Antoniou v Jog Group Pty Ltd

1. [1]

   HER HONOUR: This is an appeal from a Local Court decision that relates to a replacement vehicle dispute.

2. [2]

   By way of summons filed 20 August 2021, the plaintiff relevantly seeks:

   1. (1)

      Leave to appeal (to the extent that such leave is required).

   2. (2)

      The judgment of the Court below be set aside and a verdict be entered for the plaintiff.

3. [3]

   The plaintiff is Andreas Antoniou. The defendant is Jog Group Pty Ltd (“Jog Group”). At the hearing, G Carolan of Counsel appeared for Mr Antoniou. W Richey of Counsel appeared for Jog Group. The parties relied on a joint court book (“CB”). Mr Antoniou relied the affidavit of Muharrem Candan Koyuncu filed 20 August 2021 which was marked as Exhibit A(1)-(2) (“Ex A(1)-(2)”).

Background

1. [4]

   The agreed facts are as follows. On 8 March 2020, the plaintiff collided with the rear of the motor vehicle, a 2015 Range Rover SVR, which was being driven by a director of Jog Group, Mr Bagga. This vehicle was owned by Jog Group, which is a small motor dealer which trades under the name "Exclusive Auto Group ". As a result of this accident, repairs were required to the Range Rover.

2. [5]

   On 10 March 2020, the vehicle was taken to Sydney Autobody Pty Ltd, a body repair business. Due to the plaintiff’s insurer not accepting the quoted repair costs, the vehicle remained at that location until November 2020.

3. [6]

   During part of the period that the vehicle was at the premises at Sydney Autobody Pty Ltd, 77 days from 10 March 2020 to 25 May 2020, a replacement vehicle was hired for use through Unique Wedding Cars Pty Ltd (“Unique Wedding Cars”). This vehicle was a Mercedes-Benz SUV.

4. [7]

   The matter came before Magistrate Ong (“the Magistrate”) in Local Court proceedings Jog Group Pty Ltd v Antoniou 2020/197219 (“the Local Court Proceedings”). Jog Group (the plaintiff below) claimed it was deprived of the use of its 2015 Range Rover station wagon for a period of 77 days and claimed the sum of $43,668.00, being the full cost of credit hire of a 2016 Mercedes GLE63 AMG vehicle for that period. The issue as to the costs of repairs of the vehicle was resolved by agreement during the proceedings.

5. [8]

   The Court below gave judgment for the entire sum claimed by Jog Group with interest.

6. [9]

   The basis of the Appeal in this Court is that, in the plaintiff’s contention, Jog Group bore the onus of establishing the need for a replacement vehicle but failed to establish any instance of need associated with its business, such as would necessitate the hire of an expensive replacement vehicle. Further, the plaintiff says the Court below misdirected itself in law as to what constitutes need, and the measure of damages for loss of use of a motor vehicle that was the stock in trade of the company.

The pleading framework

1. [10]

   On 3 July 2020, by way of statement of claim filed in the Local Court Jog Group relevantly plead as follows (Ex A(1), 55):

2. [11]

   On 7 August 2020, by way of defence filed in the Local Court, Mr Antoniou pleads as follows (Ex A(1), 62):

Magistrates’ decision

1. [12]

   On 23 July 2021, the Magistrate handed down his written decision. As to whether the vehicle was a ‘stock-in-trade’ or for ‘day to day use’ the Magistrate made the following findings: (T3.39-4.2)

2. [13]

   As to whether the plaintiff demonstrated a ‘need’ for the vehicle the Magistrate made the following findings:

3. [14]

   As to whether the plaintiff failed to mitigate his damages, the Magistrate made the following findings:

4. [15]

   Having made these findings, the Magistrate made the following orders:

Legal Principles – Replacement vehicles

1. [16]

   In Lee v Strelnicks; Souaid v Nahas; Cassim v Nguyen; Rixon v Arsalan [2020] NSWCA 115, collectively (“Lee and Rixon”), the Court of Appeal considered four separate matters involving motor vehicle owners who suffered damage by reason of a negligent driver and subsequently hired a replacement vehicle. The issue before the Court was whether a claimant has a “need” for a replacement vehicle and what constitutes reasonable expenditure on hiring that replacement vehicle for the purpose of determining recoverable damages. The majority of the Court granted leave in part and allowed the appeal in part (White JA and Emmett AJA agreeing, Meagher JA dissenting in part) and made the following points of principle.

