Goolwa Quarries Pty Ltd v Adam Watson - [2012] SADC 127

District Court of South Australia
(Civil)
GOOLWA QUARRIES PTY LTD v ADAM WATSON
[2012] SADC 127
Judgment of His Honour Judge Slattery (ex tempore)
19 September 2012
CONTRACTS
GUARANTEE AND INDEMNITY - RIGHTS OF SURETY - AGAINST PRINCIPAL DEBTOR
EQUITY - GENERAL PRINCIPLES - UNDUE INFLUENCE AND DURESS
ESTOPPEL
In 2009 the plaintiff supplied Lorenzin Constructions Pty Ltd with quarry materials and with back cartage services. Lorenzin Constructions Pty Ltd fell behind in payment and was indebted to the plaintiff in the sum of $160,000. The plaintiff terminated both supply and services to Lorenzin Constructions Pty Ltd.
The defendant was employed by Lorenzin Constructions Pty Ltd as a project manager. The defendant approached the plaintiff to recommence supply to Lorenzin Constructions Pty Ltd and the plaintiff refused.
The defendant subsequently requested the plaintiff to recommence supply of quarry materials to him personally and to the same site so that he could on-supply those same quarry materials to Lorenzin Constructions Pty Ltd. The plaintiff recommenced supply of quarry materials and back carting services on that basis and all cart notes and invoices for that work were directed to the defendant at his home address.
The period of re-supply and further back carting services continued from 14 to 21 September 2009 and after that date Lorenzin Constructions Pty Ltd sourced materials from another quarry. Subsequent to 21 September 2009 Lorenzin Constructions Pty Ltd paid to the plaintiff its debt of $160,000.
The defendant refused to pay on the invoices delivered by the plaintiff and asserted that the debt was not his debt or that, inferentially, the plaintiff was unconscionable in attempting to recover from him. In the further alternative, the defendant contended that the agreement with the plaintiff was made in circumstances amounting to duress upon the defendant. Further consideration given by the trial Judge to the question of novation, or whether properly construed, the relationship between the plaintiff and the defendant was that of surety and guarantor or was an indemnity and whether the discharge of the Lorenzin Constructions Pty Ltd debt by the plaintiff operated as an estoppel against the plaintiff making a claim upon the defendant.
Held:
Judgment for the plaintiff. The agreement to recommence supply between the plaintiff and the defendant was a separate contract under which the defendant was liable to the plaintiff.
The plaintiff did not act unconscionably towards the defendant; the plaintiff ensured that the defendant understood that it would not take the risk on on-supply to Lorenzin Constructions Pty Ltd it would only look to the defendant for payment. The alleged defence of duress fails for the same reason.
There was no novation of the plaintiff’s relationship with Lorenzin Constructions Pty Ltd because the plaintiff made no agreement that involved Lorenzin Constructions Pty Ltd. For the same reason, the relationship of the defendant to the plaintiff was not under a guarantee or indemnity of the obligations of Lorenzin Constructions Pty Ltd as the plaintiff refused to enter into any further legal relationship with that company. As a result, no estoppel arises against the plaintiff.
Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 46 ; Bridge v Campbell Discount Pty Ltd [1962] AC 600, discussed.
Brukewitz v Brown (1923) NZLR 1106; Yerkey v Jones (1939) 36 CLR 649, considered.

GOOLWA QUARRIES PTY LTD v ADAM WATSON
[2012] SADC 127
PART 1

This matter arises out of a dispute over payment for the delivery of quarry materials used as road base.
The plaintiff, Goolwa Quarries Pty Ltd (“Goolwa Quarries”), was the supplier of those quarry materials. The defendant Adam Watson worked as a Project Manager for a company called Lorenzin Constructions Pty Ltd (“Lorenzin”). Lorenzin was engaged as a contractor at a Devine Homes development at Sims Road, Mount Barker in South Australia for which the quarry materials were used for road base.
In around September 2009 Lorenzin failed to make payments due to Goolwa Quarries for the quarry materials that had been supplied to Lorenzin. It is not clear to me for how long those quarry materials had been supplied to Lorenzin but that matter is not pertinent to these reasons.
Upon the failure of Lorenzin to pay Goolwa Quarries for the supply of quarry materials, the plaintiff ceased supply. I am satisfied that at that time, namely in August/September 2009, Lorenzin owed the plaintiff some $160,000. I am satisfied that the relevant trading arrangement between the plaintiff and Lorenzin were brought to an end due to Lorenzin’s default.[1]
[1] The significance of the size of the default may be understood when it was known that the average value (price) of the tonnages delivered to the site are in the order of about $400.00 per delivery
On 9 September 2009 the defendant approached the plaintiff through Mr Dean Lello, one of its directors, at the Currency Creek premises of the plaintiff. The defendant requested resumption of supply by the plaintiff to Lorenzin. The plaintiff refused on the basis that the $160,000 was still owing. On the plaintiff’s case that I accept, the defendant requested that the plaintiff supply him personally with quarry material to enable the project of Lorenzin to be completed and that, in those circumstances, invoices should be sent directly to him as the purchasing entity. That case was not put in contest by the defendant in any way.[2]
[2] Actually or implicitly, the defendant intended to on-sell the product to Lorenzin to enable Lorenzin to complete the Sims Road Mount Barker contract.
After discussion between Mr Dean Lello and the defendant, the offer put by the defendant was accepted. At a time that is not clear on the evidence, the plaintiff stipulated and the defendant accepted that the invoices of the plaintiff were to be paid within seven (7) days. In light of the prior trading history that will be developed later in these reasons, that is not surprising.
On that day, namely on or about 9 September 2009, during the same conversation, the defendant was warned by Mr Lello that if he on sold the product that he purchased from the plaintiff and that he was not paid by his purchaser, then that was not a matter of concern to the plaintiff. The plaintiff would look at all times to the defendant to pay the debts incurred in any further trading and which were due and owing to the plaintiff. That obligation was orally accepted by the defendant. The plaintiff through Mr Lello stipulated to the defendant that the plaintiff would deliver to the defendant an invoice in the amount of $40,000 plus GST. This invoice reflected the plaintiff’s estimate of the invoice cost of the product to be supplied by the plaintiff to the defendant. An invoice in the amount of $44,000 dated 18 September 2009 was sent to the defendant’s home address. It was not paid. The failure to pay that invoice is not pertinent to these reasons.
Following that conversation, the plaintiff supplied further quarry material to the Sims Road site between 14 and 21 September 2009. The amount supplied was some 3,508.99 tonnes and back carting was done by the plaintiff from the Sims Road site to the plaintiff’s premises. No payment was made for that material supplied or for the back carting. The total value owing by the defendant under the terms of the contract was $50,607.33. That amount was required to be paid within seven days but it was not paid within seven days or at any time thereafter.
On 22 October 2009 the defendant was called to the plaintiff’s premises. The fact of non-payment of the amount of $50,607.33 was discussed between Mr Dean Lello of the plaintiff, and the defendant. One of the plaintiff’s employees, Ms Gabrielle McDonald, was also present.
At that time the defendant agreed in writing to pay the amount due and owing to the defendant by the end of October 2009. The defendant refused or failed to pay that amount, and I am satisfied that a demand was made in March 2010 for payment and that the defendant has refused to pay.
I am satisfied that, as at 9 September 2009, a separate and new contract was created as between the plaintiff and the defendant. The terms of that contract were that, in consideration of further supplies by the plaintiff to the Sims Road site and for back carting from that site, the defendant made himself responsible for the payment of the plaintiff’s charges. Consideration of the promisee does not need to move from the promisee to the promisor, and the defendant could give any direction he wished to the plaintiff about where the purchases between the plaintiff and the defendant should be delivered. I am satisfied that the product was delivered and an invoice for the proper amount owing by the defendant to the plaintiff was rendered to the defendant by the plaintiff. That invoice is unpaid.
I am satisfied that the defendant has no defence to the plaintiff’s claim.
In those circumstances there should be judgment for the plaintiff.

