Collis v Howard Recycling Services Pty Ltd

1. [1]

   On 29 October 2024, Mr Collis filed an Amended Summons, commencing an appeal and seeking leave to appeal from a Local Court judgment.

2. [2]

   The judgment, the subject of these proceedings, was entered in the Local Court on 26 March 2024, in favour of Howard Recycling Services Pty Ltd (“Howard Recycling”) in the sum of $46,119.07. As well, Mr Collis was ordered to pay the costs of Howard Recycling.

3. [3]

   The Local Court heard the proceedings over two days, at the end of which the Magistrate delivered an ex-tempore judgment.

Relevant Statutory Provisions

1. [4]

   There is a limited right of appeal from the Local Court, in its General Division, to the Supreme Court of New South Wales.

2. [5]

   Section 39 of the Local Court Act 2007 (NSW) (“Local Court Act”) provides for a right of appeal in the following way:

3. [6]

   There is a broader provision for an appeal by leave of this Court, where there are grounds involving mixed questions of fact or law. Section 40 of the Local Court Act provides for this path of appeal in the following terms:

Leave

1. [7]

   Having regard to the way in which the hearing of the proceedings in the Local Court unfolded, the fact that Mr Collis was unrepresented there, and the fact that the grounds of appeal in this Court are, on their face, worthy of careful consideration, I am of the view that it is appropriate to grant leave to Mr Collis, to the extent necessary to raise any question of mixed law and fact, as articulated in his three grounds of appeal.

2. [8]

   It is now necessary to consider those grounds of appeal, without needing to differentiate in these reasons between questions of law, and mixed questions of law and fact.

Further Amended Summons

1. [9]

   At the beginning of the hearing in this Court, with the consent of Howard Recycling, I granted leave to Mr Collis to file a Further Amended Summons (“FAS”), which set out the grounds of appeal in the following way:

2. [10]

   Mr Collis submitted that those reasons for judgment:

   1. (1)

      did not identify or apply the correct tests for determining whether the parties intended to enter into binding legal relations and whether the defendant entered into the purported contract through an agent;

   2. (2)

      did not identify any facts explaining when and how the requisite authority was conferred on the putative agent by the time of the putative contract;

   3. (3)

      relied upon irrelevant matters, including that Howard Recycling was party to the putative contract; and

   4. (4)

      failed to take into account matters that were material to the issue of whether the parties intended to enter into binding legal relations.

Local Court Proceedings

1. [11]

   As earlier indicated, the Local Court proceedings took place over two hearing days.

2. [12]

   The claim by Howard Recycling against Mr Collis was for the sum of $33,350, plus interest and costs.

3. [13]

   The subject matter of the proceedings was two marine outboard motors (“the motors”).

4. [14]

   Howard Recycling claimed that there existed a contract between it and Mr Collis, for Mr Collis to transport the motors from the vendor, in Tweed Heads, to the premises of Howard Recycling, at Wyee on the Central Coast of NSW. The claim was that Mr Collis had collected the motors and taken them to his own home at Bootawa, where he had kept them in his shed and refused to deliver them to Howard Recycling, in accordance with his contractual obligations.

5. [15]

   Accordingly, the causes of action upon which Howard Recycling relied were for damages for breach of contract, and for damages in detinue.

6. [16]

   Prior to the hearing, and in accordance with the usual procedure in the Local Court, the matter had been referred for arbitration. The arbitration apparently occupied seven days.

7. [17]

   The arbitration concerned two separate Local Court claims: one about an issue relating to fencing; and the other about the motors. Mr Collis succeeded on both of the claims at the arbitration. Initially, when Howard Recycling appealed, it included the judgment in favour of Mr Collis on the fencing dispute. However, that appeal was later withdrawn.

8. [18]

   In substance then, the hearing before the Local Court, from which these proceedings arise, at which Mr Collis represented himself, occupied two days and concerned only the claims relating to the motors.

