Kleenheat Autogas v Orbit Group

PARTIES : Kleenheat Autogas Pty Ltd & Elgas Autogas Pty Ltd t/as Unigas - Plaintiffs Orbit Group Services Pty Ltd - Defendant

COUNSEL : Mr D Bernie - Plaintiff Mr T O Bland - Defendant

SOLICITORS : Williams The Law Firm - Plaintiffs Harb Lawyers - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

12303/2006 - KLEENHEAT AUTOGAS PTY LTD & ELGAS AUTOGAS PTY LTD t/as UNIGAS v ORBIT GROUP SERVICES PTY LTD

JUDGMENT (Appeal decision of Local Court Magistrate) 1 HER HONOUR: By summons filed 17 May 2006 the plaintiffs, Kleenheat Autogas Pty Ltd and Elgas Autogas Pty Ltd t/as Unigas (Unigas), seek orders, firstly, that pursuant to Division 3 Part 7 of the Local Courts Act 1982 (NSW) (the Act) an appeal is allowed from the decision dated 20 April 2006 to dismiss the plaintiffs' claim in the General Division of the Local Court at the Downing Centre, Sydney in proceedings 11431/2004 between the plaintiffs and the defendant, Orbit Group Services Pty Ltd (Orbit) before Her Honour O'Shane LCM; secondly, in the alternative, leave be granted pursuant to s 74 of the Act to appeal against the decision in the Local Court on the grounds that involve a question of mixed law and fact; thirdly, an order pursuant to s 75 of the Act that the decision in the Local Court be varied by entering judgment for the plaintiffs in the sum of $17,012.64 together with interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) (CPA) from 5 July 2004 to date; and fourthly, an order that the defendant pay the plaintiffs' costs of the Local Court proceedings as agreed or assessed. 2 The plaintiffs sought leave to appeal on questions of mixed fact and law. Section 74(1) of the Act provides that a party to proceedings under this part who is dissatisfied with the judgment or order of a Court sitting in its General Division may appeal to the Supreme Court on a ground that involves a question of mixed law and fact, but only by leave of the Supreme Court. 3 Section 75 of the Act provides that the Court may determine an appeal either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal.

Grounds of appeal 4 The plaintiffs appeal the whole of the decision of the Magistrate on the following grounds. Firstly, Her Honour erred in law by applying principles relating to non est factum; secondly, Her Honour erred in law and misdirected herself in applying principles of contract review to a commercial agreement for business purposes between companies; thirdly, Her Honour erred in law in taking into account the adequacy of the obligations of the parties under the agreement in determining a contract for business purposes between companies; fourthly, Her Honour erred in law in failing to take into account the obligation of the plaintiffs for the contract between the parties; fifthly, Her Honour erred in law in finding that the actions on behalf of the plaintiffs amounted to a misrepresentation at law on behalf of the plaintiffs such as to vitiate the contract between the parties; sixthly, Her Honour erred in law in failing to take into account the acknowledgement signed on behalf of the defendant that the signatory had read and understood the terms and conditions of the contract; seventhly, Her Honour erred in law in failing to take into account the fact that the contract had been signed by three people on behalf of the defendant; and eighthly, in the alternative, the plaintiffs seek leave to appeal on grounds of mixed law and fact from the whole of the decision of the Magistrate on the grounds that (a) failure to give such leave would cause substantial injustice between the parties, and (b) Her Honour erred in failing to draw an inference from the failure of the defendant to call any evidence from the other signatories to the contract on behalf of the defendant. 5 There are four issues raised on appeal namely, non est factum, misrepresentation, unilateral contract and Jones v Dunkel.

Notice of contention - costs orders 6 On 20 July 2006 the defendant filed a notice of contention. It pleads that it does not seek a discharge or variation of any part of the decision of the Magistrate except as to costs, on the grounds that Her Honour failed to hear any evidence or seek submissions in respect of the costs order made and thereby fell into error.

