Catania v Theodossi
[2021] FCCA 98
•28 January 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CATANIA v THEODOSSI & ANOR | [2021] FCCA 98 |
| Catchwords: UNJUST ENRICHMENT – Need to plead facts engaging a relevant law or principle that requires payment to the claimant. |
| Legislation: Federal Circuit Court Rules, rr.7.01, 13.10 |
| Cases cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Global Brand Marketing Inc v Cube Footwear Pty Ltd (2005) 66 IPR 19 |
| Applicant: | GIUSEPPE ANTONIO CATANIA |
| First Respondent: | NICK THEODOSSI |
| Second Respondent: | RALENA PTY LTD ACN 005 987 217 |
| File Number: | SYG 2563 of 2019 |
| Judgment of: | Judge Cameron |
| Hearing date: | 7 September 2020, 6 November 2020 |
| Date of Last Submission: | 6 November 2020 |
| Delivered at: | Sydney |
| Delivered on: | 28 January 2021 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Johnson |
| Solicitors for the Applicant: | Blackstone Waterhouse |
| Counsel for the Respondents: | Mr J Lee |
| Solicitors for the Respondents: | Adley Burstyner |
ORDERS
The applicant’s application in a case filed on 7 September 2020 be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2563 of 2019
| GIUSEPPE ANTONIO CATANIA |
Applicant
And
| NICK THEODOSSI |
First Respondent
| RALENA PTY LTD ACN 005 987 217 |
Second Respondent
REASONS FOR JUDGMENT
INTRODUCTION
This matter concerns the ownership of a Porsche Panamera motor vehicle (“Vehicle”) which in early 2019 belonged to the applicant, Mr Catania. It subsequently passed through the hands, to use a neutral expression, of a Mr Kalimi and at least one of the respondents and, apparently, is now owned by a third party. In his application, apparently filed before the ostensible sale to the third party was known to him, Mr Catania has sought:
a)a declaration that neither the first respondent, Mr Theodossi, nor the second respondent (“Ralena”) have any interest in the Vehicle;
b)removal of the registration in the Personal Property Securities Register (“PPSR”) established under the Personal Property Securities Act 2009 of Ralena’s purported interest in the Vehicle (“Interest”); and
c)the return of the Vehicle or damages in detinue or conversion.
The respondents allege that Mr Kalimi had been Mr Catania’s actual or ostensible agent and that Ralena had purchased the Vehicle from him in good faith, for valuable consideration, without notice of any defect in the sale and became its owner.
The respondents filed an application in a case on 3 June 2020 seeking summary dismissal of the proceeding or summary judgment in their favour and Mr Catania filed an application in a case on 7 September 2020 seeking leave to file an amended statement of claim. The proposed pleading was annexed to the affidavit of Mr Catania’s solicitor, Mr Davies, sworn 22 September 2020. Before the issue of summary disposal is considered, it is necessary to decide the application to amend. These reasons concern that issue.
LEGISLATION
Factors (Mercantile Agents) Act 1923 (NSW)
Section 5(1) of the Factors (Mercantile Agents) Act 1923 (NSW) provides:
Where a mercantile agent is entrusted as such with the possession of any goods or the documents of title to goods, any sale pledge or other disposition of the goods made by the agent in the ordinary course of business of a mercantile agent shall, subject to the provisions of this Act, be as valid as if the agent were expressly authorised by the owner of the goods to make the same:
Provided that the person taking under the disposition acts in good faith, and has not at the time of the disposition notice that the person making the disposition has not authority to make the same.
Federal Circuit Court Rules
Rule 7.01 of the Federal Circuit Court Rules 2001 (“Rules”) provides:
7.01 Power to amend
(1)At any stage in a proceeding, the Court or a Registrar may allow or direct a party to amend a document (other than an affidavit) in the way and on the conditions the Court or the Registrar thinks fit.
…
BACKGROUND FACTS
According to the parties’ affidavits, the facts of the matter are as follows.
Mr Catania was the owner of the Vehicle at the beginning of the relevant chain of events. On 28 March 2019 he had a telephone conversation with Kanye Theodossi, who appears to have been working for Ralena, in relation to an Aston Martin that Ralena had advertised for sale. Kayne Theodossi told Mr Catania that Ralena was interested in the Vehicle as a trade-in and asked for photographs of it. Although the issue of changeover price was raised, discussions did not proceed further.
