Joseph Calautti and Co Pty Ltd v Barden - [2005] WADC 257

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: JOSEPH CALAUTTI & CO PTY LTD -v- BARDEN & ANOR [2005] WADC 257

CORAM: EATON DCJ

HEARD: 16 DECEMBER 2005

DELIVERED : 22 DECEMBER 2005

FILE NO/S: CIVO 240 of 2004

MATTER :IN THE MATTER of Section 41 of the Builders Registration Act

BETWEEN: JOSEPH CALAUTTI & CO PTY LTD (ACN 009 049 101)
Applicant
AND
DEAN JOSEPH BARDEN
LORRAINE FREDA BARDEN
Respondents

ON APPEAL FROM:
For File No              :  CIVO 240 of 2004
Jurisdiction              :  BUILDING DISPUTES TRIBUNAL
Coram  :DEPUTY CHAIRMAN STAVRIANOU

Catchwords:

Appeal - Appeal from decision of the Building Disputes Tribunal - Return of deposit - Agency - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Representation:

Counsel:

Applicant: Mr R Guerrini
Respondents : Mr Vogt

Solicitors:

Applicant: Vincent Partners
Respondents : Bruce Havilah & Associates

Case(s) referred to in judgment(s):

Con‑Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226

Case(s) also cited:

Eng Mee Yong v Letchumanan [1980] AC 331
Devries & Anor v Australian National Railways Commission (1993) 177 CLR 472
Abalos v Australian Postal Commission (1988) 171 CLR 167