PART 2

It is necessary to make some comments in relation to the conduct of the trial of this matter.
The trial commenced on Monday 17 September 2012 at 10.07 am. Shortly prior to that time a facsimile had been received from the defendant. That facsimile is now in evidence and marked Exhibit D8. The facsimile purported to suggest that the defendant could not travel or work, and that for that reason the defendant would not be attending the trial of the matter. I asked for a court call to be made for the defendant but there was no response.
The court then attempted to make phone contact with the defendant. That attempt was unsuccessful.
In that event, no one appeared for the defendant either personally or by any electronic means to put any submissions in support of any application by the defendant. I therefore decided to proceed to hear the action. At the time I published reasons for my decision to proceed with the trial. Those reasons are as follow:
In this action the plaintiff’s claim against the defendant has previously been listed for trial but on that date the matter was not heard because of the unavailability of judges. The matter is listed for trial today.
On 16 September 2012 the defendant sent to the registrar of the District Court a letter of that date from his address at 1C/6 Macleay Street, Elizabeth Bay, New South Wales 2011. In the letter he identified, that is Mr Watson identified, that the action had been listed for a three-day trial commencing today. He informs that he has been unwell of late with a recurrent illness which has necessitated an admission to hospital in the last month. He did not identify for how long the hospital admission had lasted or the nature of the illness. He goes on to say that:
‘This has resulted in my being unable to undertake normal duties, including the preparation required to properly defend the matter’.
He then says in the letter that he encloses medical certificates explaining his absence and his inability to travel and to attend court today. He says that he has been referred to three specialists in an attempt to manage his health problems.
In the balance of the letter Mr Watson then goes on to identify a number of matters that go to the merits of the action and then, in the last paragraph, he says as a follows:
‘I would respectfully request that the matter be adjourned for a period of 12 weeks to allow me to continue preparation of my defence.’
The letter is signed by Mr Watson and dated by hand 16/9/12. Attached to the letter is a document under the hand of Dr William Huang, provider number 060257MA, from the Darlinghurst Medical Centre, Sydney, New South Wales. Dr Huang certifies that Mr Watson would be unfit to work/travel for a period of seven days from 16 September 2012 inclusive. Attached to that document (or as it appears) is a series of requests from Dr Huang to a number of specialists. That consists of three pages. The fourth page is a mental health assessment but it is not clear to me who prepared the mental health assessment. That assessment consists of four pages.
The final page of the bundle is a certificate from the Darlinghurst Imaging Centre in respect of Mr Watson but it is not informative. It is noted that the Darlinghurst Imaging Centre is at the same address as Dr Huang’s surgery.
The material provided by the defendant suggests that he wants 12 weeks to allow him to continue preparation of his defence. I have viewed the trial book and the defence that Mr Watson has prepared. That defence consists of the following assertions:
‘I have not received any documentation from Goolwa Quarries until I received this summons.
Up until now all correspondence has been with Lorenzin Constructions, the company that acquired the goods and received payments for them.
I do not believe this debt is mine.
I have tried to negotiate with the other party and its solicitors.’
The defence, as I read that document, is that, although there have been negotiations continuing, Mr Watson does not believe that the debt is his debt and that the debt belongs to Lorenzin Constructions. That is the issue joined in the proceedings. In my view, on the facts as I read them in the pleading within the trial book, that is not a matter that would require 12 weeks time to prepare, nor is it a matter that could not have been addressed previously by Mr Watson in consultation or in negotiation with the plaintiff. I leave aside the last point and I only mention it because Mr Watson refers to the fact that he has been negotiating. I therefore put aside that matter and merely identify the issue that has been raised.
The matter before the court related to issues that occurred some three or more years ago. It has been reached on a previous occasion but, very unfortunately, a judge was not available to hear and determine it. There has been an unsuccessful application for summary judgment. In my view, this being a commercial court and having regard to the paramountcy of the interest of justice for all parties before the court, it is appropriate, in the exercise of my discretion, that this matter proceed to trial.
Having said that, I understand the difficulties that may be faced by the defendant, however, in my opinion and in the exercise of my discretion, the interest of the plaintiff in having its claim heard and determined prevail over any excuse offered by or proffered by the defendant for failing to attend the court today. I therefore reject the defendant’s application insofar as he has made it to adjourn this matter for 12 weeks.
For the sake of completeness I also asked for an all courts call to be made of Mr Watson. There was no response.
On the front sheet of the fax sent to the court by Mr Watson there is a telephone number, being a mobile telephone number. I asked my associate to ring that number and there was no response. A message has been left for Mr Watson.
In the circumstances, in the exercise of my discretion I have decided that the matter should proceed to hearing. That decision carries with it the obligation upon the plaintiff to prove its case. We are now embarking upon the trial of the matter and the civil registry will be notified accordingly.
The view that I formed was that if an application for adjournment of the trial was to be made, then the defendant as applicant for the adjournment, should at the least present some application to the court. The mere receipt of a fax was not sufficient in my view.
This matter had been listed for trial on one previous occasion and had not been reached due to a paucity of judges to hear the matter. That very regrettable situation works a real injustice towards the plaintiff. If the matter was adjourned again, the plaintiff’s claim will not be heard until some time during the 2013 year. This is a claim arising out of factual circumstances that occurred in the 2009 calendar year. I viewed the position to be that it was for the defendant to convince me that he was entitled to an adjournment for a good cause. He did not appear at the court at the commencement of the hearing and he was not on the telephone number he had supplied to the court at the commencement of the hearing.
This court is the principal trial court of this state. In my view, it would significantly diminish the status of the court and it would be very detrimental to the administration of justice in this state for this defendant, in this case, to expect a favourable exercise of a discretion for an adjournment based upon a facsimile first seen by the court on the morning of the trial and which was unsupported either by any oral submissions made by the defendant or by anyone on his behalf.
My view was that, in light of all of the background of this matter, and in the interests of justice, and having regard to the content of the material that had been sent to the court by Mr Watson, I could see no basis for an adjournment of the trial. I could certainly not see any reason why Mr Watson should have an adjournment for 12 weeks to better prepare his defence. Recalling the fact that this is the second occasion the matter has been listed for trial in this Court, it may be presumed that the defendant was ready to proceed to trial on the first occasion.
In the course of the trial, Mr Watson rang through to the court registry. Sometime after the defendant made that phone call to the court registry, I was later given notice of the fact of that call by a message given to me in the court room.
The defendant’s phone call was a response to the phone call that the court had made to him as a matter of courtesy to hear anything that he wished to put to court concerning the documents that had been faxed to the court that morning.
Another phone call was then made to the defendant’s phone. A male person, not the defendant, answered that phone call. The defendant eventually came to the phone. He was informed of what had transpired and the current position about the commencement of the trial. The defendant did not put anything further to me.
I then informed the defendant of my decision to proceed with the trial.
The defendant immediately volunteered that he would appeal against my decision. I informed the defendant that if that was his decision, then that was a matter that he could pursue
It then became clear in that conversation that the defendant was at that time (and this situation continued throughout the hearing of this matter) accompanied by someone who was then giving assistance during the hearing. The first person who spoke to the court at the time that it returned the phone call made to it by Mr Watson on the morning of the first day of the trial identified to the court that he was a qualified lawyer, but had no practising certificate. He informed me that he was a lawyer who was giving assistance to the defendant.
It became clear throughout the evidence in this matter that a number of conversations were occurring between the defendant and this lawyer both during the time the defendant was cross examining any of the witnesses of the plaintiff and also during the time that the defendant was giving evidence before the court.
During the relevant conversation with the defendant, I informed him that if it was his decision to appeal, that was a matter for him. The defendant made no other application in that respect.
In the absence of an application by the defendant to stay the proceedings or for any other orders, I then continued with the hearing of the matter.
I ensured that a contact on voice phone was then maintained with Mr Watson, who was at that time in Sydney, and the trial was conducted with Mr Watson on the phone. Some of the documents used in evidence were emailed to Mr Watson from time to time. The content of them have been discussed in evidence and that discussion is reflected in the transcript.