2. [17]

   Firstly, the Court of Appeal found that claimant must establish a “need” for a replacement vehicle: Meagher JA at [11], [22] [27]; White JA at [69], [80] [120]; and Emmett AJA at [131]–[132].

3. [18]

   Secondly, in determining what “need” entailed, the majority referred to the principle of restitutio in integrum such that, where a damaged vehicle would have been used, the relevant need is for a replacement of that damaged vehicle in order to put the claimant in the position he or she would have been in but for the wrongdoing: White JA at [27], [60], [69]; and Emmett AJA at [119]–[120], [129]. Accordingly, “need” should be gauged by whether the claimant had a need for the use of their damaged vehicle, not by exclusively considering if the function of the replacement vehicle meets a claimant’s inconvenience: White JA at [60], [69]; Emmett AJA at [129].

4. [19]

   Thirdly, the next inquiry looks towards the reasonableness of the claimant’s hire expenditure in light of the previous conclusion. First, this involves inquiring whether an equivalent vehicle is available such as one of the same make, model and year, or if none is available, then what is available in the market that is as close to equivalent as possible: White JA at [27]; Emmett AJA at [121] and [124]. Secondly, the claimant’s cost of hiring should be no more than would be reasonably needed to hire such an equivalent vehicle in the circumstances: White JA at [27] and [68]); Emmett AJA at [125]. The cost of hiring an equivalent vehicle in the market should be the measure of damages: White JA at [27]; Emmett AJA at [128].

5. [20]

   Finally, in dissent, Meagher JA considered at [8] and [17]-[18] that regardless of whether hire costs were regarded as expenditure in mitigation or incurred as a foreseeable consequence of the tort, the analysis converged on the reasonableness of the expenditure. The claimant could recover no more than was reasonably necessary to make good their compensable loss. The relevant loss was the uses to which the damaged vehicle was likely to have been put during the period of repair, and ordinarily satisfied by the hire of a vehicle which is sufficiently comparable to the damaged vehicle in terms of functionality and specifications to satisfy the uses to which it was capable of being and likely to have been put: Meagher JA at [18]–[21]; White JA at [31], [60] and [69]; Emmett AJA at [127] and [129].

6. [21]

   This subject matter was further considered by the High Court in Arsalan v Rixon (2021) 395 ALR 390; [2021] HCA 40 (“Arsalan”). Here, the above-mentioned matters of Rixon v Arsalan and Nguyen v Cassim were heard together on appeal by Kiefel CJ Gageler, Keane, Edelman and Steward JJ. The legal principles for proof of loss and mitigation were set out by the High Court at [34]-[35]:

7. [22]

   As to the enquiries into the reasonableness of the hire, the High Court continued at [36]-[39]:

Grounds of Appeal

1. [23]

   The grounds of appeal set out in the summons are as follows:

   1. (1)

      The Court below erred in law or as a matter of mixed fact and law in holding that:

Leave to appeal

1. [24]

   Leave to appeal from a Local Court decision to the Supreme Court is governed by s 40(1) of the Local Court Act 2007 (NSW). It reads:

2. [25]

   In Lee v New South Wales Crime Commission (2012) 224 A Crim R 94; [2012] NSWCA 262 (“Lee”), Bathurst CJ restated the principles relevant to the granting of leave at [12]:

3. [26]

   Mr Antoniou submitted its reasons for why leave to appeal should be granted in the summons. They are as follows.

4. [27]

   The questions of law or mixed fact and law that are identified in the appeal grounds are questions that turn on the application of the correct legal principles for quantification of damages for temporary loss of use of a non-income producing asset.

