Banks and Muscle Car Factory Pty Ltd v Puleo

[2019] VCC 13

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

GENERAL LIST

Case No. CI-15-04119

BETWEEN

LEO BANKS

First Plaintiff / First Defendant by Counterclaim

and

MUSCLE CAR FACTORY PTY LTD (ACN 126 236 872)

Second Plaintiff / Second Defendant by Counterclaim

and

FRANCO PULEO

Defendant / Plaintiff by Counterclaim

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JUDGE:	HER HONOUR JUDGE A RYAN
WHERE HELD:	Melbourne
DATE OF HEARING:	16, 17, 18, 19, 20, 23, 24, 25, 26 & 31 July 2018
DATE OF JUDGMENT:	12 February 2019
CASE MAY BE CITED AS:	Banks and Muscle Car Factory Pty Ltd v Puleo
MEDIUM NEUTRAL CITATION:	[2019] VCC 13

REASONS FOR JUDGMENT
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Subject:  CONTRACT, QUANTUM MERUIT, CONVERSION

Catchwords:             CONTRACT – claim for work and labour done by the plaintiffs on vintage sports cars owned by the defendant – alternatively, whether plaintiffs entitled to claim for work and labour done on a quantum meruit basis

CONVERSION – whether the defendant converted Corvettes and a motorbike owned by the first plaintiff – whether the defendant converted car parts belonging to the second plaintiff

COUNTERCLAIM – whether plaintiffs indebted to the defendant for sums paid for car parts – damages claimed by the defendant representing diminution in market value of sports cars due to faulty workmanship and missing parts – debt claimed by defendant for installation of CCTV security system

Legislation Cited:     Evidence Act 2008 (Vic)

Cases Cited:            Browne v Dunn (1893) 6 R 67
  Bulstrode v Trimble [1970] VR 840

Commonwealth Bank of Australia v Duckworth [2012] WASC 476

Oris Funds Management Ltd v National Australia Bank [2003] VSC 315

Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204

Vasco Investment Mangers ltd v Morgan Stanley Australia Ltd [2014] VSC 455
Vlasons Shipping Inc v Neuchatel Swiss General Insurance Co Ltd (No 2) [1998] VSC 135

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs/Defendant by Counterclaim	Mr D Connors	Gigliotti Lawyers
For the Defendant/Plaintiff by Counterclaim	Mr S Horgan QC Mr F Badali	Gadens

HER HONOUR:

Introduction

1       The first plaintiff, Leo Banks (“Banks”) is the owner and sole director of the second plaintiff, Muscle Car Factory Pty Ltd (“MCF”).  The plaintiffs are engaged in the business of restoring, building and customising vintage sports cars known as “muscle cars”.  A muscle car is an American term used to describe a high performance sports car fitted with a V8 engine. 

2       The defendant, Franco Puleo (“Puleo”) owns a number of European prestige cars, including 10 Lamborghinis and a Ferrari.  In about 2012, Puleo decided to round out his car collection by adding Mustang convertibles and other American muscle cars. 

3       After meeting Banks in early 2013, Puleo engaged Banks and MCF to restore and customise various vintage muscle cars which he had bought or was intending to buy.  Puleo subsequently delivered several cars to MCF’s factory for works to be carried out in accordance with his instructions.  There is a considerable controversy in this case about what works were actually done on those cars and whether those works fell within the scope of Puleo’s instructions.

4       The parties had an acrimonious falling out in about mid July 2015.  Puleo’s version of events was that he removed all his cars from MCF’s factory because he had paid over $500,000 for parts with nothing to show for it due to faulty workmanship.  Conversely, Banks said they fell out because he was seeking payment of his invoices and the return of various items belonging to him which he claimed were being unlawfully withheld by Puleo. 

5       The plaintiffs seek damages for unpaid labour and reimbursement for parts paid by MCF.  These sums are claimed in contract, alternatively, on a quantum meruit basis.  There is a further claim for damages relating to specific items which are said to have been converted by Puleo.  The total sum claimed by the plaintiffs is $394,514.

6       Puleo counterclaims for moneys due under what is described as an “invoices agreement” whereby he paid for parts used in the plaintiffs’ business in exchange for Banks providing labour on his cars.  The amount claimed under the invoices agreement is US$330,305.96, representing parts paid for by Puleo which were either not used in his cars or received by him.

7       The second aspect of the counterclaim is a claim for damages for loss and damage caused by the plaintiffs’ alleged failure to exercise reasonable care and skill when undertaking work on Puleo’s cars.  The damages claimed represent the diminution in value of the cars caused by the faulty workmanship.  A claim is also made for the value of missing parts belonging to Puleo.  The total sum claimed under this head is $98,924.

8       The third and final part of the counterclaim concerns a CCTV security system which Puleo says he sold to Banks for use at MCF’s premises.  Puleo claims the unpaid purchase price of $8,000.

Witnesses

9       The trial ran for 10 days.  The court books tendered into evidence comprised eight volumes.  Witnesses called on the plaintiffs’ behalf were:

(a)Banks;

(b)Andrew Lehr, motor mechanic and former employee of MCF;

(c)Shane Abbott, custom painter;

(d)Banks’s brother, George Lakiotis;

(e)Mark Shearer, proprietor of Car Guys Garage; and

(f)David Palmer, vehicle loss assessor and expert witness.

10      The defendant’s witnesses were:

(a)Puleo;

(b) Basil Cerra, Puleo’s business associate;

(c)Tony Di Benedetto, proprietor of Fantam Rods;

(d)Anthony Mokadsi, a friend of Puleo’s and a photographer; and

(e)Graeme Cuthbert, automotive consultant and expert witness.

11      The parties agreed the matters in dispute could only be resolved by determining who was telling the truth, as opposed to being reconciled by mistake or faulty memory.  There are numerous instances in this case where the evidence given by the main protagonists squarely contradicts each other. 

12      The credit of the principal witnesses for each of the parties is an important consideration in this case, particularly as there are very few supporting documents. 

13      A thorough attack was made upon the credibility of Banks by Puleo’s counsel.  Criticism was made of his demeanour in the witness box in terms of being described as “evasive, argumentative, verbose and non-responsive”.  Puleo’s counsel submitted Banks had proffered documents which he had falsified.  In particular, it was put Banks had tendered an original document which had been altered by him by hand after discovery of the original document had been made.  This is dealt with in paragraphs 31 to 36 below where the evidence relating to the hourly rates agreed upon is examined.  It was also said Banks proffered photographs of work done on cars which did not belong to Puleo as evidence of work performed by him in order to further his own case.  Counsel for Puleo put to Banks that he had in effect concocted his various claims to stave off claims made by Puleo after Banks received a letter of demand from Puleo’s solicitors.  Needless to say this proposition was rejected by Banks.

14      For the reasons that follow, I am persuaded that some of the matters raised by Puleo’s counsel, in particular, the conflicting evidence relating to the hourly labour rates did reflect adversely upon Banks’ credit.  I have also taken Banks’ demeanour into account when assessing the reliability of his evidence, which was at times non-responsive or argumentative on sensitive topics.  Further, the fact that Banks rang Puleo’s expert witness, Mr Cuthbert, directly and questioned the accuracy of his expert report reflects poorly upon Banks in my view.  I have therefore treated his evidence with some caution in the absence of any supporting documentation. 

15      Puleo and Cerra were the principal witnesses for the defendant’s case.  Whilst they were challenged by Banks’ counsel about aspects of their evidence, there were no real issues raised affecting their credit as witnesses.  Although Cerra is Puleo’s right hand man or “combination man” as Puleo described him, there was no suggestion made nor was it put to Cerra that he was tailoring his evidence to accord with Puleo’s evidence.  The result is that I do not consider any substantive grounds were made out which would lead me to conclude that Puleo’s or Cerra’s evidence should be rejected because they were unreliable witnesses.

A. The plaintiffs’ claims

16      The plaintiffs’ claims can be dealt with as discrete claims.  There are eight separate claims.

(1)The 1967 Mustang convertible agreement (“Car 1”)

17      In about mid-2012, Puleo purchased two 1967 Mustang Convertibles.  Both vehicles were left hand drive; one was burgundy in colour and the other white.  Puleo intended to restore the burgundy Mustang and use it in the promotion of his business.  The cars were initially stored in Cerra’s garage at his home until it was decided what would be done with the cars.  The condition of Car 1 upon purchase is depicted in photographs of the burgundy Mustang taken on 15 March 2013 at Cerra’s home.[1]

[1]Court Book (“CB”) CB 852-853

18      After making some inquiries, Puleo and Cerra went to visit Banks at MCF’s factory in about February or March 2013.  They were shown around the factory and Puleo told Banks of his experience with cars and motorbikes and outlined what he wanted done to his burgundy Mustang.  Puleo said he wanted to have the body of the car ready for him to paint fire engine red.  Banks told Puleo that he had a spray booth and that he could do everything in putting the car back together.  There was also discussion about the engine bay.  Banks asked Puleo how he wanted the engine bay treated and Puleo said he wanted it clean, which meant he liked to have everything hidden under the bonnet and smooth.  Puleo said he would send Car 1 down to MCF so Banks could have a look. 

