Natty v Breen
[2018] VCC 1477
•14 September 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised (Not) Restricted Suitable for Publication |
Case No. CI-17-02448
| Natty Investments Pty Ltd (ACN 147 857 225) trading as “Le Loft” | Plaintiff |
| v | |
| Lisa Breen | Defendant |
| and | |
| Lisa Breen | Plaintiff by counterclaim |
| v | |
| Natty Investments Pty Ltd (ACN 147 857 225) trading as “Le Loft” | First defendant by counterclaim |
| v | |
| Nathaniel Alexander Harper | Second defendant by counterclaim |
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JUDGE: | HER HONOUR JUDGE MARKS | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13, 14, 15, 18, 19 & 21 June, and 18 July 2018 | |
DATE OF JUDGMENT: | 14 September 2018 | |
CASE MAY BE CITED AS: | Natty v Breen | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 1477 | |
REASONS FOR JUDGMENT
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CONTRACT – furnishings hired out by agreement and not returned – damages claimed
CONTRACT – agreement to buy chairs and share net proceeds of rental of those chairs and ownership of chairs – terms of agreement disputed – defendant paid $30,427 towards chairs and was later repaid $30,000 – whether accord and satisfaction – whether defendant entitled to any damages or delivery up of chairs
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APPEARANCES: | Counsel | Solicitors |
| For plaintiff and second defendant by counterclaim | Mr W Thomas | IPT Law (13 - 21 June 2018) Lord Commercial Lawyers (18 July 2018) |
| For defendant | Mr D Lorbeer | Marsh & Maher Richmond Bennison |
Contents
Background
Pleadings
Witnesses and contemporaneous documents
Natty’s claim
Who hired the furniture?
Lost income claim for retained furniture
Did Breen still have any of the furnishings by time of trial?
Breen’s counterclaim
Counterclaim pleadings
Who did Breen contract with?
Evidence
Analysis
Conclusion
HER HONOUR:
Background
Natty Investments Pty Ltd (Natty) carries on business under the name Le Loft, providing services in property styling, interior design and furniture rentals. In addition to providing property styling and interior design services directly to its clients, Natty has a large warehouse of furnishings and rents out furniture to other stylists for use by them in their own styling businesses. Mr Nathaniel Alexander Harper is its sole director and shareholder.
Ms Lisa Breen did some work for Natty in 2016, when she was considering developing her own property styling business. Later, she started her business providing property styling services.
In early 2017, Breen hired furniture from Natty for use in her own property styling business. She signed three contracts to hire furnishings for three properties which she was styling: at Nelson Street, Sandringham; Stevens Parade, Black Rock; and Beach Road, Black Rock.
Breen returned most of the furnishings she hired but wrote to Natty saying that she would keep some of the Nelson Street furnishings ‘until such time as the issue of the chairs is resolved’. This was a reference to chairs she considered belonged to her which Natty was refusing to hand over to her. She said she would retain Natty’s furnishings which she considered to be of a similar value to ‘her’ chairs which Natty was not handing over to her.
A few months earlier, in November 2016, Natty and Breen had agreed to purchase a quantity of European chairs with a view to earning money by renting them out. Breen had contributed $30,427, which represented half the cost of the European chairs Natty bought. Although Natty had repaid her $30,000, Breen was of the view that she was owed a further $30,000 or more under the chairs agreement, and that she was entitled to half the chairs that had been bought. Natty denied she was entitled to anything further from the chairs agreement.
After some heated emails and letters were exchanged, Natty sued her for the return of the furnishings it claimed she had retained.
Breen returned a lot of furnishings in June 2017, shortly after being served with the writ, and said that she had now returned everything. Natty disagreed, saying she still has some of its furnishings.
Natty also claimed late fees, calculated at a daily rate, for the furnishings it said Breen had kept – including in relation to the furnishings it agreed had been returned after service of the writ.
Natty also claimed that Breen had breached Natty’s copyright by putting photos of interior designs she had done whilst working for Natty on her new business website. Natty said this was misrepresentation, and amounted to passing off its business as hers. It sought damages. Breen denied these matters. She said she had not breached Natty’s copyright in using the photos, as Harper had told her she could use them – and anyway they were pictures of her ‘artistic expression’, as she had arranged the furnishings they depicted.
Breen countersued in relation to the chairs agreement which she said that she had entered with Natty or Harper in November 2016. Breen claimed damages, and half of the chairs.
She claimed as well that Harper had defamed her. He had sent a letter to someone else where he made comments saying she had kept Natty’s furnishings without permission. Although that statement on its face was true – she had kept the Nelson Street furnishings without permission – Breen said this was defamatory because the letter did not also mention that she believed she was entitled to keep the goods, because she and he were in dispute about the chairs agreement.
A year after issuing, and seven days of trial later, the parties had decided not to pursue many of their claims or defences.
The issues which remained are:
· Natty’s claims over whether Breen still has any of the furnishings she had rented, and if so what she should pay for keeping the furnishings past the dates they were due to be returned under the hire agreements.
· Breen’s claims against Natty or Harper as to whether they owed her anything as a result of the chairs agreement, or needed to hand over any of the chairs which were bought.
As set out below, I find that neither has established their claims against the other. I will dismiss the proceeding.
Pleadings
The parties’ pleadings evolved over the course of the trial. Various claims and defences were abandoned in the course of the trial, including in final oral submissions.
On day two, Natty abandoned the claim for late fees. This had been its most significant claim.
After day five of the trial most of the evidence was completed. The case was adjourned for a day out of Court so that the parties could finalise pleadings and written submissions.
The next day, Natty forwarded a proposed third amended statement of claim. It removed the claims against Breen for misleading or deceptive conduct, passing off and infringement of copyright. It also removed pleas that Breen was a bailee for reward, that she breached the furnishings agreements by using the furnishings at other locations, and several paragraphs of the prayer for relief. Harper also provided particulars of loss and damage.
Later that day, Breen forwarded a proposed amended defence to the proposed third amended statement of claim, and a proposed third further amended counterclaim. The amended counterclaim removed the claims against Natty and Harper for misleading and deceptive conduct, and defamation. Breen also provided particulars of loss and damage.
On day six of the trial, evidence was concluded. The issues were further narrowed. Most relevantly, having seen Breen’s particulars of loss and damage, Natty advised it would not argue with the quantum claimed by Breen for loss if Breen established there had been a breach of the chairs agreement. Counsel for Natty said he did not agree with the underlying assumptions or methodology. However, given the small sums involved, he said admitting the figures was practical.
The matter was then adjourned for some weeks. Final pleadings were filed, and lists of issues agreed. The parties filed written submissions addressing all the remaining issues. The case came back on for trial for a final day of oral submissions.
The documentary evidence was mostly agreed, and the Court Book, as culled, was made an exhibit.
In final submissions Natty abandoned its estoppel claim against Breen.
Witnesses and contemporaneous documents
Three witnesses were called: Harper, Breen, and Breen’s domestic partner, Mr Shaun Kelly.
The evidence of Harper on the one hand, and Breen, or Breen and Kelly on the other, about what was said at two important meetings relevant to the counterclaim – at which notes were not taken – differed on critical points. The first such meeting was a café meeting between Breen and Harper in November 2016. The second meeting was that held between Harper, Breen and Kelly at Harper’s warehouse on 16 February 2017.
I accept Harper as a truthful witness generally. I do not accept Breen’s submission that I should find that Harper was deliberately seeking to confuse Breen (or Kelly) when he showed them particular invoices sent to him by Mr Mario Fera of Slide Productions Pty Ltd, at the 16 February 2017 meeting. I find he was confused about which of the invoices he received from Fera at the relevant time related to the deal he was doing with Slide for the Australian Open venture, and which related to other deals they were doing.
Harper’s evidence about his dealings with Fera about their venture was at times confusing. However, from observing him and his demeanour I am satisfied that he was trying to tell the truth about events that he was himself confused about.
It was clear that Harper does not keep clear and well organised records generally, either for himself, or it appeared, in the course of running Natty’s business. This contributed to Harper’s difficulty in establishing Natty’s claims that Breen had kept its furniture. His records were messy and incomplete in relation to what he had paid Slide in relation to the chairs for the Australian Open venture, and what related to other furniture he had bought from Slide in other dealings.
I am not satisfied that either Breen or Kelly remembered as clearly as they said they did about what was said at the crucial meetings they were involved in. No contemporaneous notes were kept by them. I do not consider either was intending to give misleading evidence. However, it appeared likely to me that over time they have convinced themselves of the truth of their cause (as many litigants do).
The written evidence of contemporaneous messages, letters and emails sheds light on what was likely to have in fact been said at the relevant meetings.
As McLelland CJ in Equity observed in Watson v Foxman (1995) 49 NSWLR 315 at 319:
… human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the process of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
In the recent English High Court of Justice decision of Blue v Ashley (No 2) [2017] EWHC 1928 (Comm), Leggatt J said at [67]:
… I expressed the opinion in the Gestmin case (at para 22) that the best approach for a judge to adopt in the trial of a commercial case is to place little if any reliance on witnesses’ recollection of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.
I put primary emphasis on the objective facts surrounding what occurred, including the contemporaneous documents – which included sms messages, emails and letters. I also put emphasis on the inherent commercial probabilities underlying the dispute: see Bullhead Pty Ltd v Brickmakers Place & Ors [2017] VSC 206 per Sifris J:
Where there is conflicting evidence, the court will place ‘primary emphasis on the objective factual surrounding material and the inherent commercial probabilities’ together with documentation tendered in evidence.’
I prefer Harper’s evidence as to the critical conversations to that of Breen and Kelly as it is more in line with the contemporaneous documents.
Fera was not called by either party and I was not invited to draw any inference arising from this.
Natty’s claim
The three furnishing hire agreements involved Natty hiring furnishings out to Breen for agreed periods of time so that she could use the furnishings to style the three named properties.
An issue was raised as to what the terms of the hire agreements were, relating to the return of goods. The parties agreed that in each case, an invoice Natty sent Breen, which recorded the period the goods were hired for, formed part of the terms and conditions. The issue was whether the agreements incorporated separate written terms and conditions which specifically provide for the return of goods after the hire period is over.
As the invoices Natty sent for the furnishings hire for the three properties each refer to a hire period of a few weeks in each case, naming the relevant dates, I find that it was a term that the goods be returned after those dates. In my view, it goes without saying – and is implied – that if goods are hired for a specific period they should be returned afterwards. It is therefore unnecessary for Natty to rely on other written terms and conditions being incorporated into the agreements.
Who hired the furniture?
Breen’s first line of defence to Natty’s claims was that her company, Inside Concepts Pty Ltd, entered into the furnishing hire agreements, and not her personally. She says therefore that she has no liability to Natty under those agreements.
I am satisfied that Natty entered the furnishing hire agreements with Breen personally.
The company ‘Inside Concepts Pty Ltd’ and its ACN number are not mentioned in the emails and other documents sent by Breen about the furnishings. Even the bank statements showing payments on the invoices show them as coming from Lisa Tadich or Lisa Breen (she used both names).
Also, Breen agrees that she never told Harper (and hence Natty) that she was operating her interior styling business through the company Inside Concepts.
There are a few invoices which Breen sent to Natty – when she did some work for Natty before the relevant furnishing hire agreements – which refer to the name ‘Inside Concepts’. But there is no indication on those documents that this name was used by a company as opposed to being a business name that Breen herself was using. And the fact that her email address includes the words ‘inside concepts’ does not show that there is a company of that name operating the business.
Lost income claim for retained furniture
There is no dispute that for some months Breen wrongly retained some of the furnishings rented for the Nelson Street property.
However, Breen says she returned all she had retained on 13 June 2017, not long after Natty sued her in this proceeding for the return of furnishings.
Natty claims damages for lost income from not being able to rent out the retained goods elsewhere for the three month period between when they were due to be returned under the relevant agreement on 8 March 2017, and 13 June 2017 (when they were returned).
This claim must fail. No evidence was produced that Natty actually lost income.
Natty has a warehouse full of furnishings it leases out or uses in its styling business. There was no evidence that Natty had to turn away any clients or earn less on styling a home because it did not have any of the particular cushions or paintings or other furnishings that Breen kept for the extra few months after they were due to be returned. Nor was there any evidence as to the specific amounts any of these furnishings were rented out for generally by Natty. The invoices produced by Harper all showed lump sum rental charges for long lists of furniture – none of which included any of the specific items Breen retained for an additional three months.
Did Breen still have any of the furnishings by time of trial?
Natty’s second claim at trial was that Breen still had some of the furnishings she hired. It wants damages for them. Breen says she has returned everything.
This claim must fail as I am not satisfied on the balance of probabilities that Breen had any of the items claimed in her possession by the time of trial.
At the time of the hire agreements, Harper provided Breen with itemised lists (in one case, included within the relevant invoice) of the various furniture items rented to Breen. These included items such as chairs, beds, tables and lamps. It is agreed that all of the items named on these lists have been returned by Breen. There is no claim made about them.
The claims made are for items that are not specified on any of the invoices or itemised lists. The invoices or itemised lists refer, for example, to ‘multiple cushions and throws’, and ‘multiple accessories’. Natty’s claims relate to various items which it says fall within those catch-all descriptions, and which, it says, were not returned in time by Breen, or at all.
Natty did not keep contemporaneous records of what it provided to Breen by way of miscellaneous items such as cushions and throws. The entirety of this aspect of the claim involves such miscellaneous items.
Exactly what Natty claimed Breen retained has changed over time. It was finally recorded by Natty in four annexures to its amended statement of claim filed just before the trial, on 8 June 2018.
Harper gave the only evidence for Natty as to how these annexures were produced. That evidence did not satisfy me on the balance of probabilities that Breen has any of the furnishings claimed.
Harper agreed he had not seen any of the claimed items actually delivered to Breen, or seen and made notes when different items she had rented were returned by her in the main. Most importantly, Natty did not have any record of what items were included in the descriptions ‘multiple accessories’ and ‘multiple cushions and throws’, shown on the itemised lists at the time furnishings were delivered. In relation to one of the annexures, he agreed that its calculation was ‘guesswork’ by him.
Breen gave evidence of painstaking attempts to review the four annexures which Natty finally produced in its amended statement of claim (and of reviewing earlier iterations of lists of items Natty alleged she had kept). The annexures included items such as ‘bath towel – white’, ‘Aesop Hand Balm/Lotion’, ‘Book – Confetti Cakes’, ‘Cushion – Scatter Meizai Flat Grey’. It also included various art works. Breen said that Natty’s ‘fictitious lists’ kept changing but she had done her best to review them. She said she had either never hired particular items, or that Natty had collected them or she had returned them at the latest by 13 June 2017.
Harper agreed that she had returned some items and that Natty did not have records of what she had returned. For example, it was agreed that she had returned ‘three bags of cushions’ at one point – but Natty had no records of which cushions were returned.
Natty relied on some photos which it said indicated that Breen had used particular furnishings in styling other properties later on. The pictures included furnishings such as books and vases that Natty said had been hired to Breen under the furnishing hire agreement. It said that since these photos were taken after she was meant to have returned all furnishings from the three furnishings agreements, she clearly had kept those particular items.
However, Breen gave evidence, including producing invoices, to show that she had bought her own versions of these items – and it was these that were depicted in the photos.
I will give judgment for Breen on the claim.
Breen’s counterclaim
In late 2016, Harper had told Breen that he had an agreement with Mario Fera, of Slide Productions Pty Ltd, that he would purchase some European chairs from Slide, which Slide would then rent out to be used in VIP lounges in the Australian Open tennis event the following January. Harper expected to at least double his investment in the chairs.
Breen wanted to be involved. In November 2016, Breen and Natty entered the chairs agreement by which Breen agreed to contribute half the cost of the chairs Natty was purchasing from Slide.
Subsequently, Breen paid Natty half those costs – $30,427.
The parties agree that, as a result of the chairs agreement, at that stage, Breen owned half the chairs.
They disagree, however, as to what else was agreed in the chairs agreement – specifically, what, if anything, Natty was liable to pay Breen as a result of the chairs being rented out to the Australian Open.
Breen says she is entitled to a specific amount as a result of promises Natty made which became part of the terms of the chairs agreement; and to have half the chairs delivered up to her, or their value paid to her.
The parties also disagree about what was said at a meeting on 16 February 2017.
They agree that at it, Harper offered to repay Breen her contribution of $30,000.
They disagree about the basis on which that offer was made and whether the offer was accepted.
They disagree as to what the effect of the repayment of $30,000 was on Breen’s claims.
Breen says the payment was the first part of what she is owed.
Natty says the $30,000 payment to Breen amounted to an accord and satisfaction of Breen’s claims under the chairs agreement.
Alternatively, it says that Breen has been paid more than what the chairs are worth, by being paid the $30,000, and there is nothing owing to her.
For the reasons given below, Breen has not established her counterclaim on the balance of probabilities.
I will dismiss the counterclaim.
Counterclaim pleadings
The third further amended counterclaim, dated 28 June 2018, raises allegations of representations and contractual promises of some complexity. In summary, Breen alleges:
(a)Breen entered into an agreement with Natty or Harper (defined in the counterclaim as the Natty Party) in November 2016, under which the Natty Party and Breen would purchase chairs from Slide, a company owned and operated by Fera, and rent them through Slide to the Australian Open tennis event in January 2017 (defined in the pleading as ‘the AO Venture’).
(b)Before entering into the agreement, Harper made representations to Breen in connection with the AO Venture that:
(i)he had a contract with Slide, under which Slide had agreed to hire 196 Italian chairs from Harper and to pay Harper the fees payable by the organisers of the Australian Open, minus a commission of ‘at most’ 15%;
(ii)if Breen contributed half the cost of purchasing the chairs (approximately $30,000), she would own half the chairs and he would pay her half of the proceeds under his contract with Slide; and
(iii)Breen would receive a return of $60,000 after deducting the costs incurred in performing the Slide contract, comprising her initial contribution of $30,000 plus profit of about $30,000.
(c)The agreement between the Natty Party and Breen contained terms equating with the representations made by Harper to Breen. In particular:
(i)Breen was entitled to half of the difference between the hire fees payable to the Natty Party under the Slide contract and the costs incurred in delivering the chairs under the contract (which was expected to be in the range of $60,000); and
(ii)after the AO Venture, the Natty Party would either retain the chairs to hire for future events and pay to Breen half of the net profit from those hires, or would hand over half of the chairs to Breen.
(d)Breen contributed half the cost of acquiring the chairs (equating to $30,427.62).
(e)The AO Venture resulted in an amount payable by Slide to the Natty Party of $13,903.28. Breen claims half of that amount ($6,951.64) as a debt.
(f)Breen claims a further $1,444.15 for breach of warranty.
(g)Breen claims an interest in half of the chairs. Alternatively, Breen claims damages of $61,979, being half of the amount which she says the chairs could be purchased on a retail basis.
By their defences to counterclaim, Natty and Harper say:
(a)They admit that Natty and Breen made an agreement to purchase chairs for the AO Venture, but say that there were also terms of that agreement that:
(i)the parties would share equally in any profits or losses in the venture; and
(ii)the parties were to contribute equally to all expenses incurred in acquiring the chairs and their subsequent storage, after which Breen would own half of the chairs.
(b)They admit that Harper discussed the AO Venture with Breen, but say that Harper told Breen, among other things, that:
(i)there was no written agreement with Slide;
(ii)neither Harper nor Natty had a relationship with Tennis Australia, the organiser of the Australian Open. Fera (through Slide) was the only point of contact;
(iii)there was no agreement as to the quantity of chairs that were going to be hired or the price for their rental, both of which were subject to negotiation between Slide and Tennis Australia.
(c)There were general discussions about hiring the chairs out to events after the AO Venture, but no agreement was reached as to those discussions.
(d)Breen never paid half of the expenses incurred in acquiring and storing the chairs.
(e)The AO Venture ultimately made a net loss after expenses were accounted for. Accordingly at a meeting on or about 17 February 2017, Harper (on behalf of Natty) proposed two options to Breen:
(i)the parties could wait for payment from Slide, Breen would pay her contribution to the expenses, and the parties would share whatever profit or loss eventuated from the AO Venture; or
(ii)Breen’s contribution of $30,000 would be returned to her, she would not be required to contribute to any of the expenses, and Natty would own the chairs from that point.
(f)Breen accepted Natty’s offer to return her contribution of $30,000, which amount was subsequently returned in two transactions. At that point, Breen no longer had an interest in the chairs and the parties had reached an accord and satisfaction of any claim which Breen may have had against Natty in respect of the chairs or the AO Venture.
Who did Breen contract with?
Breen has sued Natty and Harper, in the alternative, as the party she contracted with.
I am satisfied on the balance of probabilities that Breen contracted with Natty about the chairs, via its director, Harper. Breen’s other dealings involving Harper were with Natty. She knew he operated through Natty as a corporate entity. I am satisfied that Natty had purchased other items from Slide in the past. And Harper gave evidence of Fera suggesting to him that he purchase the chairs ‘through Le Loft’, which was Natty’s business name.
Evidence
After the 2016 Australian Open finished, Fera suggested that Natty purchase European chairs from Slide, that Slide could then hire them out for the next Australian Open. Slide was able to obtain these chairs from the European suppliers at a significant discount to the usual price they were able to be bought in Australia. After the chairs had been hired out, Slide would then pay Natty money from the hiring arrangement, and Natty would own the chairs and be able to use them for other rentals.
Harper gave evidence that Fera told him that ‘we’ would be able to hire the chairs that Natty purchased, to the Australian Open, at ‘double the price I originally rent them out to my jobs’. He said Fera told him ‘we will get double the amount we spend because we rent them out for two weeks and they will require at least a hundred chairs.’
On 29 September 2016, Fera sent an email to Harper with quotations for each of the items of furniture that he proposed to hire to the Australian Open.
Harper did not personally have any dealings with the Australian Open in relation to the hire of the chairs. He dealt only with Fera.
On 19 October 2016, Fera sent an email to Harper identifying the furniture which Fera said the Australian Open had confirmed it wanted to rent.
Fera and Harper did not discuss what commission Slide would take for its involvement in this arrangement. In previous dealings involving Slide or Fera referring clients to Natty or Harper, Slide or Fera had taken commission of 10-15%.
Harper had told Breen about this venture he and Fera were involved in, in late 2016.
In their meeting at a café in November 2016, Breen agreed to get involved in the deal by contributing money to buy half of the chairs to be rented out to the Australian Open.
Breen had money available from a recent divorce settlement.
Harper showed a handwritten document to Breen which identified particular chairs and their quantities that were to be invested in. He believed at that stage that they would double any investment they made in the chairs.
Harper gave evidence that he proposed that they would divide everything regarding the chairs – expenses, profit and loss – half and half. Breen agreed that she was to share the costs in importing the furniture, but she said:
Losses weren’t discussed because we – it was put to me that we were going to make double your money from this deal.
…it was implied we were going to make money from this deal
Breen gave evidence that Harper had written down at the meeting, on a separate piece of paper, the amount of money that he expected they would earn. The piece of paper, she said, was gone by the end of the meeting.
Harper said to Breen that he did not have any documents or (written) contract with the Australian Open or Slide. He said that he had no connection with the Australian Open, that it was up to Fera to communicate with the Australian Open, and that Fera could not know she was involved in the arrangement.
Harper’s evidence was that Breen asked Harper how he could be sure that they would get money from the Australian Open and Harper said that he did not know because he did not have any contract or documentation.
Harper told her that he had done deals with Fera before and that Fera usually took about 10-15% commission.
After their discussion, