Nohra v Nando’s Quality Meats Pty Ltd

1. [1]

   GLEESON J: Ms Helen Nohra applies for leave to appeal from a judgment of the Local Court given on 17 March 2021 in favour of Nando’s Quality Meats Pty Ltd (Nando’s) in the sum of $38,500.

Background

1. [2]

   Nando’s claim against Ms Nohra was to recover an alleged debt of $38,500 in respect of the supply of meat. Nando’s also made a claim against two other defendants as alleged guarantors of Ms Nohra’s debt: one was Mr Salvatore Cantarella, Ms Nohra’s business partner; the other was Mamma Rosa’s Kitchen Pty Ltd (Mamma Rosa), a company of which Ms Nohra and Mr Cantarella were directors, which carried on the business of producing pasta products and had supplied some of these pasta products to Nando’s since 2009.

2. [3]

   In October 2011, Ms Nohra and Mr Cantarella commenced a supermarket business at St Marys in Western Sydney using various business names until the shop closed in October 2015. Initially, the business name was Jardin Fresh Life. In August 2012 the name changed to Costless Supermarket for a short period, and in November 2012 the name changed to Sam’s Fresh Food Barn.

3. [4]

   Nando’s pleaded claim was that the alleged contract with Ms Nohra to supply meat to the St Marys shop was partly oral and partly in writing and had been formed at a meeting in October 2011 attended by Ms Nohra, Mr Cantarella, and Mr Fedinand Inzitari, the owner and a director of Nando’s. Nando’s alleged that it was a term of the agreement that invoices would be issued by Nando’s to the entity nominated by Ms Nohra or Mr Cantarella. The guarantees were alleged to be oral and also given at the October 2011 meeting. In closing submissions at trial, Nando’s contended that the alleged contract with Ms Nohra was wholly oral.

4. [5]

   Nando’s issued invoices for the supply of meat to Jardin Fresh Life from October 2011 to August 2012, to Costless Supermarket from August 2012 to November 2012, and to Sam’s Fresh Food Barn from November 2012 to May 2014. There was unchallenged evidence from Mr Cantarella that the business at the St Marys shop was owned by Boombell Pty Ltd which traded sequentially under the three business names as indicated.

5. [6]

   The central issue in the Local Court was whether the contract for the supply of meat was between Nando’s and Ms Nohra, or Nando’s and Boombell. The magistrate concluded that on the balance of probabilities Nando’s had proved its claim against Ms Nohra in the sum of $38,500. The magistrate dismissed Nando’s claims against Mr Cantarella and Mamma Rosa.

6. [7]

   Ms Nohra has a right of appeal on a question of law pursuant to s 39 of the Local Court Act 2007 (NSW). She has a right of appeal with leave on a question of mixed fact and law pursuant to s 40(1) of the Local Court Act. There is no right of appeal on a question of fact.

7. [8]

   The four grounds of appeal relied upon by Ms Nohra are set out below at [34]. Counsel for Ms Nohra submitted that if the appeal is successful on ground 1 (adequacy of reasons), ground 3 (constructive failure to exercise jurisdiction) or ground 4 (finding not reasonably open), the appropriate relief is that the judgment of the Local Court be set aside and the proceedings be remitted to the Local Court. Counsel further submitted that if the appeal is successful on ground 2 (construction of contract), the appropriate relief is that the judgment of the Local Court be set aside and the proceedings in the Local Court be dismissed, and Nando’s be ordered to pay Ms Nohra’s costs in the Local Court.

8. [9]

   Despite the different issues raised by the four grounds (and different consequences in terms of available relief under s 41 of the Local Court Act), the appeal essentially turns on the question of who the parties to the contract were.

9. [10]

   Ms Nohra requires an extension of time as her summons was filed out of time: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 50.3(1). The principles governing the discretion to extend time for the filing of a notice of appeal are discussed by McColl JA in Jingalong Pty Ltd v Todd [2014] NSWCA 330 at [39]-[40]. Four factors of general relevance are the length and reason for the delay, whether the applicant has a fairly arguable case, and the extent of any prejudice suffered by the respondent to the application: Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369 at [55] (Basten JA, Hodgson and Ipp JJA agreeing).

