Khon Vinh Tran & Sang Le Trieu v DSL Computers & Electrical Pty Ltd t/as DLY Constructions & anor Kim Chau Tran & Khon Vinh Tran v Nghiep (David) Ly & anor

[2008] NSWDC 42

CITATION:	Khon Vinh Tran & Sang Le Trieu v DSL Computers & Electrical Pty Ltd t/as DLY Constructions & anor Kim Chau Tran & Khon Vinh Tran v Nghiep (David) Ly & anor [2008] NSWDC 42
HEARING DATE(S):	18-20/09/07, 26/11/07, 29/01/08, 5/02/08
JUDGMENT DATE:	2 April 2008
JURISDICTION:	Civil
JUDGMENT OF:	Goldring DCJ
DECISION:	Action 858/06: Verdict for defendant on claim. Verdict for cross-defendants on cross-claim. Action 859/06: Verdict for plaintiff Kim Chau Tran against defendant DSL Computers & Electrical Pty Ltd (trading as DLY Constructions) in the sum of $190,489. Verdict for defendants otherwise.
CATCHWORDS:	Contracts - Building contracts - Procedure for variations - Evidence - admissions
CASES CITED:	Built Interiors Pty Ltd v Three Dinosaurs Pty Ltd & Anor [2003] NSWCA 290 Update Constructions Pty Limited v Rozelle Child Care Centre Limited (1990) 20 NSWLR 251
PARTIES:	Khon Vinh Tran (First Plaintiff, Second Cross-Defendant) Sang Le Trieu (Second Plaintiff, Third Cross-Defendant) DSL Computers & Electrical Pty Ltd t/as DLY Constructions (First Defendant, Second Cross-Claimant) Nghiep (David) Ly (Second Defendant, First Cross-Claimant) Kim Chau Tran (First Plaintiff, First Cross-Defendant) Khon Vinh Tran (Second Plaintiff, Second Cross-Defendant) Nghiep (David) Ly (First Defendant, First Cross-Claimant) DSL Computers & Electrical Pty Ltd t/as DLY Constructions (Second Defendant, Second Cross-Claimant)
FILE NUMBER(S):	858 of 2006; 859 of 2006
COUNSEL:	Mr T. Davie (First & Second Plaintiffs, Cross-Defendants) Ms E. Olsson SC (First & Second Defendants, Cross-Claimants)
SOLICITORS:	Borak & Co Solicitors (First & Second Plaintiffs, Cross-Defendants) Turnbull Bowles Lawyers (First & Second Defendants, Cross-Claimants)

JUDGMENT

The two claims and the cross-claim

1 HIS HONOUR: The first case (858/06) is a claim for repayment of money paid by plaintiffs in the contract action (Khon Vinh Tran and Sang Le Trieu) to the defendants, allegedly in connection with a building contract between them. I shall refer to this as "the contract claim".

2 The individual defendant, David Ly has brought a cross-claim against the plaintiffs in this action for money which he claims is payable to him, mainly for “project management” work completed by him before the written building contract was entered into. I shall refer to that as "the cross-claim".

3 In the second action, (859/06) the plaintiffs Kim Chau Tran and Khon Vinh Tran also claim against the defendants for money, which they allege, they lent to one or other defendant. I shall refer to this claim as "the loan claim". Kim Chau Tran says he made a loan to enable the issue of a bank guarantee, which was apparently necessary to obtain the approval of the local council to a development application. Khon Vinh Tran alleges that $10,000 paid by him to the defendants was also a loan. This was money paid by him to the defendants to enable the construction of an electrical pillar required by the electricity supplier.

4 The plaintiffs in the two actions are related to each other. They are also related, by marriage, to David Ly, the principal of DSL Computers and Electrical Pty Limited (trading as DLY Constructions)(“DLY”), who is also an individual defendant. David Ly is by training an electrical engineer, but he is also a licensed builder, trading as DLY Constructions, which is a business name registered to a company controlled by David Ly. This company, DSL Computers and Electrical Pty Limited, is a defendant in each action.