The Local Court proceedings 7 In the Local Court Unigas claimed the sum of $17,709.98 together with interest and costs for damages occasion to it by Orbit's refusal to accept delivery of goods supplied by Unigas [S/C 18/10/04]. Unigas alleged that the parties entered into a customer agreement on 22 May 2004, for a period of two years, for the supply of autogas to Orbit's business premises known as Fleet Petroleum Smithfield. 8 Orbit alleged that the document, which was executed on its behalf, was materially altered whilst it was in the possession of Unigas and without its consent. 9 In its further amended defence, Orbit admitted that there was a written agreement with the plaintiff for the supply of autogas but disputed the terms of the agreement. It was submitted that the agreement was not one for exclusive supply. The basis for the proposition was the alleged failure of the parties to include certain information in the contract schedule. 10 The Autogas Customer Agreement comprises four sections: a. Contract Schedule and Agreement b. Direct Debit Authority c. Conditions of Supply d. Site Access Agreement. (Ex 7 in Local Court) 11 In her reasons dated 20 April 2006 the Magistrate had this to say about the agreement (at pp 2-3): It then goes on to set out instructions for completing the document in four numbered paragraphs, the last of which states in parenthesis. "If the document is in order and if Unigas agrees to supply you, Unigas will sign the document and return a copy for your records." Section A, the contract schedule, is then set out in numbered items 1 to 11. The schedule quite clearly indicates that it is an agreement dated 22 May 2004 for a term of two years. The agreement itself is set out at the end of that schedule in three numbered paragraphs, number 1 being in the following terms: "The customer agrees to purchase Autogas from Unigas and Unigas agrees to supply Autogas and make equipment available for use by the customer on and subject to the terms and conditions stated in section A (contract schedule) and section C (conditions of supply)." Paragraph 2 then provides: "The customer acknowledges that it has read and understood and agrees to the terms and conditions contained in section C", et cetera." 12 The Magistrate then referred to section C being "standard conditions of supply set out in Parts 1 to 13" and reproduced clauses 2.1 to 2.4. But importantly the Magistrate stated (at pp 3-4): "Now strictly speaking that particular clause or those clauses do not form any part of the issues before the Court in these proceedings but I have a comment to make about it later. There is no question that Mr R Eid and Mr A Eid signed the agreement on behalf of the defendant. It was the evidence of Mr R Eid that he did not read through the document at the time when he signed it. So that the real question here is what is it he signed on 22 May 2004? Was it as he contends a customer agreement or was it, as contended by the plaintiff, an agreement for exclusive supply? As noted above the document is styled Autogas Customer Agreement." 13 While the Magistrate makes comments about misrepresentation, non est factum and later, a unilateral contract, the Magistrate specifically stated that those clauses do not from any part of the issues before the Court. Nor did her comments form any part of her ultimate reasons for her decision. His Honour's decision was solely based upon the determination of facts.

The Magistrate's decision 14 The Magistrate (at p 3) stated: "So that the real question here is what is it he signed on 22 May 2004? Was it as he contends a customer agreement or was it, as contended by the plaintiff, an agreement for exclusive supply?" 15 There were two main witnesses as to what occurred on 21 May 2004, Mr Terrence Dutton on behalf of Unigas and Mr Robbie Eid on behalf of Orbit. In relation to the conflict between these witnesses' evidence, the Magistrate rejected the evidence of Mr Dutton that he left the documents with Mr Eid to read over and sign and that he would return at a later time to retrieve the documents. It was difficult to ascertain what document or documents were signed by Mr Eid on 21 May 2004. The Magistrate accepted the evidence of Mr Eid. 16 Mr Robbie Eid stated [statement 15/12/05]: "4. Just prior to the settlement of the purchase, on or about 21 May 2004, I had an inspection of the business in the presence of Mr DEHAIBI on site. Also present that day was Mr Terry DUTTON. 5. At the time, I recall that Mr DUTTON said to me words to the effect of: "For you to order Gas you would need to give me your details so that Unigas would send you the bill instead of the previous owner" At the time, I took the request at face value particularly as other suppliers had requested the same information, such as Coke; Schweppes; Mars Confectionary; Street Ice Creams only to mention a few. I did subsequently provide Mr DUTTON with the information he requested of me. 6. At the time I recall writing down my name, address and telephone number on a piece of paper and signed the bottom of the paper. I did not read nor was I shown any other document that day. 7. I recall I signed the piece of paper referred to in paragraph 6 hereinabove and headed Section A - Contract Schedule on Friday, 21 May 2004 and not on 22 May 2004. … 32. The only thing I ever signed for Unigas was an account opening form, as I did with other suppliers." 17 Mr Eid admitted filling out the credit form application. He denied signing the direct debit form and said that he did not sign a direct debit with any company whatsoever (t 50.5; 55). Mr Eid denied signing a contract schedule but admitted filling in the information on the first page of the document. He did not put the commencement date on that document and did not recognise the handwriting that inserted that date (t 58). 18 This part of the document reads: "Item 3 Term of Agreement: Commencement date: ______________ Duration: __________ years" 19 This meant that the period over which this "agreement" was to run had been left blank. 20 In conclusion Her Honour stated (at p 8): "Given that the Court has rejected the evidence of Mr Dutton about his meeting with Mr Eid and leaving him with the contract, the plaintiff is left in the position of relying entirely on the terms and conditions set out in Section C of the document standard terms and conditions… In the light of the Court's findings, it is not necessary to consider the further submissions made on behalf of each of the parties. Suffice to say that THE PLAINTIFF HAS FAILED TO ESTABLISH ITS CLAIM AND VERDICT IS ENTERED FOR THE DEFENDANT." 21 These are findings of fact which support the Magistrate's decision. It was open to the Magistrate to prefer Mr Eid's evidence over that of Mr Dutton and find that the document, when signed, was incomplete.

