Austwide Wholesalers Pty Ltd v Ibrahim
[2011] WADC 21
•18 FEBRUARY 2011
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: AUSTWIDE WHOLESALERS PTY LTD -v- IBRAHIM [2011] WADC 21
CORAM: BRADDOCK DCJ
HEARD: 20 DECEMBER 2010
DELIVERED : 18 FEBRUARY 2011
FILE NO/S: CIV 254 of 2008
BETWEEN: AUSTWIDE WHOLESALERS PTY LTD
Plaintiff
AND
SAM IBRAHIM
Defendant
Catchwords:
Contract for supply of goods on credit - Guarantee of director - Trial on undefended basis
Legislation:
Evidence Act 1906, s 79C
Result:
Judgment for the plaintiff
Representation:
Counsel:
Plaintiff: Ms K Roach
Defendant: No appearance
Solicitors:
Plaintiff: Machlins Lawyers
Defendant: Not applicable
Case(s) referred to in judgment(s):
Nil
BRADDOCK DCJ: The plaintiff company, Austwide Wholesalers Pty Ltd, (Austwide) is a supplier of various goods on a wholesale basis to retail stores including in New South Wales. The Austwide's head office is in Perth. Damon John Williams was Austwide's state manager in New South Wales between 12 April 1998 and 4 July 2005. As the state manager, he was responsible for dealing with Austwide's customers, visiting prospective customers' premises, and business development. In 2001, he met the defendant, Mr Sam Ibrahim, whilst pursuing the interests of his employer. Mr Ibrahim is and was at all relevant times the sole director of Discount Zone Pty Ltd (Discount Zone) which traded in a number of locations in New South Wales in goods of the kind supplied by Austwide.
Mr Williams met Mr Ibrahim in about September 2001 when he visited one of Discount Zone's stores in Lakemba, New South Wales. He approached him with a view to Austwide supplying Mr Ibrahim's business and subsequently received orders for goods from Discount Zone. It was Austwide's procedure that, before Austwide supplied goods ordered by its customers, a credit application was required, unless the goods were paid for in cash, in advance. Mr Williams handed such an application to Mr Ibrahim for him to complete and received it back from him, duly completed, on a subsequent occasion. After that time, goods were sold to Discount Zone and supplied to various stores of the company by Austwide.
Mr Williams gave evidence that Mr Ibrahim handed him cheques on numerous occasions in respect of invoices from Austwide for goods delivered. Mr Williams also said that he would not have any authority to consider any withdrawal from the contract or the director's guarantee given pursuant to the contract, but would refer any such matter to Perth. He gave evidence that he did not refer Mr Ibrahim to Perth head office.
The proceedings
Austwide issued a writ of summons on 5 February 2008, with an endorsed claim for $181,266.51, plus interest. The statement of claim was filed on 11 February 2010. Paragraph 11 contains a table of 44 tax invoices totalling $221,948.18 relating to goods supplied between May 2007 and November 2007. Paragraph 12 contains a table of credits in respect of those same invoices, totalling $40,681.67. The total amount claimed in par 13 is the difference between those sums $181,266.51.
Mr Ibrahim filed a defence dated 19 March 2010. In that defence, he denied the execution of the contract, denied the debt and, in the alternative, pleaded that the purported guarantee of 5 September 2001 was 'otherwise expressly withdrawn by the defendant' in 2005.
In October 2010, this matter was listed for trial on 13 December 2010. On the 20 December 2010, Mr Ibrabim's solicitors were given leave to withdraw, and the matter was relisted for trial on an undefended basis.
Austwide in proof of its claim called three witnesses, Mr Damon Williams, Ms Cheryl Robbins, and Ryan Lennon. The facts set out in these reasons are derived from their evidence and documents introduced in evidence from the company's records in Perth.
