Jo v Fudlovski
[2001] WASCA 167
•31 MAY 2001
JO -v- FUDLOVSKI & ANOR [2001] WASCA 167
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASCA 167 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:119/1999 | 5 MAY 2000 & 15 MAY 2001 | |
| Coram: | PIDGEON J WALLWORK J WHEELER J | 31/05/01 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| PDF Version |
| Parties: | JIMMY JO NICK FUDLOVSKI BLUECHIP ENTERPRISES PTY LTD |
Catchwords: | Appeal Evidence Witnesses Credibility Demeanour No new point of principle |
Legislation: | Nil |
Case References: | Abalos v Australian Postal Commission (1990) 171 CLR 167 De Vries v Australian National Railway's Commission (1993) 177 CLR 472 Braidotti v Queensland City Properties (1991) 172 CLR 293 Foran v Wight (1989) 168 CLR 385 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) 60 ALR 588 Sunstar Fruit Pty Ltd v Cosmo [1995] Qd R 214 Westminster Properties Pty Ltd v Compco Constructions Pty Ltd (1991) 2 WLR 335 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : JO -v- FUDLOVSKI & ANOR [2001] WASCA 167 CORAM : PIDGEON J
- WALLWORK J
WHEELER J
- Appellant (Plaintiff)
AND
NICK FUDLOVSKI
First Respondent (First Defendant)
BLUECHIP ENTERPRISES PTY LTD
Second Respondent (Second Defendant)
Catchwords:
Appeal - Evidence - Witnesses - Credibility - Demeanour
No new point of principle
Legislation:
Nil
(Page 2)
Result:
Appeal dismissed
Representation:
Counsel:
Appellant (Plaintiff) : Dr P R MacMillan (05/05/00) & Mr K Yin (15/05/01)
First Respondent (First Defendant) : Mr P T Arns (05/05/00)
& Mr M H Zilko (15/05/01)
Second Respondent (Second Defendant) : Mr P T Arns (05/05/00) &
Mr M H Zilko (15/05/01)
Solicitors:
Appellant (Plaintiff) : Jackson McDonald
First Respondent (First Defendant) : Arns & Associates
Second Respondent (Second Defendant) : Arns & Associates
Case(s) referred to in judgment(s):
Abalos v Australian Postal Commission (1990) 171 CLR 167
De Vries v Australian National Railway's Commission (1993) 177 CLR 472
Case(s) also cited:
Braidotti v Queensland City Properties (1991) 172 CLR 293
Foran v Wight (1989) 168 CLR 385
State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) 60 ALR 588
Sunstar Fruit Pty Ltd v Cosmo [1995] Qd R 214
Westminster Properties Pty Ltd v Compco Constructions Pty Ltd (1991) 2 WLR 335
(Page 3)
1 PIDGEON J: I agree with the reasons to be published by Wheeler J and with the orders proposed.
2 WALLWORK J: For the reasons to be given by Wheeler J, I agree that this appeal should be dismissed.
3 WHEELER J: This is an appeal in which each ground in essence complains that the learned trial Judge did not take any, or any adequate, account of certain evidence or that his findings were contrary to the weight of the evidence. The principal witnesses were the appellant and the first respondent and his Honour formed and expressed views as to the credibility of each. Based in part on the demeanour of each, to which his Honour briefly but clearly referred, his Honour reached the view that the first respondent was a more reliable and credible witness than the appellant. The difficulties facing an appellant in these circumstances are plain from the authorities: De Vries v Australian National Railway's Commission (1993) 177 CLR 472, Abalos v Australian Postal Commission (1990) 171 CLR 167.
4 In my view, the criticisms of his Honour's findings made by the appellant lack substance. His Honour dealt clearly with the major contests of fact between the parties and made findings which were, in my view, consistent with the evidence and with the view which he formed of the credibility of each party. His Honour's conclusions followed inevitably from those findings. It is true, as the appellant notes, that there are a number of matters which appear to be raised by the pleadings with which his Honour did not deal. However, a perusal of the transcript reveals that the parties ignored those aspects of the pleadings and that the trial was run on the issues with which his Honour dealt. In my view, in order to dispose of this appeal, it is necessary to set out only briefly the general nature of the issues in the trial. They are as follows.
The Dispute
5 The appellant was a businessman who normally lived in Indonesia. English was not his first language, but it was clear that he was able to communicate sufficiently for everyday purposes. The first respondent was with his wife the proprietor of a metal engineering business and the second respondent was the vehicle through which the first respondent and his wife conducted that business. The business operated mainly in the sheet metal area and the first respondent was experienced in the sheet metal industry generally. The appellant and first respondent first came
(Page 4)
together when the appellant made an inquiry in relation to another type of business venture. However, the appellant them made inquiries of the first respondent concerning the manufacture of metal doorframes.