19      Cerra delivered the burgundy Mustang convertible to MCF’s premises for Banks to look at on 15 April 2013.  Around this time, Banks said that he was still keen to perform all the work required to restore the 1967 Mustang.  He said to Puleo, “You could just come and pick it up and just drive it away.  Why have the hassle?”  Further discussion ensued whereby Banks said he charged the clients in his shop $80 per hour as a ball park figure.  Puleo responded, “That’s a lot of money … because to paint a car, you don’t charge an hourly rate.  Everyone knows how much it costs to paint a car.  You price it and that’s it.”[2]  Puleo then went on to say, “This is what you do.  You price me for a paint job and then if I want anything extra, you can price it.” 

[2]T428, 6-10

20      On 19 April 2013, Puleo sent an email to Banks asking him to price up the job.[3]  

[3]CB 967

21 Banks subsequently provided two estimates of the work to be performed on Car 1. The first was on 19 April 2013,[4] and the second on 14 May 2013.[5]  Each estimate provided had a fixed price quotation for parts and labour inclusive to have the chassis assembled, blasted, epoxied and painted.  The first estimate dated 19 April 2013 quoted “$100 per cash for you”.  Banks sent a further email later that day to Puleo seeking an hourly rate of $60 cash per hour.[6]  This email was identical to the earlier email sent on 19 April 2013 save that the hourly rate was changed from $100 to $60.  Banks denied the email quoting $60 was sent by him.  Puleo gave evidence he received the email with $60 written on it.  It was put to Banks that the estimate quoting $100 per hour had been falsified by him, which he denied.

[4]CB 968

[5]CB 994

[6]Exhibit D1; CB 969

22      The second estimate of 14 May 2013 is more detailed but did not specify an hourly rate.  None of these estimates were acceptable to Puleo.

23      On 23 May 2013, Puleo and Cerra visited Banks and concluded an arrangement as evidenced by a handwritten quotation prepared by Banks (CB 1003).

This document sets out the scope of the work to be done on Car 1, namely:

(a)a bare metal repaint inside and out and colour in the engine the same, for a fixed fee of $15,000, which included labour;

(b)a stone guard underneath and satin for a fixed fee of $1,500, which included labour; and

(c)various parts totalling $8,905;

The total for labour and parts came to $22,405 (“the fixed price agreement”).

24      Banks said the quotation of 23 May 2013 was a diminished scope of works from the earlier quotation dated 19 April 2013.  Puleo said that Banks took copies of the quotation at CB 1003.  He saw Banks write $50 on his copy of CB 1003 and initial it.[7] This was the labour rate agreed upon if Puleo needed Banks to do any further work.  Payment was to be made in cash.  Banks initialled the quotation at CB 1003 and said that this is what could be certainly locked in at a fixed price rate, but denied it was the extent of their agreement.

[7]T494.11-19

25      Cerra gave evidence that he saw Banks write the figure of $50.  Banks denies he ever agreed to the rate of $50 cash per hour.  The document at CB 1004 is Banks’ version of the document at CB 1003.  He has added some handwriting to it and also on CB 1005.  The top of page CB 1004 reads “$88 per hour”.  Puleo contends that Banks has written $88 over the $50 underneath.  A visual inspection of the document does reveal that $88 has been written over something although it is unclear what is underneath.  Exhibit D2 is a clearer copy of CB 1004. 

26      The agreement contended for by Puleo is that the rate would be $50 per hour for any additional works done, with the exception of the fixed fee agreements in respect of the 1967 Convertible (Car 1) and the J Code replacement car (Car 3).  Puleo said this was the labour rate agreed upon for any work to be undertaken on his future cars outside the scope of the fixed fee agreements for the cars mentioned.  This evidence was corroborated by Cerra.[8]

[8]T 576.22 – 577.5

27      Banks’ version of events is different to Puleo’s.  His evidence was that the parties entered into an agreement whereby he would carry out customising work on Car 1 to build what Banks described as more of a show car.  The work to be carried out was at a cost of $100 per hour plus GST plus whatever parts had to be sourced.  Banks said this figure was subsequently reduced to an hourly rate of $90 plus GST and when that figure was queried by Puleo, he agreed to reduce it by $2.  According to Banks, the parties then fixed on a figure of $88 plus GST per hour for additional labour.

28      At the time of making this agreement, Puleo said he paid a cash deposit of $8,200.  This sum was roughly half the amount quoted for the labour component of the quotation at CB 1003.  No receipt was provided as a cash deal was agreed.  Cerra also gave evidence this amount of cash was paid.  Banks denied he received a cash payment of $8,200 from Puleo.  This is yet another example of where the parties’ evidence is in direct conflict.  Counsel for Banks submitted that in the absence of a receipt, the Court could infer that Banks’ evidence was correct.  However, I do not consider the absence of a receipt necessarily supports Banks’ version.  It is clear from the evidence that the parties did engage in cash dealings from time to time.  For example, Banks paid for freight on parts but did not issue an invoice.  On balance, I prefer the evidence of the defendant’s witnesses and find that this amount was paid in cash to Banks.

29      The central dispute in respect of Car 1 is whether the scope of works changed from the original quote at CB 1003.  Banks said he was authorised to conduct further works.  He claimed Puleo had instructed him to do this both verbally and in emails.  As evidence of the change of works, Banks relied upon a number of job cards which were at CB 1881 – 1884.  He claimed that the work done on this car amounted to 332 hours.  A review of the job sheets at CB 1881 – 1884 reveals that they have been written after the event by way of summary rather than a contemporaneous record of work being performed.

30      The plaintiff claims $52,549 for Car 1.  This figure comprises $13,500 for fixed fee work, $32,137 for labour costs assessed at $88 plus GST per hour and $6,822 for parts.[9] The sum of $15,000 for labour, being the first item in the document at CB 1003, was later reduced to $12,000 according to Banks, as Puleo was going to complete Car 1 to a paint stage.  Consequently, Banks deducted $3,000 off the original quote for this item.

Hourly rates

[9] Paragraph 9 of the plaintiffs’ final submissions dated 30 July 2018

31      There is a dispute in the evidence over the amount that was agreed in respect of an hourly rate that Banks could charge for labour.  A figure of $60 per hour for labour was quoted in Exhibit D1, which was an email dated 19 April 2013 from Banks to Puleo.  Banks denied sending this email.

32      In the defence to counterclaim, the amount claimed is $90.00 per hour plus GST for labour.  This is in contrast to the amount claimed in the writ filed in August 2015 claiming $100 per hour plus GST.

33      Banks discovered documents which he described as running job sheets for vehicles in the amount of $150 for labour per hour.[10]  The defendant contends that the original job sheets were all changed to record $88 per hour, even after one document had already been discovered and produced to Puleo in discovery.[11]  

[10]CB 1135 and T272

[11]Exhibit D2 and T276; CB 2960

34      Banks did not disagree he changed the figures in Exhibit D2 but said he did so to correct the hourly rate they had agreed to at the time.  He denied the running sheets ever had $50 per hour on them.  The submission of the defendant was that, given the conflicting evidence regarding the various hourly rates claimed, there should be no reason for believing the evidence given by Banks now that the agreement was $88 plus GST.  The defendant says that the inference to be drawn from the documents is that Banks not only amended the documents by hand from $50 per hour to $88 per hour to support his case, but he also amended the original of the document at CB 2965 after discovery of it had been made with a view to misleading the Court.  Given this, the defendant said that Banks’ evidence should be rejected as being discredited and dishonest. 

35      If, as Banks says, the agreement was always $88 plus GST, it is surprising then that the figure was not pleaded in the writ when filed or in the defence to counterclaim.  The documents relied upon by Puleo do show that the hourly rates were altered although Banks’ explanation is that he did so as to ensure the correct figure was written down.  No explanation was forthcoming about why the figure of $88 figure plus GST was not written down by Banks in the first place.  During the initial discussions between the parties, Banks mentioned a figure of $80 per hour.  The second email sent by Banks on 19 April 2013 quoted a cash figure of $60.  I accept this email was sent by Banks despite his denial.  Given this, it is more likely than not that this figure was reduced to $50 per hour when the parties were negotiating on 23 May 2013. 

36      Given the conflicting evidence about the hourly rates, I am not persuaded that Puleo agreed to pay $88 plus GST per hour.  The initial quotes on 19 April 2013 referred to cash only and no mention was ever made of GST.  I prefer Puleo’s evidence and find that the agreement reached was that Banks would be paid $50 cash per hour for any additional works to be performed at Puleo’s request.

