G and S Potenza Pty Ltd v Pentridge Village Pty Ltd
[2013] VCC 399
•19 April 2013 Revised 26 April 2013
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted |
COMMERCIAL LIST
EXPEDITED DIVISION
Case No. CI-11-04661
| G & S POTENZA PTY LTD | Plaintiff |
| v | |
| PENTRIDGE VILLAGE PTY LTD | Defendant |
| AND BETWEEN | |
| PENTRIDGE VILLAGE PTY LTD | Plaintiff by Counterclaim |
| v | |
| G & S POTENZA PTY LTD and GIANUARIO FORUTNATO | Defendants by Counterclaim |
---
JUDGE: | HIS HONOUR JUDGE GINNANE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12-13,15,19-20 and 23 November 2012 | |
DATE OF JUDGMENT: | 19 April 2013 Revised 26 April 2013 | |
CASE MAY BE CITED AS: | G & S Potenza Pty Ltd v Pentridge Village Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 399 | |
REASONS FOR JUDGMENT
---
CONTRACT – whether contract with the defendant – alternative quantum meruit claim whether work performed – whether payment made for work – counterclaim for restitution of payment made - whether payment made by defendant made under mistake – total failure of consideration- whether misleading or deceptive conduct
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff and Defendants by Counterclaim | Mr I Upjohn | RNG Lawyers |
| For the Defendant and Plaintiff by Counterclaim | Mr J Nixon | Fairweather Legal |
HIS HONOUR:
1 This case requires the identification of the person or entity that performed excavation and soil sorting work at the Pentridge Village housing estate in Coburg in 2008 and for whom that work was performed. In respect of the latter issue the question became whether the defendant was liable for that work or another company (Bushy Park) was.
2 The plaintiff (“Potenza”) claims against the defendant (“Pentridge Village”), the sum of $188,607.50, being $338,607.50 including GST, less $150,000 already paid. The sum of $338,607.50 is made up of the following:
(a)$177,265 for the cost of removing soil from the stockpile at the Pentridge Boulevard site between 15 January and 8 February 2008 (the Pentridge Boulevard work);
(b)$43,560 for the cost of removing soil from the Creek Side at the Pentridge Village site between 28 and 30 August 2008 (the Creek Side work);
(c)$87,000 for the sorting of contaminated soil at the S10 stockpile in January and February 2008 (the sorting work).
3 The defendant, Pentridge Village, owns, and is the developer of, land at the former Pentridge Gaol site in Coburg, where it has developed a small suburb consisting of about 900 homes and some commercial buildings.
Potenza’s case
4 Potenza’s case is that it made an agreement with Pentridge Village in or around early January 2008 to do the earthmoving and sorting work. It claims damages for breach of contract. Alternatively it claims the sum of $188,607.50 as owing on a quantum meruit. It alleges that it formed the agreement with Pentridge Village through Mr Stefan Mrnjavac of Bush Park Concreting Pty Ltd, who it describes as the project manager for Pentridge Village.
5 The particulars in the Amended statement of Claim state that the agreement was partly written and partly oral and:
“To the extent the agreement was in writing it was contained in or evidenced by quotations by the Plaintiff dated 8 and 25 January 2008 outlining the Plaintiff’s rates at $12.00 per cubic metre for the excavation of soil from the basin from the Creek Side and $13.75 per cubic metre for the clean up of the stockpile from the Pentridge Boulevard site which is signed and approved by Stefan Mrnjavac of Bushy Park Concreting Pty Ltd as the project manager for the Defendant (Mr Mrnjavac) at the premises.
The Plaintiff provided an additional quotation dated 25 January 2008 for the sorting of contaminated soil for Lot s10 to the value of $87,000 also signed by Mr Mrnjavac.
To the extent that the agreement was oral it was constituted by conversations between John Fortunato of the Plaintiff (Mr Fortunato), Mr Mrnjavac and peter Chiavaroli of the Defendant (Mr Chiavaroli) during meetings and telephone conversations in the period from December, 2007 and January, 2008 to the effect alleged.”
6 Potenza contends that Pentridge Village held out Mr Mrnjavac as its representative in conversations between Mr Fortunato and Mr Peter Chiavaroli. It argued that Mr Mrnjavac had the actual or ostensible authority of Pentridge Village to engage Potenza on its behalf.
Pentridge Village’s defence
7 Pentridge Village contends that it made no agreement with Potenza for the performance of the works. Rather, it alleges that on or about 10 January 2008, West Homes Pty Ltd retained Mr Stefan Mrnjavac, as owner of the Bushy Park business, for reward to remove and transport clean soil from stock piles at Pentridge Village to tips. Pentridge Village alleges that:
(a) Between 15 January 2008 and 8 February 2008, the Fortunato Group removed and transported 12,892 cubic metres of soil from the S10 stock pile to tips. Bushy Park Concreting is liable to the Fortunato Group or Potenza for the price of $13.75 a cubic metre.
and
(b) Between 28 and 30 August 2008, Fortunato Group removed and transported 3,630 cubic metres of soil from the Creek Side to tips for the price of $12.00 per cubic metre.
8 Mr Mrnjavac and his business or company had no authority to make contracts on behalf of Pentridge Village.
9 Pentridge Village alleges that the sorting work referred to in paragraph 1 (c) above was performed by Bluestone Earthworks Pty Ltd under an agreement with West Homes Pty Ltd.
Pentridge Village’s counterclaim
10 Pentridge Village counterclaims for the sum of $150,000 that it paid to Potenza on 25 August 2009. It argues that that sum was money had and received by Potenza for the use of Pentridge Village. Alternatively, it was paid for a consideration that wholly failed. Further, or alternatively it claims that the $150,000 that it paid to Potenza in August 2009 was paid under a mistake of fact, alternatively as mistake of law. That mistake was that Potenza had undertaken the works referred to in its invoice dated 4 August 2009, which were the earthworks and sorting works and also that Pentridge Village was indebted to Potenza for the sum of $307,825 plus GST as set out in the Invoice.
11 Pentridge Village also claims that Potenza and its director, Mr John Fortunato, engaged in misleading and deceptive conduct by making the representation contained in the invoice. It claims loss and damages under the Trade Practices Act 1974 and Fair Trading Act 1999.
Issues for determination
12 The issues and the answers I have reached in respect of them are:
(a) Was there an agreement between Potenza and Pentridge Village as alleged by Potenza? Answer: No.
(b) If yes to (a) did Potenza perform its obligations under the agreement? Answer: Not applicable.
(c) Did Pentridge Village breach the contract by failing to pay to Potenza the amounts the amounts that it claims? Answer: Not applicable.
(d) Alternatively has Potenza established an entitlement to the amounts claimed on a quantum meruit? Answer: No.
(e) Has Pentridge Village established an entitlement to the repayment of the sum of $150,000 that it paid to Potenza? Answer: No.
13 It is appropriate to first describe the principal individuals and their businesses involved in this dispute.
Potenza Pty Ltd and G & S Fortunato Group Pty Ltd
14 The plaintiff (Potenza) is the trustee of the Fortunato Family Trust. Potenza’s director is Mr G (John) Fortunato. He is also a director of G & S Fortunato Group Pty Ltd (the Fortunato Group). Potenza owns 60 per cent of the shares in the Fortunato Group.[1]
[1]T59 and 64
15 The Fortunato Group conducts a substantial earthworks and civil works business. It was retained by Pentridge Village from the 1990s to undertake the building of roads, drainage works, kerbs and other civil works at Pentridge Village.[2] The Fortunato Group received in excess of $8 million from Pentridge Village for civil works performed at that site.[3]
[2]T256
[3]T65
16 Mr Fortunato gave evidence that in 2007, when there was a proposal to sell the Fortunato Group under consideration, he agreed with the other directors and shareholders that any further work done at Pentridge Village would be done by Potenza. However the sale of the Fortunato Group did not proceed.
17 A number of the documents referred to below were on the letterhead of G & S Potenza. They were the initials of Mr Fortunato and his wife. It was not in issue that G & S Potenza could be treated as Potenza Pty Ltd.
Pentridge Village Pty Ltd
18 In 2008 and 2009, Mr Peter Chiavaroli and his family owned at least a substantial interest in Pentridge Village. In this proceeding, it was treated as being the Chiavaroli family’s company. It is the trustee of trusts which owns the Pentridge Village site. The Chiavaroli family and others purchased the land from the State Government.
19 In 2008 and 2009, Pentridge Village had an annual turnover of $20 million to $30 million.
20 Mr Fortunato and Mr Chiavaroli have known each other, and had business dealings, for 40 years. Their offices at the Pentridge Village site were next door to each other.[4]
[4]T32
West Homes Pty Ltd
21 West Homes Pty Ltd is a builder and the main contractor for the Pentridge Village development. It has built hundreds of houses and some commercial buildings on the Pentridge Village site, which in effect is a new suburb.