9. [19]

   It is fair to say, and counsel for Mr Collis accepted, that the proceedings in the Local Court were made more complex and fractious by the behaviour of Mr Collis, whilst representing himself. He demonstrated an obvious tendency to engage in irrelevant debate and questioning. Nevertheless, the Court was obliged to determine the issues posed by the pleadings having regard to the evidence.

10. [20]

    Perhaps this exchange between the Local Court Magistrate and Mr Collis adequately illustrates some of the flavour of the hearing at the Local Court at Forster:

11. [21]

    The principal witness called by Howard Recycling was Mr John Howard. There is no doubt that Mr Howard and Mr Collis had known each other for a long time. They were long standing friends.

12. [22]

    It was Howard Recycling’s case that an oral contract was entered into by Mr Howard, on its behalf, with Mr Collis for the transport of the motors. There was no suggestion from either party that there was any written contract. It was Mr Collis’ case that he had been asked for a favour by a friend, Mr Howard, and that he had been asked to collect and store the motors at his property in Bootawa because Mr Howard had no room at his property. Mr Collis’ case was that, in being asked to do this favour for Mr Howard, Mr Howard said that he would reimburse him for his petrol and time. He said that there was no contract, that he did his work in a “voluntary capacity”, as a favour to Mr Howard.

13. [23]

    It was not in dispute between the parties that the discussion between Mr Howard and Mr Collis occurred in late January 2019, and that Mr Collis picked up the motors at Tweed Heads on 1 February 2019 and took them to his address at Bootawa, where the motors were unloaded from his truck, and stored.

14. [24]

    Howard Recycling also brought its claim in detinue, as earlier noted. It claimed that Mr Collis had collected the motors, taken and kept possession of them and had never returned the motors, despite being requested to do so.

15. [25]

    In answer to the case in detinue, Mr Collis gave evidence that, on 30 October 2019, Mr Howard had collected the motors and removed them from his property. His evidence was that he was not in possession of the motors at any time thereafter.

16. [26]

    The issues of fact posed for determination, in respect of the case in detinue brought by Howard Recycling, occupied significant time and much evidence at the hearing. Ultimately, Brennan ALCM was not persuaded that the outboard motors had been collected by Mr Howard in October 2019, but equally, he was not satisfied, on the evidence, that Mr Collis was still in possession of the outboard motors at the time of the proceedings. He dismissed the claim in detinue brought by Howard Recycling.

17. [27]

    There is no appeal to this Court by Howard Recycling against the Magistrate’s decision with respect to the claim in detinue.

18. [28]

    Accordingly, that claim does not need to be further considered in this judgment.

Local Court Pleadings

1. [29]

   In the Local Court proceedings, the plaintiff pleaded its cause of action in the following terms:

2. [30]

   In response to that part of the pleading, in a Further Amended Defence filed 26 October 2023, the following was pleaded:

Judgment of the Local Court

1. [31]

   As earlier indicated, Brennan ALCM gave an ex-tempore judgment.

2. [32]

   The judgment dealing with the contract claim is, relevantly, as follows:

3. [33]

   The Magistrate then went on to identify various amounts for costs and interest, and ultimately entered judgment in the following form:

4. [34]

   The order was formally entered on 27 March 2024.

Proceedings in this Court

1. [35]

   This Court had the benefit of being assisted on the hearing of the appeal by Mr Gaffney of counsel, who appeared for Mr Collis, pursuant to a referral made by the Court to the Pro Bono Panel.

2. [36]

   Howard Recycling was represented by Mr Marshall SC. The Court received considerable assistance from both counsel and expresses its gratitude to them. Because of that assistance, this Court was in a much-advantaged position to consider this matter than was the Local Court Magistrate.

3. [37]

   Counsel for Mr Collis identified three principal areas which, he submitted, would lead to the relief sought. The first issue was whether there was an intention to create legal relations. The second issue was whether the conclusion of agency, i.e., Mr Howard’s capacity to bind the company (Howard Recycling) was, on the facts, simply not capable of being made out, and that such conclusion was erroneous. The consequence of either or both of these grounds, should Mr Collis succeed on argument, was that no contract existed between Mr Collis and Howard Recycling.

