Griffiths Powerline Maintenance v Ids Consulting Services Pty Ltd [2006] QDC 059; Ids Consulting Services Pty Ltd v Griffiths Powerline Maintenance Pty Ltd
[2006] QDC 59
•15 March 2006
DISTRICT COURT OF QUEENSLAND
CITATION:
Griffiths Powerline Maintenance v IDS Consulting Services Pty Ltd [2006] QDC 059
and
IDS Consulting Services Pty Ltd v Griffiths Powerline Maintenance Pty Ltd. [2006] QDC 059
PARTIES:
GRIFFITHS POWERLINE MAINTENANCE PTY LTD (ACN 083 309 773)
Plaintiffand
IDS CONSULTING SERVICES PTY LTD
(ACN 088 281 672)
DefendantAnd
IDS CONSULTING SERVICES PTY LTD
(ACN 088 281 672)
Plaintiffand
GRIFFITHS POWERLINE MAINTENANCE PTY LTD (ACN 083 309 773)
DefendantFILE NO/S:
BD798 of 2003 and BD1431 of 2003
DIVISION:
PROCEEDING:
ORIGINATING COURT:
District Court, Brisbane
DELIVERED ON:
15 March 2006
DELIVERED AT:
Brisbane
HEARING DATE:
31 October 2005 1,2,3, 4 November 2005, 27,28 February 2006 1,2 March 2006
JUDGE:
SAMIOS DCJ
ORDER:
Judgment for IDS Consulting Services Pty Ltd against Griffiths Powerline Maintenance Pty Ltd in proceeding
No BD1431 of 2003 for the sum of $40,938.11CATCHWORDS:
Building and engineering contracts – contract – recovery of monies
COUNSEL:
Mr Sweeney (for Griffiths Powerline Maintenance Pty Ltd)
Mr Crowe SC with Mr Brennan (for IDS Consulting Services Pty Ltd)
SOLICITORS:
Paul Everingham and Co (for Griffiths Powerline Maintenance Pty Ltd)
Irish Bentley Lawyers (for IDS Consulting Services Pty Ltd)
These are two proceedings heard together.
In the first in time no. 798 of 2003 (the GPM proceedings) the Plaintiff is Griffiths Powerline Maintenance Pty Ltd ACN 083 309 773 (GPM) and the Defendant is IDS Consulting Services Pty Ltd ACN 088 281 672 (IDS).
In the second in time no. 1431 of 2003 (the IDS proceedings) the Plaintiff is IDS and the Defendant is GPM.
GPM is a vegetation management services company. GPM’s directors are Peter Griffiths and Delphine Griffiths.
IDS is a land clearing company. IDS’s directors are Ian Smith from 25 June 1999 and Nils Jonson from 13 December 2002.
In the GPM proceedings GPM claims against IDS $82,064.00 and IDS make the following concessions:-
Amount claimed IDS concession Hire of 4 WD vehicles $28,374.00 $ 2,938.58 Hire of machinery and plant operators $14,453.00 $ 3,582.58 Reimbursement of expenses $11,540.00 $11,540.00 Claim in respect of consulting fees for Peter Griffiths $17,308.00 $ 4,772.73 Hire of plant operator Richard Peters $10,389.00 $ 0.00 $82,064.00 $22,833.89
Regarding Mr Griffiths’ consulting fees GPM claims in the GPM proceedings the parties varied the contract for the supply of the services so that IDS would pay GPM the weekly equivalent of $120,000 per annum. IDS denies an agreement to that effect was reached between the parties. Alternatively, IDS claims if such an agreement was reached it took effect from 18 January 2003 until 31 January 2003 being a period of 13 days only.
In the IDS proceedings IDS claims against GPM $63,772 for money due and payable by GPM to IDS pursuant to a subcontract for services.
GPM denies IDS’s entitlement to the sum of $63,772 and says IDS is owed $41,770 for the services pursuant to the subcontract subject to GPM’s set off for its claim in the GPM proceedings.
IDS’s claim in the IDS proceedings and GPM’s concessions are as follows:-
Amount claimed GPM concession Labour - Supervisor $ 7,280.00 $ 5,040.00 Labour - Security $ 3,000.00 $ 3,000.00 Plant with operator – SAME 190 $ 5,720.00 $ 4,180.00 Plant with operator – SAME 260 $ 35,100.00 $ 25,350.00 Plant without operator - Excavator $ 12,672.00 $ 4,200.00 $ 63,772.00 $ 41,770.00
The parties agree no GST is payable in respect of a judgment given in these proceedings (see section 9(5) A New Tax System (Goods and Services Tax) Act 1999).