22 Mr Chiavaroli is a director of West Homes and in effect controls it.
Bushy Park
23 Bushy Park Concreting was an earthworks business operated by Mr Stefan Mrnjavac until mid 2009. Bushy Park Concreting Pty Ltd was registered on 28 May 2009 and took over the business of Bushy Park Concreting. Mr Mrnjavac was its sole director and shareholder. It was placed into voluntary liquidation on 24 November 2011.
24 Mr Mrnjavac, through Bushy Park, undertook substantial earthworks on the Pentridge Village site as a contractor to West Homes. The work included building foundations, slabs, suspended floors and performing some concreting work.
25 Mr Chiavaroli gave evidence that Mr Mrnjavac has always been a contractor of West Homes and not of Pentridge Village.[5] Bushy Park sent invoices to West Homes for the work it performed at Pentridge Village.[6]
[5]T293
[6]T242
26 West Homes paid Bushy Park Concreting over $12,000,000 for work performed between 2004 and 2011.[7]
[7]T290
27 Bushy Park also paid the Fortunato Group for work performed at Pentridge Village. [8]
[8]T225
28 Mr Mrnjavac agreed that Bushy Park was a contractor rendering invoices to, and receiving payment from, West Homes. It did not act in any other capacity.[9]
[9]T241
29 Mr Fortunato said that that the Fortunato Group and Potenza had never performed any work for Bushy Park.[10] However he later agreed that it had done so after he was shown a remittance advice dated 30 June 2008 which recorded a payment of $92,906 by Bushy Park Concreting to the Fortunato Group.[11]
[10]T 136, 142,168,170
[11]T170, DCB 291A and DCB 169A and DCB 272
Bluestone
30 Mr Mrnjavac gave evidence that Mr Chiavaroli said to him some years ago, “If you can save me any dollars under $20 a cubic metre” that he would pay him 50 cents in each dollar of any such saving. [12] Mr Chiavaroli said that there was a discussion, but no agreement was reached. [13]
[12]T174 and 230
[13]T270,288
31 In September 2007, Mr Chiavaroli and Mr Mrnjavac formed Bluestone Earthworks Pty Ltd in order to purchase machinery to perform work at the Pentridge Village site. Mr Mrnjavac and the Chiavaroli family each owned 50 per cent of it. As it turned out, another company, Bluestone Assets Pty Ltd purchased and owned the equipment which was used at the site. The equipment included a 20 tonne excavator.
32 Mr Fortunato said that he did not know of the existence of Bluestone Earthworks until the start of the litigation.[14]
[14]T89-90
Mr Fortunato and Mr Chiavaroli’s initial discussions
33 Mr Fortunato gave evidence that when he discussed with Mr Chiavaroli about doing work at Pentridge Village, Mr Chiavaroli always said, “You deal with Stefan” meaning Mr Mrnjavac.[15]
[15]T88-89
34 Mr Chiavaroli denied that he had ever had a conversation with Mr Fortunato concerning the works conducted in January and February 2008 for which Potenza claims payment. However in cross-examination, Mr Chiavaroli agreed that it might be right that Mr Fortunato asked him who to deal with and he might have told Mr Fortunato to deal with “Stefan”.[16]
[16]T293
35 In cross-examination, Mr Chiavaroli said:
“I don’t believe, I don’t really recall this conversation but most likely because we have – I don’t remember the dates but we have given all our work as concreting and removal of soil and other things, to Bushy Park and Bluestone Earthworks.” [17]
[17]T287
36 He also stated:
“I just said he might be right, yes, that he asked me who I deal with.
…
Well, Stefan had the work, whether Stefan used Fortunato or used some other company, hire company, it wasn’t my – you know, I mean I didn’t get involved in that”[18]
[18]T293
37 Mr Chiavaroli said that he did not deal with the acceptance of quotations, that he was just one of the directors, because the quotations went from Mr Mrnjavac to the construction managers and supervisors, who were working on the site.[19]
[19]T294
38 Mr Mrnjavac gave evidence that he would arrange for outside contractors to quote for work on site and then give the quotes to Peter Chiavaroli. He always did this before a contractor was chosen to perform the work.
The quotes on which Potenza relies
39 Mr Mrnjavac gave evidence that in late 2007 or early 2008, he obtained two verbal quotes for the performance of the required earthworks at Pentridge Village, one from Mr Fortunato, which was initially at $15 per cubic metre; and one from Eastern Plant Hire at $13.75 per cubic metre. [20]
[20]T193-94
40 Mr Mrnjavac said that he considered Mr Fortunato’s quote was too dear. He then received a call from Mr Chiavaroli[21] who said that that Mr Fortunato was at his office. According to Mr Mrnjavac, Mr Chiavaroli phoned him and said in respect of the stock pile work: “Look, I have John here. He wants to do the job.” Mr Mrnjavac said, “Well, he’s too dear, Peter, I have a quote here, it’s not 55 cents or $1.50. That’s what you told me to get the best price and I have.” Mr Chiavaroli then said, “Well if John matches the price, would you give him the job?” Mr Mrnjavac said, “Yes if he matches the price because he’s part of Pentridge Village.” [22]
[21]T176
[22]T176-177
41 The quotes on which Potenza sues and which it says won it the jobs, were both on the letterhead of G & S Potenza.
42 The first quote was dated 8 January 2008 and was signed by J Fortunato over the typed name G & S Potenza. It stated:
‘QUOTE For Pentridge Village as Requested by Pentridge Village Representative Stefan Mrnjavac
Please find our quote as per your instructions for the following works to be done at Pentridge Village.
Excavation of soil from the basin from Creek Side $12.00 per cubic meter.
Clean up of stockpile from site of Pentridge Blvd $13, 75 per cubic meter.
If you have any problems do not hesitate to contact us.
At the foot of the page, under the signatures, the following handwritten statement appeared:
“11.1.2008
PLEASE REMOVE SOIL AS PER QUOTATION
(Mr Mrnjavac’s signature)”
43 The $13.75 cubic metre quote included the use of an excavator, whereas the $12 per cubic metre rate did not as Pentridge Village would be supplying the excavator.
44 Mr Fortunato said that his daughter, Ms Carmela Grgas-Bego prepared the first quote upon his instructions and he gave it to Mr Mrnjavac on the date that it bore i.e. 8 January 2008. Mr Mrnjavac said, “Leave it to me for a day or two to discuss with Peter or with somebody else, I don’t know.”[23]
[23]T34-35
45 Mr Fortunato said that Mr Mrnjavac gave a verbal approval a day later and probably on11 January 2008, Mr Mrnjavac returned the quote to him signed.[24]
[24]T34
46 Mr Mrnjavac identified the quote dated 8 January 2011 and stated that his signature and handwriting were at the foot of it thereof, stating: “Please remove soil as per quotation.”[25] He could not particularly remember this document, but said that Mr Fortunato probably brought it into his office in 2008 at which time he probably dated and signed it
[25]T177
47 Mr Mrnjavac said he could not remember if the name Potenza was mentioned to him at that time. He said, “I can’t remember, I can’t remember what I did last week.”[26] Mr Mrnjavac said that when he first met Mr Fortunato his trading name was G & S Fortunato and he has always known him by that name.[27]
[26]T215
[27]T187
48 Mr Chiavaroli denied that Pentridge Village ever gave instructions to Mr Fortunato to perform the works. Rather, Mr Mrnjavac contracted with West Homes to perform the work. It was then a matter for Mr Mrnjavac whether he used Mr Fortunato or another hire company to carry out the work.[28]
[28]T293
49 Mr Chiavaroli said that Mr Mrnjavac had never been authorised to act on behalf of Pentridge Village or West Homes. He said that it would be unworkable with 30 contractors on the site if everyone was authorised to act on behalf of Pentridge Village.[29] He said most of the contractors on site had been dealing with West Homes for ten to thirty years.[30]
[29]T293-294
[30]T296
The quote for the sorting work
50 The second quote, or more precisely the third quote, because the first document contained two quotes, was dated 25 January 2008 and was for the sorting work. It stated:
QUOTE
Please find our quote as per your instructions for sorting of contaminated soil for Lot 10 stockpile to remove rock, bricks and rubbish for Pentridge Village Pty Ltd to the value of $95,000.”
If you have any problems do not hesitate to contact us.”
51 This quote was also signed by J Fortunato over the name of G & S Potenza. The price of $95,000 that was contained in it was crossed out and replaced by the handwritten amount of $87,000. That change was signed by Mr Stefan Mrnjavac and initialled by Mr Fortunato.