4. [38]

   The third area identified by counsel for Mr Collis was that the Magistrate’s reasons for decision on those two subjects were wholly inadequate.

Legal Principles

1. [39]

   Given the content of the pleadings, and, specifically, the denial by Mr Collis that there was any contract in existence in addition to the assertion that he was doing a favour for a friend, counsel submitted that the onus fell on Howard Recycling to properly prove the existence of the contract, which necessarily involved, at the outset, proving an intention to create legal relations.

2. [40]

   Counsel drew attention to the relevant legal test which he submitted could be found in the decision of the High Court of Australia in Ermogenous v Greek Orthodox Community of S.A. Inc [2002] HCA 8; (2002) 209 CLR 95, in the joint judgment of Gaudron, McHugh, Hayne and Callinan JJ, at [25], which is the following terms:

3. [41]

   In considering that question, the joint judgment drew attention to the fact that proceeding by way of presumptions was of doubtful utility. At [26], their Honours said:

4. [42]

   Counsel for Mr Collis submitted that the Magistrate was required to pay attention to whether or not there was any intention to create contractual relations by objectively assessing the state of affairs between the parties and, in particular, examining what was said or done in the “contractual” negotiations to form an objective view as to whether any intention to create a contract existed. Counsel noted that, where the existence of the contract was challenged, it was a matter for Howard Recycling to prove, on the balance of probabilities, that such a contract existed.

5. [43]

   Counsel, on the question of how a Court should go about determining the existence of an intention to create a legally binding contract, referred to the decision of Kelly v Mina [2014] NSWCA 9 where, at [96], Barrett JA with whom Ward and Leeming JJA agreed, said this:

6. [44]

   Finally, in submitting, with respect to this issue, that it was a question of law which fell within s 39 of the Local Court Act, and accordingly Mr Collis had a right of appeal, counsel drew attention to the decision of the plurality, French CJ, Kiefel and Bell JJ, in Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; (2016) 260 CLR 1 at [27], where their Honours said:

7. [45]

   If a person (the agent) is entering into a contract on behalf of a principal, and the principal sues on the contract, then the principal must prove that the agent had the requisite authority to enter the contract on its behalf.

8. [46]

   In Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1989) 170 CLR 146 at 172, Brennan J explained:

9. [47]

   Further, at 173, Brennan J said:

10. [48]

    Where the agent does not disclose the existence of a principal on whose behalf the contract is being entered, that principal may sue on the contract, but only if the principal can, and does, prove the existence of the agent’s authority at the time the contract was entered into, and that the terms of the contract and the surrounding circumstances do not indicate that the agent was, in fact, the principal: see White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 441; (2006) 200 FLR 125 at [70]-[71].

11. [49]

    If there is no actual authority for the agent to act for the principal, later ratification of the contract is unavailable: see Keighley, Maxsted & Co v Durant [1901] AC 240; Maynegrain Pty Ltd v Compafina Bank [1982] 2 NSWLR 141 at 150 per Hayne JA; Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1987) 8 NSWLR 270 at 276 per McHugh JA (Hope and Priestly JJA agreeing).

Evidence Before the Local Court

1. [50]

   Counsel took this Court to what he said was the only evidence bearing on the issue of the parties’ intention to create legal relations. Counsel drew attention to the conversation recounted in affidavits which were put before the Local Court.

2. [51]

   In an affidavit sworn 12 July 2021, which was apparently marked Exhibit 11, Mr Collis said this:

3. [52]

   In a further affidavit sworn on 16 October 2021, which was marked Exhibit 12, Mr Collis said this:

4. [53]

   The affidavit went on to repeat the substance of what had earlier been said, to which I have already referred.