At the hearing, and during the plaintiff’s opening when I was given an understanding of the plaintiff’s case (and during the time of the defendant’s absence from the court), the plaintiff produced and tendered a volume of material (exhibit P1). The defendant then attended to the trial by telephone after the tender of P1. No copy of P1 could be given to him as he failed to appear for the trial.
The position that I then confronted was whether, in the interests of justice, the hearing should be adjourned to enable the content of the exhibit to be sent to the defendant or whether the issue could be dealt with in another way.
At the time that the plaintiff applied to tender the content of P1, I refused to allow some portions of the book to be included and they were thereafter excluded. I also insisted that relevant important documents, other than those within the exhibit P1, should be sent by email to the defendant. I am satisfied that this was done because it was confirmed by the plaintiff through its counsel and it was also confirmed in evidence by the defendant.
I then considered the book P1 in light of the issues for decision arising on the face of the pleadings. There are some pertinent matters that need to be stated. The first is that the defendant does not contest that the relevant deliveries went to the Sims Road Mount Barker site of Devine Homes between 14 and 21 September 2009. Second, the defendant did not contest that the cart notes for delivery were in his name. These had been identified in disclosure. Some of them carried signatures of the defendant and others carried signatures of other persons who signed for the deliveries.
Third, the defendant did not contest that he had meetings with Mr Dean Lello in September 2009 that led to the supply of the material to the Sims Road site aforesaid.
Fourth, the defendant did not contest that he signed a document on 22 October 2009 but alleged that he was not given a copy of it. He later alleged that due to some dyslexic condition, he was not able to read the document. I will comment on that matter later.
Fifth, the defendant did contest that he had received the plaintiff’s September 2009 invoice (P1, tab 1) and I required the plaintiff to lead evidence to prove that fact.
Sixth, the defendant did not contest that he received the tax invoice dated 18 September 2009 (P1, tab 4) from the plaintiff in the amount of $44,000 including GST. He did contest his liability to pay that account.
In those circumstances, it became clear to me that it was necessary to ensure that the defendant was aware of the content of the pertinent documents in the action and in the relevant circumstances, those documents were: P1 tab 7, P1 tab 4 and P1 tab 1.
I therefore decided that the trial could proceed in circumstances where the defendant was continuously informed of the contents of those three documents so that he could understand the status of those documents in light of the evidence.
I formed the view that I could proceed this way because the defendant’s defence was consistent throughout: this debt was not his debt and it was the liability of someone else, not him.
The resolution of that matter depended upon the evidence to be adduced orally about an agreement made on or about 9 September 2009. The documents that followed were not used to inform my decision about that matter.
This was because the defendant’s primary contention was that the debt was not his.
As a secondary matter, he also pleaded that he did not get the relevant documents upon which the debt claim was based. In order to have filed that defence, the defendant needed to address the same documents that, in the end, are not determinative of his contractual liabilities.
In the premises, I insisted upon the plaintiff proving delivery of those documents to the defendant.[3]
[3] The plaintiff later discharged that burden in such a way that I am satisfied beyond any doubt, and certainly on the balance of probabilities, that the defendant received the relevant documents and that his assertions in his defence and in his evidence about delivery are without any merit at all.
I therefore formed the view that no prejudice would be suffered by the defendant, that the interests of justice in respect of the plaintiff, the defendant and the proper use of the court’s resources was best served by allowing the plaintiff to proceed with its case. In the course of evidence, when these three documents were discussed, I ensured on each occasion that the defendant was read out the content of the document and was familiar with the topics under discussion.
I used this approach repetitively.
I am satisfied that the defendant understood the matters that were addressed in evidence and that he comprehended the issues under consideration.
And his defence ultimately became one of fairness disassociated from the documents: he should not be visited with this liability because Lorenzin should have paid. The documents in P1 do not go to that issue apart from, tangentially, P1 tab 7, the document of 22 October 2009 which, properly understood, is not a liability document but one that records an extension of time to pay a debt.
I am also satisfied that Mr Watson was able to give evidence by phone, that he was able to cross-examine the witnesses led by the plaintiff by phone and that he suffered no prejudice from that arrangement.
On balance, this was of some advantage for Mr Watson. The court (and the plaintiff) were not able to see Mr Watson at the time that he was giving his evidence. The court was, in that respect, unable to make any assessment of the demeanour of Mr Watson.
I reiterate that Mr Watson was assisted by a lawyer throughout the course of the hearing. During cross examination of Mr Watson by the plaintiff’s counsel and due to the transmission by phone of what were quite audible conversations occurring at Mr Watson’s end of the phone (before Mr Watson made responses to the questions of plaintiff’s counsel) plaintiff’s counsel challenged Mr Watson about being coached in his answers. Mr Watson denied the assertion.
I am satisfied that by using the phone contact no prejudice was suffered by any party, or certainly no prejudice of any significance, and that the interests of justice were served by that process. I am also satisfied that no party suffered any prejudice or any sufficient prejudice in the conduct of the action that it was necessary in the circumstances and in the interests of justice to adjourn the hearing of the action.

PART 3

Pleaded cases

The plaintiff in its statement of claim pleads material facts in support of its action in contract. It pleads the relationship between the plaintiff and Lorenzin, the development being undertaken at Sims Road Mount Barker, and the defendant’s engagement by Lorenzin. He is described as an engineer in the pleading but I am satisfied that he was the project manager. The plaintiff then pleads that Lorenzin fell behind in its payments, that the defendant requested the plaintiff to continue to supply quarry materials to enable Lorenzin to complete the project and that an arrangement was made in September 2009 that any quarry materials supplied to the site by the plaintiff would occur under a contract or arrangement between the plaintiff and the defendant and that all future invoices should be sent to him.
The plaintiff also pleads that the defendant would on-sell the quarry materials supplied by the plaintiff to him to Lorenzin, presumably to enable Lorenzin to complete the works under the subcontract between Lorenzin and Devine Homes. It is not necessary for me to determine that matter.
The plaintiff then goes on to plead the supply of the materials, the rendering of the invoices, and the document of 22 October 2009 in respect of the undertaking by the defendant to pay the amount of $50,607.33 to the plaintiff on or about 30 October 2009, and the failure to pay.
There is a pleading in para.13 of the statement of claim about the liquidation of Lorenzin on 27 April 2010. That matter was not formally proved in evidence but nothing turns on that matter.
The gravamen of the matter is that the plaintiff claims that no payment had been made by the defendant to the plaintiff under the terms of its agreement. I am satisfied that no payment has been made.
In his defence the defendant pleads the following matters:
I have not received any documentation from Goolwa Quarries until I received this summons.
Up until now all correspondence has been with Lorenzin Constructions, the company that acquired the goods received and received payments for them. I do not believe this debt is mine.
I have tried to negotiate with the other party and its solicitors.
The third defence raised about negotiation is irrelevant and I do not consider it further.
On all of the evidence I am unable to accept the first defence, about the transmission and the receipt of the documentation insofar as it may be relevant, and I am also unable to accept the second defence, that the debt is not the defendant’s debt.

PART 4

The evidence: witnesses

The plaintiff called four witnesses: Mr Dean Lello, a director of the plaintiff; his wife, Mrs Maureen Lello, a fellow director of the plaintiff; Ms Gabrielle Majella McDonald, an employee of the plaintiff, who ordinarily works at the Currency Creek quarry of the plaintiff; and the process server Mr Phillip Atkinson.
The defendant gave evidence and led no other evidence.
In my view, this matter does not only turn on the credibility of the evidence given by the witnesses. It is a commercial cause in contract and debt and turns largely on inferences available from documents and other evidentiary material. That said, I accept the evidence of the plaintiff’s witnesses as witnesses of truth and I am able to accept the version of events that they have given.
Any difference in versions of events which was given by the plaintiff’s witnesses and the defendant, is slight, tangential and does not weigh upon the decision that I have to make in this matter.
In my view, the objective verifiable facts all support the plaintiff’s version of events.