52 Mr Fortunato gave evidence of how the quote for the sorting work came to be made. He quoted a price of $95,000, but Mr Mrnjavac said, “I'm sorry, John, your quote is too high.” Mr Fortunato said, “Look, that’s the best we can do.” He said, “No, look it’s too high, you’re missing.” Mr Fortunato asked him how much he was looking for and Mr Mrnjavac told him that he was seeking a price of $10,000 less than the initial price quoted. They agreed on a price of $87,000. Mr Mrnjavac wrote that price on the quote and he and Mr Fortunato signed the amendment.
The Bushy Park quote to West Homes
53 The other quote of potential relevance to the outcome of the proceeding was given by Mr Mrnjavac’s company Bushy Park Concreting Pty Ltd to West Homes. It was dated 10 January 2008.[31] The relevant part of that quote appears under the heading “S10 Stock Pile” and state:
[31]DCB 55
“To remove soil from site to tips. Clean soil only
Price includes * Machine hire
* Truck hire
* Tipping fees
$16.00 Plus GST Per Cubic Meter
Price does not * Rock
* Rock breaking
*Builders Rubble
* Concrete & Bricks
* Rubbish”[32]
[32]DCB 55
54 Mr Mrnjavac gave evidence that he was entitled to take the margin between the contract price i.e. of $16.00 plus GST with West Homes and Mr Fortunato’s price. [33]
[33]T220
55 Pentridge Village relied on this quote as showing that the work for which Potenza sued was actually performed by Bushy Park for West Homes and by contractors that it engaged.
The Bushy Park document 22
56 The other document of importance in the proceeding, which I will set out at this point, was written on Bushy Park Concreting Pty Ltd’s letter head and signed by Stefan Mrnjavac. That letter head included Bushy Park’s Australian Business Number. I will refer to it for the purposes of identification as the Bushy Park document 22, as that was the number it had for discovery. It stated:
“On 24th January 2008, Stefan Mrnjavac from Bushy Park Concreting Pty Ltd contacted John Fortunato from G & S Fortunato to price the sorting of contaminated soil from Lot S10 stockpile for Pentridge Village Pty Ltd.
For the remove of rock, brick and rubbish from site to the tip for a lump fixed price, and to leave contaminated soil on site for further placement on roadway to my satisfaction.”[34]
[34]PCB Tab 24
The authenticity of the quotes
57 At this point it is necessary to deal with the defendant’s attack on the first quote dated 8 January 2008. The attack was that Mr Mrnjavac had not accepted the quotes dated 8 January 2008 on the date of 11 January 2008, which he wrote as the date of his acceptance of the quote, but months later after Bushy Park had been registered. That occurred on 28 May 2009. That attack was based on the handwriting evidence of Mr Neil Holland.
58 The two quotations were typed by Mr Fortunato’s daughter, Ms Grgas-Bego, who is the account manager for the Fortunato Group and who gave evidence as part of Potenza’s case. The computer that she used was disposed of in 2008 or 2009 and the files used to create the quotations were lost.
59 Mr Mrnjavac’s evidence was that he would have signed the quote dated 8 January 2008 before the works began and that Mr Fortunato would not have started work without receiving permission to do so. However, he said, “I can’t remember because I can’t remember that far back.”[35]
[35]T188
60 I did not find Mr Mrnjavac’s evidence persuasive, as his own evidence was that he had a poor memory. I consider that his evidence on the central issue of when the quote was prepared and signed by him should be given little weight.
61 Ms Grgas-Bego stated that in 2011, her father told her that he was to provide his solicitors with copies of all material for the purpose of preparing for the litigation. He asked her to reconstruct the quotations, the computer having been disposed of. Her father gave her as an additional reason for retyping the second, fixed price quotation, that it was not possible to make out that the original quoted price had been $95,000, as that figure had been scribbled out and amended by pen to $87,000. Her father told her the details of the original 2008 quotes. She typed them according to the template that she remembered using previously and gave them to her father. [36]
[36]Affidavit of Ms Grgas-Bego dated 24 October 2012, paragraph 14
62 She stated that at the end of the computer file, which she used to retype the quotations, she found a paragraph (which was referred to in evidence as document 10.9[37]) which appeared to be very similar to the text of the letter signed by Mr Mrnjavac, which I have described as the Bushy Park document 22. She could not recall why that paragraph was on the computer file.
[37]T249 This was document 10.8
63 She retyped a further version of the quote of 25 January 2008 because her father wanted to take the document to the solicitors. She did not have a copier or scanner.[38]
[38]T 250
64 A few days later, she found copies of the original quotation of 8 January 2008 which had been stored with other documents under her house.[39]
[39]T251,261
65 Mr Fortunato gave evidence that he told his daughter what to type on the Bushy Park document 22.[40] He gave it to Mr Mrnjavac, but he denied that he had done that in 2011. He said that:
“Because the first quote I gave him at $85,000 he said for the moment he wanted to do himself. That’s why we did later. Then he come back on 24 January and he said ‘Give me the quote again for the stockpile of the soil.” [41]
[40]T100
[41]T101
66 Mr Fortunato said it was for the spoil and he thought that he had got it a maximum of one or two days later, presumably after 24 January 2008.In cross-examination, he was uncertain when he received it. [42]
[42]T45,55,109
67 He could not explain how he could have received it in January 2008, when Bushy Park was not registered until 28 May 2009. He agreed that the Bushy Park document 22 could not have been written before that time.[43]
[43]T 233
68 Mr Mrnjavac denied that he had the document typed to help Mr Fortunato bring his claim.[44]
[44]T187
69 It was put to Mr Mrnjavac that Mr Fortunato gave him the words contained on document 10.9.and that he gave it to his daughter to type and she typed up the Bushy Park document. He said that he did not know if that was the case.[45] He said that he did not remember if the quote of 8 January 2008 and the Bushy Park document were signed at the same time.[46]
[45]T233-234
[46]T235
70 He did maintain that Mr Fortunato would not have got the jobs without providing the quotes before the work was done.[47]
[47]T236
71 It is difficult to place any weight on the Bushy Park document 22 that assists Potenza’s case. The only conclusion possible is that it was created after the registration of Bushy Park on 28 May 2009.
72 The evidence of Mr Neil Holland, which I next describe, throws further light on this matter.
The expert evidence - Mr Neil Holland’s evidence
73 Pentridge Village called expert hand writing evidence to endeavour to establish that Mr Mrnjavac had signed the quotation dated 8 January 2008 at the same time as he had signed the Busy Park document 22. [48]
[48]In Mr Holland’s report it was referred to as document 22.
74 Pentridge Village called evidence from Mr Neil Holland, who has extensive experience in the forensic examination of documents. He was employed in the Documentation Examination Branch of the Victoria Police State Forensic Science Laboratory between March 1976 and June 1989. He was appointed the Branch Manager in 1980. Since 1989 he had conducted his own business associated with document examination. He has given evidence in hundreds of trials.
75 Mr Holland provided a report and gave oral evidence. In respect of documents that he identified as documents 4 – the quote of 8 January 2008 and document 22, the one page undated statement on the letterhead of Bushy Park Concreting Pty Ltd signed by Mr Mrnjavac he concluded:
“The significant striation patterns observed in the ink lines of the ‘Stephan Mrnjavac’ signatures written on the documents items 4 (under the paragraph of handwriting) and 22 establishes that these two signatures written on the documents have been written contemporaneously.”[49]
[49]Expert Report p.11
76 Mr Holland based his conclusions on a visual analysis of the striation and gooping in Mr Mrnjavac’s signatures on the documents. He also concluded that the two signatures were made with the same pen.[50]
[50]T343-350
77 In respect of the two quotation documents, which he described as document 4, being the quote dated 8 January 2008 and document 6, being the quote dated 25 January 2008, Mr Holland stated:
“Although the ink lines of the ‘G. Fortunato’ signatures items 4 and 6 appear visually similar, there are no significant striation patterns in the ink lines to establish they have been written contemporaneously.” [51]
[51]Report p11
78 Mr Holland also stated that:
“ the range of tests undertaken was extensive, however the tests established that there was no forensic evidence as to when the documents were produced or whether they were produced contemporaneously; except for the two documents items 4 and 22 where I have established that the ‘Stefan Mrnjavac ‘ signatures written on these two documents were signed contemporaneously.”[52]
[52]Ibid
79 Mr Holland acknowledged in cross-examination that he did not perform any ink tests or other tests on the paper. He was not instructed to perform those tasks and the expense of the additional tests was a relevant consideration. He did not undertake a comparative analysis of Mr Fortunato’s signature on the two quotes. However, he did not accept that carrying out any other test would have affected the conclusions that he reached. [53]
[53]T352-353
80 On the basis of Mr Holland’s opinion, the signature of Mr Mrnjavac accepting the quote of 8 January 2008 was written, not on 11 January 2008, as it purports to have been, but at the same time as his signature on the Bushy Park document 22 i.e. some time after 28 May 2009, being the date of registration of Bushy Park Concreting Pty Ltd.