On 8 May 2019 Mr Catania listed the Vehicle for online sale at $280,000. The next day he was contacted by Shervin Kalimi, a car broker and/or dealer, who said he was working with an undisclosed person who was interested in buying the Vehicle. On 9 May 2019, Mr Catania bailed the vehicle to Mr Kalimi so it could be shown to the potential purchaser. Mr Kalimi was given one of the Vehicle’s two electronic keys. Mr Catania did not authorise Mr Kalimi to sell the Vehicle and expected him to return it after the potential purchaser had inspected it.
On 10 May 2019, Mr Kalimi called Mr Catania asking that he take down the online advertisement to stop the interested party from contacting him directly. Mr Catania agreed to do that.
As part of its business, Ralena engages in transactions between motor car dealers and in the four years prior to May 2019 had purchased four vehicles from and sold three vehicles to Cars and Co Pty Ltd (“Cars & Co”). On each occasion it had dealt with Mr Kalimi.
On or about 13 May 2019, Ralena agreed to purchase the Vehicle from Mr Kalimi. On 14 May 2019 Ralena searched the PPSR and found “no indication of any interest inconsistent with the progressing purchase of the Vehicle”, Cars & Co emailed a tax invoice to Ralena the same day and Mr Kalimi purportedly sold the Vehicle to Ralena. Ralena registered its Interest in the Vehicle with the PPSR on 27 May 2019. On 14 and 15 May 2019, arrangements were made for the vehicle to be collected from Cars & Co in Sydney and transported to Melbourne and for Ralena to transfer $217,000 to the account nominated in Cars & Co’s tax invoice. According to Mr Theodossi, it is not uncommon for second hand cars to come with only one set of keys.
While negotiating the purchase of the Vehicle from Cars & Co, Ralena negotiated to on-sell it to Porsche Centre Melbourne and to have it delivered to them on or about 16 May 2019. As a result of the present parties’ dispute over title to the Vehicle, the sale of the Vehicle to Porsche Centre Melbourne was ultimately reversed.
On 20 May 2019 Mr Catania emailed the Vehicle’s registration papers to Mr Kalimi.
Because of an enquiry made of them by a further car dealer, on 20 May 2019 Porsche Centre Melbourne contacted Mr Theodossi, raising issues about the Vehicle’s title. The next day Mr Theodossi rang Mr Catania who told him that Mr Kalimi had been assisting him with disposal of the Vehicle with a view to putting the proceeds of sale towards a new car. Mr Theodossi advised Mr Catania that Ralena had bought the Vehicle and taken possession of it. Mr Theodossi also told Mr Catania that he had paid Mr Kalimi before receiving “unsigned NSW registration paperwork”, to quote Mr Catania.
On 28 May 2019, Mr Catania’s solicitors asked Mr Theodossi to return the Vehicle. Additional requests were made on 13 June 2019 and 17 June 2019. On 31 May 2019 Mr Catania sent a text message to Mr Kalimi demanding the return of the Vehicle failing which he would go to the police. Mr Kalimi replied saying that he would return the Vehicle and refund the respondents’ money.
Around May or June 2019, Mr Theodossi offered to release the Vehicle if Mr Kalimi or Mr Catania paid Ralena what it had “incurred in relation to the Vehicle”, that is to say the “full amount”.
On 7 June 2019 Mr Kalimi sent a text message to Mr Catania saying that he would be paying the respondents $45,000 that day. The respondents received $43,000 from a company they did not recognise. Subsequently, a firm purporting to have been appointed “external managers” of Cars & Co asked them to send that money to them for distribution amongst creditors. The respondents continue to hold the $43,000 pending determination of its true owner.
Ralena sold and gave possession of the Vehicle to a retail customer on or about 13 September 2019.
Parties’ positions
In broad terms, Mr Catania’s case is that Mr Kalimi had never been more than a bailee, had not been authorised to sell the Vehicle and could not pass title to Ralena. His contention is that Ralena had consequently never had any right to possession of the Vehicle and on that basis he sought return of the Vehicle, damages for conversion and detinue and removal of the Interest from the PPSR.
The respondents’ position is that Mr Kalimi sold the Vehicle to Ralena pursuant to his actual or ostensible authority to do so and that Ralena acquired title to the Vehicle as a bona fide purchaser for value without notice that Mr Kalimi lacked any necessary authority. They also contend that the claim against Mr Theodossi is misconceived because he had never asserted any personal rights in relation to the Vehicle.
Application to amend the statement of claim.