EATON DCJ: This action was commenced by Originating Summons filed by the applicant on 20 August 2004. The applicant sought a stay of an order made by the Building Disputes Tribunal on 27 July 2004, leave to appeal the decision of that Tribunal made on that day and costs. In an accompanying proposed Notice of Appeal it is clear that the applicant seeks to appeal orders made by Deputy Chairman Stavrianou to the effect that the applicant pay the respondents $7,462.
The District Court Rules 2005 provide that an appeal must be by way of a reconsideration of the evidence that was before the primary court unless the parties agree otherwise. I was informed by counsel for the parties that there was no such agreement. Accordingly, the appeal must be determined following a reconsideration of the evidence that was before Deputy Chairman Stavrianou.
The respondents made complaint to the Tribunal on 28 April 2004. The respondent to that complaint was the applicant before me. Their complaint referred to a building contract dated 16 August 2003 made between the applicant and the respondents. The respondents, by their complaint, sought compensation by refund of deposits paid in the sum of $7,937.
The matter came before Deputy Chairman Stavrianou on 20 July 2004. The respondents appeared in person and the applicant company was represented by its director, Michael Joseph Calautti. The Tribunal heard sworn evidence from Dean Joseph Barden and Michael Joseph Calautti and received into evidence a written statement signed by Dean Joseph Barden and dated 21 April 2004 (Exhibit 1), a business card handed by Mr Calautti to Mr Barton on 16 August 2003 (Exhibit 2), a contract made between the parties dated 16 August 2003 (Exhibit 3), a letter dated 21 April 2004 written by the respondents to the applicant (Exhibit 4), a letter in reply written by the applicant to the respondents dated 22 April 2004 (Exhibit 5) and a document admitted into evidence (Exhibit 6) the nature of which was not clear.
According to the evidence of Mr Calautti he had been a builder for over 36 years and had been a registered builder since 1968. He said that on or about 2 August 2003 he was approached by a man named Greg Lewkowski who carried on business as "Fineline Homes". Mr Lewkowski told him that he had been building kit homes for about 15 years, averaging 10‑15 clients per year. Mr Lewkowski explained that he was not a registered builder and could not undertake the building of his kit homes on site as such. It appears that the applicant reached an agreement with Mr Lewkowski for the purpose of the building of kit homes sold by Mr Lewkowski. Mr Calautti said:
"…I'll try to charge fees on top of the actual building and I can organise everything for you, whatever material is supplied, you getting paid for but you're not entitled to any other payments or whatsoever to interfere with the actual price for building or for alterations or for whatever, whatever is going to happen after we signing the contract. I said that the clients will have to contact me or discussing everything with me. You are out at this stage here. And he did agree to that."
It seems that the respondents wanted to build a home on a block of land owned by them at Green Head. They first approached "Fineline Homes" with a view to building a kit home on that block. It seems that at that stage they paid Mr Lewkowski $500 by way of deposit.
Subsequently on 16 August 2003 Mr Lewkowski took the respondents to 10 Cramwell Road, Balcatta, that being the home of Mr Calautti. It became clear, as a result of discussions, that the applicant would be the builder of the home at Green Head. Mr Lewkowski introduced Mr Calautti to the respondents. Mr Calautti proffered his business card which was that of Joseph Calautti & Co Pty Ltd. On that day the parties entered into a lump sum building contract whereby the applicant would build for the respondents a new steel framed house at Lot 650 being on the corner of Glover Street and Worthington Crescent, Green Head. The contract price (including GST) was $114,417. That amount was to be paid by an initial deposit of $7,437 and six progress payments thereafter. The contract provided that the respondents should pay the applicant the deposit on the day of contract or on the day that the respondents were given a certificate in approved form evidencing the taking out of home indemnity insurance, whichever event was the later.
According to the evidence of Mr Barden, during the course of conversation at the home of Mr Calautti on 16 August 2003, the day on which the contract was signed, there was discussion between all four persons present during which Mr Barden asked Mr Lewkowski: "What happens from here?". He said that Mr Lewkowski replied: "You have to pay the first instalment now." When Mr Barden queried that Mr Lewkowski stipulated that the first instalment, which I take to be the deposit, had to be paid within one week. Mr Barden said that Mr Calautti was present during the conversation and that he asked both of them who the money should be paid to. He said there was a discussion between Mr Lewkowski and Mr Calautti about liability for GST and that he was told to pay Mr Lewkowski. When asked who told him that he replied: "Well between the two of them Mr Lewkowski said, 'pay it to me'" and Mr Calautti said: "If there's any problems during the course of it you can contact Greg Lewkowski or you can contact myself."
It is common ground that by cheque dated 25 August 2003 payable to "Fineline Homes" or bearer in the sum of $7,437 drawn on the account of the respondents with the Commonwealth Bank of Australia payment of the deposit was made to "Fineline Homes".
Mr Barden said that on 21 November 2003 Mr Calautti telephoned him to tell him that Mr Lewkowski had gone into bankruptcy that they would be lucky to get 10 cents in the dollar, that he still wanted to build the respondents' home at Green Head but that he couldn't do so for the price agreed in the written contract. Mr Calautti told him that he needed a further 25 per cent on top of the agreed price.
By letter of 21 April 2004 the respondents wrote to the applicant giving notice of their intention to take what had then become a contractual dispute to the Building Disputes Tribunal. They indicated that they would be seeking compensation in the form of repayment of $500 paid "to draw up plans and specifications" and $7,437 being "first instalment deposit". Mr Calautti, on behalf of the applicant, replied by letter of 22 April 2004 in the following terms: "I am sorry but I cannot pay you the amount you paid "Fineline Homes" which occurred before you approached me with Greg Lewkowski to discuss your building. Neither you nor "Fineline Homes" paid me any amount so I am not responsible for the amount you are claiming."
It is true that the sum of $500 referred to appears to have been paid by the respondents to Mr Lewkowski prior to the contract between the respondents and the applicant dated 16 August 2003. It is clear that it forms no part of the contract amount. It is equally clear that the cheque in the sum of $7,437 was the deposit payable under that contract.
In his evidence Mr Calautti was asked whether there was, in the conversation at his home on 16 August 2003, talk about the deposit and GST. He replied: "No, no. We did not talk about the deposit." When asked if the applicant did any work after the contract was executed pursuant to the contract he said that it did not. He confirmed that Mr Lewkowski had made application to the Shire of Coorow, being the relevant local government authority, for a building licence in the name of the applicant. He said that he signed that document and that Mr Lewkowski paid the relevant fee which was about $400. Mr Calautti agreed that as the builder the applicant would usually pay for the building licence and for insurance.