The issues in the GPM proceedings became, by the end of the hearing, in the order in which the claims appear above:-
(a)did IDS agree to hire three four-wheel-drive vehicles to be used in the Moree work at the rate of $671 per week, inclusive of GST per vehicle, except that until IDS was paid by Country Energy in respect of the Moree work, IDS would pay the equivalent to the lease payments for each of those vehicles and then make up the difference between that and $671 per week;
(b)with respect to the claim for man and machine hire did IDS agree to pay GPM, for the use of certain plant and equipment to be used in the Moree work, the following rates (plus GST):
(Elevated Working Platform) - $34.00 per hour or $950.00 per week.
Truck and Wood Chipper - $36.00 per hour or $1,100 per week
Excavator - $132.00 per hour
Plant Operators - $48.00 per hour plus GST per operator, varied on 2 October 2002 to $45.00 per hour plus GST
or as claimed by IDS, IDS would initially pay GPM retail rates for EWP’s and operators and later “a wholesale rate” which in respect of the EWP’s was $23.00 per hour. This claim also includes a claim by GPM to be paid for the hire by IDS of a fire tender;
(c)there is no issue for reimbursement of expenses;
(d)with respect to the claim for the consulting fees for Peter Griffiths did IDS agree to pay GPM $2,307.00 per week (the weekly equivalent of $120,000 p.a.) for the seven weeks ending 28 January 2003 or is GPM limited to $700 per week for that period;
(e)with respect to the claim in respect to Richard Peters did IDS agree to pay for his services at the agreed rate of $45.00 per hour on the basis that until IDS was paid by Country Energy in respect of the Moree work, IDS would pay GPM the equivalent of Richard Peters’ weekly salary and then make up the difference between that and $45.00 per hour or did IDS agree to pay Richard Peters’ weekly salary during a probationary period and then IDS would employ Richard Peters at his salary;
The issues in the IDS proceedings became by the end of the hearing whether, as contended by IDS, GPM was to pay the “retail rates” set out in a January rates document (Exhibit 39) for a SAME 260 and SAME 190 and Scoper and $132.00 per hour dry hire rate for a Kato excavator or, as contended for by GPM, $35.00 per hour for a supervisor, $260.00 per hour wet hire for the SAME 260 and $190.00 per hour wet hire for the SAME 190 and $350.00 per day dry hire rate (no operator) for the Kato excavator.
Depending upon my findings, the result for each party is as set out above regarding the claims and concessions.
In his evidence Mr Griffiths said GPM was started to get into the power line industry. The work it did was line clearing and vegetation work for Ergon and Powerlink in North Queensland. When it was started it probably had about 35 employees in Cairns and had gear they had leased and owned conjointly with Envoy Pty Ltd. He explained how GPM would tender for work and how the work would be performed. He said that they decided to downsize Cairns. It was kept going but
Mr and Mrs Griffiths bought some plant and machinery and a couple of key staff and moved to Brisbane in January 2002. Although he had met Mr Smith over the telephone in 1999, he met Mr Smith face to face when he went to Grafton in relation to a contract for Country Energy. There was some discussion about a mega mulcher Mr Smith was building. The next contact between Mr Griffiths and
Mr Smith was by telephone. He said the telephone calls were occurring two to three times a week.
In one of these telephone calls Mr Griffiths said Mr Smith was keen to get some schedule of rates prices for some work. Mr Smith said he had a job coming up in the Moree area and required some prices or schedule of rates to do some hourly rate work in that area. Mr Griffiths sent the rates by email on 4 September 2002 (Page 26 book of documents). He said that these were rates he applied on other contract work. After this there was a meeting between Mr Griffiths and Mr Smith at
Mr Griffiths’ property on Bridges Road. Mr Smith told Mr Griffiths of a job some distance past Moree at a place called Belatta. Mr Smith told Mr Griffiths he required two men and an elevated working platform (EWP). Mr Smith also asked Mr Griffiths if he could use Mr Griffiths QA (Quality Assurance) and risk assessments for the job to which Mr Griffiths agreed. Mr Griffiths said that there were two operators which Mr Smith was to terminate and did Mr Griffiths have someone suitable to replace them. Mr Griffiths said he had a Richard Peters who could do the job. He also said that Mr Smith discussed upcoming work with
Mr Griffiths. Mr Smith asked for his rates on an excavator which Mr Griffiths gave Mr Smith at $132 per hour wet hire. Mr Griffiths said that Mr Smith and he discussed Mr Griffiths coming into NSW to look after the jobs. It was thought at the time this would involve two to three days a week work. He said it was agreed that he would do this for $700 a week plus out of pocket expenses, fuel and accommodation.