The matters which Mr Catania seeks to raise by way of amendment and amplification of his claims against the respondents are to the following effect:
a)Mr Kalimi had described himself as a car dealer and possession of the Vehicle was given to him personally rather than to Cars & Co;
b)the Vehicle came into the respondents’ possession on 15 May 2019;
c)although the respondents’ sale of the Vehicle to Porsche Centre Melbourne in May 2019 was reversed they sold the Vehicle to a private customer on 20 September 2019;
d)by reason of:
i)the terms of Mr Kalimi’s bailment; and
ii)s.5(1) of the Factors (Mercantile Agents) Act,
the respondents’ possession of the Vehicle had had no lawful basis;
e)from 28 May 2019 the respondents had been aware of Mr Catania’s entitlement to the Vehicle and, in particular, had been so aware when they sold the Vehicle to the private customer;
f)“Neither of the Respondents, in the circumstances, took possession of the vehicle on 15 May 2020:
(a) in good faith: and
(b)in circumstances where they knew or ought to have known that Kalimi did not have authority to do so”;
because they:
i)had been aware in March 2019 that Mr Catania, who at all times remained the Vehicle’s registered owner, was looking to sell it and so knew that no one else had authority to sell it,
ii)did not enquire whether Mr Kalimi had authority to deal with the Vehicle,
iii)acquired the Vehicle for undervalue only to sell it profitably to the Porsche Centre Melbourne;
g)the sale of the Vehicle to the private customer amounted to conversion in respect of which the respondents are liable to Mr Catania as joint tortfeasors. Mr Theodossi is a joint tortfeasor because he had “represented to third parties that he was the person having dealings and they purported to be able to do so”;
h)further, on 31 May 2019 Mr Kalimi and the respondents agreed that the respondents would return the Vehicle to Mr Kalimi who would refund the sale price. However, Mr Kalimi only made a part payment and the respondents did not return the Vehicle. The sale of the Vehicle to the private customer placed the respondents in a position whereby they were unable to perform their later agreement with Mr Kalimi, causing Mr Catania loss or damage;
i)the respondents have been unjustly enriched by the $43,000 payment which “should have been paid to [Mr Catania] as a result of such unjust enrichment”.
Considerations
Pleadings should disclose the real controversy between the parties and it is often necessary to amend pleadings to achieve that end. However, leave to amend is a discretionary issue. Some discretionary considerations potentially relevant to this application were considered by the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175. Even so, the circumstances of that case were different from those of this case, in large part because the amendments presently proposed, although not timeous, have come while the proceeding is still at an interlocutory stage.
The respondents’ opposition to the application to amend in this case was based on Mr Catania’s failure to apply to amend earlier than he did and on the merits of the proposed amendments.
Delay
Although the respondents submitted that Mr Catania had not provided an explanation for the delay in bringing the application to amend the statement of claim, his counsel explained on 7 September 2020 that the delay had been occasioned by delays in the prosecution of the application for summary dismissal and by relevant information only coming to light once Mr Theodossi’s affidavits in support of that application were served. Whatever the merits of those arguments, it is apparent that the application to amend has been prompted by the respondents’ application for summary dismissal and related concerns regarding possible shortcomings in Mr Catania’s statement of claim. That is not an uncommon circumstance. Although the claim should have been pleaded better from the outset, I do not believe that the application to amend reflects a lack of diligence or needs further explanation.
Further, the circumstances do not suggest that the Court’s business will be disrupted or other litigants inconvenienced should the amendments be allowed at this point. To the extent that the respondents could be inconvenienced by the proposed amendments being allowed, I am satisfied that an order for costs would be sufficient compensation.
Merits
The issue then becomes whether the merits of the proposed amendments are sufficiently great that Mr Catania should be permitted to include them in his pleading.
An amendment would not be permitted if it were likely to be struck out later as lacking reasonable prospects of success: r.13.10 of the Rules; Global Brand Marketing Inc v Cube Footwear Pty Ltd (2005) 66 IPR 19 at 23 [12]. The question is whether the proposed pleading discloses a real question of fact or law that should be decided at trial: Przybylowski v Australian Human Rights Commission (No 2) [2018] FCA 473 at [7]. The parties’ submissions tended to address the merits of the proceeding as a whole, including disputed or presently unclear matters of fact, rather than the merits of the proposed amendments as pleadings. In connection with such concerns, Dawson J said in Commonwealth v Verwayen (1990) 170 CLR 394 at 456:
… In granting leave to amend, a court is concerned with the raising of issues and not with their merits. Of course, an amendment which is futile because it is obviously bad in law will not be allowed. But it is no ground for refusing an amendment that it raises a claim or defence which ought not to succeed. That will be an issue upon trial. (references omitted)
The respondents also submitted that the proposed amendments should not be permitted unless Mr Catania joined Mr Kalimi as a party to the proceeding. They argued that Mr Catania seeks to cast doubt on contractual arrangements entered into by Mr Kalimi without giving him an opportunity to address the rearrangement of those dealings without his involvement. Although Mr Kalimi would seem a person potentially interested in the litigation, the fact is that the claim is in tort not contract. It is not apparent to me that Mr Catania’s claim cannot be determined without the joinder of Mr Kalimi.
