China Towing Pty Ltd v Hatzipapa

[2018] NSWDC 345

District Court

New South Wales

Medium Neutral Citation:

China Towing Pty Ltd v Hatzipapa [2018] NSWDC 345

Hearing dates:

13, 14, 15 and 16 November 2018

Date of orders:

23 November 2018

Decision date:

23 November 2018

Jurisdiction:

Civil

Before:

Russell SC DCJ

Decision:

(1)   Judgment for the defendant against the plaintiff for $717.60.
(2)   Order the plaintiff to pay the defendant’s costs of the Notice of Motion filed on 6 July 2018 in the amount of $2,349.60.
(3)   Subject to Order (2) above, order each party to pay its or his own costs of the proceedings.

Catchwords:

EVIDENCE – company secretary and accountant not telling the truth – preparation of false PAYG Payment Summary Statements – figure for wages on Statements selected “to balance the books” – dissembling explanation of that phrase – cash receipts and wages paid in cash not included in profit and loss statements – company evaded its obligation to remit taxation on wages paid to employee to taxation authorities

 

EVIDENCE – company director not telling the truth – director signed false PAYG Payment Summary Statements knowing that employee had been paid much more

 

EVIDENCE – employee not telling the truth – bank statements showed receipt of much more income than disclosed in PAYG Payment Summary Statements – explanations for additional income improbable and rejected – claim for unpaid wages fails

 

TORTS – conversion – three payments from company account to employee’s account made without authority – uncontroverted evidence that payments were made – no evidence provided to explain why employee had entitlement to these monies – case in conversion made out

  WAGES – employee had statutory entitlement to payment for annual holidays – uncontroverted evidence that no holiday pay paid to employee – case for annual holiday payments made out

Legislation Cited:

Annual Holidays Act 1944
Civil Procedure Act 2005

Category:

Principal judgment

Parties:

China Towing Pty Limited (Plaintiff)
Steve Hatzipapa (Defendant)

Representation:

Counsel:
T J Dixon with R Wathukarage (Plaintiff)
K G Bennett (Defendant)

  Solicitors:
Brendan Pigott (Plaintiff)
Theodore Solomon & Partners (Defendant)

File Number(s):

2017/169973

Judgment

1. The resolution of the issues in this case has been extremely difficult, as I have formed the view that none of the witnesses are telling the entire truth.

Background and Pleadings

2. The plaintiff’s claim was first brought in the Supreme Court by a Summons filed on 4 June 2017. The plaintiff operated a tow truck business and the defendant was employed as the driver of the tow truck. The parties fell out in the first half of 2017. The defendant felt aggrieved because he was not brought into the business as a partner. The defendant retained the plaintiff’s tow truck. The Summons filed in the Supreme Court sought an order for the defendant to return the tow truck. There was also an allegation that the defendant had converted $20,000, being the property of the plaintiff, to his own use. Damages were sought for this conversion.

3. After the Summons was served upon the defendant, the defendant arranged to return the tow truck to the possession of the plaintiff. This was noted by the Supreme Court, which then transferred the hearing of the balance of the claim to this court.

4. In the District Court the plaintiff filed a Statement of Claim on 23 October 2017. That pleading acknowledged that the defendant made the tow truck available for collection by the plaintiff on 6 June 2017. The Statement of Claim also alleged that certain chattels which were in the possession of the defendant were not returned to the plaintiff. At the hearing the plaintiff abandoned most of that claim, but still sought the return of work diaries and three of the plaintiff’s invoice books. Finally, the Statement of Claim alleged that the plaintiff had enabled the defendant to access the plaintiff’s ANZ Bank account for the purpose of carrying out his duties as an employee of the plaintiff. The pleading alleged that the defendant made the following unauthorised withdrawals from the account and retained the monies wrongfully:

1. $8,000 on 24 January 2017

2. $5,000 on 2 March 2017

3. $5,000 on 23 March 2017

4. $1,200 on 19 April 2017

5. The defendant filed a Defence on 2 March 2018. By paragraph 1 of the Defence the defendant alleged that he had an equitable interest in the tow truck. However, no relief was sought in that regard and that claim was not pursued at trial.

6. The defendant pleaded that he remained as an employed tow truck driver up until June 2017 and that he had the plaintiff’s authority to use the tow truck until about 8 May 2017. The defendant alleged that he had done work for the plaintiff in that period and he provided particulars of three jobs done for the plaintiff in April 2017, the last of which was on 18 April 2017.

7. In relation to the retained property which the plaintiff claimed at trial, the defendant said that the work diaries were left in the possession of the plaintiff by the defendant, and that the plaintiff had already collected the three invoice books by arrangement on 9 June 2017.

8. Finally, the defendant pleaded that he had authority to withdraw the four amounts from the plaintiff’s account, asserting that they were “amounts owed to him by the plaintiff for wages, business expenses and for monies paid by the defendant on behalf of the plaintiff in the form of short term loans”.

