Firth v Brooks [2003] VSC 12

5. Leave to appeal was granted on 9 October 2002 by Master Wheeler, who stayed the order of the Tribunal until the hearing of the appeal or further order, and ordered that two questions of law were to be decided on the appeal. Those questions are set out below, with the substitution of the word "Appellant" for the word "Plaintiff", in accordance with Rule 4.03(4) of the Supreme Court (General Civil Procedure) Rules 1996 ("the Rules"). The questions are:

(a) On the whole of the evidence, could a reasonable Tribunal have concluded that:

(i) the Appellant was "a part of the business" being "Auto Image";

(ii) the Appellant was a partner or proprietor of the business "Auto Image";

(iii) the Appellant should pay to the Defendant $37,235?

(b) Was the learned Tribunal Member entitled to make an order against the Appellant when there was no evidence that she had been served with the application or of any notice that she had been joined to the application?

11. On 8 May 2002 the respondent ("Mr Brooks") made a claim to the Tribunal in its Civil Claims List against Robert Frederick Firth ("Mr Firth") for the payment of $31,800 and the return of goods. The claim was said to be brought under the Fair Trading Act 1999 ("the Fair Trading Act"). In his application to the Tribunal Mr Brooks stated that he had engaged Mr Firth, under the business name "Auto Image", to build him a car, and paid a deposit of $10,000. Mr Firth commenced work straight away, and as the car developed Mr Brooks paid him with goods and also with money payments. He stated that Mr Firth then moved his factory, "then closed that and went home where he took my car. He stopped working on my car when he went back home". He stated that Mr Firth had taken his money and not supplied the car.

14. Mr Firth is the husband of the appellant ("Mrs Firth"). There is no reference to Mrs Firth in the application made by Mr Brooks to the Tribunal.

17. On 16 May 2002 the Member made the ex parte orders, expressed as follows, on the application of Mr Brooks:

1. That Julie Firth of 39 Weeden Drive, Vermont South, 3133 be joined as a second named Respondent to this application.

2. That the amount claimed by the Applicant be amended. That I give the Applicant leave to file and serve an amended application within 10 days.

3. That the matter be listed before myself for hearing.

23. On 27 May 2002 Mr Brooks sent by registered post to each of Mr and Mrs Firth a copy of a fax which he had sent to the Tribunal on 22 May. That document read, omitting formal parts:

Please be advised I wish to amend application, to include as 2nd respondent as follows.

Also, I wish to advise of my desire in changing claim amount from $31,800 to $37,235.

31. The hearing before the Tribunal took place on 10 July 2002. Neither party was represented. Mrs Firth did not appear, but Mr Firth tendered an affidavit sworn by Mrs Firth on 10 July 2002 in which she deposed:

1. I deny any responsibility for the claim by Dallas Brooks relating to alleged debts owed by the business Auto Image, Business Number 131391321X on the following grounds:

(a) the said business Auto Image (now deregistered) is and was at all times owned and controlled by my husband Robert Firth. (See attached extract).

(b) I have never had any control or ownership or shares in the business.

(c) I have never accepted responsibility for any debts, claims, action or otherwise of the business, including the alleged debt owed to Dallas Brooks.

2. Accordingly I request that the application be dismissed.

Attached to the affidavit was a business name search showing that the name "Auto Image" had been registered on 16 July 1998 by Mr Firth as sole owner, and deregistered on 16 July 2001, without the addition of any other owner at any time.

40. Evidence was given at the hearing by Mr Firth, Mr Brooks, Mr Brooks's brother Richard, and another person called by Mr Brooks and identified in the transcript only as "Warwick". At the conclusion of the hearing the Tribunal made the following order:

After hearing evidence from Mr Brooks and his witnesses and Mr Firth for and upon behalf of himself and his wife Ms Firth, I find as follows -

1. I accept that at all relevant and materials [sic] times that Ms Firth was a part of the business of the Respondent and had actually received payments from the Applicant and the Applicant's brother upon behalf of the Applicant.

2(a) I accept that the Applicant engaged the Respondents to build a Cobra motor vehicle.

2(b) I find on the evidence that the Applicant expended a total sum of $37,235.00 in respect to both the motor vehicle and ancillary items.

2(c) The Respondents clearly had the benefit of the Applicant's payments yet failed to fully complete the vehicle.

2(d) That the Respondents are [sic] not completing the vehicle had breached their agreement.

2(e) I reject the Respondents' contention that it was a term of the agreement that the Applicant continue to pay further monies.