5. [54]

   The evidence put before the Court by Howard Recycling on the issue of the contract, included the evidence of Ms Belinda Giffin who was not said to be present at any time during the interaction between Mr Collis and Mr Howard in January 2019. She did not give any evidence as to what transpired between Mr Collis and Mr Howard. In her statement of 29 June 2021, she said:

6. [55]

   The relevant entries to which Ms Giffin referred must have come into existence after the trip to and from Brisbane had been undertaken. Those entries are not capable of informing the issue about intention to enter into contractual relations.

7. [56]

   In an affidavit, sworn 23 November 2021, Ms Giffin informed the Court that she was the “Bookkeeper/Payroll Officer” for Howard Recycling. That affidavit was in addition to the previous witness statement and substantially described the contents of a running sheet recording a series of entries of monies paid to Mr Collis, or else invoices which had been paid on his behalf. It also recorded loans made by Mr Collis directly to Mr Howard for his personal purposes.

8. [57]

   Mr John Howard also gave evidence in support of the case for Howard Recycling.

9. [58]

   In a witness statement of 29 June 2021, Mr John Howard said this:

10. [59]

    In a subsequent witness statement, Mr Howard asserted that the defendant was paid for the Brisbane trip, but did not give any account of the conversation leading up to the arrangement to travel to Brisbane and collect the motors on his return trip.

11. [60]

    An account of the arrangements to collect the motors from Tweed Heads Marine was given by Mr Howard in his statement of the 12 November 2023. In that statement, Mr Howard did not recount the words that were exchanged between he and Mr Collis, but rather said this:

12. [61]

    The extracts from the two witness statements of Mr Howard, to which reference has just been made, do not set out any detail of how the oral agreement was made, rather, they are framed to assert a conclusion that there was a contract entered into between Howard Recycling and Mr Collis. Stated in that way, the evidence provides no assistance in the analysis of either issue posed by grounds 1 and 2 in this appeal.

13. [62]

    When Mr Howard was called to give evidence, his statements were tendered and became exhibits. He affirmed the truth of the material in those statements. He gave no further evidence-in-chief. In cross-examination, the following occurred:

14. [63]

    With the exception of these answers in cross-examination, which covered some, but not all, of the relevant conversations leading to Mr Collis collecting the motors, Mr Howard did not give any evidence of the conversation, nor the circumstances surrounding it, or his role, if any, in Howard Recycling at that time. Nor did he give any evidence of his authority to enter any contracts on behalf of Howard Recycling.

15. [64]

    Mr Collis gave evidence and affirmed the correctness of his affidavits, to which reference has been made above. He did not give any further evidence-in-chief about the agreement to collect the outboard motors.

16. [65]

    In cross-examination, Mr Collis was asked questions about that part of the conversation where he said that he had been asked by Mr Howard to take the motors to his own home and store them there, rather than taking them to Wyee. Mr Collis said, in the course of his cross-examination, that he thought that the conversation about taking the motors back to his place occurred after he had picked the motors up.

17. [66]

    Otherwise, it is apparent from the transcript of the Local Court proceedings that the version of the conversation given by Mr Collis in his written evidence was not challenged. To the contrary, the following exchange occurred between counsel for Howard Recycling and Mr Collis:

18. [67]

    Later in cross-examination, an exchange took place concerning Mr Collis saying that the work was done in a voluntary capacity. The cross-examination by counsel for Howard Recycling was as follows:

19. [68]

    In cross-examination, the subject of payment to Mr Collis came up. He said this:

20. [69]

    Later in his cross-examination, Mr Collis reaffirmed that he gave the invoices to Ms Giffin “to keep track of his hours” in response to being told so to do by Mr Howard. He then added this description:

21. [70]

    I note that there was considerable cross-examination about the relationship generally and in particular about Mr Collis’ assertion that Mr Howard had collected the motors.

Contract Made Through Agent

1. [71]

   Ground 1 of the Amended Notice of Grounds of Appeal is in the following form:

2. [72]

   It is to be recalled that the agent relevantly upon whom Howard Recycling relied, was Mr John Howard.

