Byrnes Corporation v Tarman [1999] NSWSC 175 | Case summary

JUDGMENT (EX TEMPORE) 1 HIS HONOUR: These proceedings commenced by a summons filed on 5 November 1998 under section 459G of the Corporations Law by which the plaintiff seeks to set aside the defendant's Notice of Demand dated 15 October 1998 and served on 19 October 1998. 2 The defendant's demand was for the sum of $11,795.45 and related to three invoices, namely: Invoice 73537 24 July 1998 $5,661.10 Invoice 3557 6 August 1998 4,541.10 Invoice 3567 13 August 1998 1,593.25 These invoices relate to the hire, supply and erection of scaffolding by the defendant to a building site where the plaintiff was the builder. 3 The plaintiff contends that there is a genuine dispute as to the existence of all but $2431.90 of the debt. It appears that the grounds for the plaintiff resisting the statutory demand have shifted over time. The plaintiff relied on no fewer than five affidavits of Mr Byrnes, its sole director, sworn on 30 October 1998, 4 December 1998, 29 January 1999, 18 February 1999 and 22 February 1999. 4 In the first affidavit Mr Byrnes denied that any money was owing. Substantial parts of the plaintiff's affidavits were not read and I was told by counsel for the defendant that various earlier grounds of objection had been abandoned. While therefore there is no evidence of the substantive grounds which have been abandoned, I am entitled to infer that there has been a shifting of ground. 5 Be that as it may, the plaintiff now says that its dispute with the defendant, apart from a few minor amounts, relates to a single issue: namely, whether there were two hiring contracts or only one between the parties. 6 The first hiring contract arose out of the defendant's contract quotation number 2389, a document addressed to 'Jim Burns' with respect to 'Burns Corporation'. The document was dated 19 February 1998 and was addressed to facsimile number 99571041. It related to the hire of scaffolding for Lot 10 Playfair Road, Mt Colah and included a weekly hiring charge of $400 and other charges. The contract arose through the acceptance of the offer constituted by contract quotation 2389 and there is no dispute that such a contract was in existence. 7 The second alleged contract is disputed by the plaintiff. The evidence is a contract quotation number 2420 addressed to 'Vlad/Jim Burns' of 'Burns Corporation'. It also refers to Lot 10 Playfair Road, Mt Colah. The facsimile number 99571041 is crossed out by hand and another facsimile number, namely 96109687, is inserted by hand. The document is dated 6 April 1998 and refers to scaffolding hire at a weekly hire rate of $970. 8 The defendant says that contract quotation number 2420 was accepted by the plaintiff by documents which the defendant puts in evidence. Those documents comprise a single page apparently headed 'Purchase Order' (though the copy in evidence is partly obscured), and a handwritten facsimile from Vlad Barac to the defendant. 9 The former document is dated 7 April 1998 and cross-refers to contract quotation 2420. It is endorsed 'Your urgent attention required' and bears a signature which appears to be the signature of Vlad Barac. The evidence is that Mr Barac was a sub-contractor of the plaintiff and was the site manager for the project at Playfair Road, Mt Colah. 10 The second document appears on its face to have been transmitted from facsimile number 96109687 'VNB Proj Man'. I infer that this facsimile was sent from a facsimile machine operated by Mr Barac. The facsimile number is the same as the facsimile number entered by hand on contract quotation 2420 and therefore I infer that contract quotation 2420 was sent to Mr Barac. 11 The handwritten facsimile bears date 8 April 1998 and is addressed to Mr McVeigh, who is the defendant's manager. It says: 'In regard to my telephone conversation even date with your office find following our purchase order number 063902,' and purports to be signed by Mr Barac. 12 The defendant says that subsequently the parties acted on both contracts, and invoices were submitted by the defendant to the plaintiff in respect of both contracts, which were paid, except for the three invoices in dispute. 13 The plaintiff says that Mr Barac, though he was site manager, lacked authority to enter into a contract to bind it with respect to the hire of scaffolding. According to Mr Byrnes' affidavit sworn on 4 December 1998, he, as the sole director of the plaintiff company, was the only person with authority to enter into agreement with respect to such matters, and he says that he did not agree at any time. He asserts that Mr Barac was never granted authority and he says that in respect of the industry to which the plaintiff and defendant both belong the usual practice and the usual authority of the site foreman is merely to execute documents such as those which confirm the time spent by a sub-contractor at the site and similar matters forming the source documents for the preparation of sub-contractor invoices. 