5 The decision in both cases rests largely on the credit of the witnesses. It is fair to say that that although there is a written building contract in standard form, prepared by David Ly, many of the transactions which occurred in the course of the dealings between the parties appear to have little relationship to the terms of this contract. By and large, the plaintiffs do not appear to have kept accurate records, where they have kept records at all. The defendant has kept records in the form of entries on a computer, but these also appear to have little relationship to facts about which the various witnesses gave evidence. In his evidence David Ly admitted that he manipulated the figures that he entered into his computer, and did so to his advantage.

6 The case occupied a number of hearing days. The final resolution of the case was delayed because David Ly became ill, and when he was well enough to give evidence, his evidence could not conclude in a single day.

7 After considering the evidence and the submissions of counsel, I concluded that the determination of the issues depends on the degree to which the parties have discharged the onus of proof that rests on them.

Who is the correct defendant?

8 The plaintiffs submit that the loan was made to David Ly as an individual, not to DLY, and that David Ly as an individual was party to the arrangements relating to the construction project.

9 There is no convincing evidence that David Ly played any part in any of the transactions involved in these proceedings except in his capacity as a builder or a person experienced in the building industry. The fact that he signed a receipt for $10,000, the money claimed to be a loan by Khon Vinh Tran, without reference to the company is not enough to convince me that this was a payment to him personally. When he acted in any capacity in relation to the Pevensey St development, all the evidence is that he acted through, or as agent for, DLY, not in a personal capacity. On the balance of probabilities I find that any alleged loan was to the corporate, rather than the individual defendant, and that in all matters related to this transaction, and especially in relation to the building contract and any contract that preceded it, David Ly acted as director, officer, or agent of DLY. DLY, not the individual, is the proper defendant in both the actions and the proper cross-claimant.

Factual background.

10 Khon Vinh Tran and Sang Le Trieu owned 2 parcels of land at 23 and 25 Pevensey Street, Canley Vale. On each parcel of land there was originally a residential house. The plaintiffs decided to redevelop the two blocks of land by building a number of townhouses on the land and renovating at least one of the houses. Originally they hoped to build 16 townhouses, but ultimately 11 were built by David Ly or his company and were sold. It does not seem to be in issue that they were sold at a considerable profit to the plaintiffs.

11 David Ly, whose wife was related to the plaintiffs, was a licensed builder. He had lengthy discussions with the plaintiffs and did work on the townhouse proposal before a formal building contract was entered into. He claims that he is entitled to a fee for this work. The defendants say that, if there was an oral agreement to this effect, it became subsumed into the written building contract and the defendants are not entitled to any further payment.

12 It was not in dispute that Kim Chau Tran, the plaintiff in the loan action, who was married to Sang Le Trieu, was a substantial businessperson who carried on an import-export business, and that it was always intended that he would import some of the materials to be used in the building project.

13 Khon Vinh Tran worked full-time as a technician for Telecom, although he says that at times he did some work on the redevelopment project.

14 There is a real issue as to the reliability of the evidence of all witnesses in this case. All were born in Vietnam, and came to Australia as adults. None of them spoke English as a first language, and only David Ly had sufficient command of English to give evidence without the assistance of an interpreter. All the witnesses grew up in a culture which had a different attitude to contract law from that encountered amongst Anglo-Celtic Australians. There was evidence from all parties that there were a number of spoken arrangements or "understandings" amongst the parties during the course of the transactions involving the construction of the townhouses.

15 Even those who have different legal and cultural backgrounds must accept that in New South Wales, the law that governs their transactions is the law of New South Wales, unless they make it very clear that their arrangements, by their own force and terms, are given legally binding force according to the law of NSW. There must be evidence which would show, on the balance of probabilities, that there were such arrangements or understandings, which ran parallel or contrary to the written contractual agreement, and that they were intended to be legally binding. I could not be satisfied by the evidence presented in this case, even on the balance of probabilities, what the nature of any of these arrangements or "understandings" among the parties was, let alone whether they were intended to have legally binding consequences under the law of NSW. I could not find that those arrangements or understandings had legal effect.

