Drivas v Cooper - [2004] SASC 162

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
DRIVAS v COOPER
Judgment of The Honourable Justice Perry
9 June 2004
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS
The appellants subcontracted to a builder for the fabrication and installation of doors and windows in a house under construction - the builder became bankrupt before the work was finished - the appellants removed the doors and windows which had by then been installed and retained them - later, the appellants negotiated with the respondent, the building owner, for the return of the items seized and the completion of the work, as to which the respondent made a down payment of $5,000 - in an action in the Magistrates Court by the appellants claiming a balance of $8,000 which they asserted to be due on the completion of the work, the magistrate held that the $5,000 was paid on a consideration which had wholly failed and ordered its repayment, together with damages for trespass and other amounts - held on appeal that there was no basis in the evidence for the conclusions reached by the magistrate - the appellants were entitled to the $5,000, together with the $8,000 due for the completion of the work, less some minor adjustments - appeal allowed.

DRIVAS v COOPER
[2004] SASC 162

PERRY J. This is an appeal by the appellants, George and Anastasia Drivas, who were the plaintiffs in the court below, from the dismissal of their claim following a trial before a magistrate sitting in the Civil Division of the Magistrates Court.
The appellants carry on business under the name Cosmos Aluminium Windows and Doors (“Cosmos”).
In October 1996, the appellants contracted with a builder to manufacture and supply as a subcontractor to the builder, certain windows and doors, to be fitted to the respondent Mr Cooper’s house at 32 Childers Street, North Adelaide.
There was some uncertainty in the evidence as to the identity of the builder. It was either Riviera Homes Pty Ltd or Rudi Ossovani trading as Riviera Homes. For the purposes of this case, nothing turns on that question. I will refer to the builder as “Riviera”.
The appellants contract with Riviera was evidenced by Riviera’s acceptance of a quotation in writing supplied by the appellants dated 31 October 1996 to perform the work for a price of $18,700.
On 4 April 1997, after some work, but not all of it, had been done, a receiver and manager was appointed to Riviera Homes Pty Ltd. By letter of 10 April 1997, another building company, Chelsea Constructions Pty Ltd (“Chelsea”) wrote to the appellants stating:
“We write to advise that Chelsea Constructions Pty Ltd have purchased the plant and equipment, stock and copyright designs of the former Riviera Homes.”
They go on to state their belief that the appellants had manufactured windows for two jobs, one of which was the Childers Street house under construction for the defendant. The letter concludes:
“Could you please provide us with a quotation for these jobs as we may be interested in purchasing same from you.”
Some discussions followed between Mr Drivas and Mr Cooper. On Mr Drivas’ evidence, the discussions were with a view to the appellants transacting direct with Mr Cooper for the completion of the work, rather than completing the contract with Riviera, or contracting with Chelsea.
Apparently, both the appellants and the respondent were happy to deal direct with each other at that stage, but Riviera, or the receiver and manager of Riviera Homes Pty Ltd, was not prepared to agree to this.
Subsequently, on 12 May 1997, the respondent paid $8,000 to Riviera as part payment of the contract price agreed between the respondent and Riviera.
No further payments were made to Riviera.
After a good deal of pressure from the appellants, Riviera subsequently passed on to the appellants the $8,000 which Riviera had received from the respondent.
At some stage, the windows and doors which were the subject of the payment of $8,000 were taken back by the appellants for the purpose of remedying some alleged defects, and reinstalled. The trial magistrate found that it is likely that the rectification work was carried out in the period between 28 April 1997 and 6 August 1997.
So that, whatever may have been the precise sequence of events, it is clear that a stage was reached at which certain windows and doors had been installed, removed for the purposes of some rectifications by the appellants, reinstalled and the sum of $8,000 paid to Riviera and passed on eventually to the appellants.
Subsequently, on 28 August 1997, the appellants once again removed the doors and took them back to their own premises. Although the appellants’ evidence was that this was with the consent of the respondent, the magistrate found that that was unlikely. He rejected the appellants’ evidence to that effect.
It seems more likely, as the trial magistrate found, that the second removal of the doors and windows and their retention by the appellants, was as a result of the failure by Riviera to pay the balance of the contract price for the work done by the appellants, beyond the $8,000 which was paid.