What the plaintiff must establish
To succeed against Mr Ibrahim, Austwide must establish to the civil standard that:
1.There was a contract between Austwide and Discount Zone for the delivery of goods;
2.Mr Ibrahim guaranteed the debts of Discount Zone, pursuant to the contract;
3.Goods were delivered to Discount Zone and invoiced pursuant to the contract;
4.The invoices particularised in the statement of claim were not paid in full in accordance with the terms of the contract;
5.The amount outstanding;
6.The quantum of the cost of debt recovery under the contract;
7.The quantum of interest due under the contract on outstanding amounts;
Mr Ibrahim denied, in his defence, both completing and signing the contract, that he was a guarantor for Discount Zone, and denies the sums outstanding. He also alleges that he withdrew the guarantee in 2005 either orally or in writing to 'Damian' Williams. If the factors above listed are proved, then, of necessity, these assertions cannot not be made out.
The credit application
The document upon which Austwide relies is a written credit application (exhibit 7, tab 3). This is in a standard form with the individual details in handwriting, apparently signed by Sam Ibrahim as 'director, partner or proprietor' on behalf Discount Zone, on 5 September 2001, twice; on the front [first] page and on the rear [second] page under the 'conditions of trading'. In each case the signature is witnessed by another signature which the surname is given as Ibrahim on the second page, but is otherwise illegible. It is date stamped 10 September 2001, on the second page, as 'received'. It bears the partial letters 'DISZON' in handwriting on the top right hand corner of the first page. This is the shortened account name given to the customer in Austwide's accounts system.
The document produced at trial was a photocopy of the original. Ms Robbins obtained the copy from the records of Austwide and stated that originals were usually kept on file. She said that in about 2002 there was an investigation by the Australian Tax Office which resulted in a number of documents being removed from the offices of the company. These were however copied and those copies returned to the office, but the originals were not returned. She stated that an account would be opened for a customer on receipt of a fax of the credit application but that no goods were delivered without an original of the application being on file, unless they were paid for in advance.
I accept Ms Robbins explanation for the loss of the original document, although she was not employed at the company at the time and this information must have come from her predecessor. She was able to demonstrate the correlation between the copy document and the first 'screen' in the customer's account page in the computer system. There is nothing about the document itself which gives any indication of it being other than a proper copy of the application. Mr Williams identified the document as being the application of Mr Ibrahim, although he could not say that he actually recognised the signature. I accept the document as the best evidence of the application made by Mr Ibrahim on behalf of Discount Zone in 2001.
In the credit application the applicant acknowledges that he or she has read and agrees to abide with the conditions on the reverse side of the document.
Those 'conditions of trading' include:
A.30 day terms: all accounts must be paid within 30 days of the end of the month during which delivery was made.
B.The company may charge the applicant interest at 17% or at the current bank overdraft rate (whichever is the higher) in the event that payment in full is not received in accordance with condition (a) above. Interest will accrue on a daily basis from the due date for payment.
C.The applicant will be liable to pay any legal costs or debt collection charges incurred by the company, in collecting outstanding accounts whether for collection of monies due or for recovery of goods supplied.
...
K.The company, may if advances credit to the applicant, withdraw that credit at anytime for any reason whatsoever. In consideration of the company agreeing to grant facilities to the applicant if the applicant is a company with the undersigned directors of the applicant, the directors do hereby jointly and severally guarantee payment of the applicant's account and agree to indemnify the company to the extent of, or all monies now and hereafter owed by the applicant to the company and agree to be bound by the terms and conditions contained on this application form and that the company may at all times act as if it were the principle debtor. In the event of all directors of the applicant not signing this form, we the signatories of this form will accept full liability under this guarantee and agree if requested to execute the company standard form of guarantee. This application is signed as a deed.
(L)The applicant, in the event of default, agrees that the company may commence court proceedings against the applicant in any West Australian court and submits to the jurisdiction of that court.
Mr Williams confirmed that subsequent to that credit application being signed and delivered to Perth, goods were delivered to the premises of Discount Zone and paid for. The credit application is not signed by Austwide, nor is there provision on the face of the document for such signature. The evidence was that when goods were delivered, this signified acceptance by the company. It would appear all went well in the course of business between the parties, goods being regularly supplied and invoices met, until about the middle of 2007, when invoices began to remain unpaid.