9. The defendant filed a cross-claim at the same time. This was later amended, but only to vary the amount sought for superannuation. The defendant’s cross-claim pleaded that he was employed by the plaintiff as a tow truck driver and manager for the plaintiff’s tow truck business. His weekly salary was said to be $1,200 “after all statutory deductions”. He pleaded an entitlement to four weeks annual leave, superannuation, sick leave and termination notice.

10. The defendant alleged that he was entitled to $1,200 nett per week from 1 January 2014 to 9 June 2017, being 178 weeks and a total of $213,600. He acknowledged that the defendant had paid $56,000, so his claim was for $157,600 in wages, and superannuation upon that amount of $27,436.34. The superannuation claim was not pursued at the trial.

11. By its Defence to the Amended Cross-Claim, the plaintiff accepted that the defendant was an employee but denied the alleged weekly wage. However, the Defence to the Amended Cross-Claim did not say what wage had been agreed upon between the parties. The plaintiff admitted that annual leave was a statutory entitlement of the defendant. The Defence to the Amended Cross-Claim was verified by the affidavit of Mr Yongfeng Guo, the sole director of the plaintiff company. Mr Guo is also known as Michael Guo.

12. Before examining the oral evidence of the witnesses, it is necessary to refer to some assertions made in correspondence written by the solicitors for the parties. This correspondence was annexed to the affidavit of Mr Guo (PX1).

13. By a letter dated 28 April 2017, Mr Nolan, solicitor for the defendant, wrote to Mr Guo. The letter was headed “partnership and ownership of tow truck registration number 7751 TT”. The letter contained the following paragraphs:

“Mr Hatzipapa has advised us that you have severed the partnership that has existed between the two of you, which we are told existed for the past three years.

We are instructed that both yourself and our client purchased the tow truck described above and that it has been used in the business. Our client has been, we are advised, the only person at the business with the appropriate license [sic] needed to drive it. We further understand that our client has been paying you weekly amounts out of his earnings, to repay any amount originally outlaid by you for the initial payment of the said vehicle.”

14. The letter went on to make an offer to purchase a half share in the vehicle for $30,000, which would then give Mr Hatzipapa a full interest in the vehicle.

15. It is to be noted that this letter, which pre-dated the allegations in the pleadings by some months, made no assertion about a failure to pay a large amount in wages. Instead, it described the relationship between the parties as one of partnership. An assertion was made in the letter that the defendant had been paying to the plaintiff “weekly amounts out of his earnings”. The only income which the plaintiff had between 1 January 2014 and the date of that letter was his earnings as a tow truck driver.

16. The response was a letter from the solicitor for the plaintiff dated 8 May 2017. The factual allegations raised in the letter of 28 April 2017 were denied. The solicitor for the plaintiff said that he was instructed that the defendant “has always been an employee of China Towing Pty Ltd”. It was denied that the defendant had any legal or equitable interest in the tow truck. The letter denied that the defendant had paid anything towards the purchase price of the tow truck. The letter made a demand for return of the tow truck and indicated that legal proceedings would be brought unless it was returned. Such legal proceedings were eventually brought in the Supreme Court.

17. Against the background of that summary of the pleadings and that pre-litigation correspondence, I will review the evidence given by the witnesses.

Evidence of Hong Lin

18. Ms Hong Lin is the wife of Mr Guo and the company secretary of the plaintiff. She is a qualified accountant. Her job involved bookkeeping for the plaintiff’s business, including bank reconciliations.

19. Ms Lin provided the funds from her personal account to assist in the purchase of the tow truck. On a number of occasions between 2013 and 2016, the defendant said to her that he should be made a partner with Michael in the towing business.

20. In paragraph 8 of her affidavit (PX2) she said:

“Throughout the time that the defendant worked with the plaintiff, the defendant would provide me with some figures about cash income. He would purport to account for his weekly salary which was initially $1,000 then later it went up to $1,200 and sometimes $1,500. These figures were written on the back of a calendar and the defendant said to me ‘these figures are accurate and are from my diary’. He always had a work diary with him which was a page-at-a-day diary and on a few occasions he showed me pages in his diary which contained records and neat handwriting. I was never given this diary to check and the defendant always had it in his possession.”

21. In the course of her oral evidence a spreadsheet prepared by Ms Lin was tendered (PX3). She gave evidence that this document was prepared by her in about July or August 2016 when the plaintiff showed her a list of figures written on the back of a calendar which recorded the cash takings received by the defendant week by week. Ms Lin gave evidence that the plaintiff received business income from two sources. From insurers paying for towing services, the plaintiff received money by cheque or by electronic funds transfer. These credits went into the ANZ account conducted by the plaintiff. Ms Lin referred to these receipts as “non-cash income”. The receipts in cash were payments made by clients direct to the defendant. Ms Lin referred to these as “cash income” and also referred to such payments as “not on the books”.

22. PX3 was the spreadsheet created by Ms Lin when the defendant showed her his cash income recorded on the back of a calendar. Ms Lin set out in PX3 a series of dates, each a week apart, a column recording the cash received and a column recording an amount paid by the defendant to himself each week, from the cash income, as his wages. Ms Lin gave evidence, later corroborated by her husband Mr Guo, that after the defendant paid himself each week in cash from the cash receipts, the balance of the cash was handed to Mr Guo.

