardson gave evidence to a similar effect in Court. He stated that he believed that the original agreement was for a period of 36 months, with a residual of $1.00 and at the end of that period title would be conferred upon the Bowling Club. Further, he stated that had he formed the belief that the Club would not be conferred title to the poker machines under the second agreement, but would instead have only been renting them, he would not have entered into that agreement. He would have sought finance elsewhere (Local Court, t 31-32). 18 The parties entered into the second written agreement which, like the first agreement, makes no mention of a $1.00 residual or that upon payment of $1.00 title to the machines would be transferred to Brush Park. Clause 1(b) of the agreement was to the contrary. Clause 1(b) says that ownership of the equipment will remain with the owner during the term, expiration or termination of the agreement and the renter is only the bailee of the equipment. 19 There was also a letter in evidence dated 13 August 2004 (Aff, Sessions 18/11/2005, p 114 of bundle) from Mr Moses, the Leasing Centre's financial controller, which stated: "…Because the Club has never given notice in accordance with the terms and conditions of the Rental Agreement, the agreement has been renewed for three additional terms of 12 months each…At no time was it ever indicated to you that we considered that we were not entitled to that payment. …Further, our decision to refund the payment of $1,367.27 and to take no steps to enforce any other rights under the Rental Agreement was done on the assumption that you have acted in good faith throughout the agreement. Now that we are aware that you have not done so, we believe that we are entitled to take action to recover the remaining rental under the renewed period of the rental, being from July 2004 to June 2005. …Clearly, by virtue of the Rental Agreement, you were required to make the payments and there is no basis to claim a refund…"

[18]

The Plaintiff does not specifically allege, and I do not find, that the Defendant was aware of the Plaintiff's alleged mistake. 23. The Plaintiff asserts and must prove mistake. There is some evidence in its favour. There is the Board Minute dated 20/05/95 referred to above. The Plaintiff also apparently disposed of the machines, as an owner. Unfortunately details of this transaction are unknown so little weight can be given to it. It also insured the machines, but as that is a contractual requirement under clause five (5) of the Second Agreement, nothing further can be read into this action. The Plaintiff's failure to give notice under the Second Agreement may be consistent with its mistake claim, or due to the way the Defendant treated the First Agreement, or because it was simply unaware of clause 23. 24. On the other hand, there is a large body of evidence in conflict with the Plaintiff's assertion. The Second Agreement is a formal signed agreement duly executed by Mr Richardson for the Plaintiff. Mr Hosking, who was the Plaintiff's then President, witnessed his signature. Both parties ostensibly adhered to and performed the terms of the Second Agreement for over five (5) years. The Plaintiff paid the lower rental provided for by the Second Agreement and not the higher amount in the Facsimile, as when required. 25. Only after performing the terms of the Second Agreement for that lengthy period, did it then claim to have made the alleged mistakes. 26. At the expiration of the initial thirty-six (36) month term the Plaintiff did not attempt to pay the $1 residual and formally take title. There is no evidence it ever made or caused to be made any diary note or record to do these things. It did not revoke the automatic bank payment after 36 months. 27. The Plaintiff describes the arrangement between the parties as "…a finance agreement in every sense" but one would suspect that a finance agreement would surely refer to an applicable interest rate, and in the formal document probably detail a default interest rate, principle and interest instalments, provision for early repayment, provision for passing of title, and other finance agreement terms. The Defendant's office receipt entry, "as per finance agreement" establishes nothing because any staff member may have used that expression in the loosest sense. 28. A Court will not, without good reason, interfere with a contract, the terms of which are clear and unambiguous. I find that is the case here. The Second Agreement entitled the Plaintiff, on notice, to end it and return the machines after 36 months. If the machines were then obsolete or unwanted for some other reason, this was to the Plaintiff's advantage. The plaintiff says it was a logical absurdity for the Second Agreement to run for further terms as occurred. At the time of signing the contract that was never the inevitable course of events. It was totally within the Plaintiff's own control to terminate the Second Agreement after the initial term. 29. There is an objective presumption that a written document, executed by the parties, is the true record of their agreement. There are two many conflicting and unexplained factors over too long a period of time. 30. I find that the Plaintiff has not proved mistake, and is not entitled to the relief sought under this head." 22 The Magistrate made findings of fact, some of which supported the plaintiff's case. However, there were significant gaps in Brush Park's evidence. Neither affidavit filed on behalf of Brush Park refers to a payment of $1.00 being made to the Leasing Centre in relation to either agreement. There was no evidence as to the circumstances which led to Brush Park entering into the first agreement. The affidavits do not mention whether title to the poker machines passed to the Club upon completion of the first agreement and/or whether the poker machines were sold by it. There was no evidence that, after the expiration of the 36 month period stipulated in the second agreement, Brush Park attempted to pay the sum of $1.00, nor that it made a request for the titles to the poker machines be transferred to it. 23 The Magistrate correctly applied the law pertaining to mistake and unjust enrichment. The Magistrate found that Brush Park did not discharge its onus of proof to establish that it had made a mistake. That being so, the onus did not shift to the Leasing Centre to show why it would be unjust for it to repay those moneys to Brush Park. There is no error of law. Leave to appeal on mixed fact and law is not warranted.