Jones v Dunkel 22 Unigas submitted that Mr Eid's father should have been called to give evidence and that an inference should have been made in accordance with Jones v Dunkel (1959) 101 CLR 298 for the failure to call him. When asked if it was his brother who also signed the contract, Mr Eid answered that it was his father. His father was helping him out. His father was an experienced businessman (t 48). 23 In John Briscoe v Securecam Pty Ltd [2006] NSWSC 794 I stated: "[24] The Jones v Dunkel rule may allow inferences of fact to be drawn from a party's failure to adduce evidence. The principle is not concerned with whether a particular inference of fact can be drawn but rather whether it should be drawn in the particular case - see Fabre v Arenales (1992) 27 NSWLR 437 at 444 per Mahoney JA. [my emphasis added] [25] In Payne v Parker [1976] 1 NSWLR 191 at 201 Glass JA set out three conditions that should be satisfied before the rule operates. Firstly, the missing witness would be expected to be called by one party rather than the other or also described as where it would be natural for one party to produce the witness, such as where the witness might be regarded as being in the camp; secondly, the witness' evidence would elucidate a particular matter; and thirdly, the witness' absence is unexplained. Even if these preconditions are met, the issue for the Magistrate is whether any inference should be drawn." 24 While I agree that the father would be viewed as being in Unigas' camp, it does not follow that he would have been able to assist. He signed his name on the next page of the document. He is not a director of the plaintiffs. 25 The Magistrate had a discretion whether or not to draw an inference. Her Honour did not draw such an inference. It was open for the Magistrate to take that approach. This Court is slow to intervene in these types of decisions and this is not one in which this Court would intervene. There is no error of law.

Costs order in the Local Court 26 Prior to the actual hearing taking place an earlier hearing date had been vacated and an order made that Orbit pay Unigas' costs. While the cross claim was dismissed on the day of the actual hearing, Orbit had notified Unigas some months earlier of its intention to discontinue. At the time the hearing took place there had been no steps taken to have those costs thrown away by the vacation of the earlier hearing date assessed. Unigas submitted that the appropriate order for costs was that each party pay its own costs. Counsel for Orbit sought an order that the usual costs order should be made for the hearing, that is, costs follow the event and the prior order for costs remain. 27 In relation to costs the Magistrate stated (at p 10): "I am aware that assessment can be a fairly lengthy process from the time of actually putting together all of the information and sending it off to the assessment. It just protracts matters very substantially it seems to me, unless there's come agreement about it, and that would be something that your instructing solicitors would engage in." 28 The Magistrate made an order that each party pay its own costs. 29 It is more likely the costs incurred for the hearing would have been greater than the costs incurred by the adjournment application together with the costs thrown away by the dismissal of the cross claim. But by making an order that each party pay its own costs, there is no necessity for two assessments to take place (failing agreement). Orbit may have come out ahead by the making of this order. Costs are discretionary. There is a wide discretion sometimes referred to as "unfettered" but that discretion has to be exercised judicially. The Magistrate has exercised her discretion properly. The costs order is to stand. The decision of Her Honour Magistrate O'Shane dated 20 April 2006 is affirmed. The appeal is dismissed. The summons filed 17 May 2006 is dismissed. 30 The costs order for this appeal is made on the basis of the usual order, that is, costs follow the event. The plaintiffs are to pay the defendant's costs as agreed or assessed.

(2) The decision of Her Honour Magistrate O'Shane dated 20 April 2006 is affirmed.

(4) The plaintiffs are to pay the defendant's costs as agreed or assessed. **********

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