10. [11]

    Here, the delay of about six weeks is relatively short and is adequately explained in the affidavits of Mr Michael Vaughan, Ms Nohra’s solicitor. The delay was mainly occasioned by the time taken to obtain the transcript of the proceedings below and a copy of the sound recordings to check the accuracy of the transcript. Nando’s has not identified any specific prejudice. Although the amount in issue is relatively small, there should be an extension of time insofar as any of the grounds involve a clear error causing demonstrable unfairness to Ms Nohra.

The evidence below

1. [12]

   In the Local Court, the parties agreed the following facts which provide some background to the dispute:

2. [13]

   Each of Mr Inzitari, Ms Nohra and Mr Cantarella gave affidavit evidence and were cross-examined in the Local Court.

3. [14]

   Mr Inzitari deposed in his May 2020 affidavit to a conversation at a meeting with Ms Nohra and Mr Cantarella on about 19 October 2011 as follows:

4. [15]

   The second defendant in the Local Court was Mamma Rosa. Although no objection was taken to par [15] of Mr Inzitari’s affidavit, evidence of his subjective understanding was irrelevant as such evidence was inadmissible: see [37] below.

5. [16]

   While the magistrate accepted that Mr Inzitari was a credible witness, he did not accept Mr Inzitari’s recollection of the oral discussion in 2011, given the passage of time.

6. [17]

   Mr Inzitari gave evidence that Ms Nohra asked him to make out the invoices to Jardin Fresh Life from around 19 October 2011 to August 2012 and Costless Supermarket from around 18 October 2012 to 7 November 2012. He said he was instructed by Ms Nohra in a later conversation to invoice “Boombell Pty Ltd trading as Sam’s Fresh Food Barn St Marys” up until 21 May 2014 (the date of the last invoice).

7. [18]

   Mr Inzitari also gave evidence that he supplied meat on a line of credit. He annexed to his affidavits documents from Sam’s Fresh Food Barn confirming the amount of the debt as at various dates, together with a letter of demand from Nando’s to Mamma Rosa, as follows:

   1. (1)

      a summary headed “Sam’s Fresh Food Barn St Marys old account” dated 7 February 2013 provided by Mr Dominic Strati, the manager of the St Marys shop, which included a schedule of invoices for meat supplied to Sam’s Fresh Food Barn and pasta products supplied by Mamma Rosa, and showing a debt owing by Sam’s Fresh Food Barn of $78,850.65 as at 5 February 2013. The summary contained the statement that “[a]ll future invoices as from 6.2.13 will be paid on delivery”. (This document is referred to as Annexure D in the magistrate’s judgment);

   2. (2)

      a letter from “Sam’s Fresh Food Barn (Boombell Pty Ltd)” dated 14 February 2014 and signed by Ms Nohra above the typed words “Helen Nohra Director”, confirming the balance of the debt then owing as $61,083.33 and stating that “[a]ll new meat deliveries will be paid in COD”. (This document is referred to as Annexure A in the magistrate’s judgment);

   3. (3)

      a facsimile from Ms Maria Perre of “Sam’s Fresh Food Barn (Boombell Pty Ltd)” to Annette at Nando’s dated 16 May 2014, confirming the amount of the debt owing as $48,317.04;

   4. (4)

      a facsimile on the letterhead of “Sam’s Fresh Food Barn (Boombell Pty Ltd)” from Ms Perre to Annette at Nando’s dated 8 August 2014, stating that the balance owing after set-off of Mamma Rosa invoices was $45,995.55. (This facsimile is referred to as Annexure B in the magistrate’s judgment); and

   5. (5)

      a letter of demand from Mr Inzitari to Mamma Rosa (for the attention of Ms Nohra) dated 10 February 2015, claiming an amount of $40,000. (This document is referred to as Annexure C in the magistrate’s judgment).

