Galal v Al Bassam Investments Pty Ltd
[2012] WASC 57
•23 FEBRUARY 2012
GALAL -v- AL BASSAM INVESTMENTS PTY LTD [2012] WASC 57
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 57 | |
| Case No: | CIV:2494/2010 | 6 - 10 FEBRUARY 2012 | |
| Coram: | BEECH J | 23/02/12 | |
| 23 | Judgment Part: | 1 of 1 | |
| Result: | Action dismissed | ||
| B | |||
| PDF Version |
| Parties: | JOHN GALAL AL BASSAM INVESTMENTS PTY LTD as Trustee for the AL BASSAM INVESTMENT TRUST ABDALLAH S MAGAR |
Catchwords: | Contract Whether person engaged as contractor by one party entered contract with another party to provide services for reward Turns on own facts |
Legislation: | Nil |
Case References: | Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 Lumbers v W Cook Builders Pty Ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635 Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494 Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
AL BASSAM INVESTMENTS PTY LTD as Trustee for the AL BASSAM INVESTMENT TRUST
First Defendant
ABDALLAH S MAGAR
Second Defendant
Catchwords:
Contract - Whether person engaged as contractor by one party entered contract with another party to provide services for reward - Turns on own facts
Legislation:
Nil
Result:
Action dismissed
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : In person
First Defendant : Mr C M Slater
Second Defendant : Mr B W Ashdown
Solicitors:
Plaintiff : In person
First Defendant : O'Connor Partners Commercial Lawyers
Second Defendant : D'Angelo Legal
Case(s) referred to in judgment(s):
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1
Henville v Walker [2001] HCA 52; (2001) 206 CLR 459
Lumbers v W Cook Builders Pty Ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635
Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494
Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221
(Page 3)
- BEECH J:
Introduction
1 The plaintiff, Mr John Galal, claims that he has not been paid for substantial work that he performed for the first defendant, Al Bassam Investments Pty Ltd. Al Bassam Investments says that Mr Galal contracted with a different entity to provide services to it and to Al Bassam Investments, and that the other entity has paid Mr Galal for the work which he did.
2 It is common ground that Mr Galal was engaged as a consultant, and later as a full-time employee, by one or more of the entities comprising the Australian Islamic College (AIC), and that he was paid by AIC.
3 The second defendant, Mr Abdallah Magar, was a controlling mind of both AIC and Al Bassam Investments. Mr Magar engaged Mr Galal to work for AIC. The essential issue in this case is whether, as Mr Galal claims, Mr Magar separately contracted on behalf of Al Bassam Investments, with Mr Galal, for Mr Galal to provide services to Al Bassam Investments for which Al Bassam Investments would pay Mr Galal.
4 It is convenient to begin by outlining some of the facts, before explaining Mr Galal's claims in more detail.
Some background facts
5 Most of the facts I outline in this section are common ground or not in substantial dispute.
6 Mr Magar founded AIC in about 1986. AIC was operated on multiple campuses. Each campus was operated through a separate incorporated association.
7 As at 1998, the Thornlie campus of AIC was operated by the Australian Islamic College (Perth) Inc; and the Dianella campus by the Australian Islamic College (North of the River) Inc.
8 Subsequently, in 2000 AIC commenced operating at the Kewdale campus, through the Australian Islamic College (Kewdale) Inc.
9 For the purposes of this action, it is not necessary to distinguish between the various entities through which AIC was operated. I will refer to them collectively and individually as AIC.
(Page 4)
10 AIC provided educational facilities to students from many different nationalities and ethnic backgrounds.
11 Al Bassam Investments was incorporated in April 1995. It has, at all material times, acted as the trustee for the Al Bassam Investment Trust. Al Bassam Investments is associated with Mr Dawoud Al Bassam, a businessman from Saudi Arabia. Mr Al Bassam and Al Bassam Investments provided substantial financial support to AIC, including by donations to AIC and loans to assist AIC to grow and to deal with cash flow difficulties.
12 In 1996, Al Bassam Investments acquired 81 Cleveland Street, Dianella, on which the Dianella campus of AIC is situated. In 1997, AIC and Al Bassam Investments entered a deed (exhibit E, page 305). The land was transferred to AIC (exhibit E, page 1013) and divided into three lots. The lot on which the buildings comprising the Dianella campus of AIC were located was held by the Australian Islamic College (North of the River) Inc. The balance of the land was held by Al Bassam Investments. Al Bassam Investments subdivided that land from 1999 to 2001. Mr Galal claims that he did substantial work for Al Bassam Investments on its subdivision of the Dianella land.
13 ACN 063 942 021 Pty Ltd (the ACN Company) was incorporated in 1994. By 1996, its shareholders were Al Bassam Investments and Magar Enterprises Pty Ltd, a company associated with Mr Magar. By 1996, Mr Magar was secretary and one of the two directors of the ACN Company.
14 In evidence and submissions, Mr Galal described the ACN Company as a wholly owned subsidiary of Al Bassam Investments. In saying that, he was evidently referring to beneficial interests. In evidence he said, without objection, that the ACN Company was trustee of a unit trust, all units of which were held by Al Bassam Investments.