A stalemate developed. This lasted for some months until about May or June 1998.
There is no doubt that a transaction was then entered into between the appellants and the respondent pursuant to which the doors and windows which the appellants were still holding at that stage were returned and reinstalled into the premises, and some further work done. This was to be on the basis that the respondent would pay to the appellants either $13,000 or $13,500 (the evidence is not entirely consistent as to the amount), as to which there would be a down payment or progress payment of $5,000.
Confirmation of this arrangement is to be found in an invoice from Cosmos dated 16 June 1998 which reads:
“Cost of windows to above address $13,500.00
Progress payment due 5,000
Paid chq 335 22/6/98”
On 22 June 1998, the respondent paid to the appellants the sum of $5,000. Clearly, this was the progress payment referred to in the invoice.
The appellants say that they completed the further work to be done and are entitled to the balance of $13,000, less the progress payment of $5000. Hence their claim in the Magistrates Court for $8,000, being the balance of the further moneys which they assert that the respondent agreed to pay.
In their defence and counterclaim, the respondent conceded that an agreement was reached in those terms:
“17.In about May 1998, the defendant and the plaintiff entered into an agreement (“the agreement”) of which the following were terms:
(a) the plaintiff was to refit the doors and windows it had taken from the house in return for the defendant paying it an amount of $5,000.
(b) the plaintiff was to complete the stage two works in return for the defendant paying it a further amount of $8,000.”
The stage two work was earlier defined in the defence and counterclaim as the “fitting of French style doors, door furniture and seals”.
In his defence and counterclaim, the respondent went on to assert that the appellants refitted the doors and windows in about June 1998, as a result of which the respondent paid over the $5,000.
The respondent goes on to allege that the appellants breached the agreement by failing to refit the doors and windows in a proper and workmanlike manner; that they damaged one of the respondent’s the French doors in attempting to fit a handle; did not undertake or complete the works within a reasonable time or at all; and did not supply door furniture as agreed (defence and counterclaim par 20).
The respondent further alleged that the appellants had made various representations, including a representation that they “would immediately complete the work to an extent that would enable the house to be locked and secured”. The respondent alleges a breach of that representation, with the result that various items were vandalised or stolen from the house.
The respondent also alleged that after giving to the appellants an opportunity to complete the work properly, he appointed another contractor to complete the work.
In the result, the respondent counterclaimed damages for breach of contract; damages pursuant to the Fair Trading Act; “recision of the agreement”; reimbursement of the $5,000 paid; and damages for breach of statutory warranties as to the quality of the work (referring to s 32 of the Building Work Contractors Act).
The trial magistrate held that on the installation in 1997 of the windows and doors, property in those items passed to the respondent.
The trial magistrate held that thereafter the appellants were creditors of the builder, initially for $18,700 (the subcontract price) which was reduced to $10,700 by the receipt of the sum of $8,000 paid in May 1997.
The trial magistrate further held that on the bankruptcy of Mr Ossovani in October 1997, the respondent was indebted to the estate of the bankrupt for the balance of $10,700, and the appellants were the creditors of the bankrupt estate for the same amount.
The trial magistrate further found that the seizure of the goods by the appellants in August 1997 was a trespass to the land and to the goods, and that their retention of the goods thereafter was wrongful.
As for the payment of $5,000 in June 1998 by the respondent to the appellants, the trial magistrate held that the payment was made by the respondent in the “mistaken belief” on his part that “he did not have title to the goods”. He found that this mistake was a mistake of fact and that there was no consideration for the payment.
In the result, he held the appellants liable to reimburse the $5,000 on the basis that it was money paid on a consideration which had wholly failed. Alternatively, if he was wrong in that view, he held that the contract of 22 June 1998 “was void, ab initio for mistake”.
Those findings led the trial magistrate to dismiss the appellants’ claim and to give judgment on the respondent’s counterclaim for $5,000, by way of reimbursement of payment made in June 1998.
The trial magistrate further held that the appellants were obliged, followed their second seizure of the doors, to deliver them up and reinstall them “to the appropriate trade standard”. He held that there were some further adjustments required in order to achieve that standard, as to which he estimated that $300 was an appropriate sum to allow for that.
He allowed a further “nominal” sum of $100 for damage to one of the doors caused by the appellants drilling holes in it in order to fit a door seal.