The outstanding accounts
Ms Cheryl Robbins has been the account controller of Austwide since April 2006. Her main duty is debt collection. She is also involved in checking and supervising other employees involved in handling application forms. She explained the electronic accounting system operated by Austwide and produced a printout from that system showing that Discount Zone had an account with Austwide, which recorded all relevant details.
She confirmed that Mr Sam Ibrahim was the principal for Discount Zone, and that she became involved in 2007 when the account was, as she described it 'getting out of hand'.
As a result of that situation, she had occasion to go through the files, at a later stage, and retrieved a number of credit notes and cheques signed by the defendant.
The accounting system can produce a printout showing all details of what has been paid in relation to each invoice rendered, where credit notes have been provided these are clearly shown, as are payments received. Ms Robbins generated and produced a statement of account for Discount Zone spanning the period from 2 May 2007 to the end of 2007, showing all invoices, payments and credit notes. She explained that towards the end of that year there were a number of deliveries dispatched to Discount Zone, which were stopped and retrieved, due to the non‑payment of outstanding invoices. Credit notes shown on or about 4 December are indications of those returned goods. Exhibit 7, tab 9 is an amended statement of account which she caused to be printed, annotated with the word 'amended', to show that included those particular returns. She explained the system whereby payments received were credited against particular invoices when supplied with a remittance advice, and that process is shown in the statement of account.
All the documentary evidence was produced from the files of Austwide, including invoices (exhibit 7, tab 5), credit notes (exhibit 7, tab 8) and cheques with annotations made by individuals other than Ms Robbins. I am satisfied that these records are genuine business records to which s 79C of the Evidence Act 1906 applies, and that the information contained in them is evidence of the facts they record, specifically the despatch and delivery of goods to Discount Zone pursuant to orders placed by that company, and the payments received for those goods where applicable.
Ms Robbins confirmed that Discount Zone was a large client and that payments were made by cheques being handed to representatives of Austwide in New South Wales which were then posted back to Perth for banking. She produced from the file 3 cheques dated, 9, 16 and 21 September 2005, drawn by Discount Zone and accompanied by compliments slips in that name. The slips had written on them details of the invoices to which the sums paid should be credited. (exhibit 7, tab 4)
Ms Robbins recalled speaking to Mr Ibrahim on a couple of occasions, in late 2007, concerning outstanding payments, and recalled that he tried to set up a payment plan. He also made offers which were not acceptable to Austwide. Ultimately, Ms Robbins faxed a letter to Mr Ibrahim on 25 October 2007, from Mr David Howie (a director of Austwide) indicating that the payment plan he had given fell short of clearing what was invoiced, but accepting payments by instalment but stating that no further default would be accepted. (exhibit 7, tab 7)
During the evidence counsel for Austwide sought to tender a faxed copy of an email from 'Sam' dated 25 October 2007. Written on the top of the single page document are the words 'attention Cheryl – By email to Paul & fax'. It refers to a prior conversation, the history of trading and proposes precise payments to reduce the debt. Ms Robbins stated that she received this as a fax not as an email. I accept that this also as a record of the business, taken from the Discount Zone file, admissible on the same basis as the other documents produced. It is the communication to which Ms Robbins was responding when she faxed Mr Howie's letter to Mr Ibrahim on 25 October 2007. (exhibit 7, tab 6)
Ms Robbins confirmed that no payment was made by Discount Zone after 12 November 2007. The statement of account shows the last cheque credited on that date to an account (111468) outstanding from May 2007.
Ms Robbins issued a 'seven day' letter to the defendant, without result, and then sent the papers to Dunn and Bradstreet for debt collection action, in November 2007. She learned that Discount Zone had been placed into administration in February 2008. She has authorised a number of payments to Dunn and Bradstreet for their work since that time. No further monies have been recovered.
The amended statement of account shows that the sum of $181,266.51 remained outstanding at 12 November 2007.
Ms Robbins provided a schedule of interest accrued on the outstanding balance (exhibit 9), at the contractual rate of 17%, which she had checked as to the attribution of payments received and credit notes. The total amount of interest outstanding as at 21 January 2010 is $104,283.