15 I accept Mr Magar's evidence (exhibit 7, pars 39 - 41), that the ACN Company was acquired for the purpose of the purchase of lot 10, Kirkham Hill Terrace, Maylands (the Maylands property). The ACN Company acquired the land in 1995. Initially, it was proposed that the ACN Company develop the Maylands property with another company. However, the other company did not proceed with its proposed involvement.
16 The ACN Company subdivided the Maylands property. The last lots were sold in 2003. Mr Galal claims that he did substantial work in
(Page 5)
- relation to that subdivision and that Al Bassam Investments is obliged to pay him for that work.
17 In November 1999, AIC acquired land at President Street, Kewdale (the Kewdale property). The deposit of $650,000 was paid by Al Bassam Investments Pty Ltd, from funds provided to it by Mr Al Bassam. The balance of the purchase price was financed by a bank loan taken out by Al Bassam Investments. Al Bassam Investments used the proceeds of its bank loan to pay the balance of the purchase price. That was treated as a loan by Al Bassam Investments to AIC.
18 Subdivision approval for the Kewdale property was obtained in 2005.
19 Again, Mr Galal claims that he did substantial work in relation to the Kewdale subdivision, particularly towards obtaining subdivision approvals, and claims that Al Bassam Investments is obliged to pay him for that work.
20 It is common ground that at some time in the first half of 1998, Mr Galal commenced performing work for AIC as a contractor. The defendants plead that he commenced on 1 March 1998. Mr Galal says that he commenced in June 1998, after discussions in or about April 1998.
21 There is also a dispute about the circumstances and conversations leading to Mr Galal's engagement by AIC. Mr Galal says that he was contacted by Mr Magar, who wanted someone to provide bookkeeping and accounting services to AIC. In particular, Mr Galal says that Mr Magar told him that an accountability report was overdue and needed immediate attention. Mr Magar says that he was telephoned by Mr Galal's father who said that Mr Galal was in financial difficulty, and asked whether Mr Magar could provide him with work. Mr Magar says that in those circumstances, he agreed to engage Mr Galal, although there was no particular immediate need for his services.
22 In my view, it is not necessary to resolve the conflict of evidence about the circumstances surrounding and precise timing of Mr Galal's initial engagement with AIC. My conclusion on the critical issues in the action is unaffected by any resolution of that conflict of evidence.
23 I accept that, as was put to Mr Galal and accepted by him (ts 301):
(a) in 1997 and early 1998, Mr Galal had been conducting his own accounting practice;
(Page 6)
- (b) by the time he spoke with Mr Magar, he (Mr Galal) was in default of repayment of his credit card facility with his bank;
(c) he agreed to commence working as a contractor for AIC at the rate of $20 per hour;
(d) he expected that his work for AIC would occupy him on a full-time basis; and
(e) he stopped promoting his accounting practice and did not take on any clients.
24 Thereafter, until early 2003, Mr Galal regularly invoiced AIC in respect of his services. Over time, the hourly rate was increased by agreement to $25 per hour and then $26 per hour.
25 Mr Galal recorded his time on timesheets. He prepared invoices to AIC based on the time recorded on the timesheet. He regularly sent an invoice, usually weekly, to AIC, with an attached supporting timesheet (ts 306, 338, 349).
26 AIC paid all of the invoices (ts 338, 341, 384); see also the statement of Mr Magar (exhibit 7, pars 81 - 83).
27 The trial bundle contained numerous invoices and timesheets from 2000 to early 2003. When the documents for tender were finalised at the conclusion of the trial, only some of those timesheets were tendered, and none of the invoices. That was evidently because there was no issue between the parties about the substance of the contents of those documents.
28 In the period from when he commenced work in 1998 until early 2003, Mr Galal normally invoiced AIC between 37 and 50 hours per week (see, for example, plaintiff's closing submissions, par 12). A few of the timesheets tendered recorded between 50 and 55 hours per week.
29 I will make further findings about the timesheets and invoices, and say more about their significance, later in these reasons.
30 Mr Galal claims that in the months after he commenced working with AIC, Mr Magar, on behalf of Al Bassam Investments, requested Mr Galal to provide accounting and other services to Al Bassam Investments, for which it would pay Mr Galal. The defendants deny that any conversation to this effect took place. Whether there was any such conversation is the central issue in the action.
(Page 7)
31 On 12 November 1998, Mr Galal was appointed the company secretary of Al Bassam Investments and the ACN Company.
32 On 24 January 2003, Mr Galal and AIC entered a written contract of employment (exhibit 4A). On its proper construction, the contract provided for AIC to employ Mr Galal full-time, as a financial controller or as required, on a gross salary of $60,000 per annum.
33 Subsequently, Mr Galal's salary was increased. In the financial year ending 30 June 2005, he was paid a gross sum of $69,427 (exhibit 4C).
34 Mr Galal's employment with AIC was terminated in December 2005. Mr Magar terminated Mr Galal's employment when he discovered that Mr Galal had fraudulently altered cheques drawn by Al Bassam Investments. Mr Magar was the signatory of Al Bassam Investments' cheque account. After Mr Magar had signed the cheques, Mr Galal altered the payee and the amount of the cheque.