16 In this case there is a significant amount of documentary evidence, but this must be placed in its proper context, which is provided by affidavit evidence. Whether or not I accept the affidavit evidence depends upon whether I accept that evidence when it has been tested by cross-examination. A number of the witnesses were asked whether or not the contents of their affidavits had been translated to them, and whether they understood those affidavits, before they swore or affirmed as to the truth of the affidavits. Given the nature and extent of the cross-examination by counsel for both parties, I am left with considerable doubt as to the accuracy of the affidavit evidence filed by all parties. I am satisfied that the solicitors and counsel for each party did the best they could in the circumstances to ensure that matters were handled properly, but in the circumstances what the legal practitioners could do was limited.

17 The weight I attach to virtually all the documentary evidence in this case must depend on acceptance of the affidavit evidence through which the documentary evidence was introduced. Given the nature and extent of the cross-examination of the witnesses who are said to have produced, or have been familiar with, most of the documents, I cannot accept documents alone, and in some cases even when they have been explained in oral evidence, as conclusive of matters in dispute, except where, on their face, they are explained and introduced in a sufficiently clear and unambiguous way, so as to admit of only one meaning and purpose, and the evidence of the witnesses introducing the documents, taken as a whole, is reliable.

18 I propose to deal with the loan claim first.

The Loan Claim (859/06).

19 In this case the plaintiff Kim Chau Tran claims that he advanced a sum of $130,000 to the defendant, primarily David Ly as an individual, a contention I have already considered, so that the defendant could obtain a bank guarantee. It was not in dispute that, before the council would approve the building plans for the Pevensey Street development, it required a bank guarantee that the builder would perform its obligations under the contract. It was also not in dispute that, after he received the bank cheque, David Ly obtained such a guarantee, of performance by DLY, from the St George Bank and used it for the purpose of obtaining council approval.

20 What is in dispute is whether the moneys paid by the plaintiff represented a payment towards the building works or a loan. It does not seem to be in dispute that, in fact, the money lent by Kim Chau Tran was not used in whole to obtain the bank guarantee and David Ly in fact used funds obtained from another source to fulfil part of the bank’s requirements. David Ly used the $130,000 for other purposes, which may or may not have been related to the Pevensey Street development. This does not go to the nature of the transaction but it does reflect on David Ly’s honesty and therefore his credit.

21 Kim Chau Tran was not a party to the building contract. The defendant says that the money was paid by Kim Chau Tran as part, or the whole, of the amount owing to him on account of the pre-contractual work that David Ly did, which was referred to in the case as a “project management fee”. Whether or not David Ly was entitled to a project management fee is hotly disputed. However, it is difficult to see how it could be argued that the money paid by the plaintiff in this claim, who never became a party to the building contract, could be characterised as a project development fee unless the defendants succeeded in the claim that the pre-contractual arrangements were entirely separate, and that Kim Chau Tran was a party to those arrangements, even though he never became a party to the building contract. For reasons I shall give, I find in favour of the defendants on that issue.

22 The payment of $130,000 was made by a bank cheque in favour of DSL Computers and Electrical Pty Limited and, in the defendant’s own records, the payment is described using the word “lend”: see the entry in the defendant’s running account ledger for 14 February 2003. This entry must constitute an admission by David Ly and DLY that the money was received as a loan. It is not denied that the plaintiff supplied David Ly with a bank cheque for the stated amount. Nor is it disputed that this was in response to a request from David Ly for that sum to enable him to obtain the bank guarantee.

23 In two separate sworn documents, David Ly first (on 12 April 2006) denied an oral agreement for a loan, but asserted an agreement to pay the sum, plus GST, as project management fees. Four months later (18 July 2006), in a verified defence, David Ly admitted that there was an agreement to lend the stated sum, but said that it was later agreed that this sum would not be treated as a loan.