23. While the defendant was employed from the start of 2014 onwards, the first page of the spreadsheet only covers the second half of that calendar year being 1 July 2014 to 28 December 2014. The second page covers the first half of calendar year 2015. Added together, the figures thus represent the cash receipts of the business for the financial year 2014/2015. The total cash received was $82,687. From this, Ms Lin said that the defendant paid himself $55,580. On the second page of her spreadsheet she worked out that on average per week there was cash of $1,590, of which the defendant received an average of $1,069 and her husband Mr Guo received an average of $521 per week.

24. A similar exercise was conducted for the 2015/2016 financial year, and it was recorded by Ms Lin on the third and fourth pages of PX3. On her spreadsheet the defendant was recorded as having received cash wages of $63,170, or an average of $1,239 per week. The cash “left over” after the defendant paid himself, totalled $26,440, which was an average of $518 per week. This is the money which she understood the defendant had handed to her husband week by week.

25. Through Ms Lin there was also tendered as PX4 a series of profit and loss statements for the plaintiff. The profit and loss statement for July 2013 to June 2014 recorded income from towing of $19,189. This amount did not include the cash income but was only the non-cash amount banked into the ANZ account. For that year wages and salaries were said to be $8,500. The only employee of the business who was paid a wage that year, according to Ms Lin, was the defendant.

26. For the 2014/2015 tax year income from towing was said to be $53,638.48. Once again this was only non-cash income and the cash income was not recorded in the profit and loss statement. The wages and salaries for that year were said to be $20,500.

27. For the 2015/2016 financial year the towing income in the profit and loss statement was $50,623.59. This was only non-cash income and the cash income was not recorded in the profit and loss statement. Wages for that year for “Steve”, meaning the defendant, were $15,000.

28. For the 2016/2017 tax year the profit and loss statement showed income of $47,328.17, which was all non-cash income. The wages for “Steve” were recorded as nil.

29. The figures for wages recorded in the profit and loss statements were reflected in PAYG Payment Summary Statements which were put into evidence as Annexure “D” to the affidavit of the defendant (DX1). Ms Lin gave some evidence about these PAYG Payment Summary Statements.

30. For the year ended 30 June 2014 the PAYG Payment Summary Statement for the defendant recorded wages of $8,500 with no tax deducted. This statement was prepared by Ms Lin and was signed by Mr Guo to declare that the information given on the form was complete and correct. For the 2015 financial year, the statement prepared by Ms Lin recorded gross wages of $20,500 paid to the defendant, with no tax deducted. Once again Mr Guo signed the statement to indicate that it was complete and correct. For the 2016 financial year the statement prepared by Ms Lin recorded wages of $15,000 paid to the defendant, with no tax deducted. Mr Guo again declared by his signature that the information on the form was complete and correct. There was no 2017 PAYG Payment Summary Statement given by the plaintiff to the defendant.

31. Ms Lin was asked in-chief why it was that in the 2014 tax year the PAYG Payment Summary Statement and the profit and loss statement showed only income of $8,500. I formed the view that her evidence on this topic was not only vague and dissembling, but was also untruthful.

32. In her evidence-in-chief Ms Lin said that she selected the figure of $8,500 “to balance the books”. She offered no explanation of what this meant. However, when asked later what she had meant by that explanation, she did not provide a cogent explanation, over and above suggesting that the figure was selected because it somehow was an appropriate figure having regard to the non-cash income recorded in the profit and loss statement. When asked in cross-examination why she had not put the cash paid to the defendant on the PAYG Payment Summary, she said that at the time of creating that document, she wanted it to be accurate because she was an accountant by training, and that she did not have enough information to enable her to put an accurate figure on the document. How that provides an explanation for the figure of $8,500 was not apparent to the court. At the very least, when Ms Lin prepared the figure to be inserted in the 2014 PAYG Payment Summary, on her own evidence she knew that the defendant was being paid cash, which he took out of the cash takings of the business. The figure of $8,500, on her explanation, was not an accurate figure, and was simply selected by her. It was not a figure she obtained from any wage records, or bank statements. There was no document that recorded a payment of $8,500 in total to the defendant, apart from the figure which Ms Lin selected to somehow “balance the books”.

33. I make the same credit findings in relation to the subsequent figures of $20,500 and $15,000 which appear in the 2015 and 2016 PAYG Payment Summary Statements. Those figures, on the evidence of Ms Lin, bore no relation to the reality. By August 2016, at the latest, Ms Lin said that she had sat down with the defendant and obtained his cash receipt figures, including the amounts paid to him in cash. Both Ms Lin and Mr Guo said that, all along, the defendant was paid in cash.

34. Ms Lin made no attempt to issue amended PAYG Payment Summary Statements, or to amend the profit and loss statements. Indeed, the profit and loss statements presented in evidence in PX4, had still not been amended to reflect either the cash income received by the business year by year, or the cash payments of wages paid to the defendant year by year. No explanation was provided as to why the profit and loss statements were still wildly inaccurate.