3. I therefore order that the Respondents should pay to the Applicant $37,235.00.

51. Orders 1 and 2 contain the Tribunal's findings of fact. The relevance of those findings to the provisions of the Fair Trading Act is not a matter with which I am concerned. The transcript of the hearing before the Tribunal shows that the Tribunal gave no reasons for those findings; in particular, no reasons for the finding that "Ms Firth was a part of the business of the Respondent". Section 117(1) of the VCAT Act provides that the Tribunal must give reasons for any order it makes in a proceeding, other than an interim order. Whether the failure of the Tribunal to give reasons constitutes an error of law so as to invalidate the decision of the Tribunal was not argued before me, and in view of the decision to which I have come it is not necessary that I consider whether to recall the parties to argue that question. I merely point out that one justification for a requirement such as that contained in section 117(1) is the assistance which reasons provided for a decision can give to an appellate court reviewing that decision.

55. Paragraph (i) of question (a) adopts the expression "a part of the business" used in paragraph 1 of the Tribunal's order. Neither counsel made any submission as to what the Tribunal might have meant by that expression, and it does not appear to me to be a term of art. It is to be assumed from an examination of the order as a whole that the relevant finding of the Tribunal was that Mrs Firth was a partner in the business with her husband and was thus liable for what the Tribunal found to be a debt owed by the business. I do not propose to consider paragraph (i) separately from paragraph (ii). On other occasions Judges of this Court have expressed the view and acted upon the principle that, in an appeal of this kind, while a Judge is not authorised to amend the order made by the Master, Rule 58.13 of the Rules empowers the Court in the words of Mandie J in DPP v Hinch [1] :

to direct, in an appropriate case, that the appeal be decided upon the questions of law identified and canvassed in the arguments advanced, where this is necessary to achieve the effective, complete and economic determination of the appeal and is otherwise just and convenient.

See also, Buckman v Barnawatha Abattoirs [2] , and Popovski v Ericsson Australia Pty Ltd [3] .

60. As Stephen J said in Spurling v Development Underwriting Inc [4] , in the context of an appeal from the Town Planning Appeals Tribunal:

In the case of decisions of magistrates the position in Victoria is well established by a line of decisions culminating in Taylor v Armour and Co. Pty Ltd, [1962] VicRp 48; [1962] VR 346, in which the Full Court of this State held that in the case of any question of fact the Court should treat the matter as an appeal from the verdict of a jury and should not make up its own mind upon the evidence but rather confine itself to seeing whether there was evidence upon which the magistrate might, as a reasonable man, come to the conclusion to which he did come. In saying this the Full Court stated that it was following the view of Herring, CJ, in Young v Paddle Bros. Pty Ltd, [1956] VicLawRp 6; [1956] VLR 38; [1956] ALR 301. The Chief Justice, in that case, adopted as the test whether "on any reasonable view of the evidence that decision can be supported"; a party aggrieved can thus only succeed if a decision contrary to the view of the magistrate is "the only possible decision that the evidence on any reasonable view can support" (see at VLR p. 41).

64. The evidence which was before the Tribunal relevant to this question begins with the affidavit of Mrs Firth and the annexed business name search, as to which see [7] above.

67. There is also relevant evidence in the transcript. Mr Brooks said:

During these discussions, both Bob and Julie - we had various discussions. . . . Now those payments along the way were either given to Bob or Julie Firth, just depending on who was there and as they were both actively involved in the management of the business, I saw no need to differentiate between the two. pp 3-4

. . . both Bob and Julie on several occasions had promised that the car would be ready by Christmas 2000 and after speaking to Julie on the phone on one occasion, Bob took the phone call over and promised me that there would be a big red bow around it for Christmas, . . . p 4

All through this project Julie and Bob would reassure me that everything was going to plan . . . during one trip to Bob's, Bob, Julie myself and I think there was another fellow there, discussed what would be a good name for it . . . p 5

It was very clear to any person using Auto Image and their staff that Julie and Bob ran Auto Image. p 5

Julie Firth owned a company called Waterbug Sales or Waterbug Services and the fax that was used to fax me details actually had Waterbug Services on it. p 12

Mr Richard Brooks was examined by Mr Brooks and the following exchange took place:

Were there times where you took money for me to pay for my car at Auto Image?----Yes, that is correct.

Were there times when you paid more than one person?----Yes, a male and a female.

Okay. Is it fair to say that one of them was Julie Firth and the other one was Bob Firth?----Well, her name was Julie. p 8

Julie has never had anything to do with the ownership or the running of Auto Image. She very rarely visits the premises in Glen Waverley, let alone work there at all because my brother was in there doing most of the sales and the paperwork. p 13

That is the whole of the relevant evidence appearing from the transcript.