37      The defendant contends the work which Banks claimed to have performed was not completed as agreed, and further was substandard and had to be rectified.[12] The photographs at CB 320 and 2326 were claimed by the plaintiff to be this vehicle.  It is the defendant’s contention that the car depicted in these photographs is not Mr Puleo’s car.  I am not able on the evidence put before me to make a positive finding that this contention is correct. 

[12]Cerra at T592 and Di Benedetto at T701

38      The expert opinion of Mr Cuthbert was that the vehicle when returned was not ready to paint and would in fact need to be stripped back to bare metal and the preparation process would have to begin from the start.  Once delamination has occurred, it cannot be repaired without stripping the damaged panel back to bare metal.[13] 

[13]Cuthbert supplementary report dated 8 May 2018 at 48 to 52, CB 194

39      Puleo argues the claim made by Banks of $52,549 in respect to this vehicle should not be allowed.  It is denied that the agreement was other than the fixed price agreement as reflected in CB 1003.  The defendant disputes that further instructions were given to extend the scope of works as alleged by Banks.  Banks has failed to prove that any requests were made for further works, or indeed shown that Puleo received anything of sufficient benefit which would either fall within the terms of a contract or the claim made in the alternative by the plaintiffs for quantum meruit.  In order to found a quantum meruit claim, it is necessary for a plaintiff to show that there are benefits accruing to a defendant as a result of the plaintiff’s performance of services which were requested and accepted by the defendant, but not paid for.[14]

[14]Vasco Investment Mangers ltd v Morgan Stanley Australia Ltd [2014] VSC 455 at [349]

40      Puleo’s case is that the photographs at CB 866 to 868 (and 878 to 883) show Car 1 was neither returned in the condition in which it was provided, nor in a state where the works the subject of the fixed price agreement were completed.  Car 1 when returned had been stripped and was without its original parts.  It had been damaged and its value reduced by reason of the works undertaken by Banks.

41      Puleo’s evidence was that none of the work which was the subject of the fixed price agreement had been done on the 1967 Mustang convertible as of March 2015.  For example, the paint job at item 1 was not properly done as the paint repelled and bubbled off.  This led to Puleo arranging for his painter, Shane Abbott, to attend at MCF to work out what was the problem.

42      I am satisfied the agreement reached between the parties was limited to the fixed price agreement entered into on 23 May 2013.  I accept Puleo’s evidence that he did not ask Banks to undertake any further works and to the extent that Banks did undertake further works, these works were not authorised by Puleo.  I am not persuaded that the agreement was varied in the manner in which Banks alleged to customise Car 1 as more of a show car and that being so, he is not entitled to receive any further payment.  His evidence relating to the further instructions allegedly given by Puleo was very general and there were no documents produced which confirmed further instructions being given by Puleo to work on the car. 

43      Although Banks claims to have conducted something in the order of 332 hours based on his job sheets, the benefit of this work does not appear to be reflected in terms of the condition of the car as returned and as reviewed by Mr Cuthbert. 

44      Banks relied upon the evidence of his expert witness, David Palmer, in support of his claim relating to Car 1.  Palmer’s report is dated 2 February 2018.  His report is confined to giving various opinions in respect of Cars 1 and 3.  In relation to Car 1, Palmer relied upon the instructions provided to him by Banks as to the extent of the work performed.  To that extent, his opinion is dependent upon the accuracy of his instructions.  Self-evidently, if those instructions are inaccurate then that reflects upon the weight to be given to Palmer’s report.  A challenge is made to Palmer’s report in the written submissions filed on behalf of Puleo.  It is said that Palmer’s evidence does not satisfy the exception to the hearsay requirement under s79 of the Evidence Act 2005 (Vic).

45      Given my finding that the works to be done were limited to the scope of the fixed price agreement made on 23 May 2013, then the Palmer report is redundant in the sense that any further works were not authorised and therefore cannot be claimed by the plaintiffs on a quantum meruit basis.  Further, even assuming instructions had been given to build a show car, it has not been demonstrated that the plaintiffs performed work of value to Puleo such that he would be unjustly enriched if he received the benefit of those works but did not pay for them given the parlous state of Car 1 when it was collected in 2015.

46      In respect of the fixed price agreement, which was in the sum of $22,405, I find that Banks was paid the sum of $8,200.  That leaves the issue then of whether any further amount should be paid to Banks for the balance of the fixed price agreement.  The difficulty with this is that Cuthbert says the works done were inadequate and that the car has to be stripped back in order for it to be repainted.  Consequently, to the extent that this work was done by Banks pursuant to the fixed price agreement, it was of substandard quality and has to be redone.  Further, the parts listed in the fixed price agreement were not returned with the vehicle when it was collected, according to Puleo and Cerra.  I do not accept Banks’ evidence that he retuned all the parts for Car 1 and that some 25 boxes of parts were collected for Car 1.  Nor does the evidence of Lehr and/or Lakiotis confirm this to be the case.  It has not been proved to my satisfaction that those parts were returned to Puleo. 

47      In circumstances where the work done was substandard and the parts installed in Car 1 were not returned, I do not consider Banks is entitled to be paid any further amount in respect of the fixed price agreement.  Consequently, the claim in respect of Car 1 fails.

(2)The Bucket’s car (1967 Mustang fastback convertible) (“Car 2”)

48      The next claim relates to a 1967 Mustang Fastback convertible which both parties refer to as the “Bucket’s car” (“Car 2”).  This was a play on words used by the parties as the name of the original owner was a Mr Burkett. 

49      The plaintiff claims an amount of $6,673 representing labour of $2,613 and parts of $4,060.  The labour component is calculated on the basis of the agreement alleged by Banks that he could charge $88 per hour for any work done on Puleo’s cars. 

50      Puleo bought the Bucket’s car in around early May 2013.  This vehicle was delivered to MCF’s factory after it arrived at the docks from the USA.  This vehicle had an Art Morrison chassis and was in very good condition.  Exhibit D3 is a series of photographs depicting the Bucket’s car when it was purchased.  Puleo confirmed that the photos at Exhibit D3 were the photos provided to him by Banks who had obtained them from Mr Burkett, the vendor.  Banks agreed the photos showed the car was a well fabricated car. 

51      Banks says he was instructed by Puleo to remove the roll cage out of the vehicle, remove the LHS dash, remove the roof skin and fit a new one, the upper and  lower plenum were to be removed and other parts, including the engine were to be bagged and stored for Cerra to collect.  The amount to be charged for labour, according to Banks, was the agreed rate of $88 plus GST.

52      Banks said the engine and gearbox were taken by Cerra within a week of the car arriving and the rest of the parts were stored upstairs at MCF’s premises.  Banks said Puleo ordered his own engine and wheels directly. 

53      Banks claimed that Puleo wanted to sell the wheels on Car 2 and Banks found a buyer for them.  He sold the rims to “Darren” at Trikfab for $2,000.  Banks says he paid the sum of $2,000 in cash for the wheels to Puleo.  Puleo denies he gave permission to Banks to sell the wheels and said he did not receive the sum of $2,000.  The selling of the wheels without permission was one of the factors that led Puleo to retrieve his cars from MCF’s factory in mid-2015. 

54      Banks gave evidence he did 28 hours’ work on the Bucket’s car.  Banks said that after this work was done, no further work could be continued because there was no engine or gearbox.  The car was put in storage and placed under a dust cover to protect its integrity.  The vehicle stayed there until the start of 2015. 

55      Banks said the Bucket’s car was collected in January or February 2015 and taken away on the back of a tow truck.  The wheels were replaced with other wheels to allow the car to be taken away in a rolling state. 

56      By contrast, Puleo said that he did not give any instructions to Banks to do any work on the Bucket’s car.  He told Banks that the car was basically ready to paint and it was to stay there until Puleo was ready to deal with it.  Puleo was not provided with a copy of the running sheet prepared by Banks in respect of this car at CB 1790.  He did not ask Banks to remove the roll cage, replace the roof skin, and remove the dash and the upper and lower vent panels, or to install a Kugler 90 degree pedal box.  Puleo said the car was perfect and ready to be painted.  The car was to be put aside, covered and only touched when Puleo was ready. 

57      The inventory for the parts for the Bucket’s car is at CB 982 to 983.  Puleo said the only things he got back from Banks were the chassis, half the panels and four wheels.  The wheels were some old wheels and not the original Boyd Coddington wheels which he claimed Banks had sold off without his permission.  All of the rest of the parts were gone.  Puleo identified the photos at CB 872 to 877 as being the condition of the Bucket’s car either when it was leaving MCF’s premises or upon its subsequent arrival at Geelong.  He confirmed that he received nothing else relating to the Bucket’s car, other than that depicted in the photograph at CB 877.