Regarding Mr Richard Peters, Mr Griffiths said he and Mr Smith agreed on the site that Mr Griffiths would accept Mr Peters’ wages being paid while they were having trouble with cash flow and once there was no trouble with cash flow Mr Smith would reimburse Mr Griffiths the difference. At a later point in time Mr Griffiths organised three motor vehicles which Mr Smith could dry hire as per his quoted rate to fill the void in the short term. Mr Smith accepted the price of $610 a week. However, because the cash flow was tight the money was just not there.
Mr Griffiths said Mr Smith asked him what deal they could do on the vehicles and Mr Griffiths said that as long as he could maintain the lease payments and any maintenance he would be happy until things got going and money coming in.
Mr Griffiths said he paid for fuel using his own credit card and also for some airfares using his credit card. In the beginning there was no problem with payments. A lump sum was received to cover these payments.
Mr Griffiths also said there was a requirement for a fire tender to be on site. The price he quoted for the provision of a fire tender was $50 a day. He said Mr Desira approved of the provision of the fire tender at that price.
On Melbourne cup day Mr Griffiths and Mr Smith attended an on site inspection at Mt Crosby for work from Mt Crosby through to Nerang. At the end of the day
Mr Griffiths and Mr Smith discussed prices for the work. Mr Griffiths asked for a price for a 190 tractor, a 260 tractor and the megamulcher. Mr Smith said seeing Mr Griffiths had been so good to him over the past few months he would look after Mr Griffiths on this one. The rates therefore agreed were $190 for the 190 tractor, $260 for the 260 tractor, and with the megamulcher he would have to negotiate with the owner of the machine and he thought he could get that for between $450-$500. Mr Griffiths said he told Mr Smith he would utilise various pieces of equipment. Later Mr Smith rang Mr Griffiths and told him he got an excavator and quoted
Mr Griffiths a price of $350 per day which Mr Griffiths was happy with.
Mr Griffiths denied that he and Mr Smith orally agreed that although IDS had the necessary machinery to tender for the Powerlink contract, GPM should tender for it, as it had a greater chance of winning the tender, and if GPM won the tender, it would invoice Powerlink in the amounts that IDS would invoice Powerlink direct as the contractor.
Mr Griffiths said that IDS did not have the necessary machinery to tender for that job.
Mr Griffiths said he was not happy with the amount of money he was being paid in the $700 a week component. He therefore spoke to Mr Desira and said he wanted $120,000 per year and a vehicle as well. He wanted it to start the following Monday. He said Mr Desira was agreeable to this. However, he said Mr Desira was going to talk to Mr Jonson but could not see it being a problem. He and
Mr Desira shook hands on the $120,000 and a Toyota land cruiser to replace his vehicle.
Mr Griffiths said he agreed with Mr Smith in relation to a job in the Goondiwindi area that a Mr Wayne Morris would be taken from one job and placed with this job at a rate of $45 an hour.
Regarding the $120,000 per year Mr Griffiths said he spoke to Mr Jonson in January. He said that Mr Jonson replied that he had never paid anyone that sort of money before and he hoped and believed that Mr Griffiths was worth it.
Mr Griffiths said on 28 January 2003 he rang Mr Smith and told him he was not happy. He wanted the money and they were not getting paid. He had been informed that Adam Desira had resigned from IDS and his information was that
Mr Jonson did not give “two hoots what happened to Delphine and I”; and “to watch our backs”; “that all is not well”. Mr Smith said it was not true and he did not want Mr Griffiths to go and they could work it out. Although a payment of $6000 came through, Mr Griffiths said he was not interested in going forward from that point on.
When Mr Desira gave evidence he said he became involved in business arrangements with Mr Jonson or companies associated with him. From discussions with Mr Jonson he understood Mr Smith was Mr Jonson’s partner in the company called IDS Consulting. He said Mr Jonson had told him that Agrifuture Imports was a company importing mulching machines from a company called FAE in Italy and basically Agrifuture Imports was a distributor throughout Australia for these mulching machines. In February 2002 he agreed with Mr Jonson to be on a retainer initially as the sales representative for FAE. In the latter part of 2002 Mr Jonson asked him to assist Mr Smith. He said Mr Jonson wanted him to professionalise IDS a little more and put a little more substance behind the company. From his observations IDS had no electronic accounting system and no evidence of any plant or equipment that IDS owned or had control over. He said Mr Jonson was the financer behind IDS. From what he could see there was no payroll system although he was not given access to any financial information. From what he could tell
Mr Smith had a credit card but that was about all he could see. Later in the year they opened a business account in Berwick in Victoria. There was no quality assurance certification. There was discussion about getting that happening. He said a person by the name of Ross Baker was a consultant who was called in to consult and create a quality assurance system. He said IDS did not have a thriving business operating in the early part of 2003.