8. [19]

   A bundle of invoices from Nando’s addressed to “Sam’s Food Barn” for the supply of meat dated between 3 January 2014 and 5 February 2014 were tendered in evidence as Exhibit 3.

9. [20]

   In cross-examination, Mr Inzitari gave the following evidence:

10. [21]

    After being shown Nando’s invoices issued between 2012 and 2014, Mr Inzitari agreed that when Mr Cantarella started operating the shop in 2011, it was first called “Jardin Fresh Life”, followed by “Cost Less [sic] Supermarket” and then “Sam’s Fresh Food Barn”. Mr Inzitari agreed that he did not send any invoices addressed to Ms Nohra.

11. [22]

    It was also put to Mr Inzitari that he addressed the invoices to the shop and that the invoices were attended to by Maria (being a reference to Ms Perre), who was the office administrator of Boombell. Mr Inzitari responded:

12. [23]

    Mr Inzitari accepted that he was aware that the company that owned the business “Sam’s Fresh Food Barn” was Boombell Pty Ltd. He said:

13. [24]

    Ms Nohra gave affidavit evidence:

14. [25]

    Ms Nohra explained the arrangements between Mamma Rosa, Nando’s and Boombell in her affidavit:

15. [26]

    The invoice marked A referred to by Ms Nohra was from Mamma Rosa to Nando’s dated 23 September 2013 for the supply of pasta products totalling $188 and contained a handwritten note signed by Ms Nohra that read “no need for payment. Take off St Marys Account”.

16. [27]

    Ms Nohra admitted in her defence to paying or causing to be paid to Nando’s ten payments between 5 March and 31 October 2015 totalling $6,751.55 (par [9]). She deposed that at the time of deregistration of Boombell in October 2017, she was not aware of any amount claimed by Nando’s against Boombell.

17. [28]

    In response to a question asked by the magistrate, Mr Cantarella explained why there were three different names for the St Marys shop. He said:

18. [29]

    In re-examination, Mr Cantarella gave evidence as to the corporate arrangement involving the three separate business names. He said they were all operating under the one company Boombell, “so Boombell trading as Jardin Fresh, then Boombell trading as Cost Less [sic], then Boombell trading as Sam’s Fresh”.

19. [30]

    On the first day of the hearing, the parties formulated the issues for resolution as follows:

20. [31]

    In closing submissions, counsel for Ms Nohra submitted that it was improbable that Ms Nohra would have entered into any agreement with a supplier to the shop at St Marys which made her personally liable for debts that might have accrued.

The judgment in the Local Court

1. [32]

   In concluding that Nando’s claim against Ms Nohra had been proved, the magistrate made the following findings (paragraph numbers have been added for ease of reference):

2. [33]

   In rejecting Nando’s claim against Mr Cantarella and Mamma Rosa on the alleged oral guarantees, the magistrate found:

Grounds of appeal

1. [34]

   The four grounds of appeal advanced in the summons are:

   1. (1)

      his Honour failed to provide adequate reasons;

   2. (2)

      his Honour erred in law in finding that there was a partly oral and partly written contract between Ms Nohra personally and Nando’s;

   3. (3)

      his Honour failed to address Ms Nohra’s material argument that it was improbable in the circumstances that Ms Nohra would enter into the alleged contract personally, as opposed to on behalf of the corporate entity in her capacity as director; and

   4. (4)

      the conclusion reached by his Honour, being judgment in the sum of $38,500, was not reasonably open on the evidence.

2. [35]

   It is convenient first to address ground 2. Counsel for Ms Nohra accepted that the other grounds are in effect alternatives, given that success on those grounds would only lead to a remitter to the Local Court.