He held that no loss or damage had been proved with respect to the alleged delay in reaching a lock-up stage and that an assertion that the doors were defective and needed to be replaced at a cost of approximately $7,370 was not made out.
He further held that the allegation that the alleged delay on the part of the appellants in completing the works meant that the respondent paid a greater amount to build the house due to “construction prices being greatly inflated at the time” was, likewise, not made out.
He dismissed some other elements in the respondent’s counterclaim which it is unnecessary for me to deal with in detail. However, the trial magistrate awarded a further $1,000 damages for trespass relating to the second seizure of the doors.
In the result, the trial magistrate awarded judgment on the counterclaim in favour of the respondent against the appellants for:
$
Reimbursement of the amount paid on 12 June 1998         5,000
Cost of remedying sub-standard work  300
Damage to the doors  100
Damages for trespass  1,000
  ---------
  $6,400
  =====
In my opinion, the factual findings which led the trial magistrate to order reimbursement of the $5,000 and to dismiss the appellants’ claim were not justified on the evidence.
As I have already pointed out, the appellants’ assertion that there was an agreement entered into in May 1998 which resulted in the payment of $5,000, and the undertaking of further work by the appellants for an additional $8,000 was conceded in the respondent’s defence and counterclaim.
Not only was that claim by the appellants conceded on the pleadings, but the evidence on both sides supported that allegation.
During the course of his examination in chief, the following passage of evidence was given by the appellant Mr Drivas:
"QSo Mr Cooper came and saw you and asked you if you still had them. [the windows]
AYes.
QWhat did you say.
AYes I had them still in stock yes, I hadn’t used them.
QWhat did he say.
AThat he wanted them back and he was sorry for what happened, you know he was happy in the beginning you know, it’s only the architect that picked on that and all this and said ‘Let’s bye gones by bye gones’. I said so I agreed and said ‘All right forget what happened and start afresh’.
QWhat was agreed that you would do.
AThat when he was ready I would install them again, when he was going to do his brickwork and do a few changes on the house and put the roof on and a few bits.
QWas he then going to pay you some money.
AYes.
QHow much was he going to pay you.
AWhen I got part of the frames in I was to get $5,000 and then on completion I would get the other eight.
QWas that you would get another eight or eight and a half thousand.
AEight and a half.
QLooking at that invoice numbered 288 dated 16 June 1998 could you tell the court what that is.
AThat’s from for the second stage after I took the windows out when he came back to me.
QThis is payment for the windows that you put back in about six months later.
AYes six or nine months later I think it would have been.
QThe invoice refers to the cost of windows to the above address $13,500.
AYes.
QHow did you arrive at that figure, was that an amount agreed with Mr Cooper or by some other means.
AYes that was with the, we had the actual door in it.
QCan you tell the court how it came that were asked to do an extra door.
AI think it was a complete extra, Mr Cooper asked for an extra door and at that time when I put them in he wanted one more and I told him I was too busy I couldn’t do it.
QWhen did he ask you to do the extra door that you did do.
AWhen we were putting in the last lot of windows the second time around.
QThe invoice refers to a progress payment due of $5,000.
AYes.
QWas that paid.
AYes that was paid yes.”
In the course of cross examination Mr Drivas said:
"QYou agreed ... or negotiated with Mr Cooper for the amount of approximately $13,000 to be paid for the work to be done on the premises.
AYes.
QWhat did that $13,000 reflect.
AThe rest of the windows that I had in my factory.
..............
AIt reflected the doors.
QAll the doors.
AMost of them.
QTo be reinstalled.
AYes.”
Later during the course of cross examination the following passage occurred:
"Q“I asked the question in May 1998 you agreed to reinstall items.
AFor $13,000 whatever it was.
QAnd to perform further work.
AYes.
..........
QIn May 1998 you renegotiated the amount left to be done and to reinstall work.
AYes.
QIn June 1998 he made a progress payment to you of $5,000.
AYes, when everything went in virtually.
QBut in relation to this $13,000 I want to break down that $13,000.
..............
QHow did you come to the figure of $13,000 in May 1998 as the renegotiated figure.
AIt was the rest of the amount from the original quote plus the door and the change of windows.”