PART 5

A factual chronology

Some time before 9 September 2009 the plaintiff was engaged to deliver quarry materials to Devine Homes at Mount Barker for Lorenzin. The contract price per tonne of material delivered was the amount of $14.85. That price was made up of the following: an ex quarry rate per tonne of $8.00, a cartage rate of $5.50 giving a total of $13.50, plus GST of $1.35 giving a total unit price of $14.85 per tonne.
In that contract two things were to occur. The first was the supply of the 20mm limestone rubble for road base. The second was what is termed ‘back cartage’. It was explained to me that back cartage was the transport back from the relevant site to the quarry owned by the plaintiff of excess or surplus material from the Sims Road site. This was stored at the quarry and was used in respect of rehabilitation, according to the evidence given by Mr Dean Lello and Ms McDonald. The rate for back cartage was in the amount of $3.30 per tonne.
Mr Dean Lello was not able to remember precisely when the contract between Lorenzin and the plaintiff commenced.[4] His recollection was that Lorenzin merely ordered materials as they were required. He recalled that there was a quote given for the supply of the materials and the plaintiff received a letter from Lorenzin that they were awarded the job and the plaintiff then started supplying materials.
[4] T46.38
The evidence of Mr Lello was that payment was ‘sparse’.[5] In terms of the relationship between the plaintiff and the defendant, Mr Lello gave evidence that a month or so before September 2009, (he cannot be sure of the date, and for current purposes that date is not pertinent) he first met Mr Adam Watson, the defendant, at the Parker Avenue site of Lorenzin at Strathalbyn. Mr Lello said in evidence that he stopped when he saw workmen from Lorenzin at the site. He spoke to the workmen at the site and, as a result of speaking with them, he was introduced to the defendant. Mr Lello said that he then raised the fact of slow payment by Lorenzin to the plaintiff and Mr Watson, who was the project manager, informed him that he was going to see what he could do about it .[6]
[5] T46.6-9
[6] T69.15-21
Mr Lello’s evidence was that he next spoke to Mr Watson by telephone and that this occurred some time prior to 9 September 2009. Mr Lello said in examination-in-chief that there was no money paid by Lorenzin to the plaintiff and that Mr Watson was told as project manager of Lorenzin that the plaintiff would not supply any more material to the site.[7]
[7] T70.26-28
Following that conversation, and I infer directly as a result of it, Mr Watson attended at the Currency Creek premises of the plaintiff, which is its quarry, and had a direct conversation with Mr Dean Lello. I find that in that conversation the defendant asked the plaintiff to continue to provide Lorenzin with more credit. It is to be recalled that at that time Lorenzin was indebted to the plaintiff in the amount of $160,000.
Upon the request by the defendant, Mr Lello refused and said that he would not be providing any more materials.[8]
[8] T71.33 - T73.11
Following the refusal by Mr Lello to provide Lorenzin with any more credit, I find that the contract as between Lorenzin and the plaintiff was terminated. Lorenzin did not pay its debt, and there would be no further supply. In the circumstances of those findings, the contract between Lorenzin and the plaintiff was effectively at an end because of the significant default by Lorenzin.[9]
[9] In these types of circumstances it is sometimes the case that if debts are paid some trading recommences. That did not happen here and I will not consider it further.
Following the initial conversation and refusal by the plaintiff through Mr Lello to provide any further credit to Lorenzin, Mr Watson then asked Mr Lello if the plaintiff would supply material to him as the contracting party. There was some discussion around that topic. Mr Lello told Mr Watson that if he did and that if Mr Watson’s customer did not pay him, then he, Mr Watson, would be up for the money.[10] It is a clear inference from this evidence that Mr Lello assumed (as was obviously the case) that Mr Watson would be entering into some sort of arrangement with Lorenzin to on-supply materials to Lorenzin to allow it to complete its subject contract with Devine Homes at the Mount Barker site. The point here is that Mr Lello was making very clear to Mr Watson that the plaintiff would not carry the risk of any failure by Lorenzin to pay Mr Watson.
[10] T72.19-20
The response of Mr Watson to Mr Lello was to the effect that if the plaintiff made a supply direct to the defendant, then the defendant would make himself responsible to ensure that payment was made to the plaintiff.[11]
[11] T72.26-27
In particular, and of importance to this case, is that Mr Lello gave evidence that he gave quite a stern warning to Mr Watson and said to him, that he, Mr Watson, would be “up for the money” in respect of any materials supplied by the plaintiff and Mr Watson agreed with that proposition.[12] Mr Watson did not challenge this evidence.
[12] T72.36 – T73.1
Further into that same conversation, an estimate was made by Mr Lello as to what amount of material would be required to complete the job. I am able to infer that Mr Lello knew enough of the site and the job to be in some position to make this assessment. In the end nothing turns on the question of the accuracy of this assessment.
Mr Lello made the estimation and informed Mr Watson that he thought that the amount required to finish the job would be in the order of somewhere around $40,000 plus GST. I have not received any evidence in relation to that estimation but there is no contest between the parties that that conversation occurred and that the estimation was made by Mr Lello.
Once Mr Lello had informed Mr Watson of that estimation, Mr Watson said to Mr Lello that he would provide to him a tax invoice in the amount of $40,000 (plus GST) within the next seven days as a progressive payment and on that basis the plaintiff immediately went forward with deliveries.[13]
[13] T73.9-11
Consistent with the attitude that he had in relation to the matter (and obviously knowing that the material was to be supplied to the Lorenzin site at Sims Road, Mt Barker) Mr Lello insisted that there be some payment in relation to this estimate of $40,000. He gave evidence, which was not challenged, that Mr Watson agreed to pay some money upfront, which was an invoice of $40,000 and that it would be paid within seven days. Mr Watson asked Mr Lello to ensure that the plaintiff sent the invoice to him direct, and it would be paid.[14] Mr Lello gave evidence that he insisted upon this arrangement and his unchallenged evidence was that Mr Watson agreed to get the money to him.[15]
[14] T77.13-16
[15] T77.37
There was further evidence given in relation to that arrangement.[16] All of the evidence given was to this effect: that the plaintiff would give no further credit to Lorenzin and that the plaintiff would not be giving credit to the defendant except under specific terms, one of those being that the defendant would receive an invoice of $40,000 plus GST, within the next foreseeable period and that invoice would be paid within seven days. For current purposes that is where the conversation ended.
[16] T79.20-23
On 14 September 2009, the plaintiff commenced its deliveries from the Goolwa Quarry site at Currency Creek to the Sims Road site. The delivery dockets in relation to the plaintiff providing material are set out in Exhibits P1, tabs 2 and 3. A further exhibit, P6, identifies deliveries made by another carter, namely, Michcon, to the Sims Road site under the name of Mr Watson. Those deliveries were made under the same arrangements and there is no discernible difference between them that requires any elucidation here. The contract delivery price was unchanged.
The significant feature of Exhibit P1, tabs 2 and 3, are that the customer in each of the tax invoices is identified as Mr Adam Watson. These invoices were in triplicate. One was retained by the truck driver, one retained at the quarry and one was delivered to site. Each cart note identified the net weight delivered and that there was a customer’s signature. It also identified who was the carter.
These invoices were then dealt with within the administration function of the plaintiff. Most of the invoices are signed by the defendant, some of them are signed by other persons who may have been on site at the time of the deliveries (the truck driver who made the delivery was required to get a signature); one or two of them are unsigned. The issue that is not challenged in this case is that the deliveries were made to the site at Sims Road, Mt Barker, and those deliveries are reflected within the documents in tabs 2 and 3 of Exhibit P1 and in Exhibit P6.
There were no payments received by the plaintiff from the defendant before 21 September 2009. In the ordinary course and as a matter of commercial commonsense, it would be unlikely for there to be invoices delivered other than on a monthly basis. The documents that were generated by the plaintiff in relation to payment were the tax invoices that are shown on the face of Exhibit P1, tabs 2 and 3 but no final invoice was generally rendered until month end.
Mr Lello gave evidence that he had a phone conversation with Mr Watson concerning payment and Mr Watson again confirmed that the plaintiff should generate an invoice. It is unclear who raised the question of the issue of an invoice but, again, that is not pertinent to this decision. It was as a result of the discussion between Mr Lello and Mr Watson that Mr Lello ordered a document to be prepared.[17]
[17] T81.15-17,36
On 18 September 2009,[18] a document was prepared under the letterhead of Goolwa Quarries addressed to Mr Watson at his then home address in Henley Beach SA. It was for an amount of $40,000 plus GST of $4,000 and the details read as follows: ‘Service Details Re: Work in Progress at Sims Road, Mt Barker Progress payment for supply of 20 mm rubble and back-loading of some soil.’ The rounded up amount is so non-specific as to reflect only the estimation that was made by Mr Lello in his conversation with Mr Watson on 14 September 2009.
[18] Exhibit P1, tab 4.