6 During the course of pre-contractual negotiations, the appellant indicated that he was a person of substantial means in Indonesia and that there would be no problem about finance for a venture in this State relating to doorframe production. He indicated to the first respondent that there was a substantial market in Indonesia for such doorframes. It was agreed that the respondents would construct a steel doorframe rolling mill ["the machine"]. The sum to be paid by the appellant in respect of the construction was AU$280,000 and the contract initially set out the manner of payment of that amount. It was not disputed that the approximate cost of constructing such a machine would be of the order of $400,000-$420,000, so that it appears that the respondents were to fund some portion of the construction. In consideration of their doing so, they were to participate in a joint venture which would be set up for the manufacture of door frames in Indonesia.
7 This agreement was made in October 1996, and required delivery of the machine within 24 weeks of "date of order and receipt of deposit". The appellant made certain payments to the respondents but they were less than those required to be made under the agreement. The respondents engaged the services of an outside expert and construction was commenced.
8 There were problems in construction, which were at times the result of matters such as machinery breakdown. However, it was also the case that the appellant became concerned about the deteriorating financial (or perhaps political) situation in Indonesia and decided that the machine should no longer be delivered there for use in that country but that it should be built for, and used in, Australia. This required a change to the plans and also, according to the first respondent, meant that significant work over and above that initially contemplated had to be done in order to produce a machine meeting specifications for Australia, at a time when considerable expense had already been incurred in the construction of the machine based upon an Indonesian use.
9 The decision to manufacture doorframes in Australia had a number of flow-on effects. One was that the parties then sought finance from a local institution to acquire land and premises for a West Australian factory. They approached a bank and at the meeting with the bank manager the appellant suggested that the respondents would mortgage
(Page 5)
- their business property by way of security. The first respondent said that he was shocked by this as he had understood that the appellant was a person of substantial means and that he had not considered providing his property as security. By this stage, the appellant had paid $66,000 towards the contract price of the machine, although the agreement required him to pay $196,000 by that time. The first respondent said that the inadequacy of funds available to him was a further factor in the delay in completion.
10 In July 1997 the parties arrived at a significant variation to their original contract. That agreement recorded that the first respondent would be "responsible to finish the first door frame rolling machine" but did not specify a date. It set out a schedule for further payments by the appellant. There were further payments by the appellant which fell short of the amounts required by the agreement as varied, and failures to make required payments. Relations between the parties deteriorated.
11 On 25 August 1997, the first respondent wrote a letter to the appellant purporting to give "an absolute guarantee … that this plant will function in a fully commercial manner and will be ready for trialing in approximately four weeks time". In November 1997, about six weeks later, the appellant wrote to the first respondent complaining about delays in finishing the machine and saying, "I think you will not hesitate to agree with me. To put 29 November 1997 as the deadline for this agreement about finishing off the door framing machine". The first respondent immediately replied, pointing out that the appellant had failed to comply with the progress payment schedule and recording his view that the largest time loss related to the change of design from a machine for use in Indonesia to a machine to be used in Australia.
12 Nothing further seems to have happened until the appellant's solicitors wrote a letter on his instructions dated 8 January 1998 demanding the return of the monies already paid by the appellant. It referred to delays in completion of the machine and advised the first respondent that should he "not remedy the breach of the contract comprised by the matter set forth above within 14 days, our client will accept that as repudiatory conduct and terminate the contract and accordingly will seek damages …".
13 The appellant's case was opened on the basis that it was a claim in contract and also relying on the provisions of the Trade Practices Act. The Trade Practices Act aspects do not appear to be presently relevant.
(Page 6)
- By the time of trial the only breach of contract relied on by the appellant was delay in performance. His Honour said, in my view correctly:
"Time not being of the essence, at least after June 1997, then the plaintiff could not terminate the contract because of delay in performance without giving a reasonable time for the defendants to perform their obligations. Furthermore in giving notice the plaintiff must be ready and willing to perform."
The Grounds of Appeal
15 I do not think it is necessary to set out the grounds in full. They fall into a number of categories, and I summarise each category and deal with it below. I refer here to the amended grounds of appeal, amended by leave granted on 5 May 2000. Ground 1 of those grounds was abandoned and ground 2(e) was not pursued.
The Effect of the "undertaking" of August 1998
16 This is raised by grounds 2(a), 2(aa) and 2(b)(1). The appellant suggests that his Honour was in error in failing to give any or sufficient weight to the evidence of this letter with its undertaking that the machine would be delivered within four weeks from that date. That error is said to have effected his Honour's reasons in a number of ways. However, his Honour dealt with the letter in his reasons. He found that it was written against a background of deteriorating relations between the parties, in a situation where the respondents were concerned not to lose the investment which they had already made and against the background of significant delay caused by the appellant. The way in which his Honour dealt with the letter, although he did not spell out the conclusion, is consistent only with a view that the letter was part of an on-going negotiation was intended to placate the appellant, and was neither an acknowledgment of a contractual duty to have the machine ready by any particular time nor a variation of the contract specifying a time for completion.