58      Cerra confirmed no instructions were given to Banks to work on this car.  Cerra said he saw the car at MCF’s factory covered in plastic or a tarp and that he did not see Banks working on that car.

59      Banks’ evidence was that this car was stripped, the parts bagged and tagged and returned to Puleo.  He said the parts were collected within a week of the car being collected.  He said they were picked by Adam, an agent of Puleo.  Banks said some 30 to 40 different parts were collected.  Banks said his employee Andrew Lehr and his brother, George Lakiotis were present when the parts were collected and gave some assistance in loading up the parts. 

60      Puleo and Cerra said that no such parts were picked up. 

61      Banks was questioned about the parts that were collected.  He said a big part of it was the engine and there was all the exterior metal that Puleo had purchased which was fitted to the vehicle.  There was an array of different parts in the vehicle including the cross ram fuel injection which was in the original box and there was all the differential, all the upper and lower control arm, pretty much all the suspension to the vehicle, as well as rings and tyres.  He said that “every part we had to that car was picked up and there would have been an array of about 50 to 60 components.”  Banks claimed that all of these parts were able to fit into the back of Puleo’s van.

62      The witnesses Lehr and Lakiotis were called to give evidence about the collection of parts.  Their evidence did not corroborate the version put forward by Banks. 

63      Lehr said he was involved in returning parts on two occasions.  On the first he retrieved a 60 kilogram drive axle known as a “third member” and gave it to a guy called Adam, and saw Adam put it into the back of a van.  His recollection was that it had been collected a couple of weeks after the 2015 Grand Prix.  On the second occasion Cerra was present to collect the parts. Lehr recalled loading into the van a Strange 9 inch rear end, described as a centre and a set of Strange axles and bearings and seals.  Lehr said Cerra returned a couple of weeks later, and had Lehr press the bearings, seals and lock collars onto the axles and give them back to Cerra. 

64      Lakiotis said he was involved in returning parts to Puleo on three or four occasions.  He could not recall the vehicle in great detail because he only saw the back, but he said the parts were loaded into a black vehicle that looked like a dual cab commonly used by tradesmen.  He said each occasion involved only one load of probably three or four boxes, with different parts each time. Lakiotis was told that Cerra was the person sent to collect the parts, but he never saw him or spoke to him. 

65      The evidence about the collection or otherwise of the Bucket’s car parts listed in the Inventory is relevant to the claim for damages made by Puleo in his counterclaim.  He seeks delivery up of these parts or alternatively, damages.  This aspect is dealt with in paragraphs 159 to 160 of these reasons dealing with the defendant’s claims.

66      CB 1790 is Banks’ running sheet for the Bucket’s car.  He said he paid for the parts listed and had not been reimbursed by Puleo.  Puleo never received a copy of this running sheet.  Puleo said he did not ask for the works to be done which are listed in the first eight lines of the running sheet.

67      I prefer the evidence of Puleo and Cerra about the Bucket‘s car ahead of Banks’ evidence.  I find that Banks was told to store this vehicle and was not instructed to do any works on this vehicle.  Therefore he is not entitled to claim any labour costs.  Even if he was, the figure would be $50 per hour not $88 plus GST for the reasons already identified above.  As for the parts he claimed to have paid and has not been reimbursed, apart from the running sheet produced and his oral evidence, there were no invoices provided or receipts evidencing payment for these parts.  The evidence relating to proof of payment for parts is inadequate. 

68      I find the plaintiffs have not proved this part of this claim.  Banks was not instructed to do any works on the car and to the extent that he did so, he is not entitled to claim the costs in the absence of any agreement.  Nor has it been established that he provided something of benefit to Puleo so as to found a quantum meruit claim assuming he had received instructions.  Accordingly, the plaintiffs’ claim relating to the Bucket’s car fails.

(3)The 1968 Mustang Fastback (the J Code replacement car) (“Car 3”)

69      This car relates to the car which is referred to as a J Code car, being a 1968 Mustang.  J Code is an engine code which is given to a vehicle at the time of manufacture and describes the size of an engine. 

70      As with so many aspects of this case, the parties’ evidence diverges dramatically. 

71      Puleo had seen a car in Banks’ factory some time before 15 May 2013 and said he would like to build one of them one day.  Banks said he would be able to do it and Puleo said, “I'm going to buy a Mustang, I'm going to chop it up and we’ll do it.”  He then bought a Mustang, being an original 1968 J Code Mustang Fastback, which was sourced by Shane Abbott.  This car was purchased by Puleo on 1 May 2013 in the sum of $20,500.[15]

[15]CB 971 - 975

72      Puleo told Banks he had bought the car and Banks asked to see it.  On 15 May 2013, Cerra had the J Code car delivered to Banks.  After the J Code car had arrived, Puleo attended Banks’ factory and told Banks, “I'm going to chop it up.  I'll chop it up and we’ll do one of those Bullitt[16] cars and put big wheels on it and all that sort of stuff”.  Banks replied, “This is too good to chop up.  I've got an Art Morrison chassis that I've got in stock and what I can do, I can basically give you a chassis, all the tinware, all gapped, all doors on it, everything in steel”.  Puleo’s evidence was that he understood this to mean a shell for him ready to receive to paint.[17]

[16]The term “Bullitt” car is a reference to the Mustang car that featured in a film of the same name

[17]T435 – 436

73      Puleo asked what he would get and Banks told him that, “What you’ll get is like the black one down there but with no wheels, no glass, no motor, no nothing, ready for you to put on your own running gear in, all the interior and everything else.”  Puleo asked for a straight swap for the J Code car.  His evidence was Banks agreed to this proposal.[18]  Cerra later provided the file for the car, which was dropped off to Banks.  Cerra gave evidence that this occurred.[19]

[18]T436 - 437

[19]T569

74      Banks denied any knowledge of the existence of the original J Code car, let alone its receipt.[20]  He said he had supplied Puleo with a 1968 J Code Mustang Fastback which had VIN numbers and import papers.  He said it was the subject of a separate agreement that occurred within three weeks of meeting Puleo in the context of a discussion about Puleo adding 10 American muscle cars to round out Puleo’s European car collection.  Banks’ evidence was that they had reached an agreement on the engine, gearbox and injection to be used in the vehicle and the size of the wheels.  He said Puleo wanted this car to be built to an elite standard, which is a higher standard than a show car.  Despite considering that the vehicle would take 2,000 to 3,000 hours to build, Banks stated he could not provide Puleo with an estimate and could only price up $40,000 to $60,000 worth of parts.[21]  Banks’ evidence of the agreement was that Puleo would pay for the parts and labour would be charged at the rate of $88 plus GST.

[20]T158

[21]T151

75      Banks gave extensive evidence about the amount of work he had conducted on the J Code replacement car.  His evidence was that he had arranged for all the parts relating to this car to be returned to Puleo.  In his words, the arrangement was for his “agent, Adam, I believe at the time or Basil, to attend my premises and load the rest and take them to Geelong after the vehicle had already left and that was only done a few days after the vehicle had left so we complied with those arrangements”.[22]

[22]T200

76      Banks said he had issued an invoice dated 20 August 2015 for $56,047.20 to Puleo for the J Code replacement car.

77      When the work was finished on 27 January 2015, this amount had increased to $101,800 representing $96,000 in labour and $5,800 in parts.   

78      The defendant submits this claim should be rejected for the following reasons:

(a)Banks produced three pages of estimates for the J Code Fastback.[23]  The estimates list the work to be performed and list part.  CB 1012 refers, after a quote for labour, to “car $20,000”.  This is relied upon as evidence to show that Banks had Puleo’s car.  They also record the cost of the original J Code car as being $20,000. 

(b)The running sheet relied upon by Banks dated 5 September 2013 revealed 1,100 hours at $88 per hour, totalling $101,800 plus $5,800 in parts.  This running sheet was clearly amended after the date appearing on it.  The running sheet should be contrasted with Banks’ invoice dated 28 July 2014 which was for $56,047.20 for work done up to that period.

(c)A further running sheet for the J Code replacement car shows amended calculations for labour and appears to have an adjusted total of $96,000 plus parts.

[23]CB 1012 – 1014

79      In respect of the J Code car, the further criticism was made that Banks has not produced any single documentary evidence to verify the work provided by him.  He only gave general evidence about how many hours was spent.  There was no verification or other documents to corroborate his evidence about the hours spent on the J Code replacement car.

80      This to be contrasted with the defendant’s case that any work to be done on the J Code replacement car was in exchange for the original J Code car which had been delivered to MCF. 

81      Cuthbert’s evidence was that the value of the labour spent by Banks was in the order of $6,688 based on a rate of $88 per hour plus GST.  This evidence was not challenged by the plaintiffs in cross-examination.