14 The defendant did not tender any evidence to contradict the plaintiff's assertion that the usual authority of a site foreman does not extend to entering into a contract of this kind. 15 As to the subsequent payment of accounts referable to the alleged second contract, Mr Byrnes says that there was a running account between the plaintiff and the defendant and that he did not notice that claims were made at a weekly hiring charge of $970 rather than $400 until after receiving the statutory demand. 16 According to Mr Byrnes, the true position is that there was an original hiring contract for scaffolding arising out of contract quotation 2389 and then subsequently there was a conversation, to which he deposed most recently in his affidavit of 22 February 1999. According to that evidence, Mr Byrnes placed the original order in a telephone conversation with Mr McVeigh in mid-February 1998 and then in late March or early April 1998 he had a further discussion with Mr McVeigh. During the further discussion Mr Byrnes asked Mr McVeigh whether he could supply scaffolding for a second unit and Mr McVeigh said: 'Yes. Sure we can. We will just double the quantity.' 17 Mr Byrnes contends that the effect of that conversation was that the additional scaffolding would be supplied under the original contract at a hiring rate of $400 per week. 18 This case comes before me as an application to set aside a statutory demand for an asserted debt. It is not an action in which the existence of the debt needs to be proved or disproved. The correct approach to a matter of this kind was described by McLelland CJ in Eq in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787. 19 His Honour said that the issue to be determined is whether there is a genuine dispute as to the existence or amount of the debt. He said: '... that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the 'serious question to be tried' criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit 'however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be' ... But it does mean that, except in such an extreme case, a court required to determine whether there is a genuine dispute should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute.' 20 A similar approach is exhibited in the judgment of Hayne J in Mibor Investments Pty Ltd v The Commonwealth Bank of Australia (1993) 11 ACSC 363. 21 It appears from those two judgments that the Court ought to allow cross-examination, if at all, only sparingly. The question of whether there is a genuine dispute ought in most cases be assessed on the basis of the documentary evidence. 22 In this case the defendant indicated that it wished to cross-examine Mr Byrnes. After the affidavit evidence was read and the evidence was otherwise closed, I decided not to permit cross-examination of Mr Byrnes. The plaintiff's counsel indicated at that stage that he wished to adduce further evidence from Mr Byrnes through his re-examination of that witness. I indicated to him then, and I remain of the view, that it is not appropriate to rely on re-examination to adduce evidence after the evidentiary case has otherwise been closed. I also remain of the view that it was not necessary in the present case to permit cross-examination of Mr Byrnes, essentially for the reasons given by McLelland CJ in Eq and Hayne J in the cases to which I have referred. 23 In its essence this case is a simple one. The question is whether the documentary evidence before the Court demonstrates that there is a genuine dispute as to whether the second contract was or was not entered into in a manner binding the plaintiff. On that simple issue, I have come to the view that there is no room for a genuine dispute on the question in view of the evidence before me. 24 The matter was put by the defendant on a number of bases. In particular, the defendant said that the proved facts demonstrated the ingredients of section 129(3)(b) of the Corporations Law. According to that provision, a person may assume that anyone who is held out by the company to be an officer or agent of the company has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer or agent of a similar company. 25 It is clear from the evidence that the plaintiff held out Mr Barac as an agent of the company; namely, a site manager. Consequently, the defendant was entitled to assume that Mr Barac had authority to exercise the powers and perform the duties of a site manager. 26 The difficulty for the defendant, however, is that the only evidence before the Court on the question of usual authority of a site manager indicates that it does not extend to making contracts of this kind. Therefore, in my opinion the plaintiff's reliance on section 129(3)(b) to show that there is no genuine dispute is unsuccessful. 