81 This conclusion is directly contrary to the evidence of Mr Fortunato. Mr Fortunato gave contradictory evidence about whether document 4, the quote of 8 January 2008 and the Bushy Park document 22 were signed at the same time. At one point he denied that that was the case, but at another agreed that they were signed on the same day.[54]
[54]T116,117
82 Mr Mrnjavac denied that Mr Holland’s conclusion was accurate.[55] He said that he did not know if he signed both documents, documents 4, the quote of 8 January 2008 and the Bushy Park document 22, with the same pen. He said that there were variations in the two signatures.
[55]T236-237
83 Mr Mrnjavac’s evidence on this point was unsatisfactory, largely amounting to saying that he did not know, or could not recall, when the documents were signed.
84 If Mr Holland’s opinion is accepted, then Potenza’s case in respect of the work described in the quote of 8 January 2008, insofar as it is based on its acceptance by Mr Mrnjavac, on behalf of Pentridge Village on 11 January 2008, could not be accepted. The non-acceptance of this claim would affect the credibility of Potenza’s other claims.
Mr Holland’s evidence and Pentridge Village’s defence
85 Potenza did not call any expert handwriting evidence. It took the view that it did not need an expert’s report because Pentridge Village had not pleaded fraud. It objected to the tender of Mr Holland’s report and the acceptance of his evidence on the basis that fraud had not been pleaded.[56]
[56]T365-405
86 Potenza’s counsel made this objection on the first day of trial. I deferred ruling on the admissibility of Mr Holland’s evidence in order to see how Pentridge Village’s case was being put.
87 On 20 November 2012, the fifth day of the trial, counsel for Pentridge Village requested that I rule on whether Mr Holland’s evidence was admissible. He said that if I should rule that it was inadmissible, he would apply to amend the defence and counterclaim. I pointed out to counsel the difficulties confronting any such late amendment application.
88 Counsel for Pentridge Village, in response to the claim that it was alleging fraud, abandoned a claim of ancillary liability for misleading or deceptive conduct against Mr Fortunato. That claim is discussed below and related to Mr Fortunato’s presentation to Mr Chiavaroli of an invoice on 4 August 2009 claiming payment of the sum of $338,607.50. The claim of misleading and deceptive conduct by Potenza and Mr Fortunato was maintained, in the case of Mr Fortunato under the Fair Trading Act. That cause of action does not require any proof of fraud or intent to mislead or deceive.
89 After hearing submissions, I ruled that Mr Holland’s evidence was admissible and that no pleading of fraud was required.
90 I gave reasons for that ruling.[57] I add the following reasons. The rules of pleading require that a plea of fraud be clearly pleaded: Rule 13.10. In addition, an allegation of fraud must be plainly put in cross-examination to the relevant witnesses. However, the pleading requirement depends upon there being a pleadable issue of fraud relied on. This is to be distinguished from a question which may involve fraud being raised in evidence as part of the defendant’s challenge to the plaintiff’s proofs.
[57]T405-407
91 The point is illustrated by the ruling of Griffith CJ in Campbell v Commissioner of Railways[58] that it was not necessary to plead fraud to allege that the plaintiff was a liar, because “you do not plead evidence.” Griffith CJ stated:
“In my opinion the defendant is entitled to bring in evidence that the plaintiff’s story is false, and if incidentally it turns out that he has been guilty of conspiracy with someone else it makes no difference to the real fact that his story is false. The amount of the conspiracy cannot make any difference to the rules of pleadings and I confess I do not understand the objection being made.” [59]
[58]Supreme Court of Queensland, Brisbane Courier Reports, 20 August 1902 cited in Royds v Norcross Press Pty Ltd (1999] BC9901324 and Ghazi v Government Insurance Office of New South Wales (1992) 29 NSWLR 336.
[59]Set out in Royds v Norcross Press Pty Ltd Supra at [35]
92 The Court is not bound by an expert’s opinion, even when it is not contradicted by another expert’s opinion. However, a Court should be cautious in acting on the evidence of the only expert who is called on an important issue.
93 There is no reason apparent not to accept Mr Holland’s evidence. None of the matters on which he was challenged weakened the weight to be given to his conclusions.
94 The conclusions and findings contained in Mr Holland’s opinion have been proved to a standard that takes into account the seriousness of the allegations. The conclusions and findings of Mr Holland to which I have referred have been made out on the balance of probabilities to my reasonable satisfaction.[60]
[60]Briginshaw v Briginshaw (1938) 60CLR 336 at 361-362 cf s 140 of the Evidence Act 2008 and NOM v Director of Public Prosecutions [2012] VSCA 198
95 Apart altogether from Mr Holland’s evidence, as I have said I found Mr Mrnjavac’s evidence was unsatisfactory and I would not place any great reliance on it, not least because he accepted that he had limited memory of events.
96 The unsatisfactory nature of Mr Mrnjavac’s evidence means that I do not accept his evidence of when he signed to accept the quote of 8 January 2008 or how the Bushy Park document 22 came into existence.
97 There is a further matter of relevance to this point. Mr Mrnjavac accepted that he had fallen into substantial dispute with the Chiavaroli family. He stated that Mr Chiavaroli would not pay one of his contractors the money he was entitled to. He said that Bluestone was wound up with a debt of $80,000, when it was owed $800,000 by West Homes. He had been excluded from the site in early 2011.[61]
[61]T240
98 That fact has to be taken into account in deciding the weight to be given to Mr Mrnjavac’s evidence. However, regardless of that matter, Mr Mrnjavac, on more than one occasion, said that he did not have a good memory. For that reason alone, I give little weight to his evidence.
99 I make the following comments about the weight to be given to Mr Fortunato’s evidence. I concluded that Mr Fortunato strongly believed that he should have been paid by Pentridge Village for all his claims, because he considered that he had performed the work. His evidence was attacked by Pentridge Village. Potenza’s counsel submitted that I should take into account that English was his second language. But he had no real difficulty in conveying what he was intending to say. As appears below, I have accepted on the balance of probabilities that he, through Potenza and contractors engaged by it, performed the work. However, the fact that he relied, as part of his case, on a quote which I have accepted was backdated in respect of its acceptance, means that I must to treat his evidence with some reservation.
The consequences of accepting Mr Holland’s conclusion
100 The consequence of accepting Mr Holland’s evidence and not accepting Mr Mrnjavac’s evidence is that I cannot accept Potenza’s first two claims insofar as they are based on the written quote of 8 January 2008.
101 That conclusion does not necessarily mean that Potenza’s claim based on conversations between Mr Fortunato and Mr Chiavaroli or on a quantum meruit thereby automatically fail. Nor does the third claim, the sorting claim, based on the quotation of 25 January 2008.
102 However, the conclusion that I have reached about when Mr Mrnjavac wrote his acceptance on the quote of 8 January 2008 does also lessen the weight that can be given to the evidence of Mr Fortunato.
103 I prefer Mr Chiavaroli’s evidence of the conversations that he did not become involved in obtaining and accepting quotes for work to be performed at Pentridge Village and that he did not do so in any conversation with Mr Fortunato. That is the practice that the evidence suggested that he adopted. I accept that on the evidence it is probable that Mr Chiavaroli informed Mr Fortunato how he might get work at the site. However, that does not establish that Mr Chiavaroli said anything to Mr Fortunato that might reasonably be interpreted to mean that Mr Mrnjavac was Mr Chiavaroli’s or Pentridge Village’s agent for the purposes of engaging contractors at the site.
Other evidence that the parties relied on in connection with the agreement issues
104 Both parties relied on other matters on the issue of whether there was an agreement between Potenza and Pentridge Village in the terms alleged by Potenza.
Potenza’s reliance on Pentridge Village’s payment of $150,000 – the meeting of 4 August 2009
105 First is Potenza’s reliance on Pentridge Village’s payment of $150,000 to it on 25 August 2009. Pentridge Village seeks to recover that amount in its counterclaim. The significance to be attached to the payment of the $150,000 requires consideration of the meeting on 4 August 2009 between Mr Fortunato and Mr Chiavaroli at the latter’s office.
106 Ms Grgas-Bego initially gave evidence that she sent Potenza’s invoice claiming $338,607.50 for works at the site to Pentridge Village before the meeting on 4 August 2009, but later said that she was uncertain whether she had.[62] Her evidence received support from the evidence of Mr Anton Paini, an employee of Pentridge Village, who said that the invoice had been received by mail.[63] However, nothing of significance turns on that matter.