82      Palmer gave expert evidence on behalf of Banks relating to the J Code replacement car, Car 3.  As with Car 1, Palmer accepted the value of the works as set out by Banks and/or MCF for a total of $144,308.44 was reasonable and on the basis of $88 per hour for labour.  Palmer did not undertake any verification of the amounts claimed but simply relied upon what he was told.  Palmer did inspect this vehicle but after works had been done on it after it left MCF’s factory.  He said that there did not appear to be any pictures which would suggest that any faulty works were carried out by MCF that would need rectification.

83      I prefer the evidence of Puleo about Car 3.  I find that the original J Code car was delivered to MCF’s premises and that the agreement struck was that in exchange for receiving the original car, Banks would build and restore the replacement J Code car.  The consideration for the work to be done on the J Code replacement car was the value of the original car which Banks acquired.  In other words, I accept Puleo’s evidence that there was a swap.  As this was the arrangement, Banks was not entitled to charge Puleo for any work done on the J Code replacement car.  Given this finding, it is unnecessary to make a determination of the nature and extent of the works claimed to have been performed by Banks and whether any moneys are owed for labour and parts.  Nor it is necessary to consider the adequacy of the expert opinion of Palmer given my finding.  Consequently, the claim in respect of Car 3 is not made out.

84      As with Car 1, any alternative claim on a quantum meruit basis also fails given the works said to have been done were not requested by Puleo. 

(4)The 1968 Camaro (“Car 4”)

85      The amount claimed for the 1968 Camaro by the plaintiffs is $11,243.  This represents $9,043 for parts and the sum of $2,200 claimed for storage costs.

86      Puleo bought Car 4 for the sum of $8,000.  A photograph of this car around the time it was purchased is at CB 860.  Car 4 was delivered to MCF.  Puleo wanted the work done on Cars 1 and 3 before work commenced on Car 4.  Car 4 was going to be one of Puleo’s future projects.  Banks told Puleo he did not have room at MCF to store the car but he had a good location for storage at a chicken shed towards Keysborough way. 

87      Car 4 was stored in a disused chicken factory.  Banks says the building the car was stored in was watertight and the car was under cover.  He claims the car was in the same condition when it was collected by Puleo as it was when delivered. 

88      Banks claims he told Puleo he would store the car at a cost of $50 per week to which Puleo agreed.  Banks also claims that Puleo and Cerra visited and saw where the car was stored.  Puleo denies that he ever went to the chicken shed.

89      Not unsurprisingly, Puleo disputes he agreed Banks could charge for storage.

90      The photographs at CB 861 to 865 depict the 1968 Camaro upon its collection from MCF in June 2015.  Puleo said the car was all rusted and dinted.  He said the car had no rust when it was sent to Banks originally.  The dash was also a lot worse than when he gave the car to Banks.  The evidence of Cuthbert is that Car 4 was delivered back in a dilapidated and rusted state.[24]

[24]See paragraph 96 of Cuthbert report

91      Car 4 was sold for $3,000 by Cerra on Puleo’s behalf.  A receipt for the car is at CB 2303.

92      Banks produced a running sheet for Car 4.[25]  This sheet is in his writing and lists parts and bears a notation that “I paid” against the various parts and lists a date.  The total sum is $5,830.

[25]CB 970

93      I accept Puleo’s evidence ahead of Banks and find there was no agreement whereby Banks could charge for storage.  Further, the evidence relating to proof of payment of parts for Car 4 is inadequate.  The running sheet claims a different figure to the sum claimed.  The plaintiffs failed to prove that these parts were ordered and paid for in respect of Car 4.  This claim is dismissed.

(5)The 1969 Camaro (“Car 5”)

94      Banks claims the sum of $1,900 for freight for parts which are said to be unpaid by the defendant relating to a 1969 Camaro.

95      Puleo said he did not own a 1969 Camaro.  Banks agreed Puleo had never delivered a 1969 Camaro.  Puleo said Banks had discussed with him the possibility of getting a 1969 Camaro.  Puleo said that one day he would do one but there was no agreement with Banks that he was to do one for Puleo. 

96      Puleo was shown an invoice at CB 1939.  He gave evidence that the parts listed were not his car and that a 1969 Camaro did not exist.

97      Counsel for Banks submitted there was evidence that Puleo did own a 1969 Camaro.  He referred to this evidence of this in paragraph 24 of his written submissions.  But even if Puleo did own a 1969 Camaro, it has not been demonstrated that the freight charge claimed by the plaintiff relates to the vehicle he may have had in his possession. 

98      I am not satisfied that Banks has discharged his onus of proof on this claim.  It has not been proved that the freight claimed of $1,900 was an expense which Puleo authorised to be incurred on his behalf.  This claim is dismissed.

(6)The Bucket’s car additional parts claim

99      This claim is made by MCF.  This is the only claim made on behalf of the second plaintiff.  An amount of $12,000 is sought representing the value of the parts lent to the defendant for use in the Bucket’s car.  The six items representing this claim are identified in paragraph 65 of the Amended Statement of Claim dated 28 January 2016 (“the ASC”) and described collectively as the “Bucket’s car additional parts.”

100     It is pleaded in paragraph 64 of the ASC that the defendant took possession of these parts in around February 2015.  MCF demanded the return of the parts on or around 14 August 2015 but the defendant has refused to return them.  MCF alleges the defendant has converted these parts and claims as damages the estimated value of the Bucket’s car additional parts in the sum of $12,000 (Paragraphs 65 to 71 of the ASC).

101     By contrast, the defendant pleads in paragraph 65 of his Amended Defence dated 6 March 2017 that these parts belonged to the 1968 Mustang Fastback (Car 3) and not the Bucket’s car.  It is also pleaded that MCF agreed to transfer ownership of these parts to the defendant in part payment of the plaintiffs’ failure to perform work on the defendant’s cars, including the Bucket’s car.  A conversation is referred to in the particulars to paragraph 65 in about July 2016 outside MCF’s premises.  It is alleged that Banks told Puleo that he could not get the car off the jig - it will have to go to Geelong and that Puleo should not worry about it as he (Banks) owes Puleo.

102     The defendant’s written closing submissions noted it was clear from photographs of the Bucket’s car upon collection and delivery to Geelong Auto Restorations that the vehicle was not transported on a jig.[26]

[26]The photographs are at CB 869-877.

103     MCF has failed to prove its claim relating to these parts because, as the defendant’s counsel pointed out, there was no evidence given by Banks on this claim.  Consequently, there was no proof these items were taken by Puleo as alleged nor was any evidence adduced of their value.  This claim by MCF is not made out.

(7)The Corvettes’ claim

104     MCF claims Puleo has wrongfully detained or converted various Corvettes and associated parts.  The Corvettes’ claim concerns two 1959 Vette roadster car bodies, one Art Morrison 1960 Corvette GT-Sport chassis, one set of Eleanor[27] rims with tyres and one 1959 Corvette complete floor plan assembly (collectively “the Corvettes”).  MCF claims the sum of $112,000 from Puleo as damages for conversion.  The plaintiffs did not adduce any expert evidence at trial to support the amount claimed.

[27]The reference to “Eleanor” is the name of the Mustang Convertible featured in the film “Gone in 60 Seconds”.

105     The case as pleaded was that Banks, acting as agent for MCF, agreed in around February 2015 to lend the Corvettes to Puleo for the purposes of modifying them to comply with Australian design rules and taking moulds to enable replication of the body shapes.  It is alleged that the Corvettes were delivered to Puleo on or around 4 March 2015 and despite an oral demand made on 14 August 2015, they have not been returned.[28]  Puleo denies he ever received the Corvettes. 

[28]ASC paragraphs 73 to 76

106     During the course of the trial, it emerged the Corvettes were owned by Banks personally and not by MCF.  This was confirmed by Banks in his evidence‑in‑chief.[29]

[29]T214

107     The plaintiffs’ case was that Puleo had introduced Banks to Mr Tony Di Benedetto (“Di Benedetto”) of Fantam Rods.  It is alleged Puleo directed Banks to take the Corvettes and parts to Di Benedetto’s premises for works to be done and Puleo reassured him they would be safe there.  As they have not been returned to Banks, the plaintiffs’ counsel submitted this was a breach of bailment. 

108     The defendant argued the claim for conversion failed on the following four grounds:

(a)    The plaintiffs’ pleaded case prosecuted a case that the Corvettes were owned by MCF and that Banks acting as agent for MCF agreed to lend the vehicle to Puleo.  Banks’ evidence was, however, that he personally owned the Corvettes;

(b)    At no time were the Corvettes ever in Puleo’s possession;

(c)     At no time did Puleo give any instructions to Di Benedetto in respect to the Corvettes; and

(d)    The evidence of Di Benedetto was that he regarded the arrangement in respect of the Corvettes to be with Banks and not Puleo.[30]

[30]See T 721.25-26 and T726.1-3

109     Banks gave evidence that in or around February 2015, he discussed with Puleo the idea of building Corvettes on a small scale, initially starting with a prototype which would be engineered to be compliant with Australian design standards.  He said an agreement was reached they would embark on a joint venture to build Corvettes and that Banks would provide the Corvettes and Puleo would pay for the parts together with any work done by Fantam Rods under the supervision of Banks.  The fabrication of the Corvettes was to be done in fibreglass to be performed by Di Benedetto personally.  Banks said he did not know Di Benedetto but that he was reassured by Puleo that the vehicles would be safe with Fantam Rods.  Banks said that he delivered the Corvettes to Fantam Rods at the direction of Puleo. 