35 On 27 April 2007, Mr Galal pleaded guilty to a number of counts of fraud. He was sentenced to 2 years' imprisonment, with parole eligibility. An order for compensation in an amount of $551,261.67 was made in favour of Al Bassam Investments. That order remains wholly unsatisfied.
36 Up until the time of termination of his employment with AIC, and during his years as a consultant to AIC, Mr Galal did not make any written demand to Al Bassam Investments for payment for services provided by him to that company. I will say more about this later in these reasons.
37 In April 2008, Mr Galal was released on parole.
38 In 2008 and 2009, Mr Galal did not take any steps to claim, or seek to recover, monies from Al Bassam Investments for work he did for that company.
39 In June 2010, Al Bassam Investments filed a creditors' petition against Mr Galal, based on the unsatisfied compensation order made by the District Court.
40 Three months later, in September 2010, Mr Galal filed the writ of summons in this action.
41 The application for the appointment of a trustee in bankruptcy to Mr Galal's estate has been adjourned pending the determination of this action.
(Page 8)
Mr Galal's claims
42 Mr Galal's claims are set out in the statement of claim filed on his behalf by his lawyers, during the period when he was represented. Mr Galal commenced the action acting on his own behalf. In November 2010, Mr Galal appointed solicitors to act on his behalf. They acted in the action until July 2011. Thereafter, Mr Galal represented himself.
43 At the trial of the action, Mr Galal ably appeared on his own behalf.
44 Mr Galal's primary claim is against Al Bassam Investments for breach of contract.
45 In support of that claim, Mr Galal pleads that:
(a) in about April 1998 he agreed with Mr Magar on behalf of AIC that he would provide accounting services to AIC;
(b) he agreed to charge the 'highly reduced rate' of $20 per hour because of the nature of the work performed by AIC;
(c) in the months thereafter Mr Magar, on behalf of Al Bassam Investments, orally requested Mr Galal, and Mr Galal agreed, to provide accounting and other services to Al Bassam Investments;
(d) it was expressly agreed that he would be remunerated at a later date at a reasonable commercial rate;
(e) the agreement with Al Bassam Investments was varied in November 1998 so that Mr Galal would be remunerated after completion of the Dianella subdivision;
(f) in January 2001, that agreement was further varied so that Mr Galal would be paid after the Maylands subdivision and Kewdale subdivision were complete;
(g) he did various substantial work on each of the subdivisions for which he has not been paid; and
(h) he claims reasonable remuneration for the work done.
46 By particulars, Mr Galal detailed the approximate number of hours that he claimed to have worked in each relevant calendar year on each of the three subdivisions. In total, he claims to have worked for 3,430 hours on the Dianella subdivision, 450 hours on the Maylands subdivision and 7,350 hours on the Kewdale subdivision.
(Page 9)
47 Alternatively, if there was no contract with Al Bassam Investments, Mr Galal claims that Al Bassam Investments accepted the benefit of the services provided by him to it, so that he is entitled to reasonable remuneration for those services.
48 Alternatively, if his claim against Al Bassam Investments fails, Mr Galal claims against Mr Magar. The legal nature of the claim is unclear. Mr Galal pleads that Mr Magar represented to him that he (Mr Galal) would be properly remunerated for services to be provided by him to Al Bassam Investments. In reliance on the representation, Mr Galal provided those services, for which he says he has not been paid.
49 Mr Galal claims damages in the amount of a reasonable remuneration for the work done. The amount claimed is not quantified.
50 Mr Galal pleads that his claim is to be reduced by the order for compensation made in the District Court in the sum of $551,000.
Mr Galal's evidence
51 Mr Galal gave evidence to the following effect:
(a) In 1998, Mr Magar contacted him and asked him whether he would do some work for AIC;
(b) they met at Mr Magar's offices on the Sunday. At the meeting, Mr Magar explained the history of AIC, said a little about its funding and accounts, and talked at length about God and other philosophical matters;
(c) Mr Galal told Mr Magar that his usual hourly rate varied from $45 to $180 per hour, depending on complexity;
(d) Mr Magar stressed the charitable nature of AIC's work, and its limited financial resources, and said that it could only afford to pay $20 per hour. Mr Galal accepted this;
(e) soon after commencing, Mr Magar asked Mr Galal to do some accounting work for Al Bassam Investments;
(f) soon after this, Mr Galal said to Mr Magar that Al Bassam Investments was a commercial enterprise so that he would expect to be paid at normal commercial rates. Mr Magar said that he accepted that, but that Al Bassam Investments could not pay at the time and payment would be sorted out later;
(Page 10)
- (g) later, in November 1998, Mr Galal reiterated that he would expect to be paid normal commercial rates for the work being done. In response, Mr Magar agreed, but said that Al Bassam Investments could not pay until the subdivision and development was complete. At that time, Mr Galal was doing work on the Dianella subdivision;
(h) by November 1998, Mr Galal was doing an average of 25 to 30 hours per week for Al Bassam Investments. He would go into the AIC offices at or before 7.00 am and not leave until about 7.00 pm, and work a full day on Sundays;
(i) after the Dianella subdivision was completed, Mr Galal spoke to Mr Magar about being paid for the work he had done on that subdivision. Mr Magar said that money was still a problem and requested that Mr Galal wait until the other subdivisions were completed;
(j) in 2002 or 2003, when the Maylands subdivision properties were sold, Mr Galal again asked if payment could be made. Mr Magar said that funds were needed for the Kewdale subdivision and that he would be paid at the completion of the Kewdale subdivision; and
(k) after he was released from prison in April 2008, Mr Galal did not turn his attention to the money he says was owed to him by Al Bassam Investments 'for a number of reasons including that I had received part of what was owed to me when I had taken money from [Al Bassam Investments] unlawfully. I wanted to forget that period in my life due to my shame. I knew that to pursue my claim would be expensive and I had limited financial resources' (exhibit D2, par 40).