82. At page 8, in cross-examination by Mr Firth, Mr Richard Brooks agreed that he had brought money "to my [i.e. Mr Firth's] place". After an exchange, the meaning of which is not apparent, Mr Firth said "If that is incorrect, what were you doing at my place giving my wife money which I don't even know about or myself money, if we didn't have that agreement?" I accept the submission of Mr Brett, for Mrs Firth, that in that passage Mr Firth was adopting and responding to the earlier evidence of Mr Richard Brooks; he was not giving evidence that his wife had received money which he did not know about.

85. The evidence of Mr Brooks and his brother (the latter evidence being, incidentally, led) must be read with the evidence adduced by Mr Firth at the hearing, namely Mrs Firth's affidavit, the business name search, and Mr Firth's own oral evidence. In the absence of reasons it is not possible to determine why the Tribunal chose to ignore all of that evidence. It should be noted that as Mrs Firth did not appear before the Tribunal, it did not have the opportunity of observing her demeanour as a witness.

88. While the evidence of Mr Brooks and his brother is consistent with Mrs Firth's being a partner in the business of Auto Image, it is equally consistent with her being an employee of the business, or with her simply assisting her husband without having any formal connection with the business at all.

91. In Nominal Defendant v Owens [5] Muirhead J, with whom St John J agreed, after citing authorities as to the undesirability of an appellate court's substituting its own view of the facts for the view of the court below, went on to say:

But of course this court must, especially where questions of credibility have had little influence on the trial judge's findings, examine the evidence and such findings to ensure that the conclusion is in fact an inference rather than a guess, a theory or a conjecture. In Luxton v Vines [1952] HCA 19; (1952) 85 CLR 352 the majority of the High Court cited a then recent decision of that court in Bradshaw v McEwans Pty Ltd 1951 (unreported), a case referred to in several other authorities. The court there said in dealing with the civil standard of proof: "In questions of this sort, where direct proof is not available it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is a mere matter of conjecture . . . but if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then, though the conclusion may fall short of certainty; it is not to be regarded as a mere conjecture or surmise . . ."

The majority in Luxton v Vines, supra, posed many questions and competing hypotheses. There the plaintiff had to rely on inferential processes to establish both the circumstance and cause of his injury and negligence itself. They concluded: "Any answer that you give to such questions is a guess. All lies in conjecture. The fact is that whatever reasons you can find for one explanation of the accident, reasons of equal sufficiency or insufficiency exist for other explanations. The circumstances give rise to nothing but conflicting conjectures of equal degrees of probability and no affirmative inference of fault on the part of the driver of a motor car can reasonably be made." . . .

So here if the circumstantial evidence upon which the learned trial judge has reached his conclusions [that the respondent was a passenger and not the driver of the vehicle] is equally consistent with a finding that the respondent was the driver and not the passenger, then the finding cannot be supported. As Lord Halsbury stated in [Wakelin v London and South Western Railway Co (1887) 12 App Cas 41 at 45] "One may surmise and it is but surmise and not evidence, that the unfortunate man was knocked down by a passing train while on the level crossing; but assuming in the plaintiff's favour that fact to be established, is there anything to shew that the train ran over the man rather than that the man ran against the train?"

97. Similarly, in the present case, the evidence does no more than raise "conflicting conjectures of equal degrees of probability", which cannot be elevated to the status of inferences. I cannot find that the evidence before the Tribunal was such that the Tribunal member, as a reasonable man, could come to the conclusion to which he did apparently come, that Mrs Firth was a partner in the business carried on under the name of Auto Image so as to be liable for a debt owed by that business. The answer to questions (a)(i) and (ii) is accordingly No.

101. Most of the submissions of Mr Levine, for Mr Brooks, which were made under this head assume that Mrs Firth was a partner in the business Auto Image. In view of the finding which I have set out in the preceding paragraph, those submissions cannot be sustained. His final submission was that Mrs Firth was estopped by her conduct from denying that she was a party to the contract with Mr Brooks. However, the evidence of the conduct of Mrs Firth in the context of the transaction with Mr Brooks is not, in my view, such as to be likely to have given rise to that assumption. I note that in his original application to the Tribunal Mr Brooks made no claim against Mrs Firth, and it would appear therefore that her conduct did not in fact have that effect. The answer to question (a)(iii) is accordingly No.

105. In view of the findings which I have made it is not necessary to consider the answer to question (b) and I do not do so. I have therefore not set out the evidence relevant to that question. There will be orders that the decision of the Tribunal be set aside in so far as it relates to Mrs Firth and the claim against her dismissed. Counsel may wish to make submissions as to the form of the orders and as to costs.

[1] Unreported, decided on 5 August 1994

[2] Unreported decision of Smith J, decided on 14 July 1994

[3] [1998] VSC 61 (Ashley J)

[4] [1973] VicRp 1; [1973] VR 1 at 11

[5] (1978) 22 ALR 128 at 131 and following