24 I cannot find any credible evidence to support the contention that there was an agreement that the sum would ever be treated as anything but a loan. David Ly alleges that on or about 10 June 2003 he was told by Kim Chau Tran, after he had visited the bank with Kim Chau Tran and Sang Le Trieu, “Let me take care of the money, you just concentrate on the construction; use the $130,000 I gave you.” Both Kim Chau Tran and Sang Le Trieu denied that conversation and also denied that David Ly was present at the bank or afterwards, and maintained this in cross-examination on this issue. Even if such a conversation did take place, it is not evidence there was any agreement that the $130,000 was no longer to be considered as a loan.

25 Although I find that there was a separate contract by some or all of Kim Chau Tran, Khon Vinh Tran and Sang Le Trieu with DLY, and possibly with David Ly, in respect of project development work, a matter I discuss below, I find that this sum of $130,000 was a loan, and has not been repaid.

26 It is also submitted that a sum of $10,000 paid by Khon Vinh Tran to David Ly was also a loan. It does not seem to be in dispute that this sum was paid for the construction of an electrical pillar, but the evidence that it was a loan is, in my view insufficient to satisfy me on the balance of probabilities that it was anything other than a payment for work properly done under the contract. Certainly the sum was not paid as a “design fee”, as David Ly suggests in his affidavit. The receipt does not specify that it was a loan. I am not satisfied that this amount was a loan, and I dismiss this part of the claim.

27 I have already indicated that I find DLY to be the proper defendant in this claim, and I find, further, that the loan was to the corporate, rather than the individual defendant.

28 Accordingly there will be a verdict for the plaintiff Kim Chau Tran against DLY in the loan claim for the sum of $130,000, plus interest. The interest should run from the date upon which the loan appears to have been received, that is, 14 February 2003 and is calculated at 9% p.a. The total interest I calculate as 60,489, making in all $190,489, which will be the amount of the verdict. DLY must pay Kim Chau Tran’s costs of this action. There will be a verdict for the defendants with costs on the remainder of the claim.

The Contract Claim (858/06)

29 A building contract was entered into between the plaintiffs Khon Vinh Tran and Sang Le Trieu as owners and DLY as builder. It was dated 5 November 2002. The contract price was a lump sum of $1,320,000.00. The works were the construction of 11 townhouses at Pevensey Street and associated works. The plaintiffs assert a significant overpayment, which they seek to recover. The defendants claim that they have not been paid in full, and this sum is the subject of the cross-claim.

30 The plaintiffs must satisfy me, in the contract claim, first, that they have paid the amounts they claim, and secondly, that they were not obliged to pay these amounts under the contract. If the plaintiffs can discharge this burden, the defendants must establish the matters they assert in their defence. In any event, they must establish the matters they assert in the cross-claim.

31 The relevant provision of the building contract is clause 17. The contract is a standard printed form produced by the Housing Industry Association. In the copy tendered part of this clause has been cut off. I do not intend to set it out, but it requires, as is common with such clauses, that notice of the variation by a builder or a response to a request by the owner to the variation should be in writing. There is no evidence of any such written variation, or response. Rather, both parties submit there were oral variations, but I cannot discern on the evidence, taken as a whole, what these might have been.

32 The contract, which is in a standard form, provides a procedure for variations. There are also a number of matters that are excluded from the contract, and it seems that there is no dispute that it was envisaged that Kim Chau Tran or his company would import items such as floor parquetry, locks, and other specified items from China for use in the construction project. It also does not seem to be in dispute that these items were not all supplied by Kim Chau Tran and had to be acquired from other suppliers.

33 The works covered by the building contract were defined by architectural plans by DLY Constructions, engineering details and hydraulic details, prepared by engineers arranged by David Ly. Schedule 3 excluded from the contract timber flooring (parquetry), architraves and skirting, spa bath, vanities, sanities [sic], stoves and tapware; kitchens; and door locks. These were the items Kim Chau Tran proposed to import from China.

The claim for overpayment

34 The starting point on legal issues is Built Interiors Pty Ltd v Three Dinosaurs Pty Ltd & Anor [2003] NSWCA 290. The legal issues in that case are virtually identical with some that arise in the present proceedings. In that case, Mason P, with whom Meagher and Ipp JJA agreed, said:

51 It is important to understand what was in dispute. The poorly drawn statement of claim casts practically no light on the matter. Fortunately, the broad picture is fairly clear.