Ground 2 – The parties to the contract

1. [36]

   The answer to the question “who are the parties to the contract?” involves the construction of the contract: Barroora Pty Ltd v Provincial Insurance Ltd (1992) 26 NSWLR 170 at 174 (Brownie J), citing Protean (Holdings) Ltd (Receivers and Managers Appointed) v American Home Assurance Co (1985) 4 ANZ Insurance Cases 60-843 at 74,055-74,056. It is often said that the construction of a contract is a question of law: Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [46] (Santow JA). However, usually the context of such statements is contracts wholly in writing. The position is different where the contract is partly oral or, as in this case, wholly oral. In such cases, the identity of the parties to the contract is a question of mixed fact and law: Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 at [127] (Campbell JA, Basten JA and Sackar J agreeing). As such, leave to appeal is required in this case.

2. [37]

   Identification of the parties to the contract must be made in accordance with the objective theory of contract: Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 at [262]-[266] (Campbell JA). As Allsop P and Handley AJA stated in Air Tahiti Nui Pty Ltd v McKenzie (2009) 77 NSWLR 299; [2009] NSWCA 429 at [28]:

3. [38]

   Nando’s bore the legal onus of proving that Ms Nohra was the other party to the contract that had been entered into for the supply of meat to the business at St Marys. To the extent that Nando’s relied upon Mr Inzitari’s evidence of the alleged conversation at the October 2011 meeting, the magistrate did not accept Mr Inzitari’s recollection of that meeting, either as to the alleged oral agreement (with Ms Nohra) or oral guarantees (allegedly given by Mr Cantarella and Mamma Rosa): see J [18], which is set out at [33] above.

4. [39]

   In finding that Ms Nohra was a party to the contract with Nando’s, the magistrate reasoned as follows:

5. [40]

   This reasoning is, with respect, erroneous, both as to the objective construction of the parties’ “dealings” and the use made of post-contractual conduct.

6. [41]

   First, that Ms Nohra was involved in the “dealings” with Nando’s did not make her a party to the contract for the supply of meat to the St Marys shop. Giving instructions to Mr Inzitari that Nando’s should invoice the business name of the St Marys shop for the meat did not evidence an intention on Ms Nohra’s behalf to accept personal liability for the debt unless she was the owner of the business conducted under that name, which she was not.

7. [42]

   Second, it does not follow from the finding that Boombell, Sam’s Fresh Food Barn and Costless Supermarket were “all interchangeable entities which were in a contract with Mr Inzitari or Nando’s Meat to be supplied meat at the store at St Mary’s [sic]” that Ms Nohra was a party to that contract.

8. [43]

   Third, it was relevant for the purpose of identifying the parties to the contract to determine who was carrying on business under the various names, including the name “Sam’s Fresh Food Barn”. This is because a reasonable observer of the communications which led to the invoices being issued by Nando’s for the supply of meat to the St Marys shop, together with the background facts known to the parties, including the names of the St Marys shop, would conclude that the parties intended that the contract would be with whomever it was that was carrying on business under the names “Jardin Fresh Life”, “Costless Supermarket”, and “Sam’s Fresh Food Barn”: Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154 at [54] (Campbell JA).

9. [44]

   The objective evidence was that Nando’s had issued invoices from October 2011 to May 2014 at the direction of Ms Nohra or Mr Cantarella to the name of the supermarket at the St Marys shop from time to time. Mr Cantarella gave unchallenged evidence that Boombell carried on the supermarket business sequentially under those three business names. There was corroborative evidence from Mr Inzitari that Ms Nohra instructed him to invoice “Boombell Pty Ltd trading as Sam’s Fresh Food Barn St Mary’s [sic]” (4 May 2020 affidavit, par [18]). Further, Mr Inzitari accepted in cross-examination that he was aware of the corporate entity, Boombell, as its name appeared on the correspondence from Sam’s Fresh Food Barn relating to the outstanding debt.