5. [28]

   It would be contrary to the interests of justice for the Court to determine that the Court below had misdirected itself in law as to the correct legal test, and yet leave uncorrected factual findings that were reached pursuant to that misdirection.

6. [29]

   But for the factual findings that raise the questions of mixed law and fact that are identified in the appeal grounds below, Jog Group would not have recovered as damages a sum that was sufficient to enliven the application for indemnity costs on which Jog Group succeeded.

7. [30]

   It would be contrary to the interests of justice to leave uncorrected factual findings that were reached pursuant to a misdirection of law, in circumstances where those findings provided the basis upon which the Court below ordered Mr Antoniou to pay a substantial portion of the Jog Group’s costs on the indemnity basis.

8. [31]

   Mr Antoniou has not identified whether leave to appeal is required. On their face, the proposed appeal grounds are simply an attempt to disturb findings of fact without precisely identifying any concomitant error of law. At best, the appeal grounds amount to questions of mixed law and fact, save for a “no evidence” argument introduced in written submissions and dealt with below.

9. [32]

   The amount in dispute is only around $43,000. In fact, the amount in issue is likely to be less. Mr Antoniou is wrong to contend that Jog Group suffered “no loss.” Irrespective of whether Jog Group was entitled to the hire car charges it sought, it still suffered a real loss for which general damages called to be awarded.

10. [33]

    Ordinarily, the Court is hesitant to grant leave to appeal where small sums are involved. That approach conforms with s 60 of the Civil Procedure Act 2005 (NSW) which requires this Court to consider the proportionality of costs to the subject matter in dispute. Notably, Mr Antoniou’s arguments about why leave should be granted mainly concern dissatisfaction with the outcome on costs, rather than any issue of principle.

11. [34]

    Mr Antoniou has not challenged the exercise of the Local Court’s discretion on costs. Instead, he says an “injustice” arose because the learned Magistrate’s decision permitted the plaintiff to then make an application for indemnity costs on the basis that an offer of compromise was beaten. That contention should not be accepted as a basis for a grant of leave to appeal. It is tantamount to merely expressing dissatisfaction about the end-result of a case. Unless a costs decision is directly under challenge, the issue of costs should remain collateral to the determination of whether a decision below has manifested a clear injustice. To reason otherwise would subvert the ability of this Court to control its workload by means of granting or denying leave to appeal in appropriate cases.

12. [35]

    Even if Mr Antoniou’s contentions on costs were taken at their highest – they would still be insufficient to warrant leave to appeal. It could not be said that the errors below resulted in an unusual or harsh outcome on costs. The indemnity costs order complained of stemmed from an offer of compromise made by the plaintiff on 11 May 2021.

13. [36]

    Although Mr Antoniou had made offers during the proceedings, none of those offers exceeded even the value of the repair claim as settled on the day of the hearing for $40,000. Thus, even if Mr Antoniou’s arguments about the hire-car component of the case were accepted below, it is unlikely a drastically different outcome on costs would have eventuated. The learned Magistrate’s findings on the hire-car component of the case did not cause costs to entirely “go the other way.” The presence of an indemnity costs order for only part of a case cannot, without more, sound a sufficient injustice to warrant leave to appeal.

14. [37]

    The questions identified in the proposed appeal grounds are heavily steeped in the unique facts of this case. They involve no principles of general application or public importance. Mr Antoniou has not demonstrated anything more than the learned Magistrate was arguably wrong in conclusions drawn from the facts of this case.

15. [38]

    Although Mr Antoniou contends that the appeal grounds involve legal principles for the quantification of damages for loss of use, he does not articulate what those broader principles are. The main argument by Mr. Antoniou (both here and below) was that Jog Group was not a contracting party to a particular hire agreement. Even if those arguments were accepted, they are tightly coupled to the facts of this case. It is notable that Mr Antoniou’s submissions contain many complaints about the inferences the Local Court ‘should have’ drawn from the evidence. That rather serves to highlight that no issue of principle transcending the facts of this case are involved in the appeal.