3. [73]

   In his judgment, Brennan ALCM said of Mr Howard that “… he apparently works for the company …”. He later expressed his conclusion relevantly, in this way:

4. [74]

   To justify this conclusion, Howard Recycling had to prove that Mr John Howard was authorised to enter into the contract for the collection and transport of the motors.

5. [75]

   To the extent that there was any evidence which touched upon Mr Howard’s authority to enter into a contract on behalf of the company in January 2019, it was contained in short compass.

6. [76]

   Ms Zali Howard, who gave her occupation as an enrolled nurse, completed a witness statement, dated 9 November 2023. The statement was tendered and became Exhibit 5. Ms Howard stated that:

7. [77]

   Ms Howard gave no evidence about John Howard’s authority to enter into the contract sued upon by Howard Recycling.

8. [78]

   In a statement of Mr John Howard dated 29 June 2021, he described his occupation at that time as “… the working supervisor for Howard Recycling …”. He then said that he had been given authority, by way of a corporate power of attorney, to conduct the proceedings against the defendant.

9. [79]

   In that statement, and in a subsequent statement dated 25 November 2021, Mr Howard did not give any evidence, or make any statement, about his employment status, or the fact that he had been given authority to enter into any contract on behalf of Howard Recycling in January 2019, which was the relevant time. Mr Howard was one person who was well placed to give such evidence.

10. [80]

    In a later witness statement dated 12 November 2023, which was tendered in the proceedings, Mr Howard again eschewed giving any evidence of his role with Howard Recycling at the time the arrangement was made for the plaintiff to collect the motors.

11. [81]

    As noted at [52] above, Mr Collis had said that, when he was discussing the arrangement to collect the motors, Mr Howard had told him that he was an undischarged bankrupt. This evidence was not the subject of any challenge in the proceedings, nor was there any contrary evidence given.

12. [82]

    Mr Collis asked these questions in the course of cross-examination:

13. [83]

    After a somewhat lengthy re-examination, Mr Collis was allowed to ask some further questions of Mr Howard by way of cross-examination. That evidence was:

14. [84]

    I would understand the answer above, given by Mr Howard in the context of his evidence, to be that in 2018 he was an undischarged bankrupt.

15. [85]

    It is of significance to note that, at no stage during the course of Mr Howard’s time giving evidence, did counsel for Howard Recycling re-examine, or seek leave to examine Mr Howard further in-chief, to address the issue of his status as a bankrupt, the timing of it (seemingly being a bankrupt in 2018), and his authority on behalf of the company to enter into an arrangement with Mr Collis with the authority of the company.

16. [86]

    On 10 November 2023, Ms Jodie-Anne Howard signed a witness statement which became Exhibit 9 in the proceedings in the Local Court. She deposed to being the Office Manager for Howard Recycling at that date.

17. [87]

    Insofar as there was a contract or agreement to pick up the motors, Ms Howard said:

18. [88]

    Ms Howard annexed a bank statement demonstrating that Howard Recycling paid an invoice for the motors.

19. [89]

    It is to be noted that the statement set out at [87] above, is not one which could have been made by Ms Howard except by acquired knowledge from an undisclosed source, because she was not present in 2019 when the arrangement was made, and she did not work for Howard Recycling at that time. Ms Howard gave no evidence, at all, about Mr Howard’s authority to bind Howard Recycling to any contract in 2019.

20. [90]

    As earlier noted, Ms Belinda Giffin, who was the bookkeeper for Howard Recycling in June 2021, provided a witness statement, dated 29 June 2021, and a second statement, dated 23 November 2021, and was called to give evidence before the Local Court. She said that she knew Mr Collis, as a friend, and had visited his property in October and November 2019. Ms Giffen said in a third witness statement, which was dated 10 November 2023, that, at the time the Local Court proceedings were commenced, she was the bookkeeper for Howard Recycling.