10. [45]

    In Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150, I agreed with the statements of Basten JA at [120]-[122] concerning the difficulties attending the use of post-contractual statements to construe a contract, and the qualification that where a statement provides evidence of facts, the assertion of which is against the interests of one party, that statement may be admissible as an admission by that party. Basten JA said at [120]-[122]:

11. [46]

    As noted in the above quote from Spigelman CJ in County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [7], the position is different where a contract is not wholly in writing. As Campbell JA explained in Lym International Pty Ltd v Marcolongo at [143], where a contract is not wholly in writing, the parties’ post-contractual conduct is relevant in ascertaining what the parties agreed as well as who the parties to the contract were:

12. [47]

    In this case, where the contract was wholly oral, the post contractual conduct which was relevant to the identification of the parties to the contract included: (a) Nando’s conduct in carrying out the contract by supplying meat to the St Marys shop at which Boombell, not Ms Nohra, conducted the supermarket business, and (b) the business records created by Nando’s, at least from November 2012, recording that the delivery of meat to “Sam’s Food Barn”. The magistrate erred in failing to have regard to this evidence, which was undisputed, and erroneously relied upon other post-contractual conduct, being Annexures A, B and C.

13. [48]

    Annexure A, the letter dated 14 February 2014 and signed by Ms Nohra as a “director” of Boombell, was not an admission by Ms Nohra that she was personally indebted to Nando’s in the amount of $61,083.33, nor implicitly that she was a party to the contract. The admission made in the letter was that a debt was owed to Nando’s by Boombell; this admission was made on behalf of Boombell by Ms Nohra in her capacity as a director of Boombell. The magistrate erred in finding that Annexure A was “a convincing and persuasive document going to evidence that there was a debt between [Nando’s] and Helen Nohra”: at J [10].

14. [49]

    Annexure B, the facsimile from Ms Perre to Nando’s dated 8 August 2014, and the earlier facsimile from Ms Perre to Nando’s dated 16 May 2014, did not include admissions made by, or on behalf of, Ms Nohra. They contained admissions by Ms Perre on behalf of Boombell of the debt owed by Boombell to Nando’s in the amounts stated in those facsimiles, respectively, $48,317.04 (on 16 May 2014) and $45,995.55 (on 8 August 2014).

15. [50]

    Annexure C, the letter of demand from Nando’s to Mamma Rosa dated 10 February 2015, contained an assertion by Nando’s that a debt was owing by Mamma Rosa. That said nothing about whether Ms Nohra was a party to the contract. Further, the letter of demand was only indicative of Nando’s subjective belief as to the parties to the contract, being Nando’s and Mamma Rosa.

16. [51]

    For completeness, Annexure D, the summary of account dated 7 February 2013, was not an admission by Ms Nohra. Mr Inzitari gave evidence that this document was provided to Nando’s by Mr Strati, the St Marys shop manager. The admission that Boombell, trading as Sam’s Fresh Food Barn, owed a debt to Nando’s as at 5 February 2013 of $78,850.65 was made by Mr Strati on behalf of Boombell.

17. [52]

    To the extent that the magistrate found that Annexures A, B and C were “convincing corroboration of the contract and the state of the debt and the supply of the meat at that time” (J [15]), the finding was correct as to the state of the debt owing by Boombell to Nando’s, but incorrect insofar as the magistrate concluded that “the contract” is to be understood as a contract between Nando’s and Ms Nohra.

18. [53]

    Looking at the matter objectively, the parties to the contract for the supply of meat to the St Marys shop were Nando’s and Boombell, the owner of the business conducted at that shop. There is a clear case of misapplication of principle by the magistrate and the error has resulted in an injustice to Ms Nohra. Accordingly, leave to appeal is granted on ground 2. The question of relief is addressed below.

19. [54]

    Given this conclusion, the other grounds do not strictly arise. However, I have considered whether to address these grounds in light of the remarks of the High Court in Kuru v State of New South Wales (2008) 236 CLR 1; [2008] HCA 26 and Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49. I am satisfied that there are good reasons not to do so in this case.

20. [55]

    First, the identification of the parties to the contract is dispositive of the appeal. On the other hand, grounds 1 and 3, which were said to raise questions of law, were, practically speaking, different ways of complaining that the magistrate’s decision on the central question of the identification of the parties to the contract was wrong.