16. [39]

    Given the small amount in issue, the lack of any obvious injustice or issue of broader principle. Leave to appeal should be refused.

17. [40]

    Mr Antoniou brings this appeal on this basis that the Court below erred in matters of mixed fact and law. Pursuant to s 40 of the Local Court, leave of the Court is required to proceed on this basis, except so far as the ‘no evidence’ argument is concerned, I shall refer to it in more detail later in this Judgment.

18. [41]

    The principles upon which leave to appeal is granted are well established. Ordinarily it is only appropriate to grant leave concerning matters that involve issues of principle, questions of general public importance or where it is reasonably clear there has been an injustice in the sense of going beyond it being reasonably arguable that the primary judge was in error: See Lee at [12].

19. [42]

    Mr Antoniou has not specifically addressed whether this matter involves issues of principle, questions of general public importance or whether it is reasonably clear that there has been an injustice in the sense of going beyond it being reasonably arguable that the primary judge was in error, other than to say that it would be contrary to the interests of justice to leave incorrect factual findings undisturbed that led to misdirection and ultimately indemnity costs. The principles of replacement vehicles have been well settled in Arsalan. It is my view that as set out earlier in this Judgment, the findings on the issues of whether Jog Group suffered any loss, their “need” for the replacement vehicle and the reasonableness of the hire are well explained and it was open on the evidence.

20. [43]

    At best these grounds of appeal raise issues of mixed fact and law which require leave to appeal. In my view these grounds do to raise any issues of principle, questions of general public importance or an injustice in the sense of going beyond it being reasonably arguable that the Magistrate was in error. On these issues, it is my view that leave should not be granted.

21. [44]

    The only ground that merits consideration is that the Magistrate erred in making findings regarding the construction of the hire contract and the authority of Mr Bagga as a director based on ‘no evidence’. This argument arises circumspectly out of Ground 1(d) As conceded by Counsel for Mr Antoniou, this ground constitutes an error of law and therefore Mr Antoniou may appeal as of right.

Appeal ground 1(d) - Jog was entitled to recover credit hire charges not incurred or paid by it (“no evidence argument”)

1. [45]

   Mr Bagga is one of two directors of Jog Group. Mr Bagga said at [16] of his affidavit (CB 112):

2. [46]

   Objection was taken to the form of that evidence and the Magistrate made ruling on the objection:

3. [47]

   Mr Bagga repeated his assertion about signing the hire agreement in his capacity as a director in the course of cross-examination, but provided no better evidence of authority (T35.18-36.12).

4. [48]

   His Honour found at T3.31-38 of his judgment:

5. [49]

   His Honour erred in making the finding for the following reasons:

6. [50]

   The Magistrate observed on T.15-18 of the Judgment "that the plaintiff company was in fact a small concern and it was not sophisticated in its organisation or management". That observation was made without any evidential foundation and points to error in the Magistrate’s understanding of how the contract should be interpreted.

7. [51]

   The fact that the contract was made by Mr Bagga personally and given the lack of evidence that the company accepted liability for any hire charges, that should have been enough for the Magistrate to dispose of the claim.

8. [52]

   It was clear from Mr Bagga's evidence that the replacement vehicle was provided to him on a credit hire basis and that he believed that the car repairer would recover the hire car cost from the defendant's insurer. Jog Group was never a party to any hire arrangement and has no obligations in relation to payment to Unique Wedding Cars.

9. [53]

   Leaving aside hire car expenses, the plaintiff did not establish any other loss associated with damage to the Range Rover. There was no evidence of loss of use of the car as a chattel employed in Jog Group’s business.

10. [54]

    The Magistrate found that Mr Bagga signed the rental agreement in his name, using his residential address, rather than the company's trading address and without "recording as to whether or not this was in his capacity as an agent of the plaintiff company".