21. [91]

    Ms Giffin’s evidence touched upon her bookkeeping duties. She was responsible for the maintenance of a spreadsheet which related to Mr Collis and payments made to him, or on his behalf, and also recording the value of work done by Mr Collis, and amounts incurred by him in carrying out the work.

22. [92]

    It is plain, and Ms Giffin accepted in her evidence, that the spreadsheet (or ledger) which she prepared included personal loans made by Mr Collis, including to John Howard, and payments made at the request of Mr Collis to third parties. In other words, whilst she maintained the spreadsheet, it recorded both business dealings between Howard Recycling and Mr Collis, and personal dealings between Mr John Howard and Mr Collis.

23. [93]

    In her evidence, Ms Giffin was not asked any questions, either in-chief or in cross-examination, about what role Mr Howard had with the company at any time at all, including when Mr Collis was asked to collect the motors. She gave her occupation at the time of giving evidence as a book-keeper. When she was asked about details of costs relating to the construction (or renovation) of a “houseboat” or “boat”, upon which the motors were to be used, she said that she was the “business book-keeper and not their personal book-keeper”. The evidence about being ‘their’ personal book-keeper referred to Mr Howard and, seemingly, other members of his family.

24. [94]

    Ms Giffin did not suggest that she was present when Mr Collis and Mr Howard discussed the arrangements about the collection of the motors. Her evidence did not inform this issue, namely, whether Mr Howard was authorised, as the company’s agent, to enter into a contract with Mr Collis for the transport of the motors.

25. [95]

    Because of the contents of the spreadsheet, which included both matters personal to Mr Collis and to Mr Howard, as well as entries relating to work done by Mr Collis for Howard Recycling, neither the spreadsheet itself nor its contents were relevant to, nor could they be taken into account when determining, the question of whether Mr Howard had the authority to enter into the transport arrangement with Mr Collis on behalf of Howard Recycling, or whether there was an intention to enter into contractual relations.

Discernment

1. [96]

   The first ground deals with whether an error of law occurred, with respect to the finding (albeit largely implicit) that Mr Howard was acting as the agent of the company when the arrangement was made with Mr Collis, upon which the company relies as giving rise to a contract.

2. [97]

   It is an error of law for a finding of fact to be made where there is no evidence which supports that finding: see Kirby J in R L & D Investments Pty Ltd v Bisby [2002] NSWSC 1082 at [13]; Hall J in US Manufacturing Co Pty Ltd v ABB Service Pty Ltd [2008] NSWSC 705 at [54].

3. [98]

   Having carefully reviewed the entirety of the record in the Local Court, I am satisfied that the plaintiff has demonstrated an error of law on the part of the Local Court Magistrate.

4. [99]

   There was no evidence, at all, which could constitute evidence of the authority of Mr Howard in late January 2019, to enter into a contract on behalf of the company, Howard Recycling, or to bind it in any way.

5. [100]

   My reasons for coming to that conclusion arise from the following.

6. [101]

   There was no evidence, at all, that Mr Howard had been given any authority to bind the company in January 2019 to enter into the contract. Mr Howard did not say he had such authority. No officer of the company said that he had such authority. No resolution or other document was produced which evidenced the existence of the authority. No evidence was given that Mr Howard was employed by the company at that time or had any role in the management or control of its affairs.

7. [102]

   The absence of such evidence addressing those matters is in contrast to the fact that there was evidence specifically addressed to Mr Howard’s authority to conduct the Local Court proceedings on behalf of the company. That authority was encapsulated in a resolution of the company which was put into evidence. That shows that the company, when considering what evidence to put before the Court in support of its claim, was alert to the issue of Mr Howard’s authority to act for it in the proceedings. It would have been very easy for the company, when providing such evidence of Mr Howard’s authority to conduct the proceedings, to include in that material, his authority to act as its agent at the time the arrangement to transport the motors was made. The absence of that evidence in those circumstances is, in my view, particularly telling.