35. I find that Ms Lin was not truthful in creating the PAYG Payment Summary Statements and the profit and loss statements. I find that this business was receiving a significant income each year in cash, and that the plaintiff company did not: include that cash income in its accounts; issue accurate PAYG Payment Summary Statements to its employee the defendant; make any deduction of tax from the income it paid to the defendant; or remit such tax which it was obliged to deduct from wages to the Australian Taxation Office. I cannot rely on anything said by Ms Lin.

Evidence of Mr Yongfeng Guo

36. Mr Guo swore an affidavit filed in the Supreme Court on 6 June 2017. He is the sole director of the plaintiff. In late 2013 the defendant came to the plaintiff and told him that he had been working for another towing company. The defendant suggested that a tow truck could be bought which the defendant would drive. Mr Guo incorporated China Towing Pty Ltd. Mr Guo and the defendant made searches for a suitable truck and eventually found one which was purchased for $79,500. The funds for this purchase came from Mr Guo’s wife Ms Lin. The tow truck was registered in the name of the plaintiff.

37. Mr Guo arranged for the defendant to operate the plaintiff’s bank account by using online banking. The defendant was provided with a debit card on the plaintiff’s ANZ account so that he could pay incidental expenses from the towing business, such as diesel fuel. Mr Guo said in his affidavit:

“He also was paid $1,000 per week which increased to $1,200 per week”.

38. In his affidavit Mr Guo said that during 2016 the defendant started discussing becoming a partner. Mr Guo pointed out that the defendant would need to pay for a share of the partnership as he was not going to give it to the defendant for free. Mr Guo said that he was not interested in becoming a partner with the defendant, but that he would sell the business to him for the right price.

39. Mr Guo’s affidavit deposes that in January 2017 the defendant said that he was going to leave and wanted to set up his own towing business. The defendant registered the business name “China Towing Service” on 20 February 2017. In March 2017 there was an argument between Mr Guo and the defendant about an alleged overcharge for one particular job.

38. On 28 April 2017 the solicitor for the defendant wrote to Mr Guo offering to purchase a half share in the vehicle for $30,000. That letter is referred to above.

39. On 8 May 2017 the solicitor for the plaintiff responded to the letter of 28 April 2017. That letter is summarised above. By this time the defendant had taken the tow truck and was not returning it. That resulted in the Supreme Court action which led to the return of the tow truck by the defendant to the plaintiff.

40. In cross-examination of Mr Guo a large number of printouts were tendered from a messaging service call WeChat, used by Mr Guo to communicate with the defendant. These printouts show that Mr Guo gave many instructions to the defendant to attend towing jobs in early 2017. There are nine messages in January 2017, seven messages in February 2017, four messages in March 2017 and two messages in April 2017. These April messages are dated 20 April 2017 and 21 April 2017.

41. In cross-examination Mr Guo said that the defendant would collect cash directly from customers. At the end of every week the defendant paid himself out of this cash and gave any “leftover cash” to Mr Guo. This happened every week when the defendant handed over the leftover money.

42. Mr Guo was shown the PAYG Payment Summary Statements. He asserted that the figure of $8,500 in the 2014 PAYG Payment Summary Statement was not correct. He said he did not know how much the defendant was paid. This is hard to reconcile with the statement in his affidavit that the plaintiff was paid $1,000 per week which later rose to $1,200 per week. At the very least, Mr Guo must have known, when he signed each PAYG Payment Summary, that the figure was incorrect and bore no relation to what he understood the plaintiff had been paid, both according to their agreement and according to the arrangement in practice by which the plaintiff paid himself out of the cash takings of the towing business.

43. I find that Mr Guo was being untruthful in signing the PAYG Payment Summary Statements. They were not true and correct. To his knowledge they significantly understated the wages paid by the plaintiff to the defendant. I cannot rely on anything said by Mr Guo.

Evidence of Mr Hatzipapa

46. In his affidavit (DX 1) Mr Hatzipapa gave evidence about initial conversations concerning purchase of the tow truck. He had the impression that he would become either a partner or a part owner in the business of the tow truck. This impression was no doubt reinforced by certain documents given to him which were annexures A, B and C to his affidavit. Annexure “A” was a letter from Ms Lin addressed “To whom it may concern”. She stated that the wages for the driver were $250 per day and that the average daily tow truck revenue was $500 in total (i.e. the wages of $250 plus income of $250).

47. Annexure “B” is a letter dated 14 April 2015 from Mr Guo to the Presiding Magistrate at Kogarah Local Court in relation to a minor criminal offence faced by Mr Hatzipapa. Mr Guo said:

“I have known Steve Hatzipapa for a period of approximately three years and during that time we became partners in China Towing Pty Ltd because of his honesty, trustworthiness and professional approach in business.

During this time, I have found that Steve’s character can only be described as courteous, friendly and extremely professional.

He is always on the lookout for new business opportunities in our relationship in an effort to build our business and to succeed in the aim of our partnership.”