11. [55]

    The Magistrate then said, without identifying the facts upon which the following was founded:

12. [56]

    That finding constituted an error by the Magistrate. It failed to deal with the obligation to objectively construe the contract and ignored the distinction between the affairs of the corporation and the individual director.

13. [57]

    An individual director does not have authority by reason of that office to bind the company in contract: Northside Developments Pty Ltd v Registrar General & Ors [1989]-[1990] 170 CLR 146 (“Northside Developments”) at 205 per Dawson J; Brick & Pipe Industries Ltd v Occidental Life Nominees Pty Ltd [1992] 2 VR 279 at 303, appealed at 361. An individual director has only a power to join in the collective exercise of corporate power by the board of directors. As Dawson J said in Northside Developments at 205:

14. [58]

    Jog Group provided no evidence of authority and the finding by his Honour that the contract was entered into by Mr Bagga as an agent for the company is an error of law.

15. [59]

    The primary argument advanced by Mr Antoniou below was that Jog Group was not the contracting party to the hire car agreement. Instead, Mr Antoniou argued that Mr Bagga entered into the hire contract in his personal capacity, and not in any way as the controlling mind or agent of the company.

16. [60]

    The learned Magistrate rejected this argument, accepting that the company had hired the replacement. The thrust of Mr Antoniou’s argument is that the learned Magistrate wrongly applied a subjective analysis to the question: “Who hired the car?”

17. [61]

    There can be no doubt that the resolution of a dispute about the identity of the parties to contract must adhere to the objective theory of contract. But the proceedings below did not involve a dispute between any alleged party to the hire contract. The plaintiff below did not seek to escape liability under that agreement. Mr Bagga did not seek to secure the benefit of the hire car for himself over the opposition of Jog Group. Nor was there any suggestion the hire company took issue with the identity of the contracting party.

18. [62]

    As a stranger to the contract, Mr Antoniou’s attempts to vitiate that agreement by arguments about its proper construction are redolent of a kind of tertius foreign to the common law. Properly understood, the defendant’s complaint is simply one of evidence and fact-finding. Part of the plaintiff’s case on damages was that it had incurred an expense. Although dressed-up in the language of privity of contract, Mr Antoniou’s argument was that the plaintiff did not actually incur that expense as a matter of fact.

19. [63]

    So far as this ‘no evidence’ argument is concerned, it was raised in the defence, albeit circumspectly. The pleadings simply put the plaintiff to proof on the assertion that it incurred hire fees. The case summary of the defendant below did not expressly reveal the argument to be advanced by Mr Antoniou on this topic.

20. [64]

    Mr Antoniou called no evidence to advance this argument (for example, he did not subpoena the records of the hire business to establish whether it relied on any representations about who it was contracting with, which would have been relevant). Mr Antoniou was entitled to adopt this strategy. However, the upshot was that when it came to determining whether Jog Group had incurred the expense as claimed, the only evidence before the learned Magistrate was from a director of the company. Mr Bagga gave evidence that when he hired the car he was doing so on behalf of the company. He was unshaken on that point in cross-examination. That was particularly significant given the lack of prior notice Mr Antoniou provided in relation to this argument.

21. [65]

    Despite this, Mr Antoniou now contends in written submissions that there was “no evidence that Jog Group was a party to the contract or was intended to be bound to it”. Although not raised as a discrete ground of appeal, it is conceded that a finding made in the absence of evidence would amount to error of law (for which leave is not required). Nevertheless, it has often been said that a “no evidence” error will not arise simply because a finding based on the evidence might be described as illogical, or even contrary to the overwhelming weight of evidence in a case.

22. [66]

    Mr Antoniou points to the fact that the rental documents did not expressly mention Jog Group by name. The rental invoice, for example, was issued only in the name of Mr Bagga. The document contained no reference to the fact that he was a director of the company (although his status as director was not disputed). Mr Antoniou thus urged the learned Magistrate below to conclude from this that Mr Bagga had in fact hired the replacement in his personal capacity.