Mr Ryan Lennon, a law clerk employed by Park Legal Solutions, produced the accounts received from Dunn and Bradstreet. The total amount claimed in par 18 of the statement of claim is $9,222.23. The invoices show items relating to a number of accounts being pursued by Dunn and Bradstreet. Discount Zone matters are clearly marked. The invoices span a period from 8 February 2008 to 1 October 2010 totalling $10,549.04. Neither the amount shown as invoiced prior to the issue of the writ, nor the total of all invoices dated prior to the service of the statement of claim, amount to $9,222.23. This sum is claimed as 'legal costs or debt collection charges incurred by the company which may be for monies or recovery of goods supplied’. There is no detail of the services provided under each invoice.
Findings
ASIC company extracts (exhibit 7, tab 2) show that Mr Ibrahim was the only director of Discount Zone from the end of 25 August 2000, until the appointment of a liquidator to Discount Zone on 25 September 2009. He was also secretary of the company from 31 August 2001 onwards.
I accept the evidence of Mr Williams and Ms Robbins as honest and accurate concerning their dealings with Mr Ibrahim and the accounts of Discount Zone.
I am satisfied for the reasons set out above that Mr Ibrahim completed and signed the credit application for the purpose of enabling Discount Zone to trade with Austwide on the terms set out in that credit application. The application is not signed by or on behalf of Austwide, but the evidence was that these were the only terms upon which Austwide did business, unless cash were paid in advance for goods delivered, and that acceptance of applications was confirmed when goods were supplied. This occurred and they were duly paid for by Mr Ibrahim from 2001 until the difficulties arose in 2007. On this basis I conclude that the terms contained in that credit application constituted a contract between the parties once accepted by Austwide.
The terms of that contract as detailed earlier in this judgment, include condition K, under which Mr Ibrahim undertook to guarantee the payment of Discount Zone's account and indemnify Austwide in respect of monies owed and not paid under the agreement.
There is no evidence to support any change in those terms or any attempt by Mr Ibrahim to change those terms, or the basis upon which he traded with Austwide, after 2001. I accept that Mr Williams would not have had authority to accept a withdrawal of or waive the guarantee. Accordingly, under the contract Mr Ibrahim is liable to indemnify Austwide for the debts unpaid by Discount Zone.
I am satisfied from the evidence of Ms Robbins that true records were kept of all goods supplied and all payments received in the dealings between Austwide and Mr Ibrahim's company.
I am satisfied that from May 2007 onwards invoices, as set out in the amended statement of account, were unpaid either in whole or in part, until November 2007, by which time a considerable debt had been incurred. I accept that efforts were made between Austwide and Mr Ibrahim to negotiate terms for the payment of the outstanding amount, but that those discussions were not effective to reduce the debt, after 12 November 2007.
I am satisfied that nothing at all was paid by Mr Ibrahim or the company after 12 November 2007, and that the total amount outstanding is the sum of $181,266.51, as claimed. I am satisfied that demand was made upon the defendant and that the debt has not been in anyway reduced.
Conclusions
I find that Austwide has made out the claim as pleaded in relation to its unpaid invoices.
Pursuant to par B of the contract, interest is payable at the rate of 17% per annum, from the due date until payment. The calculations provided by Ms Robbins of the outstanding interest properly reflect the interest accrued to the date of trial and accordingly the further sum of $104,213 is due by way of interest on the outstanding amount of 181,266.51.
I accept that the sums paid by Austwide to Dunn and Bradstreet for debt recovery on the 'Discount Zone' account are recoverable pursuant to clause C of the contract. The evidence shows an amount paid in excess of the $9,222 pleaded. It is not established precisely what was included in sum pleaded. Given that the trial proceeded undefended, I consider Austwide’s claim limited to that sum, and properly no application to amend was made. What is apparent is that some ‘solicitor’s costs’ were included in the invoices from Dunn and Bradstreet, which must be distinguished clearly from the costs of the action.
Accordingly, there shall be judgment for the plaintiff in the sum of $294,701.74
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