8. [103]

   The fact that Ms Giffin kept a ledger was not of itself, and without more, capable of proving that in January 2019, when the request was made to Mr Collis to collect the motors from Tweed Heads, that Mr Howard had authority to bind the company to a contract. There are two reasons for that:

9. [104]

   The only evidence of the oral conversation giving rise to the contract sued upon, was that given by Mr Collis, and as earlier noted, the words which he noted were not challenged, or the subject of specific cross-examination. Of importance is that, in paragraph 5 of the affidavit of Mr Collis dated 16 October 2021, to which reference is made above at [52], he records Mr Howard telling him that he was an undischarged bankrupt at the time, and that Mr Howard’s wife, Jodie, does not know that I am buying the motors”.

10. [105]

    There are two features of this evidence which are telling. The first is that Mr Howard was, as he said, an undischarged bankrupt in January 2019. As an undischarged bankrupt, you cannot lawfully be responsible for the control and management of any company. It cannot, in those circumstances, be presumed that he was acting for the company with its authority. On the contrary, any inference would be that he was not authorised.

11. [106]

    Secondly, what Mr Howard told Mr Collis was that he was buying the motors. He did not say that the company was buying the motors. Those words do not suggest that he was acting with the authority of the company, as its agent, to bind it. On the contrary, they tend to the opposite conclusion.

12. [107]

    Howard Recycling, as the plaintiff, had the onus of proving that the contract sued upon was entered into by an agent on its behalf, and with its authority. There was no evidence that Mr Howard was authorised to act as its agent. Such evidence as was called more generally in the proceedings, did not give rise to any inference that Mr Howard had such authority. On the contrary, that evidence was either neutral, or gave rise to an opposing inference.

13. [108]

    As the company had the onus of proving the authority of Mr Howard, and it was within its power and capacity to prove it, its failure so to do has the consequence that the finding to the contrary by the Local Court Magistrate was erroneous.

14. [109]

    In the absence of any proof of the authority of Mr Howard to bind the company to the contract sued upon, the plaintiff’s claim must fail.

15. [110]

    On this ground, I would uphold the appeal by Mr Collis.

16. [111]

    The second ground of appeal dealt with the issue of whether there was an intention in January 2019, having regard to what was said and the surrounding circumstances, to create legal relations.

17. [112]

    The context for this ground of appeal was that it was clear in the Local Court at the hearing of the proceedings, that Mr Collis disputed that there was any contract, and maintained that the discussion in January 2019, and the arrangements which were made to collect the motors, were nothing more than his doing a favour for a long-standing friend. Accordingly, a central matter to be addressed in the Local Court was whether, in the circumstances, there was any intention on the part of Mr Collis and Mr Howard to create legal relations.

18. [113]

    The company had the onus of proving that a legally binding contract came into existence. Such a legally binding and enforceable contract is not a contract unless, from an objective assessment of what was said and the surrounding circumstances, it can be said that each party intended to create legal relations. Put differently, the words spoken and the surrounding circumstances need to show that the parties intended that their agreement would be legally binding and so be subject to adjudication by the Courts in the event of any dispute. Such intention is to be judged not subjectively, but on the basis of an objective assessment of what the parties did and said in relation to their agreement.

19. [114]

    The Local Court Magistrate did not explicitly address this issue. It was an error of law for the magistrate to fail to address the issue, and make a finding about an essential element of the existence of a legally binding and enforceable contract.

20. [115]

    Counsel appearing in the Local Court before the Magistrate did not specifically make any submission to the Magistrate about the need for the Court to address such a feature, nor did counsel draw the Magistrate’s attention to evidence upon which he based any submission about the intention to create legal relations. In those circumstances, it is not surprising that the Local Court Magistrate did not specifically and separately address this issue.

21. [116]

    It is clear, however, from the material that was before the Local Court Magistrate, that a finding that there was an intention to create legal relations between Mr Collis and the company at the time of the discussions in January 2019, could not have been made.

22. [117]

    Leaving aside, for the moment, my conclusion about the absence of any authority on the part of Mr Howard to enter into a contract on behalf of the company with Mr Collis, the state of the affairs between the parties and the surrounding circumstances do not prove the requisite intention.