[62]T263
[63]T338
107 The invoice was dated 4 August 2009 and was on the letterhead of G & S Potenza. It was headed works done at Pentridge Boulevard. It sought payment of the three amounts: the January/February Pentridge Boulevard soil removal in the sum of $177,265.00, the Creek Side soil removal in the sum of $43,565.00 and the sorting of contaminated soil work in the sum of $87,000. GST was added to each of these amounts.[64] The invoice did not contain the name of the person or business to whom it was directed.
[64]PCB Tab 21
108 Ms Grgas-Bego said that she and her father walked into the office and spoke to the receptionist telling her that they had a meeting with Mr Chiavaroli. She told them to go to the boardroom where they met Mr Peter Chiavaroli, who was later joined by his sons Leigh and Damian. She said that she and her father gave them the invoice and:
“they informed us that they didn’t have the whole amount and they could only give us $150,000 which we agreed to and they said to us that once they had the money they would pay us. They also requested dockets which a couple of days later I did photocopy them and send them through email.”[65]
[65]T254
109 Mr Fortunato’s account of the meeting was that he submitted the invoice to Mr Chiavaroli, who said in essence that because he and Mr Fortunato had known each other for a long time, it was better that he pay, presumably meaning first pay, small sub-contractors. Mr Fortunato said that he didn’t need the money at the time and that he trusted Mr Chiavaroli. Mr Chiavaroli said that he would pay him later.[66]
[66]T150-51
110 In cross-examination, Mr Fortunato gave evidence that Mr Chiavaroli said:
“…The best we can do for you, he said, we pay $150,000 at the moment, he said later we pay the rest and it never happened.”[67]
[67]T150-151
111 Mr Fortunato also said that Damian Chiavaroli, at the direction of his father, took the tax invoice and wrote him a cheque for $150,000, which he received at a later point, after 25 August 2009.[68]
[68]T152
112 Mr Chiavaroli’s evidence was that he was working in the boardroom, which he used as his office, and that Mr Fortunato, on his own, walked into the boardroom waving an invoice and wanting money. Mr Chiavaroli said that:
“I listened to his argument and screaming and then I called my son Damien, I told him to take John with him, take an invoice and to pay him $150,000 but it had to be sorted out with Breese Pitt Dixon”[69]
[69]T268
113 Mr Chiavaroli said that he didn’t look at the invoice and only saw it after the litigation commenced. [70] Mr Fortunato walked out with Damian Chiavaroli and that was the end of the matter as far as he was concerned.[71]
[70]T275
[71]T269
114 Mr Chiavaroli gave the following evidence:
“I have known John for a long time, he was desperate for money, he was upset so I called in my son, Damian, because he wasn’t getting progressive payments from Breese Pitt Dixon or payments from other places and I said, ‘Okay, you say you owe this money, call in Damian. Damian take John with you, take this invoice or whatever he’s got and pay him 150 subject to John goes and sees Breese Pitt Dixon to sort all this out.” [72]
[72]T275
115 Breese Pitt Dixon Pty Ltd (“Breese Pitt Dixon”) was the project manager for the Pentridge Village site.
116 Mr Chiavaroli said that Mr Fortunato had to see Breese Pitt Dixon to sort out the invoice, but he never did. [73] Mr Fortunato denied that that was said.[74]
[73]T275
[74]T151
117 Towards the conclusion of his cross-examination, Mr Chiavaroli was asked about the cheque for $150,000 and the following exchange occurred:
“Q. So you have signed this cheque, yours is the second signature on the right-hand side?--- A. Correct.
Q. And this cheque is payable to G & S Potenza, isn’t it? --- A. Correct.
Q. And it’s from Pentridge Village, not from West Homes? --- A. Correct.
Q And that’s inconsistent with the answers you just gave me before that Pentridge Village pays West Homes and West Homes pays the contractors, isn’t it? ---A. Correct, but---
COUNSEL: Your Honour, these will go into the plaintiff’s court book as tab 56.
HIS HONOUR: Do you want to say something Mr Chiavaroli? ---A. The reason why this went through Pentridge because it was represented to me it was to do with infrastructure that’s used or cleaned soft spot under the Pentridge Boulevard.
COUNSEL: Q. That wasn’t put to Mr Fortunato, was it, that this was a different job, for cleaning up a soft spot, you’re telling the court for the first time now, aren’t you? --- A. No, that’s what Mr Fortunato represented to me at the time of the meeting.” [75]
[75]T 303- 304
118 This explanation for the payment of the cheque for $150,000 was not mentioned by Mr Chiavaroli in his evidence in chief and was not put in cross-examination to Mr Fortunato. There was no re-examination of Mr Chiavaroli. There was no evidence before the Court of what Mr Chiavaroli was referring to when he mentioned “infrastructure that’s used or cleaned up a soft spot under the Pentridge Boulevard.” Nor was there any evidence of what representation Mr Fortunato was alleged to have made about these matters at the meeting.
119 Mr Damian Chiavaroli, who was the accountant and financial controller for West Homes, gave evidence that on 4 August 2009, his father called him into the office and told him to go with Mr Fortunato and draw a cheque. He said that Mr Fortunato gave him the invoice in the office. He told Mr Fortunato that he could not give him any funds then and that he first needed approval from Capital Finance to draw a cheque.[76] Capital Finance were the financiers of the Pentridge Village project.
[76]T322
120 Bills for the construction of Pentridge Village had to be approved by the quantity surveyor, Napier & Blakely on site for West Homes. They would liaise with Capital Finance and ascertain how much work had been done. Pentridge Village was obliged to submit to Capital Finance for approval at the end of each month, every invoice requiring payment of $10,000 and above and a full listing of every cheque to be issued.[77]
[77]T332-333
121 Mr Leigh Chiavaroli, who was at the time predominantly involved in sales and marketing in the Pentridge Village business, gave evidence that he did not attend the meeting between his father and Mr Fortunato on 4 August 2009. Three weeks later on 25 August 2009, he co-signed Pentridge Village’s cheque to Potenza for $150,000.[78] He had no recollection of the circumstances in which he signed the cheque.
[78]T315
122 Mr Anton Paini, who was an employee of Pentridge Village, gave evidence of its office procedures. He said the invoice from Potenza came by mail.[79] He wrote on the invoice “Hold. Stefan speak to Peter”. “Peter” was Mr Peter Chiavaroli.
[79]T337-338
123 There was a dispute on the evidence about whether Ms Grgas-Bego was present at the meeting of 4 August 2009. I find on the balance of probabilities that she was. Her evidence suggested that she had a clear recollection of it and of the request that she provide dockets. She later complied with the request.
124 I find that on the balance of probabilities that Mr Fortunato, accompanied by his daughter made his demand for the $338, 607.50 to Mr Chiavaroli. Without examining the invoice, Mr Chiavaroli directed his son Damian to pay him $150,000 and said that he would have to deal with Breese Pitt Dixon for the remainder.
125 The evidence does not reveal what consideration was given to Mr Fortunato’s claims between 4 and 25 August 2009 or why the quantity surveyor, or Breese Pitt Dixon or Capital Finance each apparently authorised the payment of $150,000.
Pentridge Village’s descriptions of the $150,000 payment
126 A second point relied on by Potenza was Pentridge Village’s explanations for the payment of $150,000 in the versions of its defence that were filed in the proceeding.
127 The proceeding was commenced on 26 September 2011. The statement of claim alleged that on or around 26 August 2009, Pentridge Village paid $150,000 (“part payment”) to Potenza in partial satisfaction of the debt owed to it for the works performed under the Agreement. Pentridge Village’s defence denied that allegation.
128 Potenza delivered an amended statement of claim dated 2 March 2012 which stated:
“ 8. On or around 26 August 2009, the Defendant made payment of $150,000 (“part payment”) to the Plaintiff in partial satisfaction of the Plaintiff’s debt for the works performed under the Agreement.
PARTICULARS
On 4 August 2009, Carmela Grgas-Bego and Mr Fortunato attended the offices of the Defendant on the Pentridge site in Coburg to request payment of the full outstanding balance. Mr Chiavaroli and two of his sons were in attendance. During this meeting, Mr Chiavaroli requested from Mr Fortunato further time to make payment. It was agreed by the parties that the Defendant would be granted further time to make payment on the condition that the Defendant made payment of around half of the payment of the funds outstanding to show they were committed to satisfying the debt. Mr Chiavaroli also requested additional copies of the dockets which the Plaintiff then supplied.
9. In recognition of the making of the part payment to the Plaintiff, the Defendant was allowed further time to make payment towards the balance of the moneys owing pursuant to the Plaintiff’s invoice, which indulgence the Plaintiff agreed for a reasonable time.”