However, the respondents’ submissions concerning the allegations against Mr Theodossi had greater merit, in that they argued that the proposed amended statement of claim failed to articulate the basis on which Mr Catania alleged that Mr Theodossi was liable as a joint tortfeasor. That argument involved an assumption as to the roles played by each of the respondents that serves to identify a significant difficulty with the proposed pleading. The respondents’ submissions take no issue with the allegations made against Ralena and proceed on the basis that the company is the more significant of the two respondents on this question, with the consequence, they submit, that the joinder of Mr Theodossi needs to be justified by a clearer pleading. However, it is not clear that Ralena occupied such a position. Proposed para.10D is particularised as follows and suggests that Ralena may not, on Mr Catania’s case, have been the principal actor:
(d)at all times the First Respondent was the controlling mind of the Second Respondent and the person through whom the Second Respondent dealt with others …
The difficulty revealed by the respondents’ submissions is that the proposed pleading does not identify with adequate specificity the respondents’ respective roles in transactions involving the Vehicle. It is not possible to know from the pleading whether one or other of the respondents was the principal actor, and so how the other would also be liable in conversion, or whether there was some other basis for joint liability. The allegation that Mr Theodossi is a joint tortfeasor because he “represented to third parties that he was the person having dealings and they purported to be able to do so”, does not achieve that goal because, quite apart from being obscure of meaning, it identifies no recognised basis for a finding of joint tortious liability.
Further in that connection, it may be that the allegation against Mr Theodossi is based on him having possession of the Vehicle at some point and so having converted the Vehicle by not surrendering it or by transferring it, or allowing it to be transferred, to the private customer. If so, it would be necessary for Mr Catania to show, as a preliminary matter, that Mr Theodossi had had joint possession of the Vehicle at all relevant times. His possession of the Vehicle is alleged in proposed paras.[7] and [10B] but neither of those proposed allegations that the respondents took possession of the Vehicle is supported by particulars, being bald assertions only. In circumstances where Mr Theodossi was plainly a servant or agent of Ralena, the more orthodox inference would be that in his dealings with the Vehicle, he was acting on behalf of Ralena, which seems to be an available interpretation of the particular just quoted, and not in his own behalf. If Mr Catania wishes to pursue the allegation that Mr Theodossi had joint possession of the Vehicle in his own behalf, then some particulars are necessary and they should have been included in the proposed amendments, rather than being left to be sought at a later date.
The point to which the respondents’ submissions fairly draw attention is that the proposed pleading does not make clear how it is said that the respondents are joint tortfeasors.
Another matter of concern is the allegation that, if the ultimate sale of the Vehicle to the private customer is held to have been lawful, the respondents should pay Mr Catania the $43,000 that was paid to them by, apparently, interests associated with Mr Kalimi. The lack of pleading clarity regarding the link between Mr Kalimi and the payer of that sum was correctly identified by the respondents as a reason why this allegation should not be permitted. However, there is also a more fundamental difficulty. Mr Catania wishes to allege that retention by Ralena of the $43,000, in circumstances where it has also received payment from the private customer, would cause it to be unjustly enriched and he is entitled to that sum. However, he has failed to plead facts that engage a law or principle (see Hightime Investments Pty Ltd v Adamus Resources Ltd [2012] WASC 295 at [183]-[185]) that would require Ralena to pay any such windfall to him rather than to, for instance, Mr Kalimi or interests associated with him on the basis of a total failure of consideration for the agreement to rescind the original sale.
CONCLUSION
The proposed amended statement of claim annexed to the 22 September 2020 affidavit of Mr Davies is insufficiently clear in its allegation that the respondents are joint tortfeasors for the proposed amendment to be permitted. Even were the document not deficient in that respect, for the reasons given it would nevertheless be necessary to reject those paragraphs which make a claim to the sum of $43,000.
The application to amend the statement of claim will be dismissed.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Associate:
Date: 28 January 2021
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