The document[19] was prepared by Mrs Maureen Lello on the instructions of her husband and was sent in the mail to Mr Watson at his address. The address shown on the face of Exhibit P1, tab 4, is the home address of Mr Watson. That address was provided by Mr Watson to the plaintiff in the conversations that occurred in September 2009. I am satisfied that the invoice was prepared and sent by the plaintiff to the defendant in the ordinary mail. I am unable to accept Mr Watson’s assertions that he did not receive the invoice.
[19] Exhibit P1, tab 4.
Following the delivery of the document,[20] no payment was received. A little later than a week after that document was generated (its date was 18 September 2009 and presumably it was received on or about 20 or 21 September 2009), a conversation occurred between Mr Dean Lello and Mr Watson about the failure of Mr Watson to pay the account.[21] Mr Watson told Mr Lello that an agent of his, a Mr Roger Smith, who at the time Mr Watson said was involved in the sewing machine industry, would come to see Mr Lello and pay the account.[22] Mr Lello has a clear memory that the person mentioned was Mr Roger Smith.[23]
[20] Ibid.
[21] Ibid.
[22] T84.12-13
[23] T84.15
Soon after that conversation occurred, Mr Lello says that he was informed by his staff that somebody who was not identified rang the offices of the plaintiff and asked for EFT details of the plaintiff and volunteered that he (the unidentified person) was going to “EFT” the money. That never occurred.[24] It is not completely clear who Mr Roger Smith is but he is the person who was identified by the defendant as the relevant person who would come and pay the debt owed to the plaintiff by the defendant.
[24] T84.17-22
The last delivery made by the plaintiff to the Sims Road, Mt Barker site under the agreement between the plaintiff and the defendant occurred on 21 September 2009. The last delivery docket in Exhibit P1, tab 3[25] carries that date.
[25] Tender Book P1 Tab 3
In his evidence Mr Watson volunteered that from that date another quarry was used to supply the material. This decision was made by Lorenzin according to the evidence of Mr Watson. The plaintiff was not informed of this and did not know that fact until trial.
No payment was made by Mr Watson to the plaintiff after 21 September 2009. Following that non-payment, Mr Lello rang Mr Watson some time between 18 and 22 October 2009 and said to Mr Watson words to the effect that no money had been paid under the terms of their agreement[26] and that if no payment was made, then the matter would become a legal issue.[27] The implication from this is that Mr Lello was informing Mr Watson that legal proceedings would be taken against him in the event that payment was not made.
[26] T86.26-27
[27] T86.33-34
During that conversation and according to the evidence of Mr Lello which was not challenged by Mr Watson, Mr Watson said that he would come to the office of the plaintiff to discuss payment and sign any unsigned dockets.[28] It is not clear precisely when this conversation took place but, again, the dating of that conversation is not pertinent to these reasons.
[28] T87.35 - T88.3
However, there is some significance in another piece of correspondence received before 22 October 2009. Exhibit P1, tab 5 is a letter sent to the plaintiff, Goolwa Quarries, from Lorenzin. It is signed by Ms Viranchi Shah who the defendant identified as an employee of Lorenzin working one day per week in administration and accounts. The subject of the document is ‘Request for delivery docket copies’. It is dated 13 October 2009 and reads:
On behalf of Adam Watson, with reference to your invoice No.0910-12764 for September-2009 for the amount of $50607.33 (including GST)
We are missing some delivery dockets as follows and request copies as soon as possible.
Below that text in the document are set out a request for delivery dockets in respect of some 25 deliveries. Two of those deliveries, namely docket No.7253 and docket 7293, relate to back cartage.
In my view it is significant on a number of levels that this document is sent on behalf of Mr Adam Watson personally. It refers to an invoice sent by the plaintiff to the defendant. The plaintiff’s evidence that I accept is that the invoice was sent by the plaintiff to the defendant in the ordinary surface mail. It was not sent to Lorenzin. The plaintiff’s only contact with Lorenzin at that time was to seek payment of Lorenzin’s debt of $160,000.
The document referred to as ‘the invoice’ is a document at Exhibit P1, tab 1. That is the invoice that was generated within the administrative function of the plaintiff. It was invoice No.0910-12764 and it is dated September 2009. Again, it is addressed to Mr Watson at his then home address in Henley Beach. It sets out the invoice price for all cartage between 14 September 2009 and 21 September 2009. As a matter of inference, it is plain that document was not sent to Lorenzin. It is also plain that, on balance, the only place that Lorenzin could have got that document was from Mr Watson.
The document at P1, tab 5 seeks only a small portion of the delivery dockets, that is, copies of the delivery dockets for the relevant period between 14 September and 21 September 2009. Inferentially, somebody else - either Lorenzin or Mr Watson or perhaps both of them - are in possession of the balance of those documents.
The dockets in Exhibit P1, tabs 2 and 3, number 116 in total. There are only 25 identified in Exhibit P1, tab 5, and copies are sought of those 25. In my view, the document at Exhibit P1, tab 5 is significant because it discloses, inferentially, some contact between Mr Watson and Lorenzin in relation to the question of payment to the plaintiff of the debt incurred by the defendant. However, that does not affect the arrangements made between Mr Watson and the plaintiff.
The documents requested by Lorenzin were sent under cover of a letter from the plaintiff to Lorenzin dated 13 October 2009[29] and some 16 pages of material were sent. Mrs Maureen Lello gave evidence that she prepared and sent these documents.
[29] P1 Tab 6
Meeting on 22 October 2009
I am satisfied that a meeting took place at the offices of the plaintiff at its Currency Creek quarry premises on 22 October 2009. There was some dispute about the time of the meeting, but that is not pertinent to these reasons.
I am able to identify from the first page of Exhibit P1, tab 1, that the invoice to Mr Watson of September 2009, which I infer was sent no later than on or about the last day of September 2009, was also faxed from the plaintiff’s head office in Melrose Park to the Currency Creek quarry at 7.55 am on that day.
The meeting on 22 October took place in the presence of the defendant, the plaintiff and Ms Gabrielle McDonald, an employee of the plaintiff.
Ms McDonald gave evidence on two occasions and on the second occasion she was able to clarify a number of matters that she could not recall on the first occasion. I draw no adverse inference against her in relation to that matter and it appeared to me that on the first occasion she gave evidence, she had not seen some of the documents for some time. Be that as it may, Ms McDonald gave evidence that Mr Dean Lello asked her to be present at the meeting.[30] She confirmed the date and place of the meeting.[31]
[30] T38.35-36
[31] T38.31
The evidence given by Mr Lello and Ms McDonald was that a conversation occurred on that date concerning the failure by the defendant to make payment for the material supplied under the terms of the contract reached on 9 September 2009. Both Mr Lello and Ms McDonald gave evidence that assurances were received by them from Mr Watson that payment would be made.[32]
[32] T93.11
During the course of the discussion on that day, Mr Dean Lello asked Ms McDonald to type a document to reflect the conversation that was occurring at that time. I am satisfied that Mr Lello did not give Ms McDonald any specific instruction about the wording but merely that whatever she was to type was to reflect the conversation as it was occurring with the defendant. Ms McDonald gave similar evidence and I am satisfied that it was left to her discretion as to what was to be contained on the face of the document that was to be signed.
Ms McDonald left the meeting and went to an ante area adjacent to the office in which the meeting was taking place and typed up a document. It is Exhibit P1, tab 7. It reads as follows:
Agreement between Adam Watson of … Henley Beach SA 5022 and Goolwa Quarries Pty Ltd … Melrose Park SA 5039
Attention: Dean Lello
I, Adam Watson, do hereby agree to pay my debt of $50,607.33 to Goolwa Quarries Pty Ltd on or before 30 October 2009.
There was then provision made for signatures for identification of the name of the signature and the date and the same for a witness.
The evidence given by Ms McDonald was that having prepared the document she returned with the document to the meeting place which was very close to the point at which she was typing. She recalls that Mr Watson read the document, and then signed it, and she identifies his signature and her signature on the document. She has also given evidence that a copy of the document was given to Mr Watson.
Ms McDonald and Mr Lello also gave evidence that at the time that the meeting took place on this day, 22 October 2009, the invoice sent to Mr Watson,[33] (and I accept for current purposes that it was sent some time after 21 September 2009 and more probably on or about 30 September 2009), was on the table in front of the parties and was quite visible. A copy of the document was faxed to the quarry at 7.55 that morning. I accept the evidence of Mr Lello and Ms McDonald.
[33] Exhibit P1, tab 1.
I accept the evidence of Ms McDonald that the defendant read the document in her presence and signed it. Some evidence was volunteered from the defendant that he has a reading problem. It was described as dyslexia. I accept the evidence of Mr Lello and Ms McDonald that if the defendant does suffer from a reading disability they were not aware of it, did not observe the defendant having any difficulty reading the document and they were not made aware of the problem by the defendant.
I find at no time did any of the officers of the plaintiff or any persons employed by the plaintiff have any notion of any reading disability that may have been suffered by the defendant. No evidence was led of any condition of dyslexia allegedly suffered by Mr Watson. I am satisfied that nobody from the plaintiff, be it officers or employees, were aware that the defendant was labouring under some deficiency or labouring under some difficulty in reading the document put before him. The plaintiff’s witnesses gave evidence that they all saw Mr Watson read and sign the document.
The evidence also is that Mr Watson was a project manager of Lorenzin. He volunteered in his evidence that as a project manager he would need to be able to read copious amounts of material. He said in evidence that he used another person to read the documents for him. It is not necessary for me to decide the truth or otherwise of that statement. The important feature here is that, even if that statement was true, Mr Watson did not bring the person with him to sign the document or to speak to the plaintiff’s representatives, and he certainly did not ask anyone to read the document over to him or ask for them to get his assistant to read it to him to ensure that he understood what it was that he was signing.
My view of the matter is that the document does no more than record a fact, that Mr Watson is agreeing to make payment of what he describes as his debt on or before a particular date. In my view the document does no more than record an existing liability. It does not create a new one. Under the terms of the document, the liability of Mr Watson to make a payment to the plaintiff subsists under an earlier contract and it is not created under the terms of the document of 22 October 2009. The document operates to extend the time for Mr Watson to make a payment of a debt due and owing to the plaintiff. The question for my consideration is whether or not the debt as between Mr Watson and the plaintiff exists.
Subsequent to the execution of the 22 October 2009 document no payment was made. I am satisfied that the plaintiff then instructed solicitors, Messrs Clelands, and those solicitors then sent a letter of 2 February 2010 to Mr Watson at his home address. The document is Exhibit P4 and it reflects the case put by the plaintiff at this trial in relation to its claim against the defendant.
I have heard evidence from Mr Atkinson, which I accept, that Mr Atkinson attended with the document P4 and all of the attachments to P4, namely P1 tab 4, P1 tab 7 and P1 tab 1 and served them personally on the defendant. I am unable to accept the defendant’s assertions to the contrary.
Mr Atkinson gave evidence that those documents were open and that at the time that he served them upon Mr Watson the document, being the letter from Clelands, Exhibit P4, was showing face up to Mr Watson. That document carries the following heading: ‘RE: MONEYS OWING BY YOU TO GOOLWA QUARRIES PTY LTD’.
Mr Atkinson gave evidence that upon the serving of these documents on 27 March 2010 (Saturday evening) Mr Watson looked at the documents and said words to the effect that “…these problems were caused by Lorenzin.”
I am satisfied on all of the evidence that the documents were served upon Mr Watson and he was plainly notified of the claims of the plaintiff. I am also satisfied that the relevant product the subject of the claim was supplied to the Sims Road site. I draw these inferences from Exhibit P1 tabs 2 and 3 being the documents generated at the time that the material left the Currency Creek Quarry and were delivered to the Sims Road site and from the material disclosed in P1, tab 12, which are the Navman logs of the trucks used to deliver and back cart. I also refer to Exhibit P3 which is a summary of the material disclosed on the face of P1 tabs 2 and 3 and tab 12.
It therefore follows that I reject the denials of the defendant in his defence that he did not receive any documents. I am not able to accept the version of events put forward by the defendant.
I accept the plaintiff’s evidence in relation to the following matters: the contents of P1, tabs 2 and 3, being documents that were delivered concerning the deliveries to the site. I accept the evidence of Maureen Lello that the document at P1, tab 4, was sent by mail to the defendant at his address and I accept that document P1, tab 7, was read by the defendant in the way described by Mr Dean Lello and Ms McDonald. I accept the evidence of Mr Atkinson in relation to service.[34] I also accept the evidence of Mr Atkinson that the content of Exhibit P4 and the annexures that I have already described were served upon the defendant and that the defendant clearly understood the claims made against him by the plaintiff.