21. [56]

    Second, although ground 4 was said to be a question of mixed fact and law (Orr v Cobar Management Pty Ltd (2020) 103 NSWLR 36; [2020] NSWCCA 220 at [59] (Bathurst CJ and Bell P)), there is arguably a contrary view that the question whether a conclusion is reasonably open on the evidence is a question of law (see Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32). It is preferable to decide that issue in an appeal where the issue has practical significance. This is not that case.

22. [57]

    Third, no purpose would be served addressing grounds 1, 3 or 4 as success on these grounds would only result in a remitter.

Relief

1. [58]

   This Court can determine an appeal under ss 39(1) or 40 in one of four ways. Section 41(1) of the Local Court Act provides:

2. [59]

   This appeal turned on the identification of the parties to the contract. In light of the conclusion that the magistrate erred in finding that Ms Nohra was a party to the contract, the appropriate order is to set aside the judgment in the Local Court. In the circumstances, no occasion arises to consider Nando’s application in its notice of motion filed 2 September 2021 seeking an award of pre-judgment interest, relying on the slip rule: UCPR, r 36.1.

3. [60]

   The parties agreed that this Court should finalise the matter in the Local Court if ground 2 was upheld. The question which arises is whether this Court can make further orders disposing of the proceedings below and dealing with the question of costs in the Local Court.

4. [61]

   If no new findings of fact are required to be made, this Court should exercise the power of the Supreme Court conferred on it by s 41(1) of the Local Court Act and s 75A(10) of the Supreme Court Act 1970 (NSW) and dispose of the proceedings below, including by exercising the discretionary power of the Local Court with respect to costs: Thaina Town (on Goulburn) Pty Ltd v City of Sydney Council (2007) 71 NSWLR 230; [2007] NSWCA 300 at [104] (Spigelman CJ, Mason P, Beazley, Giles and Ipp JJA agreeing), a case involving leave to appeal from a decision of the Land and Environment Court with respect to costs, where appeals to the Court of Appeal were only permitted on a question of law and the Court of Appeal re-exercised the discretionary power of the Court below with respect to costs. See also: Drive My Car Rentals Pty Ltd v Gabriel [2021] NSWCA 73, where I said at [112]:

5. [62]

   Since there was unchallenged evidence that Boombell was the owner of the business conducted at the St Marys shop, including under the business name “Sam’s Fresh Food Barn”, the Court’s decision on the question of identification of the parties to the contract leaves only one possible outcome. It would be entirely unsatisfactory in terms of additional costs and court time to remit the matter to the Local Court to make orders to dispose of the matter in accordance with my conclusion. I am satisfied that the matter can be disposed of on the basis of the undisputed facts concerning the owner of the business conducting the supermarket at the St Marys shop: Kostas v HIA Insurance at [30] (French CJ). The appropriate order is to set aside the judgment below and make an order dismissing the proceedings in the Local Court against Ms Nohra.

6. [63]

   As to the costs below, although no order was made by the magistrate, again no new findings of fact are required to be made and this Court should exercise the power conferred on it by s 41(1) of the Local Court Act and by s 75A(10) of the Supreme Court Act and exercise the discretionary power of the Local Court with respect to costs: Drive My Car Rentals v Gabriel at [112]. In light of the different outcome on appeal, the appropriate order below is that Nando’s pay Ms Nohra’s costs of the proceedings in the Local Court.

7. [64]

   There is no reason why costs of the appeal should not follow the event in this Court: UCPR, r 42.1.

Orders

1. [65]

   Accordingly, the Court makes the following orders:

   1. (1)

      Grant an extension of time to the plaintiff to file the summons seeking leave to appeal.

   2. (2)

      Grant leave to appeal on ground 2 only.

   3. (3)

      Allow the appeal and set aside the orders of the Local Court made on 17 March 2021 against the first defendant (Helen Nohra).

   4. (4)

      Order that the proceedings in the Local Court against the first defendant be dismissed and the plaintiff pay the first defendant’s costs in the Local Court.

   5. (5)

      Dismiss the balance of the defendant’s notice of motion filed 2 September 2021.

   6. (6)

      The defendant pay the plaintiff’s costs of the appeal in this Court.