129 Pentridge Village’s amended defence, dated 26 April 2012, stated:
“On or about 25 August 2009, the Plaintiff agreed with the Defendant that the Plaintiff’s claim in the sum of $338,607.50 (‘the Claim’) was compromised by agreement on the basis that the Defendant would pay $150,000 in full and final satisfaction of the Claim
PARTICULARS
The agreement compromising the Claim was formed in a face to face meeting between Peter Chiavaroli for the Defendant and John Fortunato for the Plaintiff at Pentridge Village, Coburg to the effect alleged.
On or about 25 August 2009, the Defendant duly paid the sum of $150,000 to the Plaintiff. “
130 On 30 July 2012, Pentridge Village obtained documents from the liquidator of Bushy Park Concreting Pty Ltd that showed two cheques for the amounts that Potenza claimed from Pentridge Village had been drawn and made payable to G & S Fortunato Group Pty Ltd and had been signed by Mr Mrnjavac for the Pentridge Village work in January and February 2008 and the Creek Side work in August 2008.[80]
[80]Affidavit of David Fairweather PCB Tab 8
131 On 22 August 2012, Pentridge Village amended its defence pursuant to leave to plead:
“Save to admit that it paid $150,000 to Potenza in late August 2009 it denies paragraph 8.”
132 Counsel for Pentridge Village in final submissions submitted that the arguments available to a party often receive closer scrutiny when counsel is briefed, sometimes close to trial. There is on the Court file an affidavit by Pentridge Village’s solicitor in support of the application for leave to amend the defence, which describes the difficulties that he had experienced in obtaining instructions. That affidavit was not addressed during the trial and it is therefore inappropriate that I take it into account.
133 Nevertheless, the history of the proceeding shows that the first time that Pentridge Village alleged that it had made a mistake in paying Potenza the sum of $150,000 was three years after the payment was made and three months before the commencement of the trial.
134 Pentridge Village also relied on particular matters in support of its defence that it did not make an agreement with Potenza concerning the work at the site. I will next consider those matters.
Potenza’s delay in claiming payment
135 Potenza did not send or deliver an invoice to Pentridge Village for it claims until 4 August 2009 - many months after the work had been done. That was the day of the meeting between Mr Fortunato and Mr Chiavaroli.
136 Potenza said that this delay was due to the close relationship between Mr Chiavaroli and Mr Fortunato. They were speculative builders and it made sense not to pay themselves, when there were more pressing bills owing to third parties to be paid first. Mr Fortunato said that he did not need the money at the time and that he trusted Mr Chiavaroli.
137 Mr Fortunato gave evidence that he knew that Pentridge Village was going to receive money in August 2009, because his daughter, Ms Grgas-Bego was going to settle her purchase of units at the Pentridge Village in August 2009. When Mr Chiavaroli paid Mr Fortunato $150,000, he passed it on to his daughter.
138 Mr Fortunato said that Mr Chiavaroli told him, that because his daughter bought units in the Pentridge Village development, Potenza could put the money that Pentridge Village owed towards the payment of the purchase price for the units. [81]
[81]T 50
Mr Chiavaroli’s loan to Mr Fortunato
139 There was also the fact that on 22 June 2009, Mr Fortunato borrowed $300,000 from Mr Chiavaroli. His evidence was that one reason that he wanted the money was so that his daughter could settle the purchase of her units.[82]
[82]T143,150
140 He did not repay the loan on time and it was extended for six months to 22 December 2010.[83]
[83]T147
141 Mr Chiavaroli sued Mr Fortunato for the amount of the loan and obtained repayment of it together with interest and legal costs.
142 Mr Fortunato said that at the meeting on 4 August 2009, Mr Chiavaroli told him, “I'll pay you later”. Mr Fortunato said that after that time, he pushed Mr Chiavaroli because he wanted the rest of the money “because he lent to me $300,000, you see.” I took that to mean that he wanted Mr Chiavaroli to pay him the amount that Potenza claimed from Pentridge Village because Mr Fortunato owed Mr Chiavaroli the amount of $300,000 that he had borrowed.
143 Mr Chiavaroli gave evidence that on one occasion, Mr Fortunato burst into his office and asked him why he was being sued. Presumably this occurred after Mr Chiavaroli had commenced proceedings to recover the $300,000 that he had loaned to Mr Fortunato. Mr Chiavaroli said that he told Mr Fortunato that he owed him money. He said that he was pretty furious when Mr Fortunato told him that he had falsified his wife’s signature on the loan agreement and that he threw Mr Chiavaroli out.[84]
[84]T306 and 148
Mr Mrnjavac’s two cheques of 27 June 2009
144 Pentridge Village also relied on Mr Mrnjavac’s action, which has been mentioned previously, in writing two cheques dated 27 June 2009 to the Fortunato Group for amounts of $177,265, which is the amount alleged to be due for the Pentridge Boulevard works and $43,560, which is the amount alleged to be due for the Creek Side works. Neither cheque was delivered to Potenza or the Fortunato Group.
145 Mr Mrnjavac said that he wrote the cheques to get his accounts in order for his accountant and for the taxation authorities. He also wrote the cheques because he was not sure what his liability was for the work. He kept the cheques because he never received an invoice from the Fortunato Group or Potenza for the work carried out at Pentridge Village.[85]
[85]T220-226
146 Mr Mrnjavac gave evidence that as it was the end of the financial year, he wrote the cheques out “like every other company does for tax purposes.” He claimed privilege against self incrimination under s128 of the Evidence Act 2008 in respect of answering questions whether he wrote the cheque for $43,560 in order to claim a tax deduction for that amount in the 2009 tax year.[86]
[86]T224
147 He accepted that he had a liability to either Fortunato Group or Potenza for the price of the work performed at the Pentridge Village site. If he had received an invoice from them he would have paid it.[87] If he had received an invoice from Mr Fortunato for the sum of $177,265, he would have billed West Homes first. West Homes would have paid him and in turn he would have paid Mr Fortunato.[88]
[87]T438
[88]T219
148 On 16 September 2012, Mr Mrnjavac sent two tax invoices to West Homes demanding the moneys due to him under the sharing agreement in respect of what was described as the G & S Fortunato quote for the Pentridge Boulevard and for the Creek Side work, being the 50 per cent of the difference between plaintiff’s price and $20 per cubic metre. The invoices were indorsed as being Payment Claims under the Building and Construction Industry Security of Payment Act 2002.[89]
[89]DCB258-259
149 West Homes replied on 27 September 2012 purporting to provide a payment schedule, which included the proposition that the claims were statute barred and that the liquidator of Bushy Park was the only entity with standing to make any payment claims.[90]
[90]DCB 252
The rates charged by Potenza
150 Pentridge Village relied on the rates used by Potenza in calculating its claim to argue that it was a subcontractor i.e. to Bushy Park or another entity other than Pentridge Village. The detail of that argument by Pentridge Village was as follows.
151 Potenza’s claim in respect of the August Creek Side work was based on the rate of $12 per cubic metre, which amounted in total to $43,560. In fact, the contract price contained in the quote was $13.50, so there was a margin in the middle which was consistent with Bushy Park being the head contractor.
Pentridge Village’s Jones v Dunkel submission
152 Pentridge Village relied on the principle in Jones v Dunkel[91] to argue that Potenza’s failure to produce particular documents that it had sought, and to call certain witnesses should lead the Court to conclude that those documents and witnesses would not have assisted its case. Secondly, it argued that upon drawing that inference, the court could more readily accept the evidence of Pentridge Village and draw inferences in its favour. Potenza had been forced to make five affidavits of documents.
[91](1959) 101 CLR 398 and O’Donnell v Reichard [1975] VR 916
153 Pentridge Village relied on the fact that Potenza had not produced tax invoices from G & F Excavations, which had carried out part of the work. It argued that Potenza should have produced the Fortunato Group’s ledgers including loan account ledgers.
154 Then Pentridge Village argued that there were critical witnesses who were not called, but should have been. They included Mr George Fares, who did the sorting work. Next was Ms Vanessa Mrnjavac, who was Mr Mrnjavac’s daughter.
Conclusion on whether Potenza has proved that it made the agreements alleged with Pentridge Village.
155 Potenza has not proved on the balance of probabilities that it made an agreement with Pentridge Village to perform the work for which it claims payment.
156 In reaching that conclusion, I have applied the following statement of the Victorian Court of Appeal in Lederberger v Mediterranean Olives Financial Pty Ltd[92]:
“Identification of the parties to a contract must be in accordance with the objective theory of contract. That is the intention that a reasonable person, with the knowledge of the words and actions of the parties communicated to each other, and the knowledge that the parties had of the surrounding circumstances, would conclude that the parties had. The process of construction requires consideration not only of the text of the documents, but also the surrounding circumstances known to the parties and the purpose and object of the transaction. This in turn presupposes knowledge of the genesis of the transaction, the background, and the context in which the parties are operating.”