Mr Desira said the first work that he became involved in was in Moree which was a mulching job for a farmer called Munroe. After three or four weeks of being involved with the work on the site he saw opportunities to become involved with rural utilities. He decided to make an approach to Country Energy but unbeknown to him Mr Smith had already done that and in advance of him a demonstration was put in place to do some under power line clearing with a tractor. He said that Country Energy were impressed with the machinery on the trial. He met
Mr Griffiths on the mega mulcher release and then Mr Griffiths came down to Moree at the time of the dismissal of two employees. Mr Griffiths arrived with an employee of his, Richard.
Later in his evidence he said he recalled discussions about Mr Griffiths becoming employed by IDS. His recollection was that he was trying to replace the two employees that had been made redundant with Mr Griffiths and his employee for a very small package in the vicinity of $800 a week. He said some months later
Mr Griffiths was looking for a sum to compensate him for the increase in the amount of work and it was in the vicinity of approximately $120,000 that also included his wife’s services at that stage as well. Regarding Mr Griffiths remuneration his discussions were relayed to Mr Jonson and having spoken to
Mr Jonson he agreed on the $120,000 package for the office that was being run efficiently out of Brisbane by Mrs Griffiths while Mr Griffiths was still commuting or spending time out on various works for IDS. He said he discussed the figure of 120,000 with Mr Jonson. He said the figure of 120,000 was not tied to the purchase of GPM by IDS. He said in the last two months of the year of 2002 a process was commenced to investigate the viability or otherwise of buying GPM.
Further, Mr Desira said that in the first week in January (2003) he went to Melbourne for a meeting and went to Mr Smith’s residence. The QA was tabled and he could see that there was no mention of himself in either company and within an hour it became apparent he was somehow moved sideways or completely out of both organisations from what he could see. He asked Mr Smith and Mr Jonson what was happening and he was told that all he needed to do was to stay away from IDS and go back to Perth and have a couple of months off. Later he resigned.
Mrs Griffiths gave evidence. Mrs Griffiths was in control within GPM of its administrative arrangements, accounting, ledger, debtors, creditors, invoicing etc. Mrs Griffiths said in 2001 GPM tendered with a company called Tenix for an Ergon contract. It was a schedule of rates tender. There had not been a schedule of rates tender prior to that time. Prior to September 2002 she had never had to manage an hourly rate type account receivable situation for GPM. GPM had a payroll. Employees used to fill out timesheets. Some of the employees were on hourly rates. It was therefore necessary to keep track of that. Regarding the email dated
4 September 2002 containing rates she said that those were comparable to what was involved in the GPM tender for Ergon. Those rates were presented to Ergon in what became an unsuccessful tender in 2001. Regarding the documents at pages 29 to 32 of the book of documents her understanding was that because GPM was in considerable debt with the tax office and they had a bank which they were in credit risk management they thought if they had a letter of support for an income and contractual type basis to take to the bank from IDS that would assist them. The document at page 32 of the book of documents quotes Mr Griffiths annual salary to be $70,000 plus expenses per annum. This letter is dated 13 September 2002 and is headed “To whom it may concern”. It purports to be signed by Mr Smith.
Regarding Mr Peters, her understanding was that he was to be paid according to the schedule of rates. However, in the interim IDS would be invoiced just for what
Mr Peters got paid and they would catch the remainder up at a later date. Mrs Griffithssaid she invoiced for a little more than what Mr Peters received as his net pay. Regarding the motor vehicles her understanding of the arrangement was that they were to be paid for under the schedule of rates but in the interim due to the fact that IDS had a cash flow problem they would be invoiced at the lease payment level. It was on that basis that Mrs Griffiths invoiced the respective vehicles until the termination of the arrangement. Regarding the excavator hired at Belatta
Mrs Griffiths said that her husband told her to invoice it at $55 an hour whereas the schedule of rates provides for $132 wet hire. Mrs Griffiths also prepared invoices claiming the payment of $700 a week for her husband’s experience and services. Mrs Griffiths assisted IDS with the installation by IDS of the MYOB program.
Mrs Griffiths said she gave a lot of assistance to the Melbourne office of IDS.
Mrs Griffiths said there was discussion between her husband and Mr Desira regarding payment of the $120,000 plus a motor vehicle. Mrs Griffiths said that the payment of the money was not to involve her or her services, it was just for
Mr Griffiths and a new vehicle. What she heard in the conversation was the figure of $120,000. Later in her evidence she said that she was not to be involved in the $120,000. She said another discussion regarding Mr Griffiths pay package took place sometime in mid January 2003. The meeting took place at 34 Bridges Road which was their home. Mr Jonson, Mr Griffiths, herself and Mr Desira were present at the meeting. In the back yard away from the meeting was a Mr Silcock with her children. She said Mr Jonson said that he had never paid anybody this money before but understood that Mr Griffiths was worth it. Mrs Griffiths created an invoice to IDS from GPM claiming 6 weeks consulting fee for Mr Griffiths at $1100 per week. She believed she created this on 17 January 2003. She said the meeting at which the remuneration was discussed predated this document. She worded it according to Mr Desira’s instructions. She said she asked Mr Desira if she could send an invoice or what the process was for the $120,000 and Mr Desira replied “just invoice $1100 a week until it is sorted”.
