Goldmate Group Pty Ltd v Ethnic Communications Pty Ltd

1. [1]

   HER HONOUR: By Notice of Motion filed 26 March 2021, the defendant seeks an order that the plaintiff’s appeal against a decision of Magistrate Kennedy (“the Magistrate” or “Her Honour”) in the Local Court of New South Wales be dismissed as incompetent.

2. [2]

   The plaintiff is Goldmate Group Pty Ltd. The defendant is Ethnic Communications Pty Ltd. The plaintiff was represented by Mr M. J Davis of Counsel. The defendant was represented by Mr J. Mack of Counsel. The parties relied on a Court book comprised of four volumes (Ex A(1)-(4)).

3. [3]

   I shall deal with the appeal followed by the notice of motion. To ascertain whether the appeal is incompetent, it is necessary that I first address the grounds of appeal raised. The parties agree with this approach.

4. [4]

   The orders sought by the notice of motion are as follows:

   1. (1)

      An order under r 50.16A of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) that the appeal commenced by summons filed on 11 March 2021 be dismissed as incompetent.

   2. (2)

      Alternatively, an order that leave (required under s 40 of the Local Court Act 2007 (NSW)) to appeal from the judgment and orders of Magistrate Kennedy in Local Court Proceeding No. 2019/388787 be refused.

Background

1. [5]

   The proceedings below arose out of a commercial dispute between the Ethnic Communications Pty Ltd (the plaintiff below) (“Etcom”) and Goldmate Group Pty Ltd (the defendant below) (“Goldmate”). In short, Etcom sued Goldmate in the General Division of the Local Court of New South Wales for a breach of contract relating to advertising services (“Agreement”).

2. [6]

   The proceedings below were directed to the issues of whether a contract is formed between the parties; whether Ms Ludwell was authorised to enter into the Agreement on behalf of Goldmate; and if not authorised, whether subsequent acts of Goldmate’s employees ratified the Agreement.

3. [7]

   Goldmate is a small company. The sole director and CEO of Goldmate was Mr Ni. The Magistrate found that Goldmate through its Group Marketing Manager, Ms Ludwell, contracted with Etcom. Other employees of Goldmate, namely, Mr Cai (the financial manager), Ms Shirley Sun (the marketing coordinator), and Mr Yang (the chief financial officer (“CFO”)) were also involved with the contract.

The law

1. [8]

   Sections 39 and 40 of the Local Court Act 1997 (NSW) (“Local Court Act”) relevantly read:

2. [9]

   In regards to appeals concerning findings of fact, in Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 (“Australian Gas Light”), Jordan CJ stated (at 138):

3. [10]

   In R L & D Investments Pty Ltd v Bisby & Anor [2002] NSWSC 1082, Kirby J referred to the dicta of Jordan CJ in Australian Gas Light and went on to relevantly distill the authorities into the following broad propositions at [13]:

4. [11]

   It is common ground that Goldmate has not sought leave pursuant to s 40 of the Local Court Act. Goldmate’s position is that the appeal only raises questions of law and therefore pursuant to s 39 of the Local Court Act leave is not required. Etcom’s position is that the appeal raises questions of fact or alternatively it raises questions of mixed fact and law, and therefore as leave has not been sought the appeal is incompetent.

5. [12]

   The defendant relies on UCPR 50.12 and 50.16A. They relevantly read:

The Appeal grounds

1. [13]

   The grounds of appeal as set out in the summons filed 11 March 2021 are as follows:

2. [14]

   In Goldmate’s written submissions, the grounds of appeal were recast as:

   1. (1)

      The learned Magistrate erred by mis-expressing and misapplying the principles with regard to ostensible authority.

   2. (2)

      The learned Magistrate erred by mis-expressing and misapplying the principles with regard to implied authority.

3. [15]

   On 28 July 2021, Etcom filed a notice of contention raising questions of rectification and estoppel. In the event that the appeal was not dismissed, Etcom submitted that the learned magistrate ought to have found that if there was no authority to enter the agreement, Goldmate is estopped from denying the existence of the agreement and/or Ms Ludwell (with or without Mr Cai) had no authority to bind Goldmate, and that Goldmate ratified the agreement entered into by Ms Ludwell and/or Mr Cai.

4. [16]

   Goldmate’s contention is that the Magistrate did not have to make a proper determination on the question of rectification. Goldmate’s appeal is therefore limited to the two grounds set out above at [14]. Goldmate submits this amounts to an appeal on a question of law alone.

The hearing in the Local Court

1. [17]

   On 17 December 2020, at the hearing in the Downing Centre Local Court before the Magistrate, Etcom relied upon the evidence of Mr Benjamin Keane, its Chief Financial Controller and Ms Richa Bulchandani, its then account director. Goldmate relied upon the evidence of Mr Ni and Mr Yang.

2. [18]

   Her Honour summarised the issues in dispute at T2.18-40. As per that summary, Etcom’s claim is that it offered to provide a three-month campaign to promote Goldmate’s services to multicultural groups in Sydney for a price of $56,600, not including GST. Etcom required an upfront payment of 50%, being $28,300 not inclusive of GST, to be paid prior to commencement of the campaign. It is common ground that that sum has not been paid.

3. [19]

   Goldmate alleges that shortly after the end of the campaign, Ms Ludwell’s employment was terminated. It submits that there was no written contract between the parties, and that Ms Ludwell, who allegedly contracted on behalf of Goldmate, had no authority to bind Goldmate and Etcom was aware she no authority to bind Goldmate. Goldmate admitted that some services were requested by Ms Ludwell and otherwise denies that a final agreement on all terms was reached (T2.25-40):

4. [20]

   At the hearing of this appeal, the Goldmate referred to a highpoint in its case in the Local Court. It is an email dated 27 August 2018 between Ms Ludwell of Goldmate and Ms Loretta of Etcom where Ms Ludwell stated (Ex A(2) p 312):

5. [21]

   The Magistrate, in her decision, referred to this document in her judgment. I have highlighted where it appears in bold.

6. [22]

   In the Magistrate’s decision, Her Honour stated (T5.19-47):

7. [23]

   Her Honour continued (T6.34-T7.13):

8. [24]

   Her Honour discussed whether an agreement had been reached stating (T10.24-35):

9. [25]

   After the Magistrate determined that an agreement had been reached, she turned her attention as to whether Ms Ludwell had authority to bind Goldmate. Her Honour stated (T10.37-12.25)

10. [26]

    Goldmate relied upon two authorities, Left Bank Investments Pty Ltd v Ngunya Jarjum Aboriginal Corporation [2020] NSWCA 144 (“Left Bank”) and Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] QB 480 (referred to in Left Bank) at [58]-[60],[64].

11. [27]

    In Left Bank, Gleeson JA (with whom Bathurst CJ and Bell P agreed) set out the law in relation actual, implied and ostensible to authority at [55]-[68]:

12. [28]

    In its submissions Goldmate noted that in the course of the decision below, her Honour concluded that Ms Ludwell was clothed by Goldmate with ostensible authority to enter into the Agreement. Her Honour also concluded that it might also be said that Ms Ludwell’s authority to enter into the Agreement was implied. Goldmate referred the following passage from the decision below (T12.17-12.74):

13. [29]

    Goldmate submitted that her Honour’s factual findings, which gave rise to the above conclusions, may be found at T10.37-12.5 and its appeal would not necessitate the disturbance of those facts.

14. [30]

    Goldmate submitted that pursuant to Left Bank at [60], a representation as to authority which creates apparent or ostensible authority, is required to be made by a person who has actual authority to make such a representation.

15. [31]

    Accordingly Goldmate contended that, the question as to whether such a representation as to authority has been made is anterior to the question of whether a third party has relied upon a person’s ostensible authority.

16. [32]

    Goldmate submitted that the factual findings critical to the anterior question, as opposed to the question of Etcom’s reliance may be found at T10.38-10.44 (as set out earlier in this judgment at [25]). The factual findings, to which Goldmate refers, other than Ms Ludwell’s appointment to the position of “marketing manager”, concern acts or representations of Ms Ludwell, as opposed to representations made by Goldmate.

17. [33]

    Goldmate submitted that the Magistrate did not deal with the question as to whether Goldmate, or a person acting with its actual authority, represented to Etcom that Ms Ludwell had the authority to bind Goldmate to the agreement. Rather, the decision below incorrectly concentrated on the question as to whether Etcom had relied upon Ms Ludwell’s ostensible authority.

18. [34]

    Goldmate submitted that Her Honour’s failure to apply the principles contained in Left Bank amounted to a misdirection in, or error of law, and accordingly, their appeal falls within the ambit of a “question of law” for the purpose of s 39(1) of the Local Court Act.

19. [35]

    In relation to implied authority, Goldmate submitted that in Left Bank, after considering the relevant authorities, the Court of Appeal determined that in order to find implied actual authority two questions need to be answered: first whether a principal had in fact agreed to accept an offer made by a third party; and second whether a principal had conferred on its officer, agent or employee, authority to communicate that acceptance to a third party.

20. [36]

    Goldmate submitted that the Court of Appeal came to that conclusion based on the principle expressed in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72; (1975) 7 ALR 527 at 531, that an agent cannot have implied actual authority to inform an offeror that an offer has been accepted when no decision has been made by the principal to accept the offer. Further, Goldmate submitted that pursuant to Left Bank at [65] the implication of authority does not stop with the mere fact of a person holding a particular office.

21. [37]

    Goldmate submitted that the Magistrate’s decision as to implied authority to enter into an agreement appears to have been based upon the “vesting of the role of Ms Ludwell in her actions, in the actions of other members of the defendant in participating and in fact ratifying her work” (T12.20-25). While Her Honour was seized with evidence demonstrating that Mr Ni was the sole director of Goldmate she did not deal with or determine the anterior question, namely whether Goldmate had in fact agreed to accept an offer made by Etcom.

22. [38]

    Goldmate submitted that Her Honour’s failure to apply the principle contained in Left Bank amounted to a misdirection in law as contemplated by Jordan CJ in Australian Gas Light, and accordingly falls within the ambit of a “question of law” for the purpose of s 39(1) of the Local Court Act.

23. [39]

    Etcom submitted that the Her Honour made three key findings as to the quality of the evidence which were all against Goldmate. These were:

24. [40]

    Etcom submitted that the findings in the decision relevant to Ground 1 and the authority issue include the following:

25. [41]

    Etcom submitted that given these factual findings it is not clear how Goldmate can surmount the conclusion that “Ms Ludwell was acting in her designated role and that, consistent with the evidence, the plaintiff was entitled through her conduct and engagement and her position and title to infer that she had authority to enter into the agreement”: T12.18-20. Any attempt to do so must necessarily involve a challenge to the above factual findings and therefore appeal ground 1 is incompetent.

26. [42]

    Etcom further submitted that even if it could be said that the Authority Issue can be maintained with the present factual findings, such as to give rise to an appeal which involves a question of mixed law and fact, leave would be required. Given the Summons does not seek leave it is therefore incompetent.

Resolution

1. [43]

   In order to ascertain whether there was implied or ostensible authority when Ms Ludwell of Goldmate entered into an agreement with Etcom, the Magistrate was required to make factual findings. In essence, Goldmate relied upon one email from Ms Ludwell of Goldmate to Ms Loretta of Etcom dated 27 August 2018 to assert that Ms Ludwell did not have either implied or ostensible authority as agent to act for Goldmate. That email is reproduced earlier in this judgment at [20]. The Magistrate stated that the email had indicated Ms Ludwell was waiting on a further sign off by the CEO when he returned on Thursday. Her Honour noted that email was relied upon as notice being given to Etcom that authority had not yet been given.

2. [44]

   Her Honour’s factual findings were as follows; at the time of the email the plaintiff had already entered into a contract. The fact that Ms Ludwell raised an issue of internal procedure that needed to be followed did not amount to her raising an issue of lack of authority on her part. The Magistrate accepted that Mr Yang was aware of the agreement. Mr Yang did ratify the agreement in some form, and this ratification was later communicated to Etcom as signing off. He, by his own admission, was aware that the project was on foot. At no time did he, Mr Cai, or Ms Ludwell's immediate supervisor contact the plaintiff and inform them that there was no consent to the agreement.

3. [45]

   Goldmate submitted that a representation as to authority, which creates the apparent or ostensible authority is required to be made by a person who has actual authority from a principal to make such a representation (Left Bank at [60]) and there is an anterior question which needs to be addressed in a case like the present. Relying on the email, Goldmate submitted that an agent cannot have implied actual authority to inform an offeror that an offer has been accepted when no decision has been made by the principal to accept that offer (Left Bank at [67]).

4. [46]

   The Magistrate made adverse findings in relation to the evidence of Goldmate’s two witnesses, Mr Yang and Mr Ni. She made findings regarding Mr Yang’s evidence that he recalled very little of anything about the project and yet it was clear from the documentary evidence that he had received the proposal and the invoice prior to and on the very same day that Ms Ludwell indicated that he had signed off. Mr Yang produced a document that he said was a delegation of 40 authorities. The Magistrate noted that this document purportedly prevented even Mr Yang from signing up for the Agreement.

5. [47]

   So far as Mr Ni is concerned, the Magistrate records that Mr Ni was shown this document, and was unaware of it. His evidence conflicted with Mr Yang’s in several significant respects, and this was certainly one of them. Mr Ni remained very firm that anything over a few hundred dollars would need to be signed off by himself. He later changed that to a higher amount of around $1000. Mr Yang agreed that he knew about several of the events that were actually occurring. The Magistrate found that evidence in Goldmate’s case “generally wanting” and “unreliable” and that there were the internal inconsistencies within each witness’s evidence. In other words, Her Honour did not accept their evidence.

6. [48]

   The Magistrate did not believe Mr Ni’s evidence that anything over a few hundred dollars (or later $1000) would need to be signed off by himself. Nor did Her Honour accept Mr Yang’s list of delegation of authority. The Magistrate made a finding that actual authority was given to Ms Ludwell. The Magistrate was entitled to make these factual findings.

7. [49]

   Her Honour made critical findings that, on the evidence available, on 27 August 2018 Ms Ludwell sought and obtained the sign off from both her manager and CFO and that it was an internal process that strengthened the plaintiff’s claim that, in fact, she did have authority. The Magistrate made findings that Ms Ludwell was acting in her designated role and that, consistent with the evidence, the plaintiff was entitled through her conduct, engagement, position and title to infer that she had authority to enter into the agreement. Her Honour found that there was ostensible authority and that there was implied authority in the vesting of the role of Ms Ludwell in her actions, in the actions of other members of the defendant in participating and in fact ratifying her work. No attempt was made by anyone to identify or inform any person within the plaintiff otherwise.

8. [50]

   It is my view that the Magistrate correctly decided that Ms Ludwell did have the actual, implied and ostensible authority of Mr Ni to sign the agreement on behalf of Goldmate.

9. [51]

   Even if I am incorrect on the question of authority, the grounds of appeal involve questions of mixed fact and law. Goldmate did not seek leave under s 40 of the Local Court Act for leave to raise such questions and accordingly the appeal is incompetent.

Result

1. [52]

   The result is that the appeal fails.

Costs

1. [53]

   Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant’s costs on an ordinary basis including the costs of defendant’s notice of motion filed 26 March 2021 seeking to dismiss the summons as being incompetent.

   1. (1)

      The appeal is dismissed.

   2. (2)

      The summons filed 11 March 2021 is dismissed.

   3. (3)

      The plaintiff is to pay the defendant’s costs on an ordinary basis including the costs of defendant’s notice of motion filed 26 March 2021 seeking to dismiss the summons as being incompetent.