48. Annexure “C” is a letter dated 14 April 2015 addressed to the Presiding Magistrate at Kogarah Local Court in relation to what appears to be a demurrage claim in relation to damage to the tow truck. It is signed “Michael Guo Partner” and “Steve Hatzipapa Partner”.

49. Nevertheless, no formal partnership agreement was ever entered into and Mr Guo remained the sole director of the plaintiff company.

50. I find that there were discussions regarding an eventual partnership being offered to Mr Hatzipapa, but that it never came to pass. Those initial discussions, and the correspondence referred to above, no doubt gave Mr Hatzipapa a sense of grievance when in 2016 and 2017 he raised the question of partnership with Mr Guo. That is relevant to how Mr Hatzipapa framed his claim in these proceedings. This is dealt with below.

51. In his affidavit Mr Hatzipapa referred to the three PAYG Statements referred to above. He annexed copies to his affidavit. He said in his affidavit (at para 47) that he was not paid the agreed amount of $1,000 per week, which was to increase to $1,200 per week. He also says in his affidavit (para 53) that the amount of money he estimates he is owed by the plaintiff for past wages is $157,600. He got to this figure by calculating $1,200 per week from 1 January 2014 to 9 June 2017, and deducting the three amounts in the PAYG Statements of $8,500, $20,500 and $15,000. His calculations are set out in his affidavit in paragraphs 48-53.

52. Mr Hatzipapa said in his affidavit that he sometimes received cash from customers which he either deposited into the plaintiff’s ANZ account or which he gave directly to Mr Guo or his wife Ms Lin.

53. Mr Hatzipapa gave evidence about a settlement of $35,900 which was received from litigation involving damage to the tow truck. He paid this amount into his own account. He says that this was at the direction of Mr Guo. He then withdrew the money from his account and paid it, within a relatively short period, back to China Towing Pty Limited. No claim was made in relation to the receipt of these funds, and their prompt repayment meant that no claim could be made. It was submitted that somehow receiving this settlement into his own account reflected badly on the credit of Mr Hatzipapa. I reject that submission. Mr Hatzipapa was the manager of the business and was entitled to deal with that money as he saw fit, subject to accounting to the plaintiff for the money. He gave such an accounting. Further, he says that he paid the money into his own account at the direction of Mr Guo. The evidence shows that many payments which should have gone directly into the company account were made either to Mr Hatzipapa or to Mr Guo personally.

54. In relation to the amounts which the plaintiff claimed had been converted by Mr Hatzipapa, he said that in 2017 he had conversations with Mr Guo advising him that he was taking some money from the business because he was owed that money. How he was owed those amounts was never explained in detail in the affidavit. He did say in paragraph 75:

“When Mr Guo had recouped all of his investment, I believed that I would then be paid the monies that were owed to me for working without full pay and also for my involvement as a partner, as then, I believed I was.”

55. Mr Hatzipapa denied retaining any of the chattels or documents of the plaintiff business.

56. In relation to the notion of partnership versus employment, Mr Hatzipapa said at paragraphs 110-112 of his affidavit:

“110. After receiving the responses from the plaintiff and Mr Guo in these proceedings, I now accept that I was never a partner of the company known as China Towing Pty Ltd. I accepted this on the 9 June 2017, when I enabled the tow truck and several items to be given back to the plaintiff.

111. In any of the communications received from the plaintiff, I have never been told that I have been dismissed as an employee.

112. I now know that I was always an employee.”

57. In his oral evidence in-chief Mr Hatzipapa said that if he received cash he gave it to Mr Guo or Ms Lin. He said that any money received by EFT went into the business account (ANZ) or into his own account. Anything without a receipt went into his own account. Anything with a receipt went into the China Towing ANZ account. He said that anything which went into his account was classified as his wage. He recorded this in the Collins diaries, which were kept in an archive box in the back of the office with all of the other documentary information about the tow truck. The 2017 diary was kept on his desk in the office.

58. He said that the PAYG Statements were all true and that this was all of the money he was ever paid as an employee.

59. The defendant was required by a Notice To Produce to produce the bank statements for his own personal NAB account. He produced many, but not all, of the NAB statements.

60. The evidence showed that the incomplete NAB statements disclosed the following deposits to the defendant’s personal bank account between 2 July 2014 and 1 July 2015:

(a) Cash payments	$1,600
(b) EFT	$750
(c) Cheque payments	$1,300
Total	$3,470

61. The NAB statements showed that for the period between 2 July 2015 and 1 July 2016 the following deposits were made to the account:

(a) Cash payments	$20,400
(b) EFT	$3,840
(c) Cheque payments	$2,000
Total	$26,240

62. This was only for nine months of the financial year, as the statements for November 2015, May 2016 and June 2016 were missing.