110     Under cross-examination, Banks confirmed the Corvettes were never delivered to Puleo.  The evidence as supported by Di Benedetto was that the Corvettes were delivered to him in early February or March of 2015.  Both Banks and Cerra gave evidence that they saw the Corvettes at Fantam Rods. 

111     Banks claimed that following the parties falling out, he telephoned Puleo and Cerra in early to mid-July 2015 to demand the return of the Corvettes.  He gave evidence he had a final phone call with Puleo around 25 or 26 July 2015 during which he was told “I could kiss my Corvettes and motorbike goodbye.”  This conversation was not put to Puleo in cross-examination.  Cerra denied there was any conversation that the cars would be returned in exchange for the Corvettes.

112     Banks’ solicitors, Tait Lawyers, wrote a letter of demand to Di Benedetto on 14 August 2015 requesting return of the Corvettes.  Di Benedetto gave evidence he had received a call from a man who said he was Banks’ lawyer regarding the return of the Corvettes.  A day or so later he received a letter of demand from Tait Lawyers.[31]  A couple of days later an unbranded truck arrived to collect the Corvettes.  The driver told Di Benedetto he was “here to pick up the cars for the Muscle Car Factory.”  The Corvettes were loaded in a single trip and were removed.  Di Benedetto swore a statutory declaration on 16 July 2016 giving this account of the events and confirming he had not retained any of Banks’s property.[32] Banks described this statutory declaration as not worth the paper it was written on.  Despite Banks’ protestations, I found Di Benedetto to be an honest and straightforward witness whose evidence I accepted without any hesitation.

[31]CB 2296

[32]CB 2295

113     The evidence of Banks was that he had not received the Corvettes.  He said that he neither collected them himself nor instructed anyone else to do so. 

114     When cross-examined about his assertion that Puleo or his agents had collected the Corvette parts from Fantam Rods, Banks said that Di Benedetto had “hinted in a phone conversation with him that Puleo had collected them.”  Counsel for Puleo submitted this evidence should be rejected because it was neither put to Puleo nor Di Benedetto in cross-examination.  Additionally, Di Benedetto gave evidence that he had not told Puleo or Cerra about the phone conversation with the solicitor from Tait Lawyers or the letter of demand he received from Tait Lawyers.

115     Puleo denied the allegation there was any alleged joint venture or agreement that he and Banks would build Corvette cars together or that he would invest in such a project.  Puleo told Banks he was not interested in going into business with him to build Corvettes and did not want to work again with partners.  He offered to help Banks because his business was a mess.  Puleo   told Banks he could help guide him in his business and assist in marketing Banks’ Corvettes.

116     Puleo said he would let Banks display the Corvettes in his “man cave”[33] in return for a $5,000 commission on any vehicle sold.  Banks was very happy with that proposal according to Puleo but the proposed arrangement never eventuated.

[33]The “man cave” is a reference to a building owned by Puleo where he displays his prestige cars – see T484-485

117     Puleo recommended the services of Di Benedetto to Banks to do the fibreglass work on his Corvettes because Di Benedetto specialised in fibreglass and he had done some work for Puleo on one of his hot rods. 

118     Puleo’s evidence was that he did not have the Corvettes and did not know where they are.  He had not spoken to Di Benedetto or anyone about them and had never received a letter of demand from Tait Lawyers, the plaintiffs’ solicitors.  Cerra gave evidence he did not know where the Corvettes are and did not have anything to do with their removal from Fantam Rods. 

119     Conversion requires proof of intentional unauthorised interference with the property of another.  In Oris Funds Management Ltd v National Australia Bank,[34] Osborne J referred to the decision of Dixon J in Penfolds Wines Pty Ltd v Elliott,[35] where his Honour noted:

“The essence of conversion is a dealing with a chattel in a manner repugnant to the immediate right of possession of the person who has the property or special property in the chattel ...  an intent to do that which would deprive 'the true owner' of his immediate right to possession or impair it may be said to form the essential ground of the tort.” 

[34][2003] VSC 315

[35](1946) 74 CLR 204

120     The undisputed evidence is that the Corvettes went to Di Benedetto.  His evidence was that they were collected by a person purporting to act on behalf of MCF.  Banks claims he never received the Corvettes.

121     Counsel for the plaintiffs conceded during his closing submissions that the claim as pleaded had caused him some difficulties and the plaintiffs had not proved the Corvettes were taken by Puleo.[36]  The claim for conversion was then put as arising from Puleo acting as a bailee for the Corvettes.  A claim for breach of bailment by Puleo was not specifically pleaded.  Nor was it established on the evidence that Puleo had agreed to act as a bailee of the Corvettes.  The arrangements regarding the delivery of the Corvettes to Fantam Rods were struck between Banks and Di Benedetto alone and did not involve Puleo.  Puleo’s role was limited to recommending Di Benedetto’s services to Banks.

[36]T833

122     There is simply no evidence before the Court to show that the Corvettes were converted by Puleo, even assuming they were not returned to Banks.  It was not proved that Puleo is or has ever been in possession of the Corvettes.  It has not been established Puleo has wrongfully detained or converted the Corvettes to his own use.  For all these reasons, the claim against Puleo for conversion of the Corvettes fails.

(8)The motorbike claim

123     Banks seeks damages in the sum of $100,000 for conversion of a motorbike.   He purchased a green custom-built Dakota Thunder Chopper motorbike (“the motorbike”) in about October 2014 on eBay for US$13,500.  Banks kept the motorbike at his workshop at MCF where Puleo saw it.  Banks says Puleo offered to fit a new seat for the motorbike after Banks complained about it being uncomfortable.  Puleo arranged for Cerra to collect the motorbike from MCF so a new seat could be fitted.  The motorbike was then delivered to Puleo’s showroom in Camberwell in or around March 2015.  Works were done on the motorbike, including some detailing and building a new leather seat. 

124     Puleo sent a text to Banks at CB 1977 which referred to the detailing done on the motorbike.  He also sent photos to Banks of the motorbike.  The detailing was done by Crazy Paving in April 2015.  CB 2010 is a copy of an invoice for the detailing which Puleo said he paid.  He also paid for the seat at a cost of $500 (CB 211).  Banks had promised to pay but never did so.  Banks denied he received any message about the detailing.

125     The parties again disagree about what happened to the motorbike.  Banks’ evidence is that the motorbike was never returned to him.  Puleo gave evidence that he does not have the motorbike.  He agreed it had been in his showroom around March 2015 but it was his belief it had been collected from his premises.  He was not present when it was picked up.

126     Cerra gave evidence that he did pick up the motorbike from Banks and took it to Puleo’s showroom to enable the repair works to be undertaken.  An email was sent to Banks setting out the detailing done and the cost of $1,600.  Banks denied receiving this email.  Cerra said that after the detailing on the motorbike was finished, he called Banks who agreed to come and pick it up.  Cerra recalled Banks attending alone with a black Crewman Ute at Puleo’s showroom.  Together they pushed the bike onto the trailer.  Cerra also recalled that Mokadsi had helped push and tie down the motorbike.  Cerra said that the motorbike was loaded up and Banks then drove away.  Cerra said he did not have the motorbike and had no knowledge of its whereabouts.

127     Cerra’s evidence was corroborated by Mokadsi who recalled attending Puleo’s showroom when he saw a car or a ute with a trailer parked in the front.  Behind the trailer was a green custom motorbike and next to the bike was Cerra and Banks.  He was aware that it was Banks’ motorbike from overhearing parts of conversations with Puleo.  Mokadsi said he helped Cerra and Banks push the motorbike onto the trailer.  He then went into the showroom and when he returned outside he saw the motorbike was fastened to the trailer.  He did not see Banks but heard his voice and then heard a car door slam and the car was driven away although he did not say by whom.  He was unshaken in his account on cross-examination. 

128     At the commencement of the trial there was an order for witnesses out of Court.  Mokadsi was not on a list of witnesses and remained in Court throughout the hearing.  When Cerra gave his evidence, and mentioned Mokadsi having been present, counsel for the defendant then chose to call Mokadsi.  Counsel for the defendant frankly admitted he had not known that this evidence about the presence of Mokadsi was going to be given by Cerra.