[24]

"If there is a claim of misrepresentation, or non est factum, or if there is an issue as to whether a document was intended to affect legal relations or whether, on the other hand, it was tendered as a mere memorandum of a pre-existing contract, or a receipt, or if there is a claim for equitable or statutory relief, then even in the case of a signed document it may be material to know whether a person who has signed it was given sufficient notice of its contents. The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document…" 32 The Magistrate reproduced earlier in this judgment] correctly applied the decision in Toll [Reasons at 28]. 33 The next issue is whether or not the grounds relied upon by the plaintiff (the quote and the alleged different operation of the two agreements), constitute circumstances, such that there would be an obligation on the defendant to bring those matters to the attention of the plaintiff, or if the plaintiff should be bound by virtue of the fact that it executed the agreement as it was written. Further, if the defendant fails to bring those matters to the plaintiff's attention, has it engaged in misleading and deceptive conduct by virtue of its silence? 34 In relation to the quote (also reproduced earlier in this judgment), the Magistrate commented that the Board Minutes of a meeting of 20 May 1999 are consistent with Mr Richardson's evidence that Brush Park's committee agreed that Brush Park should take the new poker machines "…in reliance of the contents of the fax". Sometime after that meeting, Mr Richardson said to a representative of the Leasing Centre words to the effect "The Club is happy with the quote. Can you please prepare the lease documents?" The representative of the Leasing Centre replied "Ok we'll get them to you as soon as we can." [Reasons at 12] 35 The Magistrate went on to observe that, as the quote did not describe the machines' model or serial numbers and the monthly rental was different from the second agreement, there was some additional contact between the parties, not in evidence. The monthly rental in the quote was $1,325.14 but the amount in the agreement was for a lesser amount, namely $1,243.72. Mr Richardson's explanation was that "he thought the monthly rental rate of $1,243.72 would in fact be increased to $1,325.14 as a result of adding stamp duty and FID." It was the Magistrate's view that "This explanation is obviously wrong and demonstrates the risk in reconstructing events years later." The Magistrate made a finding that the fax and agreement were obviously different in purpose, form and content [Reasons at 18] . This finding was open to the Magistrate. 36 In Henjo Investments Pty Ltd and Ors v Collins Marrickville Pty Ltd (1988) 79 ALR 83, the Federal Court said the following about silence constituting misleading and deceptive conduct [at 95]:

[27]

(For legible copy see magnified copy at the end of this judgment) 38 The Magistrate stated [Reasons at 33]: "Mr Richardson said he was not aware of clause 23 in the First Agreement, and, for the Second Agreement, he said "I do not recall whether I read any of the terms, which may have been attached to the proposed second agreement." The Defendant could reasonably assume the Plaintiff was aware of terms in the two executed Agreements. I do not find the Defendant knew the Plaintiff was unaware of s 23 in either Agreement. In these circumstances, I find the Defendant's conduct in not specifically telling the Plaintiff about section 23 in either Agreement, or that it intended to rely on it in the Second Agreement, is not or is not likely to be misleading or deceptive." 39 The same problems in relation to lack of evidence arise here. While this Court may have a different view as to the significance of the small print size, the terms of the agreement (including clause 23) are clear. The Magistrate held that the Leasing Centre was under no obligation to bring to Brush Park's attention terms that were clear on a reading of the agreement, particularly as the quote and the agreement were, in his view, different in purpose, form and content. 40 Finally, Brush Park submitted that, to the extent that there was conflicting or unexplained evidence on the Leasing Centre's side, the Leasing Centre had an obligation to call witnesses to explain any confusion in the Court's mind and did not do so. The Magistrate's reference to "unanswered questions and unexplained circumstances" are references to gaps in the evidence from Brush Park's camp. As such, it does not follow that a Jones v Dunkel (1959) 101 CLR 298 inference should have been drawn against the Leasing Centre. 41 It is my view that it was open to the Magistrate to make the findings he did and arrive at the decision he did. It is not warranted that leave be granted in respect to a mixed question of fact and law. There has been no error of law. 42 The decision of Magistrate Garbett dated 27 February 2005 is affirmed. The appeal is dismissed. The summons filed 23 March 2006 is dismissed. Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed.

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