52 In his statement dated 22 December 2011 (exhibit D1), Mr Galal gave evidence about the work which he did for Al Bassam Investments on the three subdivisions.
53 He summarised the work he did on the Dianella subdivision in these terms:
7. In relation to the Dianella Subdivision, my work included receiving the necessary approvals from the Education Department to excise the 'super lot' from the title of the land upon which the Australian Islamic College (Dianella) Campus is located, liaising closely with Project Manager (Mr Y Dutoit), attending meetings and
- corresponding with officers from the local shire - the City of Stirling, WA Planning Commission, Water Authority, Planners, Architects, Engineers, Westpac Banking Corporation, Real Estate Agents (particularly Ray White Doubleview), Auctioneers, Stephanie Laurie Settlements, amongst others.
- …
9. Also in relation to the Dianella subdivision I was responsible for the payment of all accounts, and receipting of all proceeds of sales, recording all transactions and maintaining an accounting system from which annual accounts are drawn. I was also responsible for completing the Business Activity Statements and annual tax and ASIC returns.
54 He annexed a number of documents from Al Bassam Investments' files which he said were indicative of the work which he did on the subdivision.
55 He summarised his work on the Maylands subdivision in similar terms (par 45). He also identified two additional particular tasks on which he worked. He negotiated with Homeswest to waive a condition of the sale of the Maylands land to the ACN Company requiring construction of units within a certain period of time. He also negotiated with the Valuer General's office regarding the value of the blocks (pars 45 and 46).
56 Again, Mr Galal annexed to his statement a number of documents which he said were indicative of the work which he did on the Maylands subdivision.
57 Mr Galal's statement did not annex documents from the files of Al Bassam Investments regarding the Kewdale subdivision in the period in which Mr Galal worked. He subpoenaed Al Bassam Investments and AIC to produce such documents, but none was produced for that period. The evidence about the steps taken to comply with the subpoena was not always consistent, and was less than satisfactory. I do not draw any inference against Mr Galal from the absence of documents to support his claim about the work he did in relation to the Kewdale subdivision.
58 I will say more about the extent to which it is necessary to make findings about the precise extent of the work done by Mr Galal on the subdivisions later in these reasons.
(Page 12)
Other evidence relied on by Mr Galal
59 Mr Galal called a number of other witnesses. In my view, the evidence of the other witnesses does not assist Mr Galal's case on the critical issue of whether he orally agreed with Mr Magar, on behalf of Al Bassam Investments, that Al Bassam Investments would pay Mr Galal to provide services to it.
60 The evidence of some of the witnesses called by Mr Galal was directed to establishing that Mr Galal took steps and did work on behalf of Al Bassam Investments. These witnesses include Mr Mariotti, Ms Laurie and Mr Bird. I am satisfied that Mr Galal did work and took steps on behalf of Al Bassam Investments. The question is whether he did so as part of his duties under his contract with AIC, or whether he did it pursuant to a separate oral agreement or other discussion between him and Mr Magar, on behalf of Al Bassam Investments, for Al Bassam Investments to pay Mr Galal for his services. The evidence of these witnesses does not assist, either way, in relation to that question.
61 Some of the other witnesses called by Mr Galal were, in substance, witnesses for the defence. Ms Amina Hansia was the general office assistant to Mr Magar. Ms Rashida Hafeez was the office administrator or business manager for AIC. Mr Yusuf Du Toit was engaged as the project manager for the three subdivisions. The first defendant prepared witness statements for each of these persons. Mr Galal called each of them. In substance, he cross-examined them on their statement, without objection from the defendants. The first defendant tendered each witness's statement of evidence.
62 In his closing submissions, Mr Galal invited me to make adverse credibility findings about these witnesses. In my view, it is not necessary to make detailed findings about their evidence. That is because, as I will explain, I do not accept the evidence of Mr Galal on the critical issue in the case, for reasons that have nothing to do with the evidence of these witnesses.