129     Counsel for the plaintiffs objected to Mokadsi giving evidence as he had been present throughout the hearing and had not obeyed the order for witnesses to be out of Court.  I permitted Mokadsi’s evidence to be given but noted it would be a question of what weight should be attached to his evidence.  When a witness disobeys an order for witnesses out of Court, the Court has no discretion to exclude the evidence in either civil or criminal cases.  The opponent of the party calling the witness is at liberty to comment on the weight of the evidence.[37]

[37]Cross on Evidence at 17055; see also Commonwealth Bank of Australia v Duckworth [2012] WASC 476 at [22] – [32]

130     In assessing the evidence on this claim, I have taken into account the fact that Mokadsi was present throughout the hearing and was able to hear Cerra’s evidence.  Despite this, I accept the evidence given by him and Cerra in respect of the collection of the motorbike by Banks as being truthful.  I prefer their evidence to Banks’ evidence and find that Banks did collect the motorbike from Puleo’s showroom.  Given that finding, Banks has failed to prove that Puleo converted his motorbike.

131     The claim made for damages for conversion of the motorbike in the sum of $100,000 was not the subject of any expert evidence.  Counsel for the plaintiffs acknowledged there was no expert evidence relating to the motorbike.[38]  There was no evidence upon which the Court could reliably make any estimation of the value of the motorbike, even assuming it had been converted by Puleo. 

[38]T822

132     The claim against Puleo for damages for conversion of the motorbike is dismissed.

133     In his closing address, counsel for Puleo noted that there had been a failure to comply with what he referred to as the second aspect of the rule in Browne v Dunn.[39] He submitted counsel for the plaintiffs had not cross examined his client on a number of matters in relation to the 1968 Camaro, the 1969 Camaro, the Bucket’s car additional car parts and much of the matters relating to the collection of parts. In support of that contention he relied upon the decision of Bulstrode v Trimble[40] regarding counsel’s obligations to put material to a witness in cross examination. He submitted that where evidence in chief is not tested in cross examination, the rule will incline a judge or jury to accept the evidence. However, as Newton J noted at 849.21-7:

“I know of no case where it has been held that where evidence of a witness upon a particular matter is allowed to pass without cross-examination, but evidence of a substantial character is called by the opposite party in direct contraction thereof, the judge or jury is required in law to accept the former evidence. And, in my view, this is plainly not the law.”

[39](1893) 6 R 67, T768 – 770.

[40][1970] VR 840

134     The result then is that although a matter may not have been tested in cross examination, it does not always follow that the witness’s evidence in chief must be accepted. As previously mentioned, practically every matter in this case was in issue. Whilst it may be well be that Puleo was not cross examined on some of his evidence, I do not find that this necessarily leads to the conclusion that his evidence in chief must be accepted. Much of the matters he deposed to had already been contradicted by Banks in his evidence in chief, such that the battle lines were clearly drawn. In the circumstances, I do not consider that any alleged failure to cross examine on certain issues has any real bearing on the findings I have made.

Identity of contracting parties

135     In the ASC, it is pleaded that the claims relating to the work done on Puleo’s cars was pursuant to agreements entered into by Banks and Puleo.  The agreements arose from oral discussions between those men.  No formal written contracts were ever prepared.  In the amended defence and counterclaim dated 6 March 2017, Puleo alleges the agreements relating to the works for the cars were entered into with him by either of the plaintiffs or both.  Banks gave evidence that he incorporated MCF primarily to deal with American car parts manufacturers whose preference was to deal with a corporate entity rather than a sole trader.  There was no evidence led upon which a finding could be made that MCF was ever a contracting party to the agreements relating to the works to be performed on Puleo’s cars.  The relevance of this is that it affects the rights of Puleo to recover under his counterclaim.  His claim for damages for faulty workmanship on his cars is available against Banks only, being the other contracting party to the agreements.

B.The defendant’s counterclaim

136     Puleo’s counterclaim falls into three parts.  The first is a claim for sums due under the invoices agreement.  The second is a claim for damages representing the diminution in value of the cars returned to Puleo and the value of missing parts.  The amounts in question have been assessed by the defendant’s expert witness, Cuthbert.  The third and final claim is for a debt due in the sum of $8,000, being the purchase price of a CCTV system which Puleo says he sold to Banks.

(1)Invoices agreement

137     Puleo gave evidence that in about early to mid-2013 he entered into an agreement with Banks whereby Puleo would pay for motor vehicle components ordered by the plaintiffs from third party suppliers (“the invoices agreement”).  Puleo said Banks told him he would like to do Puleo’s work but could not because he had a number of cars and people were not paying him.  Puleo also recalled Banks said he needed parts so that he could finish them and then work on Puleo’s cars.

138     Puleo said Banks asked him for money to either invest in his business or borrow money for Banks to buy parts for the cars in Banks’ workshop.  Puleo replied he would not give him any money because it is not what he does but would help buying and paying people direct through a friend of his with a US dollar foreign currency account.  Puleo said they agreed that if there were additional work needed, Banks would pay off his debt at $50 per hour.

139     The invoices agreement excluded the 1967 convertible and the J Code replacement car, as both those agreements were for fixed work for fixed consideration. 

140     Puleo gave evidence that the arrangement was that Banks would forward an invoice to Puleo for payment.  Puleo would forward the email enclosing the invoice to Mr Pat Ianuali, a business associate of Puleo’s, who would then attend to payment on Puleo’s behalf.  Mr Ianuali would pay the invoices via his US dollar foreign currency account.  Mr Ianuali would forward Puleo a copy of a payment receipt evidencing the payment that had been made.  Puleo would then send an email to Banks attaching the remittance slip.  Puleo’s evidence was corroborated by Cerra.[41]

[41]T576.2 – 577.5

141     Under the invoices agreement, Puleo paid US$383,205.41 to suppliers in respect to invoices and quotations forwarded to him by Banks for payment.  This list of payments is referred to in Exhibit D8.  Puleo said he had paid all of the plaintiffs’ suppliers’ invoices from May 2013 pursuant to the invoices agreement.  The amount of the payments listed in Exhibit D8 was admitted by the plaintiffs,[42] but the existence of the invoice agreement as pleaded by the defendant is denied by the plaintiffs. 

[42]T240.7-9

142     Puleo admits that some of the amounts listed in Exhibit D8 were for parts for his cars and were received by him.  The amount that he concedes for those parts is US$52,899.45.  Puleo claims the balance of US$330,305.96 being for parts which were not used for his cars or received by him after he eventually withdrew all of his cars from Banks

143     Cerra gave evidence that he had reviewed each of the invoices paid by Puleo pursuant to the invoices agreement.  He identified the parts received and  highlighted in yellow on Exhibit D7 the items that were either on the vehicles at the time of collection or collected at some other time from the plaintiff.  Mr Cuthbert calculated the value of those parts totalled US$52,899.45. 

144     Banks denied the invoices agreement was entered into as alleged by Puleo.  He said that all the parts paid for by Puleo were for Puleo’s cars and those parts were ultimately returned to him.  His evidence was that Puleo agreed that Banks would organise the parts needed to build Puleo’s cars so that Puleo could get the 20 per cent discount distribution base and Puleo would pay for those parts directly to Banks’ suppliers.[43]  Banks also denied there had been an agreement to work at a rate of $50 per hour and said that the labour had been agreed at $88 plus GST per hour.

[43]T66

145     Counsel for the defendant submitted in their written closing submissions that Banks’ evidence should not be accepted and noted that:

(a)It is clear from an analysis of invoices conducted by Mr Cuthbert that the invoices paid by Puleo included a majority of parts that were not for Puleo’s cars.[44]  The explanation put forward by Banks by saying that the parts included parts for future cars should not be accepted. 

(b)Banks gave evidence that all the parts were ultimately returned to Puleo.  He called his former employee, Andrew Lehr, and also his brother, George Lakiotis, to support his evidence.  However, the defendant submitted that those witnesses’ evidence did not corroborate the evidence given by Banks. 

[44]See Exhibit D7

146     I have not been persuaded by Banks or the witnesses called on his behalf that all of the parts referred to in Exhibit D8 were returned to Puleo either because they were on his vehicles or delivered separately.  Nor was I convinced by the evidence of Banks, when he said during cross-examination, that various parts were for the benefit of Puleo’s cars when it was clear that many of the parts he was taken to related to other customers’ cars.  The evidence of Banks’ staff was equivocal about the nature and extent of the collection of parts on behalf of Puleo and did not establish his case that all parts belonging to Puleo were collected.  Nor have I been persuaded that the claim for parts should be reduced by reference to any labour done by Banks on Puleo’s cars pursuant to the terms of the invoices agreement.  For the reasons already given, I am not satisfied that Banks has proved he is owed any money by Puleo for labour.