23. [67]

    It was open for the Magistrate to accept this argument. The documents alone did not make it clear one way or the other who the hiring party was. However, his Honour was not bound to reach a conclusion. The fact that the documents only mentioned Mr Bagga did not exclude the conclusion that Jog Group was the contracting party. For one, the doctrine of undisclosed principal would leave open the real possibility that Jog Group was the contracting entity irrespective of whose name was on the documents. There was also ample evidence to support a finding that the company in fact hired the replacement:

24. [68]

    It could not be said that there was no evidence to support the finding that Jog Group hired the car.

25. [69]

    Although the Magistrate remarked upon Mr Bagga’s state of mind when signing the rental contract, his Honour was not adopting a wholly subjective analysis of that question. A fair reading of decision below is that the Court was principally focused on the fact that it was the company who owned the vehicle, and it was therefore the company who required the replacement. It was in that context that the Court remarked that Mr Bagga did not turn his mind to acting “in anything other than [in a] capacity as the vehicle’s owner.” That is, as a director of the entity whose chattel was damaged and who had reason to replace it.

26. [70]

    In this ground of appeal, Mr Antoniou submits that the Magistrate made findings relating to Mr Bagga’s authority to bind Jog Group to the hire contract and subsequently that Jog Group was a party to the hire contract based upon no evidence.

27. [71]

    The Magistrate, at T3.31-38 of his judgment, made the following findings:

28. [72]

    From a fair reading of this excerpt, it is clear that the Magistrate applied a subjective construction of the commercial contract, considering what was in the ‘mind’ of Mr Bagga when he entered the contact and his own understanding of his actions. In my view, this amounts to an error of law. As conceded by Jog Group, the identification of the parties to a contract must be made in accordance with the objective theory of contract. The objective theory of contract was described in the High Court decision of Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 105-106 by Gaudron, McHugh, Hayne and Callinan JJ. As to the requisite intention to create contractual relations, their Honours said that although the word 'intention' is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties: see also Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 348-353 per Mason J.

29. [73]

    Jog Group submitted that despite this subjective construction of the contact, the Magistrate’s decision that Jog Group was a party to the hire contract was not based wholly on no evidence. It is submitted that, firstly, the vehicle involved in the accident was purchased and registered in the name of Jog Group. Secondly, the replacement vehicle was hired on the same day that the vehicle involved in the accident was taken for repairs. Thirdly, the evidence of Mr Bagga, who hired the vehicle, was one of two directors of Jog Group and his authority to act on Jog Group’s behalf was not challenged before the Magistrate. Finally, Mr Bagga was cross-examined and the Magistrate who accepted his evidence that he entered the hire agreement on behalf of Jog Group.

30. [74]

    However, it is my view that this evidence alone would not be sufficient to entitle the Magistrate to make a finding that Jog Group was in fact a party to the contact when the objective theory of contract is considered. As submitted by Mr Antoniou, there was no objective evidence before the Court below of the communications between Mr Bagga and Unique Wedding Cars in which the Magistrate could have based the conclusion that Mr Bagga was acting as an agent of Jog Group and therefore had bound them to the contract. In my view, the necessary evidentiary nexus between Jog Group and the hire contract was simply not there. The Magistrate’s erred in law when he analysed whether Jog Group was a party to the contract through a subjective lens rather than an objective one. This error of law infected the rest of his decision.

Result

1. [75]

   The Magistrate’s decision dated 23 July 2021, in proceeding Jog Group Pty Ltd v Antoniou 2020/197219, is set aside. The matter is remitted to the Local Court for determination according to law.

Costs

1. [76]

   Costs are discretionary. Costs normally follow the event. The defendant is to pay the plaintiff’s costs.

   1. (1)

      The Magistrate’s decision dated 23 July 2021, in proceeding Jog Group Pty Ltd v Antoniou 2020/197219, is set aside.

   2. (2)

      The matter is remitted to the Local Court for determination according to law.

   3. (3)

      The defendant is to pay the plaintiff’s costs.