[92][2012] VSCA 262 [19]
157 The holding out of a person as a representative of the company gives them ostensible authority to act as agent. The holding out might result from permitting a person to act in a certain manner without taking proper safeguards against misrepresentation.[93]
[93]See Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 467 referring to Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72 at 80
158 The evidence does not establish on the balance of probabilities that Mr Mrnjavac had any actual authority to enter into contracts as agent for Pentridge Village that would bind it. Mr Mrnjavac gave no evidence that he had actual authority nor did any other evidence.
159 I refer to and incorporate my conclusion stated previously that I am not satisfied that Potenza has proved its version of the conversations that Mr Fortunato had with Mr Chiavaroli. I prefer Mr Chiavaroli’s version of the conversations. But, even Mr Fortunato’s version of the conversations does not advance Potenza’s case on this point.
160 I do not accept Mr Mrnjavac’s evidence that he spoke with Mr Chiavaroli about the prices that Mr Fortunato might charge. Even if did, it would be consistent with Mr Mrnjavac checking to make sure that Pentridge Village would pay him a price that would give him the price that he wanted, rather than giving him the authority to enter into contracts on behalf of Pentridge Village.
161 Therefore any alternative claim of Potenza based on conversations between Mr Fortunato and Mr Chiavaroli has not been proved.
162 Potenza has not proved Mr Mrnjavac had actual or ostensible authority to bind Pentridge Village to any agreement that he reached with Mr Fortunato or Potenza.
163 Mr Fortunato was used to dealing with West Homes. West Homes usually dealt with Bushy Park. There was no evidence of significant prior agreements between Potenza and Pentridge Village.
164 Pentridge Village’s payment of $150,000 to Potenza is significant. As discussed in respect of Pentridge Village’s counterclaim, that payment has not been explained. Of course more recently, Pentridge Village has sought its return. I do not consider that the fact of that payment overcomes the problems of proof that Potenza has and which I have discussed above.
165 I did not consider any of Pentridge Village’s Jones v Dunkel points to be decisive on the question of whether the contract alleged by Potenza had been proved.
166 The result of my conclusions is that Potenza’s claim based on the quotes or on the pleaded conversations has not been proved.
Potenza’s quantum meruit claim
167 Potenza brought an alternative quantum meruit claim to recover the amount of $188,607.50 as a reasonable sum for the work that it alleged that it had performed at the request of Pentridge Village, rather than under a contract. Deane J described this action as:
“the ordinary common law right to bring proceedings on a common indebitatus count to recover fair and reasonable remuneration for work which he has actually done and been accepted by the building owner.”[94]
[94]Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 262
168 Potenza argued that it performed the works for Pentridge Village at its request contained in the discussions between Mr Fortunato and Mr Chiavaroli.
169 Potenza contended that the amount due to it on a quantum meruit could be calculated by multiplying the number of loads that had been removed by the market price for that work. That would result in the calculation of a fair and reasonable price.
170 Potenza argued that Pentridge Village knew that it was carrying out the work and was not doing so without expectation of payment. Pentridge Village had accepted the work and its land had been improved by them.
171 Pentridge Village argued that because the work was performed pursuant to a contract between Bushy Creek, acting in its own right and Potenza, Potenza has no right of action on a quantum meruit against Pentridge Village, or West Homes which engaged Bushy Creek. It relied on the statement of Gleeson CJ in Lumbers v W Cook Builders (in Liq) that:
“… in the ordinary case a building sub-contractor does not have a restitutionary claim against a property owner, but must look for payment to the head contractor.”[95]
[95](2008) 232 CLR 635 at 654-655
172 Pentridge Village also relied on the judgment of Vickery J in Skilled Group Ltd v CSR Viridian Pty Ltd.[96]
[96][2012] VSC 290
173 Pentridge Village referred to the following statement in the text Building and Construction Contracts in Australia by Dorter and Sharkey that:
“…The obligation to pay fair and just compensation for a benefit which has been accepted will only arise in a case where there is no applicable genuine agreement or where such an agreement is frustrated, avoided or unenforceable.”[97]
[97]October 2012 update at paragraph 1.970
174 Pentridge Village also pointed out that Potenza’s quantum meruit claim as pleaded was based on a reasonable remuneration of which it said that expert evidence would be led at trial. No such evidence had been led.
175 Potenza’s submissions in some respects sought to rely on the free acceptance of a benefit doctrine, which in some circumstances can give rise to an obligation to make restitution, but would not appear to in this case.[98] There was no circumstance of a failure by Pentridge Village to take a reasonable opportunity to reject the proffered services.[99]
[98]See Andrew Shelton & Co Pty Ltd v Alpha Healthcare Pty Ltd [2002] VSC 248 at [95]-[107]
[99]Lumbers v W Cook Builders Supra at p656
Conclusion on quantum meruit claim
176 I accept Pentridge Village’s defence to the quantum meruit claim. The evidence suggests a contract was made with Bushy Creek. Potenza did not perform the work without negotiating an agreement to do so. However, the evidence suggests that the agreement was with Bushy Park.
177 I am also not satisfied that Pentridge Village requested Potenza to do the work for it, or engaged in other conduct that might give rise to a quantum meruit.
Did Potenza perform the work?
178 In view of the conclusion that I have reached, it is not strictly necessary to consider further arguments advanced by Pentridge Village, but for the sake of completeness I will do so.
179 One issue was whether Potenza had performed the work for which it claims payment. Obviously, even if had a contract with Pentridge Village, it would still have to prove that it performed the work required by that contract.
180 Potenza’s case is that it did the work in January and February 2008 at the Pentridge Village at the S10 site by engaging a number of contractors, mainly truck drivers, people who brought trucks on site and who were engaged by companies, such as Lantrak. George Fares was the operator of the excavator.[100]
[100]T195
181 Pentridge Village contended that the Fortunato Group performed the first item of works at the Pentridge Boulevard site, but denies that it was performed pursuant to a contract made with it. However, it accepted that it was open to the Court to find that Potenza had performed the January/ February Pentridge Boulevard work because it had proved that it had paid Lantrak for carrying out that work.[101] This concession was properly made. There was ample evidence through Mr Mrnjavac’s soil movement log of the work being done.
[101]T417
182 In its final written submissions,[102] Pentridge Village contended that the Fortunato Group performed the Creek Side work in August 2008 pursuant to a subcontract with Mr Mrnjavac. I consider that Mr Fortunato’s evidence proves that the work was done by Potenza and its contractors.
[102]Paragraph 18
183 The Creek Side works were performed between 28 and 30 August 2008. G & S Fortunato or Potenza was billed directly by Lantrak, which transported the soil from the site to the tips. Potenza had an account with Lantrak but the bill was paid by the Fortunato Group and Mr Fortunato received a reduction in his loan account with the Fortunato Group.[103] Mr Fortunato gave evidence that he paid the $40,000 to the Fortunato Group three years later. He said that this comprised in part the repayment to the Fortunato Group of $31,544.70 spent by undertaking the cartage works between 28 and 30 August 2008.[104]
[103]T48
[104]T159
184 Mr Mrnjavac agreed that Bushy Park Concreting charged West Homes for the Creek Side soil cartage works undertaken by Mr Fortunato in August 2008. Bushy Park sent West Homes an invoice of 10 September 2008 for the sum of $53,908.50 for the same works, same quantity with the only difference being a higher price.[105] It was paid on 13 September 2008.[106]Mr Mrnjavac said that Bushy Park’s invoice of 10 September 2008 contained an error because he should have been charging West Homes $16 a cubic metre.[107] In fact, he charged West Homes $13.50 a cubic metre and Mr Fortunato quoted him $12. Mr Mrnjavac appears to accept that he charged West Homes for the soil cartage works conducted by Mr Fortunato on 28 to 30 August 2008. He also accepted that Mr Fortunato did the Creek Side work and Bluestone supplied the excavator to load the trucks.[108]
[105]DCB 103
[106]DCB 103, 195
[107]T216
[108]T247
185 Mr Fortunato said that it was nothing to do with him and he did not know what arrangement West Homes had with Bushy Park.[109] That proposition is correct to a point, but Mr Mrnjavac’s action was a further example of the usual pattern whereby Bushy Park billed West Homes for work done by contractors at the site.
[109]T124-128
The January sorting work
186 Pentridge Village’s major argument about whether Potenza had performed particular work was directed at the sorting of contaminated soil performed in January and February 2008.
187 Mr Fortunato gave evidence that soon after the Pentridge Boulevard work was completed, Potenza commenced the sorting works, using an excavator with a sorting bucket a couple of metres wide The sorting works took five days to do.[110] The price for this work was the $87,000 contained in the quotation of 25 January 2008.
[110]T75,92
188 The sorting work was performed by G & F Excavations and supervised by Mr Fortunato.[111] He paid G & F Excavations a sum just over $20,000.[112] Their books of account were not produced.