63. The NAB statements showed that for the period between 14 July 2016 and 16 June 2017 the following deposits were made to the defendant’s personal account:

(a) Cash payments	$14,076.91
(b) EFT	$17,392.05
(c) Cheque payments	$100.00
Total	$31,884.10

64. For this financial year the statements missing were 1-14 July 2016, 7 October-18 November 2016, and 4-14 May 2017.

65. The defendant was cross-examined about the difference between the deposits made to his account and the figures in the PAYG Statements. He provided several explanations, none of which I accept. Firstly, he said that he had his own cash resources being savings from previous jobs, and from time to time he would take cash money from home and go and deposit it in the bank. Why he was doing this several years after he earned that money was not satisfactorily explained. The defendant said that he was attempting to create a good savings record in case he wanted to apply for a home loan. There was no suggestion that he was in a position to make such application. Further, it really defies common sense for money to be kept in cash for many years, not earning interest, and then for it to be deposited into a personal bank account.

66. Secondly, the defendant said that from time to time he played the poker machines and some of this money might have come from winnings. However, he said that he also had losses on poker machines, and I do not accept that the additional monies deposited in the NAB, over and above what is recorded in the PAYG Statements as his income, was money which came from poker machine winnings.

67. Thirdly, the defendant was cross-examined as to how, if the PAYG Statements were correct, he supported himself. The bank statements disclosed that there was a regular direct debit from the NAB bank account for $320 per week (reducing later to $300 per week) for rent. The defendant was a single man and the tow truck work was his only source of income at the relevant time. He had to feed himself, clothe himself, entertain himself, and transport himself in that time.

68. I find that the defendant was being paid cash for his wages by the plaintiff company. The defendant himself said this in his oral evidence-in-chief. That oral evidence-in-chief was contradicted by his assertion that all he was paid was what was in the PAYG Statements.

69. I find that the defendant had a sense of grievance in early 2017, when he thought the tow truck had been paid off and he wanted to become a partner in the business, but Mr Guo declined his request. He kept the tow truck because he thought that he was in effect a part owner of it. When a dispute arose about the right to possession of the tow truck, the assertion made on the instructions of Mr Hatzipapa, by his solicitor, was that he was a partner in the business and a part owner of the tow truck. There was no assertion made at that time, that the defendant had been an employee who was owed over $150,000 in wages.

70. I find that the defendant opportunistically, upon realising that he was better off asserting that he was an employee, decided to deliberately misstate how much he had been paid in cash for wages, by making the assertion that the PAYG Statements were true and correct. Having regard to the deposits made into his personal account, and having regard to the fact that he would have needed money to live on over and above the artificial figures set out in each PAYG Statement, I find that he was paid substantially in accordance with the arrangement between the plaintiff and the defendant, which was that he would receive $1,200 per week nett of tax.

71. I make that finding about tax, because the obligation to deduct any tax from wages, even those paid in cash, falls upon the employer. The plaintiff made no deductions from wages to pay tax, even though that was its statutory obligation. An employer cannot put money in the hands of an employee and then tell that employee to, in effect, pay their own tax out of such wage.

72. Ms Lin attempted to say at one stage that she always thought that the defendant should have been a contractor and given her a tax invoice. I regarded this answer as untruthful and the last refuge of the desperate. That suggestion had never been made before Ms Lin concocted it in the witness box to provide yet another untruthful explanation for the false PAYG Statements.

73. The evidence does not enable me to say how much the defendant was paid in cash for his wages. He may have been paid all of his wages, or he may have been short paid. He may have taken more than he should. I simply cannot make a finding on that on the evidence.

74. I regard the plaintiff as a witness who gave evidence which was untrue, when he asserted that the only money he was paid for wages was that set out in the PAYG Statements. Clearly, just from an analysis of his bank statements, he was paid a lot more than that. The defendant bears the onus of proving, on his Amended Cross-Claim, that he was not paid his full wage. He has not called evidence which I can accept, to make a finding in his favour on that issue.

Disposition of the plaintiff’s Statement of Claim

75. I find that the defendant did make the four payments from the ANZ account of the plaintiff, to himself, which are set out in the Statement of Claim and referred to above.

76. I find that there is no evidence that the defendant was owed the first three amounts of money or that he had any entitlement to these funds.

77. He made these transfers to himself at a time when his relationship with Mr Guo was becoming difficult, and he had a sense of grievance and disappointment that he had not been made a partner, as he understood he had been promised.

78. I am satisfied that he was entitled to the fourth payment which was $1,200 on 19 April 2017. Firstly, $1,200 was his weekly wage. Secondly, he did work in that week, as evidenced in the invoices and the WeChat messages. Thirdly, he described the payment as “wages” in the internet banking transfer.

79. I am not satisfied that he was owed any other money for unpaid wages or that he had advanced any monies to the business, which had not by that stage been paid back.

80. The defendant made no attempt to establish that he was entitled to any of the first three payments, by producing evidence, for example, by identifying loans he made to the plaintiff. I cannot rely upon the evidence of the defendant, let alone his vague assertions that this was money owed to him by the business.

81. There will therefore be a finding that the plaintiff is entitled against the defendant to damages for the following payments made without authority:

(a) 24 January 2017	$8,000
(b) 2 March 2017	$5,000
(c) 23 March 2017	$5,000
Total	$18,000

82. The plaintiff is entitled to interest at court rates in relation to these payments. The calculation of interest is set out in the tables below.