52 None of the so-called Variations had resulted from written instructions from the Architect or were otherwise documented in the manner required by Clause 5.3 of the Contract. They were correctly described in Progress Claim No 8 as "Unapproved Variations".

53 The Builder bore and assumed the difficult task at trial of establishing either that the Contract had itself been varied so as to permit contractual recovery on a different basis; or that restitutionary principles permitted the Builder to sue off the Contract. As I understand it, the Builder contended that a contractual variation, and/or unjust enrichment giving rise to a restitutionary claim, occurred every time an individual "Variation" was actually agreed upon and the necessary work done. This was in the context where the formal Contract continued in force as the framework for regulating the parties' rights during construction work and its aftermath, including the proceedings litigated in the District Court. This was a difficult task, all the more so because no question of repudiation or acceptance thereof was ever raised ( Liebe v Molloy [1906] HCA 67 ; (1906) 4 CLR 347; Brooks Robinson Pty Ltd v Rothfield [1951] VLR 405 at 409 ; Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251; Trimis v Mina [1999] NSWCA 140 (1999) 16 BCL 288).

54 The Builder's evidence was completely unmatched to any claim that the contract had been varied and the trial judge was correct to reject the alternative restitutionary claim (Red 181-2). The type of work involved in the disputed variations claims was very much part and parcel of the overall project. There was nothing to indicate that at any time the parties moved away from viewing the Contract as the complete framework by which their legal rights would be governed. Some of the items may well have qualified as "Variations" within the definition in Clause 1.2, but the procedural stipulations in Clause 6.7 had not been complied with. This offers no basis for the Builder ignoring the contract (by suing in restitution) and leaves the Builder far short of proving a case of contractual variation.

55 The Builder faced additional hurdles. Assuming that it was open for it to ignore Clause 6.7, the Builder could only recover additional recompense, either in contract or restitution (assuming availability), if it could show that:

work was done that went beyond the contractual works;

this was done at the request of the Proprietors (the possibility of "free acceptance" within restitutionary principles was never put into the ring); and

that work had a proven cost and/or value.

56 For many "variation" items there was simply no attempt to grapple with these matters. or others, the attempt was half-hearted or unsuccessful.

35 The principles set out in this passage apply to this case, although there are some significant factual differences from Built Interiors. First, in that case, a number of written variations were made in accordance with the contractual provision. In this case there is no evidence of any written variations in accordance with contract. Secondly, not only the builder relies on what are alleged to be oral variations, but the owners also contend that they made payments because of oral variations, and indeed disputes over the nature of those variations give rise to their claim that they have overpaid the builder.

36 In the normal course of events under such a building contract, the practice would be for the builder to submit a "variation" and claim payment from the owner where additional expenses such as the purchase of additional material were incurred, or the carrying out of additional work, such as the construction of piers, became necessary. Under this contract, it appears that no formal variation was ever prepared or submitted by David Ly to the owners. It also does not appear that any formal record was made of any event where Khon Vinh Tran himself performed work, such as painting, on the project. Rather, this was left to an informal arrangement, and there is absolutely no corroborative material. The plaintiffs cannot even rely on bank records, as many of the payments made were in cash. The only evidence is the affidavit evidence of Khon Vinh Tran himself, which, for other reasons, I find unreliable.

37 In this case, the builder claims for additional work carried out by him. I apply what was said in the Built Interiors case. I could not find on the evidence before me that, in the absence of a formal variation, the builder was entitled to any payment apart from those required under the original contract, except possibly payment for additional work on piering, which is a matter referred to in the engineering specifications. Because of the unreliability of David Ly as a witness, I could not be persuaded even on the balance of probabilities that this work had been done, or that if it was, the costs were as he stated.

38 That would be sufficient to dispose of most of the subject of this part of the cross claim, although I shall say more about other parts.