[111]T77,87
[112]T83
189 Mr Mrnjavac said that Mr Fortunato’s job was to remove the soil from the site and Mr Skutter’s job was to sort it, using the excavator with the sorting bucket. [113] Mr Skutter worked for Bluestone Excavations.[114]
[113]T212
[114]T199
190 Pentridge Village’s case was that the sorting works were not done by Potenza or the Fortunato Group, but by Bluestone Earthworks pursuant to a retainer with West Homes. These works were billed by Bluestone Earthworks to West Homes. Mr Mrnjavac agreed that four invoices relating to the sorting work had been paid.[115]
[115]T210 and DCB 171-175 and 197
191 There was evidence that Mr Mrnjavac was carrying out work through Bluestone Earthworks on the Pentridge Village site at the same time of mid-January to early February when the sorting work was carried out. Potenza says that this was different work and that that work had nothing to do with him.[116]
[116]T91 and DCB 172
192 Mr Fortunato was asked about an entry in the Bushy Park Supplier Ledger showing a payment of $92,906.00 in respect of an invoice dated 30 April 2008 from the Fortunato Group that had been paid on 30 June.[117] Mr Fortunato said that it had nothing to do with Potenza and did not relate to works undertaken in January or February 2008.[118] He said that the Fortunato Group never did work for Bushy Park Concreting.[119] That, as Mr Fortunato later conceded, was not the case.
[117]See DCB 287
[118]T136
[119]T142
193 Mr Mrnjavac said that the work to which the April invoice related had nothing to do with the work the subject of the present claims, but was done on another site known as S8 or S2.[120] Mr Mrnjavac’s work diary entries supported the conclusion that contractors working on behalf of Mr Fortunato had performed the work.[121]
[120]T189
[121]T 189
Conclusion
194 It is not surprising that on a large building site there were different contractors performing similar work. The possibility for confusion particularly some years later as to sho did what work is obvious.
195 I have taken into account the Jones v Dunkel submissions made by the defendant.
196 The issue of who performed the soil sorting work is not clear cut and I have reservations in many respects about the evidence of some of the plaintiff’s witnesses. However, on balance, taking into account Mr Fortunato’s evidence and Mr Mrnjavac’s contemporaneous diary entries, I am satisfied on the balance of probabilities that Mr Fortunato, through Potenza, engaged the contractors who did the sorting work.
Pentridge Village’s counterclaim
197 Pentridge Village argued that the sum of $150,000 was money had and received to its use. This claim was based on principles of restitution.
198 Pentridge Village submitted that it had paid the sum of $150,000 to Potenza under a mistake of fact or law. The fact that the payment has been caused by a mistake, was sufficient to give rise to a prima facie obligation on the part of the recipient of the payment to make restitution: see David Securities Pty Ltd v Commonwealth Bank of Australia.[122] There were no circumstances which would make an order for restitution unjust.
[122](1992) 176 CLR 353
199 It also argued that the consideration for the payment of the $150,000 had totally failed. Pentridge Village also argued that the payment was made as a result of misleading and deceptive conduct.
200 Any benefit that West Homes had received by reason of cartage works performed was a benefit received pursuant to its contract with Bushy Park Concreting.
201 Pentridge Village argued that Mr Chiavaroli would not have directed Damian Chiavaroli to pay the $150,000 unless Mr Fortunato had asserted the existence of the debt and provided the invoice.
202 Potenza argued that Pentridge Village’s total failure of consideration claim in respect of the repayment of the $150,000 cannot sit with its concession that Potenza did do work.
Conclusion on counterclaim
Mistake
203 Pentridge Village bears the onus of proving its entitlement to recover the $150,000. That entitlement does not arise automatically because Potenza’s claim against Pentridge Village has not succeeded. The mistake has to have caused the payment and Pentridge Village bears the onus of proof on that issue. [123]
[123]David Securities Pty Ltd v Commonwealth of Australia (1992) 175 CLR 353 at 376-377, 395-6, 402 and Mason and Carter’s Restitution Law in Australia 2nd ed p156
204 Pentridge Village has failed to discharge that onus for the following reasons.
205 First, there were no explanations of why the payment was made other than that given by Mr Chiavaroli in chief and in cross-examination, which I have set out above.
206 The first explanation that Mr Chiavaroli gave hardly amounted to evidence of being misled by a false representation. Rather it showed Mr Chiavaroli was prepared to arrange payment for a long standing acquaintance, who had been doing work at the Pentridge Village site and not being paid. It is not surprising that, faced with such a complaint from some one that he knew well, that Mr Chiavaroli, without reference to the legal questions of who were the contracting parties, should decide to authorise a substantial payment in respect of the work that he presumably knew, at least in general terms, had been done at the site.
207 Mr Chiavaroli’s second explanation in cross-examination was vague and lacking in detail. It was not put to Mr Fortunato in cross-examination. It really amounted to evidence that Mr Chiavaroli authorised the payment to Potenza on Mr Fortunato’s description of the work. The work so described was quite different to the work described in the Invoice and was work that no other witness in the trial had mentioned.
208 I find on the balance of probabilities that Mr Fortunato did not make the representations that Mr Chiavaroli alleged. In those circumstances Pentridge Village has not proved a mistake made by Mr Chiavaroli.
209 Secondly, the description of accord and satisfaction that Pentridge Village gave to the payment of $150,000 in its amended defence is significant.
210 Thirdly, there was no evidence of what occurred in the three weeks between 4 August and 25 August 2009. The evidence suggested that Mr Chiavaroli gave no further consideration to the matter and did not read the Invoice. The counterclaim alleges that he was misled by the Invoice, but the evidence does not support that conclusion. The evidence suggests that a number of persons were involved in processing the claim, including staff of Pentridge Village, the quantity surveyor, Breese Pitt Dixon and Capital Finance. Apart from Mr Paini and Mr Damian Chiavaroli, no one else from Pentridge Village’s side gave evidence that they read the Invoice.
211 Fourthly, Pentridge Village only commenced an attempt to have the $150,000 returned as a counterclaim in this proceeding on 22 August 2012 more than three years after the payment was made.
212 Taking all these matters into account, I do not consider that Pentridge Village has proved that it made a mistake of fact or of law in paying the $150,000 to Potenza.
213 Potenza relied on the principle that generally a payment made to compromise an honest claim is irrecoverable on the grounds of mistake: see Hookway v Racing Victoria Ltd.[124] But I do not consider that that principle is applicable in this case - there must be questions of whether the claim fits within that principle.
[124](2005) 13 VR 444 at [48] –[69]
Total failure of consideration
214 To prove a total failure of consideration justifying a restitutionary order, Pentridge Village must prove what caused it to make the payment.
215 There has to be proof of a “failure to sustain itself of the state of affairs contemplated as a basis for the payments the [defendant] seeks to recover.”[125] Putting the question another way: was it unconscionable for Potenza as the recipient of the payment to retain it in circumstances in which it was not specifically intended that or especially provided that it should so enjoy it? [126]
[125]Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 557 per Gummow J
[126]See Equuscorp Pty Ltd v Haxton (2012) 286 ALR 12 at [32] quoting Gummow J in Roxborough at [103]-[104]
216 Pentridge Village has not proved that it made the payment to Potenza on a basis that would make it unconscionable for it to retain it. Pentridge Village has not proved that the payment was made on the basis of state of affairs that was not sustained.
217 Although there are differences between mistake of law and failure of consideration, I again refer and apply the matters I listed in concluding that a mistake had not been proved. They are also of relevance to this claim.
218 Mr Chiavaroli knew that Mr Fortunato through his companies had performed work at the Pentridge Village site. He may have known or, at the least accepted, that he had not been paid for that work. He was prepared to pay his old acquaintance part of his claim. Neither he nor any one else at Pentridge Village saw any reason to revisit the payment for more than three years.
Misleading or deceptive conduct
219 As I have previously stated, I find that Pentridge Village has not proved that the representation that Mr Chiavaroli says caused it to authorise the payment of $150,000, did in fact do so.
220 If on the other hand, the conduct considered is Mr Fortunato’s delivery of the Invoice, then Pentridge Village has not proved that it acted in reliance on it in deciding to make the payment. Nor has it proved that it was mislead or deceived by it.
221 Pentridge Village must prove that it suffered loss by or because of the misleading or deceptive conduct of Potenza e.g. s 82 of the Trade Practices Act 1974 and s159 of the Fair Trading Act 1999. That statutory formula incorporates ordinary principles of causation.[127]
[127]Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525
Conclusion
222 Neither the plaintiff’s claim nor the defendant’s counterclaim has been established.
223 Subject to hearing the parties as to the form of orders, I would dismiss both claim and counterclaim.
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