PART 6

[34] T202.1-21 particularly, and see generally T198-204

I make the following formal findings:
1. On 9 September 2009 or on or about that date a verbal agreement was made between Mr Dean Lello, a director of the plaintiff, and Mr Watson, the defendant, the terms of which were as follows:
1.1The plaintiff supply to the defendant 20 mm crushed rubble for road base
1.2 to the Sims Road Mount Barker site which was the site of the subcontractor Lorenzin for the principal contractor Devine Homes
1.3made under cart notes directed to the defendant personally and delivered by the plaintiff to the site and to be signed by the defendant or the defendant’s agent
1.4 at a price of $14.85 per tonne delivered, and
1.5in respect of any material carried away from that site (back cartage) in the amount of $3.30 per tonne.
2.In the negotiations for the contract the plaintiff through Mr Lello stipulated, after having made an assessment that the defendant would take approximately $40,000 worth of material (plus GST) to finish the job that the plaintiff would deliver to the defendant an invoice in that amount for payment by the defendant. The inference arising from the conversations between Mr Lello and Mr Watson, before 9 September 2009 and on 9 September 2009, was that the defendant required the plaintiff to replicate the contract that the plaintiff had with the company Lorenzin for the supply of road base material to and for back cartage away from the Sims Road site. As I have already identified, that contract included a charge for back carting. It was at least implicit, if not actually agreed, that back carting would form part of the contract rights as between plaintiff and defendant.
3. I find that the contract between plaintiff Lorenzin ended no later than 9 September 2009.
4.In accordance with the terms of the verbal agreement, between 14 and 21 September 2009 the plaintiff delivered to the Sims Road site quarry materials in an amount of 3,508.99 tonnes (Exhibit P3) at a cost of $14.85 per tonne delivered and 122.9 tonnes were back carted at a rate of $3.30 per tonne carted. These transactions occurred at the request of the defendant.
5. In accordance with the parties oral agreement an invoice dated 18 September 2009 was raised by the plaintiff and was sent by ordinary mail to the defendant. I find that this invoice was received by the defendant some time between 19 and 21 September 2009 in the ordinary course of the post. That invoice was not paid. Nothing turns on the fact that this invoice was not paid.
6. I find as a matter of ordinary inference that the document of 18 September 2009, not having being received in the mailbox of the defendant until some time towards 21 September 2009, would not have been paid until some time after supply under the oral agreement between the plaintiff and the defendant ceased on the 21 September 2009.
7. I find that the reason that supply by the plaintiff to the defendant under the oral agreement ceased was because on 21 September 2009, Lorenzin appears to have issued an order for rubble supplies from Kanmantoo Quarries. After that date there was no further trading between the plaintiff and the defendant. The plaintiff was not made aware of the decision by Lorenzin to use product supplied by Kanmantoo Quarries.
8. I am satisfied that P1, tab 1 had been sent to the plaintiff after 21 September 2009 and before 22 October 2009, and that it would have been expected to have been received by the defendant in the ordinary mail after the end of September 2009.
9. Following termination of trading and non-payment by the defendant, Dean Lello made contact with the defendant and arranged to meet him at the Currency Creek Quarry premises of the plaintiff on 22 October 2009.
10. Present at the meeting were Dean Lello, Gabrielle McDonald and the defendant. At the meeting there was a conversation, the effect of which was that the plaintiff required payment from the defendant of the invoice P1, tab 1 a copy of which was on the table in front of them at the time of the meeting.
11. As a result of the conversation of 22 October 2009 Dean Lello instructed Gabrielle McDonald to prepare a document. That document was prepared, it was handed to the defendant who read it, signed it and the defendant’s execution of it was witnessed by Ms McDonald; it is Exhibit P1, tab 7.
12. The defendant did not make payment on or before 30 October 2009 or at any time.
13. In March 2010 the defendant was served with P4 (and attachment) and has refused to pay.
I am therefore satisfied that the contract was separately formed between the plaintiff and the defendant on 9 September 2009. I am also satisfied that the plaintiff performed its terms of the bargain between them and supplied crushed rubble road base material from its quarry to the Sims Road site and back carted material from that site.