39 The builder, however, is not the plaintiff in these proceedings, but the cross-claimant. He admitted in his evidence that the plaintiffs had paid more than the amount stipulated in the contract, but had a number of reasons why this was the case. The plaintiffs claim that they have overpaid the builder and that he is obliged to repay to them any sum over and above the contract price, unless there is a very clear case that they have agreed to make an additional payment.

40 Most of the evidence in the plaintiffs' case (as opposed to the evidence on the cross-claim) was directed to the way in which they said that they had overpaid the builder.

41 Although they annexed massive quantities of documentation to their affidavits, when they were cross-examined, the plaintiffs’ witnesses, especially Khon Vinh Tran, did not really seem to have specific knowledge of what the documents represented and when and how they had paid the money to David Ly.

42 The building contract is for the plaintiffs' protection as much as it is for the builder's. The Built Interiors case, in my mind, is authority for the proposition that where there is a formal contract setting out specific procedures to be followed if there is a departure from the conduct contemplated by the contract, a party to the contract who does not follow those specified procedures risks his or her position. If the builder does not submit proper variations, the builder risks losing the right to claim payment for additional expenses. Equally, if an owner pays money without receiving a formal variation, he or she risks, other than in some closely circumscribed cases, being unable to recover the payment. In the case of the owner of a single dwelling contracting with the builder, it might be possible to construe the position more in favour of the owner, but in the case of a commercial building contract such as the one before me, the court must assume that the parties are ordinary, reasonable business people, who will know enough about the realities of business to know that they must follow the stipulated procedures in order to protect their positions.

43 It is certainly possible for a party to prove an entitlement claimed in the manner in which the plaintiffs have claimed for overpayment here. That is one of the exceptions to the general principles, and is clear from Built Interiors and also from Update Constructions PtyLimited vRozelle Child Care Centre Limited (1990) 20 NSWLR 251, to which Senior Counsel for the defendants referred in her submissions and to which the Court of Appeal also referred. However, in this case, the plaintiffs have not discharged the evidentiary burden that they bear in respect of such overpayments as they allege.

44 On the evidence before me, because I do not accept the evidence of the plaintiffs as sufficiently reliable to enable me to make any findings of fact about the payments that were made by them, and by Kim Chau Tran on their behalf, I cannot find, on the balance of probabilities that the plaintiffs have proved that they have made the payments that they claim to have made over and above the contract price.

The cross-claim

The alleged project development contract

45 The cross-claimants submit that an oral contract was made on or about 23rd August 2001 for the preparation and redevelopment of the site, which was terminated on or about 5th November 2002 when the written contract was executed. They say that, at this time, the plaintiffs had paid David Ly for most of this work, but the sum of $4,362.42 was outstanding on the oral contract. It appears that the money, which David Ly says that the plaintiffs paid, was the same money that Kim Chau Tran had lent to David Ly.

46 David Ly submits that none of the parties conducted themselves strictly in accordance with the written terms of the contract and says that the plaintiffs are estopped from relying strictly on the written terms of the contract. However, he himself relies on that contract.

47 While the defendant David Ly, admitted in his evidence that the plaintiffs had paid him more than the contract sum, he alleged that they were liable to pay him more than that sum on two bases.

48 The first basis was that, before the written contract was entered into, there was a an oral or implied agreement that David Ly or his company would perform project development work, that is, to obtain the necessary approvals from the Council and entered into preliminary discussions with engineers, architects and trades people, all of which is work that normally has to be done before a formal building contract is concluded.

49 The second basis is that, by a series of informal arrangements, partly oral and partly implied, the parties amongst themselves agreed to make what were, in essence variations to the contract.