83. (a)

Start Date	End Date	Days	Rate	Amount Per Day	Total
24/Jan/2017	30/Jun/2017	158	5.5%	$1.2055	$190.47
01/Jul/2017	31/Dec/2017	184	5.5%	$1.2055	$221.81
01/Jan/2018	30/Jun/2018	181	5.5%	$1.2055	$218.19
01/Jul/2018	23/Nov/2018	146	5.5%	$1.2055	$176.00
Total	669	$806.47

84. (b)

Start Date	End Date	Days	Rate	Amount Per Day	Total
02/Mar/2017	30/Jun/2017	121	5.5%	$1.2055	$145.86
01/Jul/2017	31/Dec/2017	184	5.5%	$1.2055	$221.81
01/Jan/2018	30/Jun/2018	181	5.5%	$1.2055	$218.19
01/Jul/2018	23/Nov/2018	146	5.5%	$1.2055	$176.00
Total	632	$761.86

85. (c)

Start Date	End Date	Days	Rate	Amount Per Day	Total
23/Mar/2017	30/Jun/2017	100	5.5%	$0.7534	$75.34
01/Jul/2017	31/Dec/2017	184	5.5%	$0.7534	$138.63
01/Jan/2018	30/Jun/2018	181	5.5%	$0.7534	$136.37
01/Jul/2018	23/Nov/2018	146	5.5%	$0.7534	$110.00
Total	611	$460.34

86. The total interest is $2,028.67.

87. The plaintiff is entitled to a judgment on its claim for $18,000 + $2,028.67 = $20,028.67.

88. I am not satisfied that the defendant has retained the work diaries and the three invoice books sought in paragraph 6 of the Statement of Claim. I do not accept the evidence given for the plaintiff that sufficient searches have been made for those documents. There is no evidence that I accept that the defendant has retained the documents.

89. If the defendant had retained, for example, the 2014 work diary, in which company information was recorded, it would be astounding if Ms Lin, a qualified accountant, had not obtained that book many years ago. The same applies to the subsequent work diaries. This part of the plaintiff’s claim fails.

Disposition of the Cross-Claim

90. For reasons earlier set out the claim for past wages fails. I have already found that the defendant was paid a lot more than the artificial amounts set out in the PAYG Statements, and that his evidence as to non-payment of wages cannot be accepted.

91. However, in paragraph 1(d) of the Amended Cross-Claim, the defendant claimed damages for non-payment of four weeks annual leave in accordance with the Annual Holidays Act 1944. The plaintiff admitted in its Defence to the Amended Cross-Claim, that this was a statutory entitlement of the defendant.

92. The defendant said that he never took holidays, as he was always on-call. One page of the spreadsheet Exhibit PX3 purports to show that there was little or no work done over one Christmas, but I have not accepted the accuracy of that spreadsheet, nor the circumstances in which Ms Lin said it was created. The plaintiff’s called no evidence to show that they had ever provided annual holidays for the defendant or paid him for them.

93. I find that this part of the Amended Cross-Claim is the only head of damages upon which the defendant succeeds. He will be entitled to four weeks annual leave for his work between 1 January 2014 and 19 April 2017, which I find is the last day of his employment. There is no evidence that he did any work at all for the plaintiff after that date.

94. The calculation of that past annual leave is as follows:

(a) 1 January 2014 to 1 January 2015 - $1,000 x 4	$4,000
(b) 1 January 2015 to 1 January 2016 - $1,200 x 4	$4,800
(c) 1 January 2016 to 1 January 2017 - $1,200 x 4	$4,800
(d) 1 January 2017 to 19 April 2017 - $1,200 x 3.8	$4,560
Total	$18,160

95. Interest upon those amounts is set out in the following tables:

96. (a)

Start Date	End Date	Days	Rate	Amount Per Day	Total
01/Jan/2015	30/Jun/2015	181	6.5%	$0.7123	$128.93
01/Jul/2015	31/Dec/2015	184	6%	$0.6575	$120.99
01/Jan/2016	30/Jun/2016	182	6%	$0.6557	$119.34
01/Jul/2016	31/Dec/2016	184	5.75%	$0.6284	$115.63
01/Jan/2017	30/Jun/2017	181	5.5%	$0.6027	$109.10
01/Jul/2017	31/Dec/2017	184	5.5%	$0.6027	$110.90
01/Jan/2018	30/Jun/2018	181	5.5%	$0.6027	$109.10
01/Jul/2018	23/Nov/2018	146	5.5%	$0.6027	$88.00
Total	1423	$901.99

97. (b)

Start Date	End Date	Days	Rate	Amount Per Day	Total
01/Jan/2016	30/Jun/2016	182	6%	$0.7869	$143.21
01/Jul/2016	31/Dec/2016	184	5.75%	$0.7541	$138.75
01/Jan/2017	30/Jun/2017	181	5.5%	$0.7233	$130.92
01/Jul/2017	31/Dec/2017	184	5.5%	$0.7233	$133.08
01/Jan/2018	30/Jun/2018	181	5.5%	$0.7233	$130.92
01/Jul/2018	23/Nov/2018	146	5.5%	$0.7233	$105.60
Total	1058	$782.48