I am satisfied that in breach of the contract the defendant has failed or refused to pay for the product delivered.
Subject to any defence available to the defendant, the plaintiff is entitled to judgment for the amount supplied under the contract.

PART 7

I have already dealt with the defences of the defendant as pleaded and I have rejected them. In my view there was only one substantive defence namely that the defendant did not believe that the debt was his debt. I reject that defence for all of the reasons that I have set out above. However, in evidence the defendant developed another defence, namely unconscionable conduct or duress. The factual basis that the defendant developed in respect of this was that he informed the court that his immediate superior, Mr Bill Lorenzin at Lorenzin, issued threats to him in the circumstances where, apparently, Mr Bill Lorenzin plainly anticipated the demise of Lorenzin and was desperate to avoid that occurring.
The defendant informed the court that Mr Bill Lorenzin was prone to fits of violence and rage fuelled by alcohol. These threats held out by Mr Bill Lorenzin to the defendant occurred at these times when Lorenzin had been imbibing alcohol.
The defendant informed the court that Mr Bill Lorenzin informed him that unless he could find some way to ensure that the plaintiff continued to make supply, then the ‘house of cards’ of Lorenzin would fall and that the employment of some 300 employees would be threatened. The defendant informed that court that following such threats, which included significant violence, being locked in rooms and having to smash windows to escape, the defendant came, ‘and did the deal’, with the plaintiff, namely the contract of 9 September 2009.
At the time that these threats were made to the defendant, the plaintiff was completely unaware of what was transpiring in the Lorenzin operation. All that the plaintiff knew was that Lorenzin had not paid the plaintiff for a long time and the amounts outstanding were very significant($160,000). A quick review of the history of trading between the plaintiff and the defendant discloses that a debt of $160,000 amounts to about 400 loads of material (at a rate of $400 per load on average). The amounts dealt with by the plaintiff are large in volume but small in value. Mr Lello informed me and I accept that at the time Lorenzin was a significant debtor of the plaintiff.
It is therefore of little surprise that, having regard to the nature of that debt from Lorenzin, Mr Dean Lello formed the view that the collectability of that debt was fraught. It was his decision to no longer continue trading with Lorenzin in respect of the Sims Road, Mount Barker contract and it was his decision to terminate.
The question for my consideration is whether or not there is any connection between what was said and done by Lorenzin to the defendant and the contract between the plaintiff and the defendant as I have found it.
It is clear that equity can give relief in circumstances that amount to conduct by one party towards another that may be considered as unconscionable. One such circumstance is the situation where a plaintiff and defendant may be in a position to exploit a particular weakness of the other. In that case, the burden of justifying that a transaction is unconscionable would be upon the defendant.
The law in relation to the topic is reasonably well settled. Unconscionability and duress are all species of what is described as ‘fraud’ in the context of equity.
The authors of Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies[35] describe the position in terms of fraud as follows:
[35] 4^th Edition at 12-050 (M. G. & L.)
a.Misrepresentation by persons under an obligation to exercise skill and discharge reliance in trust as in fiduciary relations not including inducements to contract or otherwise for the representee to act to his detriment in reliance upon the defendants (citations omitted).
b. The use of power over another that is disadvantageous to the other parties.
c.The pursuit of interests in conflict with duty arising from a fiduciary relation or the entrusting of a power by a donor.
d.Improper reliance upon legal rights with particular reference to the setting aside of judgments procured by fraud and to the use of statutory defences where the relations and dealings between the parties make it unconscionable to press the statute.
e.The constructive trust viewed as a remedial device for the person upon whom the court imposes a trust.
f.Agreements which are bona fide between the parties but in fraud of third persons (citations omitted).
Summarising the position put by the defendant, the only category that may be applicable is that which is described as ‘pressure as fraud’.
In Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 46 at 45-6 McHugh JA with whom Samuels and Mahoney JJA agreed rejected the overbearing of the will theory of duress in favour of asking whether “…the pressure which induced the victim to act went beyond what the law is prepared to countenance as legitimate…”[36]
[36] At paragraph 12-065 of M. G. & L. the relevant authors quote the authorities and text writers who have embraced that formulation of the position by McHugh J when his Honour sat in the Court of Appeal of New South Wales.
The second category raised by the defendant carried with it a reference to the possibility of undue influence as the second head of fraud.
The court has jurisdiction in equity where it finds that there has been undue influence. The principle is well understood and is defined relevantly as ‘jurisdiction to prevent a person taking surreptitious advantage of the weakness or necessity of another which, knowingly to do, was equally against the conscience as to take advantage of his ignorance’: ‘A person is equally unable to judge for himself in one as the other.’[37]
[37] M. G. & L at 12-065; 12-070; 12-075 and the authorities there cited
The authorities about what constitutes undue influence are well settled, and reasonably well understood. I refer particularly to the judgment of Sir John Salmond in Brukewitz v Brown (1923) NZLR 1106 at 1109-10 and the decision of Yerkey v Jones (1939) 36 CLR 649 at 675 where the High Court held:
In the relations comprised within the category to which the presumption of undue influence applies there is another element besides the mere existence of an opportunity of obtaining ascendency or confidence and of abusing it. It will be found that in none of those relations is it natural to expect the one party to give property to the other. That is to say, the character of the relation itself is never enough to explain the transaction and to account for it with suspicion of confidence abused.’
Applying, first, the principles in relation to unconscionability, I find that the relevant factors as I have found them do not give rise to any suggestion of any unconscionable conduct on the part of plaintiff towards the defendant. The contract entered into between the plaintiff and the defendant was a voluntary act. There was no evidence to suggest that the plaintiff was informed by the defendant of anything that occurred as between him and Bill Lorenzin. Quite the opposite. The plaintiff informed the defendant that it would no longer deal with Lorenzin and the plaintiff was looking to recover the debt owed by Lorenzin. The contract that was made between the plaintiff and the defendant on 9 September 2009 was oral and its existence was then confirmed in all of the conversations that occurred in September and October. I accept that it may not be in the usual course of things for an employee to take on a contract such as this. But that did not happen here: a new contract was formed on the same terms but with a very clear warning to the defendant by the plaintiff that it was the defendant who took the risk of the contract under which he on-sold the material. In my view this was sufficient to remove any notion of unconscionability
The meeting of 22 October 2009 does not change this situation. The document, P1 tab 7, creates no new contractual rights and merely identifies an extension of time for payment of an existing contractual debt liability.
Therefore, there was not, on the part of the plaintiff towards the defendant unconscionable conduct or anything in the nature of conduct which could be identified as unconscionable. There was no aspect of fraud in equity because there was no misrepresentation, there was no abuse of power, there was no pursuit of interest in conflict with duty, there was no improper reliance upon legal rights, there was no constructive trust and there was no fraud of third persons.