Mr Cooper’s evidence was to the same effect.
In examination in chief, he said:
"QYou agree that you entered into renegotiations with Mr Drivas regarding your particular property.
AI did.
QHow did that renegotiation come about.
AI said before it was in my interest to keep things moving quickly so it was, he had the doors there they were already made. We would have had to go through a whole new cycle of finding someone else to quote to make the replacement doors and as I was saying it was getting difficult to find people to do quoting at that time so I wanted to get things moving along. I went and asked him if he still had the doors and would he be interested in picking things up again and reinstalling them and completing the job.”
Later in the course of his examination in chief, the following passage appears:
"QAfter the re-negotiations took place, and the reinstallation of doors and windows you paid an amount to Cosmos.
AWithin seven days I agreed with him if he reinstalled the doors I would pay this first amount that he claimed which was $5,000 and that was paid, I think, on 22 June.”
Evidence to the same effect was given during the course of Mr Cooper’s cross examination.
He further said in cross examination that because the appellants failed to complete the work as agreed, he did not make any further payments and “terminated” the contract. He was unclear as to just what communication, if any, he made to the appellants to suggest that the contract was terminated.
The invoice dated 16 June 1998 is further confirmation of the agreement which was struck at that stage.
Against the background of that evidence, with respect to the trial magistrate, there is simply no foundation for the view that there was any mistake of fact on the part of the respondent, or that there was a total failure of consideration for the payment of $5,000.
All that happened was that after the stalemate developed following the second seizure of doors and windows by the appellants, some months later the respondent inquired of the appellants whether or not they still had the doors and windows. When he was told that they were still held by the appellants, he entered into a fresh agreement in consideration of the reinstallation of those items and the performance of some further work, with a down payment of $5,000 and the balance of $8,000 [or $8,500] to be paid on completion.
The evidence does not suggest that the respondent applied his mind to the question of the legal ownership of the doors at that stage. If he was under any mistake as to that, he certainly did not give any evidence to that effect.
All that the evidence demonstrates is that at that stage he was keen to break the stalemate and strike a deal which would enable the doors and windows to be restored and the remaining work to be performed.
For the reasons which I have given so far, the principal conclusions reached by the trial magistrate should be reversed.
Having regard to the trial magistrate’s findings as to the failure of the appellants on reinstallation of the doors to perform the work to an appropriate standard, it would be appropriate to allow in favour of the respondent $300 on that head and a further $100 being the amount allowed by the trial magistrate with respect to the holes in the doors, a total adjustment of $400.
The award of $1,000 damages for trespass cannot be sustained. It seems to me that a proper construction of the arrangements made between the parties in June 1998 is that any question of a claim by the respondent with respect to the second seizure of the doors was then waived.
In the result, the appellants were entitled to judgment against the respondent for $8,000 less the adjustments of $400 to which I have referred, a balance of $7,600.
The appellants are entitled to interest on that sum. I would calculate interest for a period of, say, five years, which approximates the period from the end of 1998 to the date of judgment in October 2003. The judgment varied in accordance with the order disposing of the appeal will still speak from then. Further interest will then run under the rules of court.

I fix interest in a lump sum of $2,000. In doing so, I have adopted a notional interest rate of 6 per cent.
Before parting with the matter, I should say that one of the principal arguments advanced by the appellants on the hearing of the appeal was that the trial magistrate had erred in deciding the case on a basis which was neither pleaded nor argued, nor supported by the evidence. In deference to the respondent’s contention that in fact all relevant issues were canvassed at the trial, I permitted counsel on both sides to file affidavits, following the completion of the argument on appeal, deposing to their recollection as to the course of the trial.
It has not been necessary for me to deal with those affidavits, or with that issue, having regard to the fact that, in my view, the bases upon which the trial magistrate saw fit to dismiss the claim and award damages on the counterclaim, cannot be sustained on either the evidence or the pleadings.
Summary
I order:
1.That the appeal be allowed.
2.That the orders under appeal be quashed.
3.That there be substituted an order that the appellants have judgment against the respondent in the sum of $9,600 inclusive of interest.
4.That the amount of $6,400 paid into court by the appellants pending the hearing of the appeal be paid out to the appellants, together with accrued interest thereon.
I will hear the parties as to costs.