147     There was no challenge made to Cuthbert’s evidence about the accuracy of his evidence other than a couple of questions about the value he ascribed to some of the parts.  It was not put, for example, that his evidence about the various parts he identified as not being for Puleo’s cars was incorrect.  I accept the evidence given by Mr Cuthbert about the parts he identified which were not parts associated with Puleo’s cars as being accurate. 

148     Accordingly, I find for Puleo on this part of his counterclaim and that he is entitled to damages in the sum of US$330,305.96.  Counsel for Puleo noted in his closing oral address that if judgment were given on this part of the claim, that conversion into Australian currency should be made at the time that judgment is entered.[45]

(3)CCTV claim

[45]In support of this proposition, counsel relied upon a decision of Byrne J in Vlasons Shipping Inc v Neuchatel Swiss General Insurance Co Ltd (No 2) [1998] VSC 135

149     Puleo gave evidence that in mid to late 2014, Banks entered into an agreement with him pursuant to which he would supply a closed circuit security system (“CCTV”) in the sum of $8,000.  It is not disputed by the parties that a CCTV system was delivered to Banks in mid to late 2014.  But the arrangements pursuant to which it was delivered are contested. 

150     Puleo said he had discussed with Banks the issue of security at MCF’s factory.  He suggested to Banks that he should invest in a CCTV system similar to that used by Puleo.  Banks told him he could not afford it.  Puleo then offered to sell to Banks the previous system used in his premises for the sum of $10,000.  Banks made a counter offer of $8,000 which Puleo accepted.  Puleo arranged for the delivery to MCF’s premises of a 16 to 20 camera Bosch CCTV system including an internet-enabled digital video recorder (DVR) and the wiring required to put it together.  Puleo said that Banks asked him for details of the man Puleo used to install the system.  Puleo did so but was later told by this man that Banks had not wanted to pay anything to have it installed.  Puleo said he saw the system installed at MCF’s premises and the big screen was in Banks’ office.  Banks told Puleo he had installed it himself.  Before he sent this system to Banks, there was no CCTV installed at MCF.

151     Banks confirms there was a discussion about the CCTV system in Puleo’s office.  Banks says Puleo mentioned at the end of the conversation he was going to throw the CCTV system out and that Puleo offered it to him.  Banks said he did not need it as he already had a 16 camera full surveillance system installed at his premises. 

152     It is not in dispute that the CCTV system was delivered by an employee of Puleo’s a day or two after this conversation.  Banks’ evidence was that he had not requested or agreed to pay for the CCTV system but stored it at his premises so as not to insult Puleo. 

153     Puleo’s solicitors, Barretts Lawyers made a demand for payment in respect of the CCTV on 31 August 2015.

154     This is yet another example of where there is a total conflict in the evidence between the principal players.  Having regard to the matters mentioned previously in respect of Banks’ credibility, I prefer the evidence of Puleo and accept his evidence there was an agreement that Banks would take the CCTV system for an agreed price of $8,000.  It is not in dispute this sum has not been paid and therefore, I find for the defendant on this aspect of his counterclaim.

(3)Damages claim representing diminution in value of Puleo’s cars

155     The third component is the claim for damages relating to the losses said to have been caused by the negligent workmanship of the plaintiffs.  This head of damage is assessed by reference to the difference between the market value of the cars and parts when delivered to MCF and the diminished market value after collection by Puleo.  The defendant relies upon the opinions of market value set out in the Cuthbert expert reports.  Whilst the accuracy of some of the figures relating to parts was queried by Banks’ counsel by reference to a catalogue and decoder book,[46] there were no submissions made on behalf of the plaintiffs that this method of assessment adopted by Puleo was not open.

[46]Exhibits P6 and P7

156     The amounts claimed by the defendant in respect of the diminution in the value of the cars are as follows:

(a)1967 Mustang Convertible (Car 1)  $16,000

(b)1967 Mustang Fastback (Bucket’s car) (Car 2)      $57,924

(c)1968 Mustang Fastback (Car 3)  $20,000

(d)1968 Camaro (Car 5)  $5,000

157     The J Code replacement car (Car 4) is not the subject of any claim for damages made by the defendant.

Car 1

158     The expert evidence of Cuthbert was that the 1967 Mustang (Car 1) had a market value of $22,000 to $24,000 in the condition it was in prior to delivery to MCF in about July 2013.[47]  He sighted Car 1 on 30 October 2017.  Cuthbert’s assessment of the market value of the vehicle upon collection is $8,000.  His assessment takes into account the state of the Car 1 in the photographs depicted at CB 866 to 868 and a reduction in value by reason of missing components.[48]  The amount sought in respect of this vehicle is the difference in the value of the car as delivered compared with its value when it was collected.  The difference is assessed by Cuthbert in the amount of $16,000.  Accordingly, this is the basis upon which the defendant makes its claim for damages as part of its counterclaim. 

Car 2

[47]Cuthbert’s supplementary report at 30 and 47; CB 188 and 194

[48]Cuthbert’s supplementary report at 37; CB 191

159     Cuthbert’s evidence was that the Bucket’s car inventory of parts was worth $66,024 when purchased by Puleo.  He said the works done by the plaintiffs had devalued the Bucket’s car considerably. The photographs at CB 869 to 876 show the condition of the Bucket’s car when Cerra organised for it to be picked up from MCF and delivered to Geelong.  Puleo says the car was gutted.  He did not receive the seats back or the dash.  Banks denied the photos depicted the car as it was when it left his premises.  He said it showed Car 2 as it was when it left Geelong.

160     Puleo claims as damages the sum of $57,924 for Car 2.  This sum is calculated by deducting the amount that Cerra sold the car for in the sum of $8,100, from the market value of the parts as assessed by Cuthbert in his supplementary report in the sum of $66,024. These are the parts listed in Schedule A referred to in paragraph 107 of the amended defence and counterclaim dated 6 March 2017. This is the inventory of parts relating to Car 2 which have not been returned to Puleo. Cuthbert assessed the value of those missing parts on pages 15 and 16 of his supplementary expert report dated 8 May 2018.

Car 3

161     Cuthbert sighted the J Code replacement car on 30 October 2017.  He assessed the market value of this car at $20,000.  His assessment of the market value of the original J Code car was $40,000.  The defendant claims as damages the difference between these two sums, namely $20,000. 

Car 5

162     Cuthbert assessed the market value of the 1968 Camaro at $8,000 prior to delivery to MCF.  In his supplementary report, he revised his assessment of the market value of this car after collection at $4,000.  He had previously assessed the after value at $6,000. This car was sold for $3,000.  The amount sought for the 1968 Camaro is $5,000.  Counsel for the plaintiffs referred to evidence of extensive repairs being conducted on Car 5 which would potentially lead to the view that the sale price achieved was not a bona fide sale. But it is unnecessary to make a finding upon this issue as the claims for damages is made on the basis of the before and after market values, so in this case the difference is $4,000 under this head. I will award this sum rather than the sum of $5,000 claimed in paragraph 216 of the defendant’s closing submissions dated 30 July 2018.

163     I accept the evidence of Cuthbert relating to his before and after assessment of the market values relating to Puleo’s cars.  In my view, this is a reasonable method of measuring Puleo’s loss as a result of the faulty workmanship on the part of the first plaintiff.[49] The plaintiffs did not argue that this was an inappropriate way to measure Puleo’s losses.

[49]McGregor on Damages, Sweet & Maxwell, 19^th ed, at  4-050; and also Westlaw AU, Commercial Damages: Damage to goods – normal damages (at 11 February 2019) [6.1610]

164     The amount claimed for the Bucket’s car, Car 2, was assessed slightly differently. This involved a comparison of the market value of the parts upon purchase by Puleo less the price that Puleo achieved for this car. As has been seen, the parts for this car were never returned. There were no “after” parts available to produce a comparison. I consider this is a reasonable way to measure Puleo’s loss in respect of this car.

165     Accordingly, I find Puleo is entitled to damages in the amounts assessed by Cuthbert in his expert reports.  The total of the sums under this head is $97,924.

166 An alternative claim for damages was pleaded in paragraphs 99 to 102 of the defendant’s counterclaim. The defendant sought to rely upon s267(4) of the Competition and Consumer Act 2010 (Cth). It is unnecessary to make any findings relating to this claim as it was not pursued by the defendant at trial and was not the subject of any submissions.

Conclusion

167     Each of the plaintiffs’ claims is dismissed.  Puleo has succeeded in the three claims made in his counterclaim and is entitled to judgment against Banks for the following sums:

(a)      US$330,305.96 (to be converted into AUD upon the entry of judgment);

(b)      $8,000;

(c)       $97,924

168     I will hear from the parties on the precise orders to be made consequent upon these reasons, including orders for costs and interest.

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Certificate

I certify that these 41 pages are a true copy of the Reasons for Judgment of Her Honour Judge A Ryan delivered on 12 February 2019.

Dated: 12 February 2019

Stephen Cremean

Associate to Her Honour Judge A Ryan