23. [118]

    Mr Howard and Mr Collis were friends of long standing and were accustomed to doing things for each other, including doing favours, when asked. Mr Collis was a retired pensioner with a medical disability. Mr Howard was an undischarged bankrupt.

24. [119]

    The contents of the spoken words, as given in evidence by Mr Collis (which is the only source of what was, in fact, said in January 2019, and which was not the subject of any challenge by contrary evidence or cross-examination) were not words of a kind reflecting the minimal formality necessary for the entry of the parties into a binding contract. On the contrary, they are most informal, and are wholly consistent with a personal request being made.

25. [120]

    The words spoken make no reference to any specific time within which the motors are to be collected and returned to the Central Coast, no specific sums of money are agreed upon to carry out the job, nor are there any terms of payment agreed for the provision of the service. There are no formal indicia of the kind ordinarily to be found in a contract for the supply of transport services.

26. [121]

    The request to collect the motors only arises after Mr Collis, in discussion with Mr Howard, tells him that he was going to Brisbane for his own purposes – that is, to purchase wheels for his camper truck. Mr Howard apparently seizes the opportunity to ask him to collect the motors on his return trip. The words used by Mr Howard are consistent with asking for a favour with an offer of recompense for any expense incurred.

27. [122]

    The conversation occurs during a meeting of old friends in which, amongst other things, this matter is discussed.

28. [123]

    To the extent that the contract was said to be with the company, Howard Recycling, the company’s name is never mentioned. The company’s ownership of the motors is never mentioned until after the motors were collected and were at Bootawa (or else on their way there): see [58]. There is no question discussed of who will be responsible for insurance for the motors during the course of the transport, or who would be responsible for any damage which occurs in the course of collecting the motors and transporting them from Tweed Heads. On the contrary, the unchallenged evidence is that Mr Howard said that he was purchasing the motors.

29. [124]

    Had the Local Court Magistrate been asked to consider the question of intention to create legal relations, then the only finding which could have been made was that there was no such evidence, and such a conclusion was not available.

30. [125]

    I would uphold the second ground of appeal.

31. [126]

    Having upheld both grounds of appeal, it is unnecessary for me to consider the adequacy of the reasons of the Magistrate, which formed the third ground of appeal.

Appropriate Outcome

1. [127]

   Section 41 of the Local Court Act provides that this Court may determine an appeal by varying the terms of the judgment or order in the Local Court, or by setting aside the judgment or order. It may also remit the matter to the Local Court for determination.

2. [128]

   In my view, the appropriate order, having regard to the matters established on this appeal, was that the Local Court ought to have dismissed the proceedings and ordered the company, Howard Recycling, to pay the costs of Mr Collis.

3. [129]

   That conclusion was inevitable given that essential matters to be proved by the company, being the authority of Mr Howard, and the intention to create legal relations, were not proved. In the first of those two matters, the company, being the party with the onus, did not adduce any evidence of the existence of any authority.

4. [130]

   In those circumstances, it seems to me that it would be inappropriate for this Court to remit the matter for determination to the Local Court.

5. [131]

   In those circumstances, in my view, the correct approach is to vary the judgment entered in the Local Court so that it reads:

   1. (1)

      Amended Statement of Claim filed 25 October 2023 is dismissed.

   2. (2)

      Order the plaintiff to pay the defendant’s costs.

Costs in this Court

1. [132]

   It follows that the company, Howard Recycling, which is the defendant in the Supreme Court, should pay the plaintiff’s costs in these proceedings.

Orders

1. [133]

   I make the following orders:

   1. (1)

      Appeal upheld.

   2. (2)

      Vary the terms of the judgment in the Local Court entered on 27 March 2024 so that the judgment reads:

   3. (3)

      Defendant, Howard Recycling Services Pty Ltd to pay the plaintiff, Garry Collis’ costs of these proceedings.