50 The defendant submits that the works carried out by David Ly fell into two distinct periods – the work done in preparation of and obtaining of development approval and construction certificate (from approximately August 2001 to 5 November 2002 – the ‘development works’) and the work done in construction (from 5 November 2002 – the ‘construction works’). The defendants’ case is that these were 2 quite separate contracts, one oral and one written, and that it (via David Ly) initially agreed to do the development works for the cost of those works plus a fee of $130,000.00 (plus GST) and $13,000 per unit constructed on the site. David Ly’s evidence was that he negotiated this agreement with Kim Chau Tran, but Kim Chau Tran’s evidence was that “most discussions occurred between Khon Vinh Tran and David Ly” (paragraph 9, affidavit of Kim Chau Tran of 5th June 2007). For reasons I shall state, on this issue (one of the few issues where I prefer the evidence of David Ly to that of other witnesses) I prefer the evidence of David Ly. Khon Vinh Tran obviously had an interest in the development, as he was one of the owners of the land. However, he had a full-time job, and, despite the evidence of both Khon Vinh Tran and Kim Chau Tran, I consider it more likely, on the balance of probabilities, that most of the negotiation and supervision was carried out, not by Khon Vinh Tran, but by Kim Chau Tran. In cases where David Ly says that he negotiated with Kim Chau Tran, rather than Khon Vinh Tran, I prefer the evidence of David Ly, because all the other evidence suggests that it was Kim Chau Tran who made the real decisions on behalf of the plaintiffs. The evidence from Khon Vinh Tran regarding the terms upon which DLY was engaged to prepare the development proposal was unsatisfactory in many respects, which I shall examine in more detail later.

51 The evidence supports the existence of an oral contract for the development phase of the works and that the terms were that David Ly and his company would carry out the necessary work to get the project designed and approved by Council, following which the company would be awarded the contract to build the project. If I had more evidence about the terms and conditions of this contract, I would probably find that it was not subsumed into the written building contract, but was quite separate. The plaintiffs deny the existence of such an agreement. However, while I can find, on the basis of David Ly’s evidence, that he did negotiate such a contract with Kim Chau Tran, probably on behalf of Khon Vinh Tran and Sang Le Trieu, I cannot determine, even on the balance of probabilities, what the terms of this contract were. Because I do not find David Ly a credible witness on most issues, I do not accept most of his evidence, with the result that, as the onus of proving the content of this contract is on the party asserting it, I cannot determine the terms and conditions of the project development contract.

52 The credit of the individual defendant, David Ly, is crucial in this case. Although he is clearly intelligent and articulate, the worth of his evidence was significantly reduced when he admitted in cross-examination that the various records kept by him on his computer appeared to have little relation to fact. He kept two separate sets of records, but did not say clearly what the reason for this was. It appears that he entered figures and descriptive material into his computer when, and in such amounts and words, as it suited him. He conceded on several occasions that the amounts, which he had entered in at least one set of records, were significantly greater than the amounts that actually should have been entered. These inflated figures made up in the bulk of the amounts that are the subject of the cross claim, that is, the amounts to which David Ly claims he or DLY is entitled. So many of the entries in these records are totally worthless, that it is difficult for me to see which, if any, of the entries are worthy of any credit all.

53 As David Ly was responsible for these entries, I must find that I cannot rely on very much of his evidence at all. He clearly is not honest in his record keeping, so I cannot find that he is honest in other respects. Except where I have indicated that I accept his evidence in the case of a conflict with other evidence, I reject the whole of his evidence.

Oral variations to the contract

54 As the cross-claimants bear the onus of proof of the matters on which they rely in the cross claim, I must find that they have not discharged that burden of proof. On the basis of David Ly's evidence, I could not be satisfied even on the balance of probabilities, that any amount is due to him or his company.

55 For similar reasons, I place no weight whatever on the calculations that are the basis that the defendants claim to be entitled to retain any moneys they have received.

56 Where the plaintiffs allege overpayment, the onus of proof is on them, not on the defendant. The evidence in relation to the actual costs of the works and the instructions given by the plaintiffs with respect to the works is complicated and unsatisfactory in most respects. There are a number of reasons for this.

57 Significant parts of Khon Vinh Tran’s affidavit were in identical terms to those of Kim Chau Tran and Sang Le Trieu. Sang Le Trieu and Kim Chau Tran admitted that they had discussed their evidence before the trial. The degree of commonality on the wording and contents leads me to doubt the reliability of this evidence.

58 None of the plaintiffs is really familiar with written English, with the result that Sang Le Trieu at least, and probably also Khon Vinh Tran, in their cross-examination, demonstrated that they had very little real understanding of what was included and excluded from the written contract in the first place.