98. (c)

Start Date	End Date	Days	Rate	Amount Per Day	Total
01/Jan/2017	30/Jun/2017	181	5.5%	$0.7233	$130.92
01/Jul/2017	31/Dec/2017	184	5.5%	$0.7233	$133.08
01/Jan/2018	30/Jun/2018	181	5.5%	$0.7233	$130.92
01/Jul/2018	23/Nov/2018	146	5.5%	$0.7233	$105.60
Total	692	$500.52

99. (d)

Start Date	End Date	Days	Rate	Amount Per Day	Total
19/Apr/2017	30/Jun/2017	73	5.5%	$0.6871	$50.16
01/Jul/2017	31/Dec/2017	184	5.5%	$0.6871	$126.43
01/Jan/2018	30/Jun/2018	181	5.5%	$0.6871	$124.37
01/Jul/2018	23/Nov/2018	146	5.5%	$0.6871	$100.32
Total	584	$401.28

100. The total interest is $2,586.27. The defendant is entitled to a judgment on his Amended Cross-Claim for $18,160 + $2,586.27 = $20,746.27.

Section 90 Civil Procedure Act 2005

101. In the end result the plaintiff is entitled to a judgment against the defendant for $20,028.67. The defendant is entitled to a judgment against the plaintiff for $20,746.27. The difference between those two amounts is $717.60, which difference is in favour of the defendant.

102. Section 90 of the Civil Procedure Act 2005 provides:

1. The court is, at or after trial or otherwise as the nature of the case requires, to give such judgment or make such order as the nature of the case requires.

2. If there is a claim by a plaintiff and a cross-claim by a defendant, the court:

1. may give judgment for the balance only of the sums awarded on the respective claims, or

2. may give judgment in respect of each claim,

3. and may give judgment similarly where several claims arise between plaintiffs, defendants and other parties.

103. This is an appropriate case to make an order under s 90(2)(a). There would be no utility or purpose in giving separate judgments for the full amounts found. There will be a judgment in favour of the defendant against the plaintiff for $717.60.

Costs

104. The plaintiff has succeeded and the defendant has succeeded. As it happens, their two successes almost balance each other out. If costs were to follow the event, I would order the defendant to pay the plaintiff’s costs, and the plaintiff to pay the defendant’s costs.

105. Most of the time at the hearing was taken up with the defendant’s claim for unpaid wages, which is a claim that has failed. A key reason for that failure was the cross-examination of the defendant upon his NAB bank statements, which showed much larger deposits than the figures set out in the false PAYG Statements. That cross-examination only succeeded because counsel for the plaintiff was astute enough to require the defendant to produce his NAB bank statements. That only happened during the hearing. Indeed, the state of preparation of the plaintiff’s case was less than satisfactory in many regards.

106. As was stated at the outset of this judgment, and many times throughout it, none of the three witnesses could be believed on their oath.

107. I find that the appropriate order for costs is an order that each party pay its or his own costs of the proceedings, save for the specific costs dealt with below.

Costs of the Defendant’s Motion filed on 6 July 2018

108. The defendant filed a Notice of Motion on 6 July 2018 seeking orders that the plaintiff’s Statement of Claim be struck out, that the Defence to the Cross-Claim be struck out and that there be judgment for the defendant on his Cross-Claim. The motion was supported by a number of very detailed affidavits by the defendant’s solicitor Mr Nolan. Put shortly, the plaintiff failed time after time to comply with court directions, thereby delaying the proceedings and adding to expense. The motion sought a strike out on the basis of lack of due despatch on the part of the plaintiff.

109. Those affidavits establish that allegation. Had the matter been dealt with at an interlocutory stage, serious consideration would have been given by any court to striking out the Statement of Claim and the Defence to the Cross-Claim. However, the Judicial Registrar on 19 July 2018 set the matter down for hearing for three days, made directions about the service of evidence and stood the motion over to the trial.

110. I embarked upon a hearing on the merits, since the matter had been allocated a three day hearing. I indicated to both counsel at the commencement of the trial that I would deal with the costs of the motion as part of the judgment in the overall case.

111. The defendant’s solicitor gave evidence that the lump sum costs sought in relation to the motion were in the amount of $2,349.60.

112. The only surprising thing about that figure is that it is so low. There was no dissent from this proposition. This is an appropriate case for a lump sum costs order for the amount sought by the defendant, to be made. I will order that the plaintiff pay the defendant’s costs of the Notice of Motion filed on 6 July 2018 in the amount of $2,349.60.

Conclusion

113. My orders are:

1. Judgment for the defendant against the plaintiff for $717.60.

2. Order the plaintiff to pay the defendant’s costs of the Notice of Motion filed on 6 July 2018 in the amount of $2,349.60.

3. Subject to Order (2) above, order each party to pay its or his own costs of the proceedings.

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Decision last updated: 23 November 2018