27 However, section 129 of the Corporations Law is not by any means an exclusive code of the circumstances in which a company may become bound by conduct of a person purporting to be the company's agent. It is well-established by principles of the general law of agency that a third party may hold a company bound by conduct purporting to be undertaken on the company's behalf if the person purporting so to act is clothed with ostensible authority by the company. 28 In my opinion, the undisputed facts in this case lead to the conclusion that Mr Barac was in fact clothed with ostensible authority to bind the plaintiff to the alleged second contract in all the circumstances, even though purely as a site manager he may not possess such authority. 29 The facts which I have set out above indicate that contract quotation 2420 arose as a result of a conversation between Mr Barac and someone on behalf of the defendant, presumably Mr McVeigh. After that conversation took place it appears that the defendant sent the contract quotation to a facsimile machine operated by Mr Barac. 30 The next step is crucial. Mr Barac responded by sending by facsimile to Mr McVeigh a handwritten facsimile cover sheet enclosing the document apparently headed 'Purchase Order' which appears, on its face, to be a document of the plaintiff. The document appears to be in a standard form and the covering facsimile refers to it by using a purchase order number. I infer from this evidence that Mr Barac had access to stationery of the plaintiff. 31 Further, in the absence of any other evidence, I believe the only appropriate conclusion is that Mr Barac's access to that stationery was obtained with at least the acquiescence of the plaintiff. 32 That being so, it is correct to say that the plaintiff had in that way armed Mr Barac with the means of binding it to contracts with respect to the operation of the site, even if the usual authority of a site manager would not go sufficiently far to permit such a contract to be made. 33 Given this evidence, it is not to the point for the plaintiff to seek to prove that Mr Barac was not actually authorised by the plaintiff through Mr Byrnes to make the contract. The plaintiff becomes bound by the contract whether it knew the contract was entered into, or whether it expressly authorised the contract, solely because the person who made the contract on its behalf was clothed with ostensible authority to do so in all of the facts and circumstances. 34 It seems to me therefore that this is one of the relatively uncommon cases when it can be said there is no genuine dispute with respect to the existence of the second contract and, consequently, the existence of debts flowing from that contract. In reaching my conclusion, I do not place any emphasis on the fact that invoices referable to the second contract were paid by the plaintiff. I rely on the ingredients of ostensible authority to which I have referred. 35 It follows from this reasoning that, except in a number of minor matters, my conclusion is that there is no genuine dispute with respect to the amount claimed in the statutory demand. 36 There are, however, some further matters on which the plaintiff relies, some of which are conceded by the defendant. 37 Mr Lawson, appearing for the defendant, conceded a point raised in paragraph 15 of Mr Byrnes' affidavit of 4 December 1998, in which an over-charging is alleged, and also a point raised in paragraph 12 of the same affidavit. He informed the Court that the total reduction in the amount claimed should be $370. Mr Cross, for the plaintiff, submitted that there is also a dispute with respect to transport pick-up rates involving a charge of $50 on each of two occasions, but conceded that the dispute with respect to one charge of $50 depends upon the issue of whether there was or was not a second contract, a matter which I have resolved against the plaintiff. 38 Therefore, as I understand it from the submissions of counsel, it is agreed that there should be a reduction in the statutory demand of $370 and it is contended by the plaintiff, but not conceded, that a further reduction of $50 should be made. I propose to make that further reduction as contended for by the plaintiff. 39 The result is that the statutory demand should be varied by reducing the amount claimed by a total sum of $420. My orders are: 1. That the creditor's statutory demand for payment of debt in the amount of $11,795.45 dated 15 October 1998 and served on 19 October 1998 be varied by reducing the amount claimed to $11,375.45. 2. Pursuant to sections 459F(2) and 459(H)(4) of the Corporations Law I declare that the demand has effect as so varied as from the date when the demand was served on the plaintiff. 3. I dismiss the plaintiff's summons. 4. I order that the plaintiff pay the defendant's costs of the application.

Byrnes Corporation v Tarman

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