63 By way of general observation, I do not give any significant weight to the assertions made by these witnesses about the extent of work done by Mr Galal. In my view, these witnesses, particularly Ms Hafeez and Mr Du Toit, revealed in cross-examination a propensity to make assertions unfavourable to Mr Galal's case, and to downplay the extent of work which he undertook, without any adequate foundation for doing so. For example, I give no weight to Ms Hafeez's assertion (exhibit 2, par 47) that 95% of Mr Galal's work was in relation to AIC and 5% for
(Page 13)
- Al Bassam Investments. Further, Mr Du Toit appeared to me to wish to defend the position that Mr Galal did not do significant work. For example, when he was asked about the content of a letter signed by Mr Galal, he went out of his way to volunteer that somebody could have instructed Mr Galal to write the letter (ts 221).
64 Similarly, I would not rely on Mr Magar's evidence about the nature and extent of Mr Galal's work on the subdivisions. For example, Mr Magar exaggerated the work said to have been done by Ms Hafeez and Ms Hansia. In my view, that was because Mr Magar wanted to minimise the work done by Mr Galal.
65 The parties joined issue on the nature and extent of the work done by Mr Galal on the subdivisions. Cross-examination by Mr Galal, and of Mr Galal, involved close attention to the individual documents annexed to Mr Galal's statement. It is not necessary to make detailed findings in this respect. I am satisfied that Mr Galal did a substantial amount of work on the subdivisions, more than portrayed by the defendants' witnesses, but less than portrayed by Mr Galal. The precise nature and extent of the work done does not influence my thinking on the critical issue.
66 That brings me to the resolution of the critical issue.
Was there an agreement for Al Bassam Investments to pay Mr Galal for services to be provided to it by him?
67 The critical issue in the action is whether, in the context of an existing contract between Mr Galal and AIC for Mr Galal to provide services, Mr Magar agreed on behalf of Al Bassam Investments that Al Bassam Investments would pay Mr Galal for services to be provided to Al Bassam Investments.
68 As I have said, the only evidence in support of Mr Galal's case on that issue is his own evidence.
69 Mr Magar, the other party to the alleged conversations, denies that any such conversations occurred.
70 There is no document recording or evidencing the alleged conversations.
71 I am not satisfied that Mr Galal and Mr Magar had any discussion in which they agreed that Mr Galal would provide services to Al Bassam Investments for which Al Bassam Investments would pay Mr Galal. That is not because I accept or prefer Mr Magar's evidence on this topic.
(Page 14)
- Rather, taking into account the objective probabilities, and Mr Galal's conduct, as I find it to be, from 1998 onwards, I do not accept his evidence about the alleged conversations. That conclusion takes into account the following matters.
72 First, the effect of Mr Galal's evidence is that he and Mr Magar agreed that he (Mr Galal) would be paid at a reasonable or normal commercial rate for the work that he did for Al Bassam Investments. There is nothing in Mr Galal's evidence to explain why, even if payment was to be deferred, the parties would have left the commercial rate to be paid for work for Al Bassam Investments unascertained, rather than fixing a rate then and there. As a starting point, that may be thought to be somewhat unlikely.
73 Secondly, on Mr Galal's evidence, he agreed to defer payment by Al Bassam Investments, which he characterised as a commercial entity, while being regularly paid by AIC, the entity which was for charitable or other public purposes. While I acknowledge Mr Galal's evidence that he was, in effect, 'under the spell' of Mr Magar, there is room to doubt the likelihood that Mr Galal would have agreed to perform substantial work for Al Bassam Investments on the basis that he would be paid at some uncertain future time. Moreover, the same point arises in relation to Mr Galal's evidence that at the completion of the Dianella subdivision, when he raised the question of payment, he was asked to wait until the other subdivisions were completed, to which he agreed. There is room to doubt the likelihood of his apparent willingness to continue to defer any payment for what he characterises as work for very substantial number of hours for which he was to be paid at commercial rates.
74 Thirdly, Mr Galal's evidence about the alleged agreement must be viewed in the context of his evidence that after his initial discussions with Mr Magar he expected to be working full-time with AIC and be paid $20 per hour. Thus, he was not expecting to be free to engage in other work, at what he might have considered to be more commercial rates, on top of the AIC work. Rather, when he started with AIC he was evidently content to work full-time at $20 per hour. That bears on the probability that he complained about doing work for Al Bassam Investments at a rate of $20 per hour. For the reasons explained in this section, I do not accept that he did.
75 Fourthly, in February 2003, Mr Galal signed a full-time employment contract with AIC. There is no evidence of any discussion about how that contract would sit with what, on Mr Galal's evidence, was an existing
(Page 15)
- arrangement for Mr Galal to do many hundreds of hours, or more than a thousand hours, per year of work for Al Bassam Investments, for which Al Bassam Investments would pay separately. In my view, it is unlikely that the parties would have signed a full-time employment contract with AIC without even mentioning the separate arrangement with Al Bassam Investments, if such an arrangement had existed.
76 Fifthly, on Mr Galal's evidence, he spent thousands of hours working for Al Bassam Investments over a period of more than seven years, without ever providing any invoice or timesheet to Al Bassam Investments (ts 349). In that period, he did not make any demand for payment. Mr Galal might say that that is explained by the fact that he had agreed to defer receipt of payment until after the Kewdale subdivision was completed. Even so, on Mr Galal's evidence, there was no communication of any kind between Mr Galal and Al Bassam Investments about the extent of his work, or about the extent of monies which would, on his evidence, consequently be owed by Al Bassam Investments to Mr Galal. That seems to me to be inherently unlikely. Both parties would have had an obvious interest in ensuring there was some certainty about the amount of work Mr Galal had done.
77 Sixthly, in my view, it is telling that Mr Galal did not assert an agreement by Al Bassam Investments to pay him for the work he had done for that company or make any demand at any time before Al Bassam Investments instituted bankruptcy proceedings against him in June 2010.
78 As I have said, Mr Galal did not make any written demand, or articulate in writing any claim, against Al Bassam Investments until after his defrauding of that company had been discovered.
79 The evidence includes three letters written by Mr Galal to Mr Magar in the months after his fraud was discovered. Mr Galal's letter of 18 February 2006 (exhibit E, pages 924 - 926) was written in the context that Mr Galal's fraud had been reported to the police. In essence, the letter is an abusive rant against Mr Magar. In the letter, Mr Galal:
(a) stated that he had done an enormous amount of work for Al Bassam Investments on the three subdivisions;
(b) said that he had not been paid anything for that work;
(c) asserted that Mr Magar had received substantial funds from Al Bassam Investments, for which he had done nothing;
(Page 16)
- (d) asserted that, in substance, he (Mr Galal) had been doing the work for Al Bassam Investments but Mr Magar was receiving the money;
(e) stated that he (Mr Galal) had borrowed $150,000 from Al Bassam Investments which he had intended to repay;
(f) stated, in parenthesis, that for seven and a half years' work, after taking $150,000, Mr Galal was still owed 'lots' of money; and
(g) stated that what he had taken was 'justifiable' and was 'much less than what I have given to' Al Bassam Investments.
80 It is noteworthy that the letter did not mention any discussions between Mr Magar and Mr Galal about Al Bassam Investments paying Mr Galal at an hourly rate, or at all, for work Mr Galal did for Al Bassam Investments. The letter did not assert any agreement for Al Bassam Investments to pay Mr Galal for his work. Nor did the letter, in substance, demand payment for work done for Al Bassam Investments. Rather, in his letter, Mr Galal was asserting that the broad justice of the situation justified his (criminal) conduct. See, in similar vein, his reference in his earlier letter of 14 February 2006 (exhibit E, page 929) to having committed a 'crime of justice'. If there had been an express agreement for Al Bassam Investments to pay for Mr Galal's work, in my view, it is likely that Mr Galal would have mentioned that agreement in his letter of 18 February 2006, and demanded payment.
81 I have outlined Mr Galal's evidence about why, after he was released from prison, he did not turn his attention to the money he says was owed to him by Al Bassam Investments. See [51(k)] above. I do not find that evidence convincing.
82 Taken together, these six matters would lead me not to accept Mr Galal's evidence about the alleged agreement for Al Bassam Investments to pay for his work. There are further significant reasons which reinforce that conclusion. Indeed, each of the seventh and eighth matters, to which I now turn, would, alone, lead me to not accept Mr Galal's evidence about the alleged agreement. Moreover, the seventh and eighth matters are related, and reinforce each other.
83 Seventhly, I find that Mr Galal recorded on his timesheet and charged AIC all of the time that he spent working at the AIC office, regardless of whether the task was for AIC, or Al Bassam Investments, or the ACN Company, or any other related entity.
(Page 17)
84 Early in his cross-examination, Mr Galal gave this evidence about the way he recorded his time on his timesheets:
Your time sheets have a time that you started?---Correct.
That was down to a five-minute time?---That would just simply record the time that I arrived, so yes.
So from the time you arrived, you were reporting to the AIC to the time that you left?---Yes.
You would say you had had a lunch break of a certain period of time?---Yes.
You would take that off?---Yes.
The time that you recorded as arriving and the time that you recorded as leaving was down to a five-minute thing?---For AIC purposes, yes (ts 306 - 307).
85 In my view, in that evidence Mr Galal was saying that when he arrived at the office he would record his start time, and when he left the office he would record his finish time. He would deduct the period of any lunch break and charge AIC for the time he spent from his start time to his finish time.
86 Work on Al Bassam Investments' tasks was interspersed with his AIC work (ts 325, 326, 338).
87 Later in his evidence in cross-examination, Mr Galal put things differently. He said that if he arrived at work and first did some Al Bassam Investments' work, he would not record his start time until he commenced working on AIC matters. Similarly, when he finished working on AIC matters, he would record his finish time, but then might do further work on Al Bassam matters. He explained the position this way:
Perhaps if I may be allowed and, hopefully, this might be helpful, the times that are recorded and shown on the time sheets that are exhibited in the book of documents relate to times that start with AIC and finish with AIC. It is true that in between those times there has been time spent on Al Bassam work. Those times have been recorded elsewhere or at least a note has been made of so, for example, if I recorded '7.00 to 5.00' and I spent a couple of hours during that time on Al Bassam, I would record that somewhere else in another record. There have been also occasions, many occasions where I would come in early, and this example: I might have started at 6.00, did an hour on Al Bassam, record '7.00' for attendance purposes when I start work for AIC. I might have finished officially for
(Page 18)
- AIC at 5.00 and I might have done additional work on Al Bassam that night, and that would have been recorded elsewhere, so it's actually a mix, so there are times that relate to Al Bassam work before and after the starting and finishing times shown in the records and there is Al Bassam work time that has been spent during the AIC times which has also been made note of and compensated elsewhere (ts 340).
88 I do not accept that evidence. In my view, it is inconsistent with his earlier evidence at ts 306 - 307, set out above. It is also inconsistent with what Mr Galal put to Ms Hansia (ts 166) that the times recorded on the invoice matched the times recorded for Mr Galal in the attendance book. See also ts 172 and 179. Further and in any event, to my mind the approach explained by Mr Galal would be arbitrary and would not make any sense. Mr Galal did not back away from his evidence that he charged AIC for all of the time between his recorded start and finish times, less any lunch break. For all of that time the AIC clock was on. That was so regardless of the extent to which some of that time was spent on Al Bassam Investments' work. See also ts 342 - 343. On Mr Galal's evidence, AIC would pay for all of his time between the first AIC job and the last AIC job, regardless of how much Al Bassam Investments' work was done in between, but Al Bassam Investments would be billed separately for work outside of that. There is no apparent reason why Mr Galal would have invoiced on the basis that AIC pays for a randomly determined part, but not all, of the work he did for Al Bassam Investments. Moreover, on Mr Galal's approach, he would be paid twice for the time he spent on Al Bassam work while the AIC clock was on.
89 Eighthly, I find that Mr Galal did not separately record the time which he spent on Al Bassam Investments' work. To my mind, it is unthinkable that a person who had agreed to be paid a commercial rate, to be determined later, for work done would fail to record, in any way, the hours he had spent or the tasks he had performed.
90 In the course of his cross-examination, Mr Galal said that, after a while, he had recorded the time he spent on Al Bassam Investments' work (ts 325). I do not accept that evidence. Mr Galal said nothing in his witness statements, or in the affidavit which he filed in the Federal Court bankruptcy proceedings, to suggest that he had made any records of his time spent on Al Bassam Investments' work. He accepted that that was so (ts 327, 340 - 341). Mr Galal did not explain his failure to mention in his statements and affidavit that he had made any such records. In my view, records of this kind would be obviously consistent with, and supportive of, the existence of the agreement which Mr Galal alleged. Having observed Mr Galal conduct this trial over five days, I am satisfied that he
(Page 19)
- is an intelligent man who, in preparing his witness statements, would have appreciated the significance of such documents, had they existed.
91 Further, Mr Galal wrote letters setting out, in detail, various classes of documents which he sought by way of discovery or subpoena. He did not mention any time records allegedly made by him concerning his work on Al Bassam Investments matters. See exhibits E3, E5, E11 and E12. In cross-examination, Mr Galal accepted that he had not specifically referred to such documents in his letters or subpoena, but said that he intended to capture them in what he wrote (ts 328). I do not accept that evidence. I am satisfied that, had Mr Galal believed such documents existed, he would have specifically referred to them in his letters and the schedule to the subpoena he caused to be issued.
92 For all these reasons, I do not accept Mr Galal's evidence about the alleged agreement that he would be paid by Al Bassam Investments for work he did for it.
93 Mr Galal's submissions emphasise the different character of AIC and Al Bassam Investments. He submits that:
(a) AIC is a not-for-profit incorporated association, whereas Al Bassam Investments is a private company which operates with the object of making profit;
(b) AIC, as a not-for-profit association, could not engage in commercial activities such as subdivision of land; and
(c) under funding agreements AIC has with the Commonwealth and the State, AIC is not permitted to spend money on commercial profit-making enterprises such as developing land.
94 I accept the first proposition. I do not accept the second proposition. In support of it, Mr Galal relies on s 4 of the Associations Incorporation Act 1987 (WA). That section controls the purposes of an incorporated association and prohibits an association for the purpose of trading or securing profit to members from being incorporated under the Act. In my view, the legislation does not prevent an incorporated association which has a primary object that is educational (or otherwise within s 4(1) of the Act) from engaging in activities with the object of making profits to use for the educational purpose of the association. There is no evidence about the funding agreements the subject of Mr Galal's third proposition.
(Page 20)
95 It is open to have viewed the subdivisions as having a benefit for AIC. The subdivisions were conducted by different entities. The Maylands subdivision was not conducted by Al Bassam Investments, but by the ACN Company. In any event, it is open to see the subdivision by the ACN Company as for the financial benefit of AIC. Mr Galal asserted that in correspondence in 2000 (exhibit D1, pages 156 - 160 and exhibit E, pages 1061 - 1062). The Kewdale land was owned by AIC, so even if Mr Galal's claim was generally accepted, it is difficult to see why work on the Kewdale subdivision would not have been within the ambit of his contract with AIC.
96 In any event, the question is not whether it was proper for AIC to agree to pay for Mr Galal's services and then to permit some of his time to be spent on tasks for Al Bassam Investments. The question is whether that is what happened. For the reasons already explained, I find that that is what occurred.
97 For a number of years, AIC, Al Bassam Investments and the ACN Company operated from the same registered office in Booragoon, sharing a post office box and telephone and facsimile numbers. Correspondence sent by Al Bassam Investments also included email addresses belonging to AIC accounts. From at least February 2003, AIC's website was included in Al Bassam Investments' letterhead. See exhibit D1, pages 108, 110, 123, 209, 219, 223; exhibit 4A. In my view, the AIC office operated without any clear or sharp distinction being made between AIC matters and Al Bassam Investments matters. I do not accept that while he was working in AIC's office, Mr Galal ever raised the distinction between Al Bassam Investments and AIC as a ground to support receiving separate payment from Al Bassam Investments for the work he did. I find that no conversations on that topic occurred. Mr Galal was contracted to and later employed by AIC. Under his contract he performed work at the direction of Mr Magar. Some of that work related to Al Bassam Investments. Nevertheless, it was work performed pursuant to and under Mr Galal's contract with AIC.
98 These conclusions are fatal to Mr Galal's claims. I turn now to explain why that is so.
The reasons Mr Galal's claim fails
99 The findings I have just made are, obviously, fatal to Mr Galal's contract claim. I have found that no contract existed between Mr Galal and Al Bassam Investments.
(Page 21)
100 The findings I have made are fatal to the claim by Mr Galal against Al Bassam Investments for reasonable remuneration for the services he provided to that company. If services are provided under a valid and subsisting contract, there is no room for a claim in unjust enrichment or restitution for reasonable remuneration for the value of the services; see, for example, Lumbers v W Cook Builders Pty Ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221, 237 - 238.
101 Mr Galal's other claim is for misrepresentation against Mr Magar. The claim fails at the first hurdle of establishing the pleaded facts. As I have said, I find that Mr Magar did not represent to Mr Galal that Al Bassam Investments would remunerate Mr Galal for services to be provided by him to Al Bassam Investments.
102 Had Mr Galal established the pleaded representation, there would have been other obstacles to the pleaded claim against Mr Magar. The legal nature of the claim, and the cause of action relied on, is unclear. The plea is put as a claim of misrepresentation. There is no plea of negligence or fraud. It is basic that, absent statutory intervention, innocent misrepresentation is a ground for rescission of a contract but does not give rise to a claim for damages.
103 One possibility is that the pleaded facts be viewed as the foundation for a claim for damages under what was, at the relevant time, s 82 of the Trade Practices Act 1974 (Cth). Counsel for Mr Magar resisted any such contention, with considerable force. Apart from anything else, there is no plea that the relevant misrepresentation or conduct was made in trade or commerce. On the face of it, conduct within an employer/employee relationship would not be conduct within trade or commerce: see Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594.
104 Further, damage is an element of a claim for damages under s 82. The statement of claim pleads that the plaintiff provided this service in reliance on the representations and that Al Bassam Investments denies any obligation to make payment for those services. The statement of claim then claims damages in the amount of a reasonable amount of remuneration for the work done. On the face of it at least, the claim for damages seeks compensation for a loss that is not caused by any misrepresentation. In a case of this kind, damages under s 82 will, generally at least, seek to restore the plaintiff to the position it was in had the representation not been made. They are not awarded with the object of placing the plaintiff in the position it would have been had the
(Page 22)
- misleading statement been true. See, for example, Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1; Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494. I do not overlook that common law principles relevant to assessing damages in contract or tort are not directly relevant (Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 [18]), and that rigid distinctions between the measures of damages do not apply in this context: Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388.
105 As I have found that Mr Galal's contract claim fails, the question of quantification of the claim for loss does not arise. Nevertheless, I make these observations.
106 Mr Galal's claim was squarely based on the application of a reasonable commercial hourly rate for the number of hours that he worked. Mr Galal has failed to satisfy me in relation to either of the two essential integers to such a calculation of loss.
107 First, Mr Galal's evidence about the number of hours that he worked on Al Bassam Investments' matters was extremely generalised. He simply asserted, in a single paragraph of his witness statement, that by November 1998 he was working on average 25 to 30 hours on such matters (exhibit D2, par 27). The effect of his submissions is that that evidence should be taken to mean that he worked 25 to 30 hours per week from then until the end of 2005. I do not read the evidence that way. In any event, if that is what the evidence means, I do not accept it. There is evidently no sound foundation for Mr Galal's alleged estimate. To my mind, it is no more than a figure plucked from the air.
108 Secondly, Mr Galal has not adduced evidence of a reasonable commercial rate. The addendum to Mr Galal's witness statement contained par 28 stating that he considered $75 per hour to be a reasonable sum. The defendant objected to the paragraph. In response to the objection, Mr Galal provided a document setting out some further material which he would propose to give in evidence, and seeking leave to adduce the expert evidence in par 28 of the addendum.
109 I gave reasons upholding the objection to the evidence and refusing Mr Galal's application for leave (ts 267 - 274).
110 Prior to trial, Mr Galal foreshadowed that he would seek to adduce expert evidence from an accountant. During the trial, and at its conclusion, he continued to foreshadow such a possibility. No application was made.
(Page 23)
Conclusion
111 For these reasons, I would dismiss Mr Galal's action. I will hear from the parties on the question of costs.
0
6
1