(Page 7)
Expert Evidence as to Time for Completion and Complaints of Delay
17 This is raised by grounds 2(aa) and 2(b). The gist of the ground is that a "reasonable" period within which to complete the machine would have been a very short period indeed, having regard to:
• Expert evidence that the change in specification would have delayed completion by weeks only;
• Expert evidence that at December 1997 it should have taken no more than eight weeks to complete the machine; and
• the correspondence dealing with delay including the earlier letter of the appellant purporting to set a date for completion.
18 The short answer is that his Honour clearly took account of this material. He referred to the correspondence in detail in his judgment. It is true that he did not expressly refer to the expert evidence as to the time which would be taken for completion of the machine. However, the evidence of the first respondent, which his Honour accepted, was that delay was caused both by the changes to the specifications and by the appellant's failure to pay on time. The delay caused by the change in specifications appears to have been not merely the delay necessarily caused by the need to start construction afresh and the time taken for that, but also because the change of specifications meant that expense already incurred and payments already made by the respondents were wasted, further contributing to financial pressure. The first respondent at trial agreed that it would not have taken him very long to complete the machine, had he been in funds to do so. He placed responsibility for lack of funds at the feet of the appellant, and his Honour clearly accepted that evidence.
No Unequivocal Repudiation by the Appellant
19 This is dealt with in ground 2(c). It refers to the fact that the statement of claim does not plead a termination of the agreement by the appellant and suggests that the letter of 8 January 1998 merely asserted a right in the appellant to terminate but did not in terms do so. There was no further purported termination by the appellant.
20 This appeal took an unusual course. It was argued in part in May of 2000 and then adjourned part heard as a result of the appellant's then expressed wish to add a further ground to the grounds of appeal. That ground was not ultimately pursued. However, by the time the matter was brought on again in May of this year, the appellant had changed solicitors.
(Page 8)
- It appears that this point was not raised, or not clearly raised at trial (the appellant there being represented by different counsel again), and the first counsel who represented the appellant on the appeal appears to have based the greater part of his argument on the assumption that the appellant was by letter of 8 January 1998, purporting to terminate the agreement.
21 Assuming, however, that it is appropriate to permit the appellant now to argue this point, it was open to his Honour to regard the letter of January 1998 as intended to be in effect self executing. The respondents pleaded what they described as acceptance of the appellant's "repudiatory conduct". The letter of 8 January 1998 shows no willingness on the part of the appellant to perform his contractual obligation. It is to be understood against the background of the previous dealings of the parties. It is to be noted also that it appears that each party, subsequent to January 1998, conducted himself in a way which suggested that all parties regarded the letter as bringing the contract to an end at the expiration of the fourteen days; in particular, the appellant rejected later attempts to negotiate on the basis that it was "too late".
Was the Appellant Entitled to Repudiate?
22 Considerable argument was addressed to the question of whether the appellant was entitled to repudiate the contract whilst in breach of it by failing to pay part of the agreed purchase price as and when the instalments fell due. It is not clear to me that this issue is raised by any of the grounds of appeal. Nevertheless I deal briefly with it.
23 The argument was that it would have been open to his Honour to find that the appellant was delaying payments because he was concerned about the ability of the respondents to perform their part of the bargain and the inadequate manner in which the machine was being constructed. Then, it was argued those delays in payment being in effect "caused" by the respondents, it would still be open to regard the appellant as being able and willing to carry out his part of the bargain. It was accepted that he was in breach in the sense that he had not paid on time.
24 The problem with this proposition is that there appears to be no evidence directly dealing with the appellant's reason for failing to pay on time. An inference that he only did so because of poor performance by the respondents would be inconsistent with the whole of the tenor of his Honour's reasoning in which, although he recognised that there had been some delays and problems attributable to the respondents, he formed the
(Page 9)
view that the primary cause of them was the appellant's unilateral decision to alter the ultimate destination of the machine.
Windfall to the Second Respondent
25 This is dealt with in ground 2(d). It is suggested that a termination of the agreement on the part of the second respondent would be unconscionable because it had contributed to the delay in the completion of the machine, and because termination would result in a windfall to it on the basis that it retained the machine and retained also all funds paid by the appellant.
26 The first observation to be made is that it is not at all clear to me that this unconscionability issue was squarely raised at trial. In any event, on the evidence, the value of the machine was estimated at the date of trial at $100,000 approximately. The evidence was also that the first respondent borrowed the sum of $320,000 in order to fund the manufacture of the machine. The appellant had on the evidence contributed a sum of $158,000 towards the manufacture of the machine. Further, the evidence suggested that the market for the machine is small, since the West Australian market in metal doorframe making is already dominated by two or three corporations. In those circumstances, the argument that termination resulted in a "windfall" to the second respondent does not appear to me to be open.
Conclusion
27 For the reasons given, I would dismiss the appeal.
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