It is clear that the statement made by Mr Calautti in his letter of 22 April 2004 that the amount paid by the respondents to "Fineline Homes" was paid before the meeting of 16 August 2003 was correct insofar as it related to the sum of $500 but quite incorrect insofar as it related to the deposit of $7,437. The deposit itself was paid some nine days after the date of contract and, having regard to the terms of the contract, before the respondents were legally obliged to make payment, there being no evidence of home indemnity insurance at the time of payment.
Deputy Chairman Stavrianou gave written reasons for decision which were published on 6 September 2004, he having given an extempore decision on 20 July 2004, the day of the hearing. In those reasons the Deputy Chairman said:
"Mr Calautti told the Tribunal that there was no discussion about the deposit at the time when he met Mr Barden at his home. I do not accept that to be the position. I accept Mr Barden's evidence in preference to Mr Calautti's in relation to what occurred at the meeting on 25 August 2003 (sic)."
There was, on the evidence, no meeting on 25 August 2003, that being the day when the cheque was drawn by the respondents for payment of the deposit. The Deputy Chairman's reference was undoubtedly to the meeting of 16 August 2003.
The evidence of Mr Barden was to the effect that Mr Lewkowski had stipulated that payment of the deposit was to be made within a week. In fact, payment was made nine days later and before the respondents were contractually obliged to make payment having regard to the terms of the contract. The deposit was undoubtedly paid to "Fineline Homes" having regard to the terms of the cheque. Having regard to the fact that the contract was signed on 16 August 2003 with all parties present with Mr Lewkowski and that the contract provided for payment of the deposit in the sum of $7,437 it strikes me as quite improbable that there would have been no discussion as to payment of that amount. There is a consistency as between Mr Barden's account of what was said at the meeting of 16 August 2003 and what transpired nine days later. If there had been no discussion as to payment of the deposit, as Mr Calautti insisted, it seems highly unlikely that the respondents would pay an amount which clearly was the deposit pursuant to the contract before they were legally obliged to do so and to an entity which was not a party to the contract signed by them. It does appear to me that the whole purpose of the meeting was to facilitate the introduction of the respondents to the applicant by Mr Lewkowski and the execution of a lump sum building contract whereby the applicant would build the respondents' home at Green Head for a contract price of $114,417.
Given that the deposit was paid on 25 August 2003 to "Fineline Homes" pursuant to an arrangement agreed at the meeting of 16 August 2003 consideration must be given to the relationship that existed, if any, between the applicant and Mr Lewkowski. Deputy Chairman Stavrianou was satisfied that Mr Lewkowski was the agent of the applicant and that he received the deposit payable pursuant to the contract made between the applicant and the respondents in that capacity. Once an agent receives money on behalf of a principal there is a duty to account. Consistent with the duty to account an agent who, in acting within his or her authority, receives money on behalf of the principal must pay that money over to the principal or otherwise account for it as prescribed by the terms of the agency. ("Law of Agency", G E Dal Pont, Butterworths, par 13.10). If Mr Lewkowski was indeed the agent of the applicant for the purpose of receiving the deposit on the applicant's behalf then payment by the respondents of the deposit to Mr Lewkowski would constitute payment to the principal, the applicant. In the event of a failure by Mr Lewkowski to pay the deposit to or otherwise account to the applicant the applicant's sole recourse would then have been against Mr Lewkowski for failure to account for moneys received in his capacity as agent. (Con‑Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226 at 234).
It is the party who alleges the existence of an agency who bears the burden of proving so and moreover of establishing that the agent acted within the scope of his or her actual or ostensible authority. An agent need only be engaged by the principal to perform an act or acts, that is, to render a service to the principal. A commission agent, for example, might be employed by a vendor to find a purchaser for the vendor's goods or property and will be paid a commission on the introduction of a successful purchaser. ("Law of Agency", Dal Pont, par 1.7).
By the time the respondents met Mr Calautti there was, on the evidence of Mr Calautti, an established relationship between the applicant and "Fineline Homes" whereby the applicant would act as builder for clients of "Fineline Homes" seeking to build a kit home being the "Fineline Homes" product. It is not necessary to determine precisely the terms of the relationship that existed between the applicant and "Fineline Homes". For the purposes of the matter before me it is clear that the applicant and the respondents on 16 August 2003 entered into a written agreement which provided for the payment of the deposit to the applicant. Deputy Chairman Stavrianou was correct in his finding of fact that subsequent to or at the time of execution of that contract an arrangement was made (an arrangement to which the applicant was a party) whereby the respondents were to pay the deposit pursuant to the contract to Mr Lewkowski within seven days. Given that Mr Lewkowski was not a party to the contract made between the applicant and the respondents and yet he was to be the recipient of the deposit paid by the respondents pursuant to that contract one can only conclude that he received that deposit as the agent of the applicant and that, in doing so, he was liable to account to the applicant upon receipt. The fact of the matter is that he became bankrupt before accounting to the applicant. It is not clear whether the applicant lodged a proof of debt in bankruptcy. It is clear, however, that in the wake of the bankruptcy Mr Calautti on behalf of the applicant contacted the respondents and effectively repudiated the contract. The law recognises that a party may commit an anticipatory breach of contract by manifesting an inability or unwillingness to perform before any performance is due. Such a breach amounts to repudiation if inability or unwillingness relates to the whole contract or an essential term of it or will result in the loss of the substantial benefit of the contract. In that event the innocent party may terminate the contract forthwith without waiting until performance falls due. (Cheshire & Fifoot's "Law of Contract", 8^th Australian ed, Seddon and Ellinghaus, Butterworths, par 21.14). A payment made under a contract for which no benefit is received because of breach by the other party is recoverable as damages (op.cit. par 23.9).
It is the case that the learned Deputy Chairman correctly characterised the relationship between Mr Lewkowski and the applicant as that of agent and principal, respectively. It follows that payment by the respondents to Mr Lewkowski was payment to the principal. It is the case that the agent failed to account to his principal and subsequently became bankrupt. In the circumstances, given the applicant's repudiation of its contract with the respondents they were entitled to the return of their deposit. The findings of fact and law made by the learned Deputy Chairman were correct. It follows from the foregoing that the orders made by him were correct. It follows further that the application for leave to appeal should be dismissed.
I should say that counsel for the applicant made it clear that par 2(a) of the applicant's proposed Notice of Appeal was, in truth, a denial of the existence of the relationship of agency as between the applicant and Mr Lewkowski. So far as grounds 2(b) and (c) are concerned I find that the learned Deputy Chairman was correct in holding that the applicant was in breach of the contract between the appellant and the respondents made on 16 August 2003 and was correct in holding that the respondents were entitled to compensation. I will hear the parties as to costs.