This was a contract between two freely contracting parties and, in my view, the plaintiff could and did properly assume that, whatever was to occur in terms of payment as between the defendant and Lorenzin, that was a matter for the defendant. Mr Dean Lello quite properly said in evidence that it was not a matter for his inquiry what arrangements the defendant had made with Lorenzin. He wanted the defendant to understand his own personal exposure because he refused to accept any further risk of default between the plaintiff and Lorenzin. And the court does not have some supervisory jurisdiction over the making of contracts. The court will not, except in particular circumstances not relevant here, relieve against bad bargains.[38]
[38] Bridge v Campbell Discount Pty Ltd [1962] AC 600 at 626
So also in relation to undue influence. There is no evidence, and no assertion of any evidence, of any knowledge on the part of the plaintiff of anything done by Lorenzin towards the defendant. Similarly, there is no evidence that the plaintiff did anything except protect its own commercial interests by refusing to give supply to Lorenzin.
For the same reasons, no criticism could be made of the plaintiff for protecting its own commercial interests by ensuring that payment was made to it in respect of the goods that it was supplying so that risk in relation to payment passed to the defendant rather than being carried by the plaintiff.
In my opinion, and also having regard to the fact that the defendant was unrepresented, there were further matters that may have been argued on his behalf and for the sake of completeness must be considered by me having regard to all relevant authorities in respect of a person in the defendant’s position.
There are three further matters to be considered. They are: whether there has been a novation of the Lorenzin contract (and somehow that Lorenzin remained liable under it); whether the proper view of the matter is that there has been any guarantee given by the defendant; or whether there is any indemnity. That is, whether or not the arrangements between the plaintiff and the defendant were merely a novation of the arrangement between the plaintiff and Lorenzin, secondly whether what was truly happening as between the plaintiff and the defendant was that the defendant was merely giving a guarantee to the plaintiff of the liability of Lorenzin or alternatively whether what the plaintiff was receiving from the defendant was an indemnity.
The feature of novation is that there is a new arrangement between parties. It is usually described in the context of A having a contractual arrangement with B and then, by agreement between A, B and C the contractual arrangement between A and B is novated to C so that the mutual obligation formerly arising between A and B now arises as between A and C.
It is particularly to be noted that the common law of Australia recognises, in terms of novation, that there must be an agreement as between A and B and C. In the arrangements that have been identified, there was no involvement of Lorenzin. Nothing was known of Lorenzin’s intentions, except that it was not paying its bills. Thus, it follows that any agreement made was between two parties only; the plaintiff and the defendant.
The second point to contraindicate novation was that there was no extant agreement between the plaintiff and Lorenzin. In my view, whatever contract existed between the plaintiff and Lorenzin was terminated no later than 9 September 2009. It follows that there was nothing to novate; there was no extant contract between A and B to novate to a contract as between A and C.
Turning then to the question of a guarantee, there can be no doubt that the requirements for writing , namely, s26 of the Law of Property Act (1936), no longer applies in respect of guarantees (see Statutes Amendment (Enforcement of Contracts) Act 1982 s 1982 s3).
The argument may be postulated that if the plaintiff settled its debt with Lorenzin then this further debt should have been discharged and the plaintiff is estopped from calling on the plaintiff’s guarantee (if it existed). This would require a finding that the plaintiff considered that it was dealing with Lorenzin after 9 September 2009 and that its arrangements with the defendant was a guarantee arrangement of the obligations of Lorenzin to the plaintiff.
However, as a question of fact, whatever occurred as between the defendant and Lorenzin was not an arrangement entered into which included the plaintiff, nor could the defendant allege, and it has not been alleged, that the plaintiff was involved in any arrangement that included the plaintiff, the defendant and Lorenzin. That is because there was no surety/creditor relationship that existed. All that did exist was a debt owed by Lorenzin to the plaintiff. That debt subsisted and so no arrangement entered into as between the plaintiff and the defendant could, unless under seal, or for proper consideration, properly consist of being a guarantee by the defendant of the liability of Lorenzin. The plaintiff has disclosed in evidence that the debt owed by Lorenzin of $160,000 owed as at September 2009 was eventually paid.
However, the prospect of any liability one way or the other under a guarantee and the possibility of a successful defence in estoppel in pais is too remote to be considered further. That is because the plaintiff’s contract with Lorenzin was over and any extant contract was a new contract as between the plaintiff and the defendant. That conduct forecloses any prospect of such a defence being available to the defendant.
An indemnity is generally understood to be a transaction for consideration whereby a stranger to the contract agrees to hold one party safe against the default of one or other parties to the contract, or in respect of any failure of that party’s obligations under the contract. The most common form of indemnity and the most commonly used form is a contract of indemnity insurance.
In my view, a contract of indemnity is not involved in the circumstances of this case for the same reasons as subsist in respect of a guarantee. The reasons are straightforward. There is no extant contract between the plaintiff and Lorenzin in respect of which an indemnity could operate. The extant contract for supply and payment was made between the plaintiff and the defendant. The defendant did not hold himself out as an agent of Lorenzin; he had to disclaim any such connection because of the plaintiff’s refusal to deal with Lorenzin.
I have previously mentioned the question of back carting. There is no specific evidence regarding an agreement concerning the cost of back loads, but those back loads were part of the contract made with Lorenzin. The defendant wanted the plaintiff to recommence supply. Whether or not the parties especially turned their minds to the issue, back cartage occurred under the Lorenzin contract and then under the 9 September 2009 contract. There was a reasonably seamless transition from one to the other. Charges were raised for work done including back cartage and the defendant did not challenge the point on the amount of the charges. Upon a proper reconciliation of the facts of the matter, the cost of back charging was properly a cost to be on charged by the defendant to whomsoever he billed for the work. It is therefore actually or implicitly part of the 9 September 2009 contract.
Confirmatory of this position is the fact that the document P1, tab 1, was on the table at the meeting on 22 September 2009. It had already been sent to the plaintiff in the ordinary mail. That document shows back carting charges included within the plaintiff’s claim. No challenge has been made or raised by the defendant in respect of those charges.
Although it could not be said that the material back carted was material of the defendant, because of the replication of the arrangements between the plaintiff and Lorenzin under the agreement between the plaintiff and the defendant, it was at the very least implicit, if not actually the case, that the plaintiff agreed to pay the back carting. That being so, it is also implicit, having regard to what is known of the relationship between the defendant and Lorenzin - and I refer in particular to P1, tab 5 - and the conversations between Mr Lello and the plaintiff in September and October 2009, that the parties assumed, if not agreed, that back carting would form part of the arrangements between them.
I, therefore, reject all of the defences of the defendant and I find that there are no other defences that may have been available to him which would avail him a defence to the claim made against him by the plaintiff.
I recognise that I am under a particular obligation to ensure that I canvass all issues, namely, those defences canvassed by the defendant, and any other defence that may have been available to him. I have performed that task and, in the result, I am unable to identify any defences of the defendant that answer the claim to the plaintiff.

PART 8

In the circumstances, I give judgment in favour of the plaintiff on its summons in the amount of $50,607.33. In accordance with Exhibit P2, I allow interest to the date of judgment in the amount of $15,140.15. I make an order for costs in favour of the plaintiff.