59 The written contract included only fundamentals of the work to be done, in anticipation that some work would be carried out with materials imported from China by Kim Chau Tran, which was only partly carried into effect. It is not clear how much of this work was actually done, or by whom.

60 Large sums of money were paid in cash. People are entitled to make payments in cash (and indeed, some cultural factors may come into play in this regard) and those recipients are perfectly entitled to use cash to pay for goods. If they are able to bargain a better price because of payments in cash, no adverse inferences can be drawn. However, in this case the result is that there are very poor paper records to corroborate the affidavit and oral evidence of witnesses. Some of the payments David Ly made to suppliers did not go through his bank and the same seems to be true of payments made to him or to DLY by the plaintiffs. The book entries of David Ly are such that little, if any, reliance can be placed on them at all.

61 The plaintiffs were given or shown invoices and summaries of payments throughout the job, as it is possible to infer that without this information, they would not have made payments, and there is no evidence that they ever queried or doubted the charges. On all the evidence Kim Chau Tran, at least, was regularly on the site and was in a position to observe the use of materials and labourers. There is no evidence that David Ly was challenged about these charges at the time the work was being done. The plaintiffs appear to have, with one exception, paid when requested to do so. They also, on the evidence, displayed a remarkable lack of curiosity about what the project was going to cost. None asked David Ly for a written quote as to the likely cost of the works or about the probable cost for getting the development approved in the first place.

62 Although Khon Vinh Tran was one of two owners, I find that in reality he had very little to do with the project in practical terms and no relevant part in the development of either the pre-contractual relationship or in the building contract. For example, he could not remember meeting David Ly on site to discuss the project; he did not meet the engineer, or the architect, nor did he meet or talk to any Council officer about the project. He kept virtually no records relating to the project, and did not receive a copy of any invoice. Some copies were sent to Kim Chau Tran, but none to Khon Vinh Tran. He worked full time for Telstra throughout the relevant period. His evidence about measurement and the making of calculations was vague.

63 I find Kim Chau Tran even less reliable as a witness than the other witnesses called for the plaintiffs. He appeared to have a better command of English, at least written English, and he, rather than Khon Vinh Tran, seemed to be familiar with the owners' obligations under the contract. However, he also seemed evasive in his answers to questions which, in the context, seemed to be about matters within his knowledge. He seemed to be the moving force behind his wife and Khon Vinh Tran, yet appeared not to accept responsibility for his actions.

64 Sang Le Trieu only read the price and some of the inclusions/exclusions. She appears to have relied on her husband, Kim Chau Tran, in respect of all aspects of the project.

65 I also find that I cannot place any weight on virtually any evidence given by Kim Chau Tran, Khon Vinh Tran and Sang Le Trieu. They appear to have kept no intelligible business records, and when cross-examined about various items, which they claim to be informal variations to the contract, they were unable to give satisfactory answers.

66 It appears to me that there were undoubtedly arrangements made between the parties, which called for the plaintiffs to make payments to the builder that were additional to the contract price. I could not find, on the basis of the evidence presented to the Court in these proceedings, that the plaintiffs are able to establish to the requisite standard of proof the exact amounts owing. In cases such as this the plaintiffs bear the burden of establishing the propositions that they assert, on the balance of probabilities. If they assert that a particular sum of money is owing to them, they must prove that amount. I find that they have been unable to do this.

67 The plaintiffs must satisfy the Court not only that, more probably than not, DLY overcharged them, but also by what amount, and I find that the evidence simply does not support such a finding, much less identify an amount. The plaintiffs’ claim should be dismissed.

68 For those reasons I dismiss both the claim and the cross-claim.

69 I make the following orders:

Action 858/06: Verdict for defendant on claim. Verdict for cross-defendants on cross-claim.

Action 859/06: Verdict for plaintiff Kim Chau Tran against defendant DSL Computers & Electrical Pty Ltd (trading as DLY Constructions) in the sum of $190,489. Verdict for defendants otherwise.

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