There is an issue in the proceeding about what date a variety of invoices were created, posted and dated. Mrs Griffiths prepared a spreadsheet (exhibit 30) using as its base the description and numbers of invoices in the amended statement of claim to explain the date each of the invoices so described were created and the date and means they were sent to IDS. Mrs Griffiths’ evidence on this point is intended to meet the claim by IDS that many of the invoices were fraudulently manufactured as a reaction to the receipt of a statutory demand on 26 March 2003. Mrs Griffiths denied that the invoices were created with that intention. Mrs Griffiths said invoice numbers 257,258,259,260 were created between 10 and 13 January 2003. They were posted as soon as those invoices were created. Some of them are for the month so they were dated by Mrs Griffiths the last day of the month. That does not apply to all of them. The ones of 17 January, number 265 and following were created on the day 17 January as the invoice bears. They were sent to IDS on or about the same day. Two invoices were created on the 20th. Two on 30 January. Mrs Griffiths recalled receiving exhibit 31. She did not agree with Wayne Morris Scoping at $65 an hour for 13 hours 11 hours a day. She also disagreed with the mulcher being at a rate of $360 an hour for 101 hours. Mrs Griffiths said she started to produce the first of the batch of invoices about 7 February and finished the job on 14 February 2003. They were not sent out immediately because she and her husband were seeking legal advice which they obtained on 24 February 2003.
Mrs Griffiths also said that a statutory demand was not sent for $155,000 on legal advice as they had not sent some of the invoices to IDS. Therefore, another statutory demand was reissued for $31,500 approximately which was for the invoices that Mrs Griffiths knew that IDS were in possession of.
Mr Smith gave evidence about his experience in the industry, including delivering papers to a symposium and other organisations. He identified the rates charged by IDS in late 2002 and these became Exhibit 39. He also identified a tender to Country Energy, which became Exhibit 40. He also identified some tax invoices for the hire of equipment and these became Exhibits 41 and 42 respectively. He explained how Agrifuture Imports imported machinery and then was rebuilt as a purpose-built unit with a mulching unit or a stone crusher on the back. That company did all the marketing and IDS was into consultancy and also actually working the machinery. Regarding the relationship between Mr Jonson and
Mr Smith he said he (Mr Smith) was like a technical director. He spent most of his time in the field looking at jobs or looking at scenarios. He said they have companies that come to them if they have a problem and IDS comes in and tries to solve it or work out whether they can build something or find something worldwide that can sort that out. He said Mr Jonson basically looks after all the finance side and everything else in the company. He explained how a tractor is customised so that it can drive right through the bush without breaking it. He said as of September 2002, when Mr Griffiths starting working through GPM for IDS, the equipment IDS was using was predominantly running the 190 and working down in the Moree area. They had a rock crusher with that or a stone-crusher, which was the only one in the country, and they also had the mulching unit on it. They also had at their disposal an excavator with a groomer head on as well. At that time IDS had its office at
Mr Smith’s home in Victoria. The employees of IDS at that time were himself, his wife, Shane Paenga and Brian McMillan, as well as Mr Jonson. He said he had discussions with Mr Griffiths regarding GPM’s work. Regarding a future relationship together, he said Mr Griffiths was performing a lot of ground crew work, which IDS were not basically geared up to do. IDS preferred to stick to their expertise, which was machinery, and Mr Smith had a contract that he had quoted on prior with Country Energy. He thought that would be a good test to see how they could work together. He wanted to see how efficient ground crews were in conjunction with IDS’s machines. He spoke to Mr Griffiths and said that he had a contract which looks like he had won, and he asked Mr Griffiths if he could send him some prices so IDS could utilise that opportunity to do one job together. He said Mr Griffiths did send him the prices. However, before that there was a job on a nut farm at Moree where they met Mr Desira. The people operating Mr Smith’s machine were not performing well and it was decided to get rid of the workers and replace them with Richard Peters. He said he told Mr Griffiths that he would take on Mr Peters and just pay him the wages, and if he was any good, then he would be taken on full-time. If he was no good, then he could revert back to Mr Griffiths and no one would have lost. Five days after those workers were sacked IDS started the first contract that it had won with Country Energy, doing the grain silo job at Moree. He said he agreed with Mr Griffiths for GPM to charge IDS standard commercial rates. Regarding the rates dated October 2 2002, he said those prices were just a one off price specifically for that job (see document 26 in the book of documents). Regarding the document at page 38 of the book of documents dated 2 October 2002, Mr Smith said he did have discussions with Mr Griffiths about the rates in the letter. He said he asked Mr Griffiths to send him his normal rates so
Mr Smith would know what he could charge out from. He said Mr Griffiths said that there was room to move with respect to these rates. He said Mr Griffiths well knew that these rates were what Mr Smith was going to charge out. He said there was a discussion with Mr Griffiths to pay him $700 a week. Regarding the leasing of vehicles, he said that Mr Griffiths said because of his situation, if IDS could take over the lease vehicles on his vehicles that was all he was after and no more. He said Mr Griffiths said that would really help him out of a bind because at the moment the vehicles were just parked up and GPM was just paying for them and was not getting an income for them and that was hurting GPM. Mr Smith saw this as a good opportunity for them to utilise those vehicles. He said there was absolutely no discussion whatsoever between himself and Mr Griffiths that IDS would pay any hire for any of those vehicles. He was just to pay the lease and in doing that it would be helping Mr Griffiths out, otherwise Mr Smith would buy his own vehicles and reap the benefits out of that. Mr Smith said he agreed to pay the maintenance costs and the fuel in the same conversation. Mr Smith said he also agreed to pay Mr Griffiths’ expenses, in addition to the $700 a week. He said he agreed to pay Mr Peters’ expenses, in addition to his wages. He said it was discussed to put Mr Peters on a salary so that they did not have to worry about the hours that he worked. He denied there was any discussion with Mr Griffiths that he would pay an hourly rate for Mr Peters. He said for $700 a week Mr Griffiths would spend at least three to four days a week looking after the workers. He was given a business card as a manager for the area of Northern New South Wales and Queensland. Mr Smith agreed to pay Mr Griffiths’ phone account. He said
Mr Griffiths gave him a specific rate of $23 an hour for the EWP hire, which was basically a wholesale rate. Mr Smith said an invoice numbered 231A, dated 31 December of 2002, provides for a rate of $37.40 per hour for the EWP. He said this price was never discussed and the first time he saw it was after they had their
fall-out and they were served documents. Mr Smith also said he had no discussions with anyone that Mr Peters would be paid on any basis other than his wages. That is there was never any discussion with anyone that Mr Peters would be paid an hourly rate. Regarding amended invoices Mr Smith said they were received from GPM in February 2003, or even a bit later, after IDS served a statutory demand upon GPM. Regarding an invoice number 266 from GPM to IDS dated 17 January 2003 claiming consulting fees for Mr Griffiths for the period 9 December 2002 to 17 January 2003, a period of six weeks at $1,100 per week, Mr Smith said he never had any discussions with anyone about paying Mr Griffiths $1,100 per week. The first time he saw this document was the same timeframe as the rest of the documents that came through after the statutory declaration. Mr Smith denied ever agreeing to pay Mr Griffiths anything other than the $700 per week Mr Griffiths was being paid, with the exception there was talk of Mr Griffiths being paid the $120,000 for himself and his wife in November and in December. He said
Mr Griffiths was not happy with the amount of hours that he was putting in and in particular the amount of kilometres that he was doing in his wagon, and he wanted to know how the proposed buy-out was going on because Mr Desira and
Mr Griffiths and Mr Jonson were looking after that and Mr Smith did not know that much about that side of it. He said Mr Desira was basically driving that side of it. His understanding was that once the buy-out of GPM was completed, the $120,000 was to cover Mr and Mrs Griffiths and basically the use of the office, so as a complete package. He denied giving Mr Desira any authority to bind IDS in terms of agreeing to pay any increased wages to Mr Griffiths. Regarding three motor vehicles that IDS was paying the leasing and expenses on, he said he agreed with Mr Griffiths, that IDS would take over the lease payments on GPM’s vehicles and keep up the maintenance on those vehicles as well. If the buy-out proceeded IDS would end up purchasing those vehicles anyway, and it made sense to IDS, because they had to run the vehicles they would maintain them and everything else.
Mr Smith also confirmed the relationship between the parties was terminated in late January. He recalled about 28 January 2003 he had a conversation with
Mr Griffiths in which Mr Griffiths said he had had enough and the deal with the takeover was not proceeding and he was not happy and that was it, and he was out there.
Mr Jonson was called. He said his role in IDS was the financial side and organisation of machinery, importation and selling or delivery. He was ultimately responsible for the decision about how much employees were paid. He recalled
Mr Desira becoming, in 2002, a national manager for IDS and being paid $48,000. A Mr Silcock was employed in early 2003 by IDS and was paid approximately $50,000 per annum. Regarding Mr Smith, he was paid approximately between $45,000 and $50,000 per annum. He agreed Mr Griffiths was paid $700 per week, which was something he approved. However, he did not approve any increase in what Mr Griffiths or GPM would be paid by IDS. Further, he never approved
an increase in terms of what Mr Griffiths would be paid to $120,000 per year.
Mr Jonson said not even the national manager was paid that amount and it was “a ridiculous amount of money”. He said IDS was looking at buying out GPM. He had discussions with Mr Desira about that. He also had discussions with
Mr Griffiths directly about that. He said there was some discussion with Mr and Mrs Griffiths about what Mr and Mrs Griffiths would be paid by IDS in the eventuality of a buy-out if the buy-out had proceeded. However, he said it all came down to the buy-out first. He said Mr Desira came up with a figure of about $125,000, but Mr Jonson said he would never have paid that. He said he would not have paid that amount even if there had been a takeover because why should he pay a local manager more than he would pay a national manager. He said, “It just doesn't add up”. He said he authorised the purchase of a new Land Cruiser for
Mr Griffiths in early 2003. He said it was not a problem to him. It was a show of good faith to get things moving. He said he decided not to proceed with the buy-out because, even before he could decide that, they all resigned and it all turned sour. He said he never made a decision not to do it. Looking back he would not have done it, but it never came to that point because it all just changed from one day to the next. He said GPM had a tax debt in the order of $140,000 or $150,000. He was still interested in acquiring the assets and the staff, but not the tax debt. He authorised the arrangement whereby GPM’s three vehicles were used by IDS on the basis that IDS made the lease payment and met the petrol and maintenance costs. He said the plan was to take over and go a step further and, as Mr Griffiths had problems paying the repayments on those vehicles and IDS needed the vehicles for the staff, he agreed to this arrangement. Mr Jonson said he did not authorise any other payment to be made with respect to these vehicles. Further, he did not authorise anything other than payment of Mr Peters’ wages during the time he was employed by IDS. Regarding a meeting in January 2003 at Morayfield there was present Mr Desira, Mr Griffiths, Mr Silcock, Mrs Griffiths and of course Mr Jonson. What Mr Jonson recalled about the meeting is that it upset him very much. He said Mr Desira and Mr Griffiths wanted Mr Jonson to get rid of Mr Smith, which he could not understand at the time. He told them not to make him choose to get rid of his partner. He said it did not make any sense. He said he never authorised
Mr Desira to agree to increase the wages of any IDS employee.
In addition to the oral evidence, a number of documents were tendered as exhibits during the proceedings including the book of documents, volume 1 and volume 2.
In GPM’s statement of claim in the GPM proceedings it is alleged that in early December 2002 the parties varied “the supply contract” so that IDS was to pay GPM the weekly equivalent of $120,000 per annum in return for the services and expertise of Mr Griffiths as a consultant in relation to the Moree work. The particulars given are to the effect the variation arose out of a conversation between Mr Griffiths and Mr Desira. Alternatively, the variation arose in discussions which took place in Morayfield on 18 January 2003, at which time Mr Jonson said words to the effect, “I have never paid anyone that much money before. I hope that you are worth it”. GPM claims this amounts to a ratification of what Mr Desira offered
Mr Griffiths on the earlier date.
However, when Mr Griffiths gave evidence he said “the deal” was a deal whereby he would be paid $120,000 and a car in the event IDS purchased GPM. I consider that is inconsistent with GPM’s statement of claim and Mr Desira’s evidence when he said the agreement to pay GPM $120,000 per annum for Mr Griffiths’ services was separate from the buy out of GPM by IDS.
Further, Mr Desira said the $120,000 was for a package comprising of Mr Griffiths and Mrs Griffiths and their Brisbane office. According to Mr Desira, the $120,000 was to consist of approximately $50,000 for Mrs Griffiths for her services and the balance for Mr Griffiths, with a vehicle. However, Mr Griffiths’ evidence and that of Mrs Griffiths was that the $120,000 per annum was for Mr Griffiths alone. I consider that evidence to be inconsistent with the evidence of Mr Desira.
Further, an invoice from GPM to IDS, number 266, dated 17 January 2003, claimed for Mr Griffiths’ consulting fees from 9 December 2002 and 17 January 2003, six weeks at $1,100 per week. Exhibit 30, which was produced by Mrs Griffiths, shows that this invoice was created on or about 17 January 2003. Mrs Griffiths’ evidence about this invoice was that she had not invoiced for Mr Griffiths’ consultancy fees from 9 December as she was waiting for clarification of the pay deal. She asked
Mr Desira if she could send an invoice or what was the process for the $120,000. She said Mr Desira said, “Just invoice $1100 per week until it is sorted”.
Therefore, Mrs Griffiths’ evidence on this point, which I accept, shows Mr Desira had not agreed with Mr Jonson to pay Mr Griffiths $120,000 per annum. I consider that is contrary to GPM’s statement of claim in the GPM proceedings.
Further, at page 32 of the book of documents, volume 1, there is a letter on IDS letterhead representing that Mr Griffiths’ salary is to be $70,000 plus expenses per annum. The letter is dated 13 September 2002. Mr Griffiths accepted the letter was not correct on its face. However, it was presented to a bank to assist Mr and
Mrs Griffiths, who then owed money to the tax office and were in risk management with the bank. I consider that does not reflect well upon Mr Griffiths. Further, when cross-examined Mr Griffiths accepted that in two statements of claim in the GPM proceedings he relied upon this letter to claim he was entitled to be paid by IDS on the basis of this sum of $70,000. Although he accepted in cross-examination it was wrong of him to do so, I consider that also does not reflect well upon Mr Griffiths.
Further, there are invoices from GPM to IDS which are consistent with what IDS says was agreed between Mr Smith and Mr Griffiths. Of course it is GPM’s case those invoices reflect only what was agreed to a point and that later there would be an adjustment to reflect the entire agreement between the parties.
However, two invoices from GPM to IDS should be mentioned. Invoice No. 226 is for the hire of an excavator. GPM charged on this invoice $55 per hour rather than the “agreed” $132 per hour. Similarly on invoice No. 231 the charge for the EWP is $23 per hour rather than the “agreed” $37.40 per hour. It is IDS’s case that what was agreed was $55 and $23 per hour respectively. Although GPM later issued correcting invoices, what was on the invoices in the first instance is what IDS claims was agreed. The two invoices do not involve a claim by GPM that a charge was to be made which was later to be adjusted.
Mr Griffiths’ explanation for the $55 per hour in invoice No. 226 was that it
was a mistake and he could not comment on where the original rate came from. Mrs Griffiths’ evidence regarding the invoice was that she was instructed by
Mr Griffiths to bill the excavator at $55 per hour.
Mr Griffiths’ explanation for the $23 per hour in the invoice No. 231 was that it worked back to the weekly rate. He could offer no further explanation for the change in the invoice. Mr Griffiths’ explanation of invoice No. 231 was that the $23 was an error and it always had been. She said the $23 was in her head.
A number of submissions were made by GPM about the credibility of Mr Smith and Mr Jonson.
Having considered these submissions and the evidence in these proceedings I do not accept there was anything adverse about Mr Smith’s evidence nor do I accept there was anything about the conduct of IDS’s case that detracts from Mr Smith’s evidence, nor that his evidence was inconsistent with “core” documents. I do not accept the abandonment by IDS of the agency claim in the proceedings detracts from Mr Smith’s credit. I do not accept Mr Jonson was in any way unhelpful, nor that his evidence was in any respect unsatisfactory. I was favourably impressed by Mr Smith and Mr Jonson as they gave their evidence.
In all the circumstances I do not accept Mr Griffiths’ and Mrs Griffiths’ explanations about invoices No. 226 and 231. I accept the evidence of
Mr Smith and Mr Jonson and accept their evidence where it is in conflict with the evidence of Mr Griffiths, Mrs Griffiths and Mr Desira.
In the GPM proceedings I find:-
(a) the four-wheel-drive vehicles were to be paid for by IDS meeting GPM’s lease payments;
(b) that for man and machine hire IDS agreed to initially pay GPM “retail rates” for EWP’s and operators and then agreed to pay “a wholesale rate” which in respect of the EWP’s was $23 per hour. There was no agreement whereby IDS agreed to pay GPM for a fire tender;
(c) it is agreed by the parties that GPM is to be reimbursed for expenses in the sum of $11,540;
(d) that GPM is limited to $700 per week for Peter Griffiths consulting fees because there was no enforceable agreement to pay GPM $2,307 per week being the weekly equivalent of $120,000 per annum;
(e) that Richard Peters was to be paid a weekly salary during a probationary period and then when employed by IDS be paid a weekly salary;
The result being there is due and payable to GPM by IDS $22,833.89.
In the IDS proceedings I find GPM was to pay IDS for labour and equipment at “the retail rate” set out in Exhibit 39 for the SAME 260 and the SAME 190 and the Scoper and $132 per hour dry hire rate for a Kato excavator. It is agreed by the parties that IDS is to be paid $3,000 for labour for security. The result being there is due and payable to IDS by GPM $63,772.
I set off the sum due and owing by IDS to GPM against the sum due and owing by GPM to IDS. I give judgment for IDS against GPM in the IDS proceedings for the sum of $40,938.11.
I will hear the parties on the question of costs.
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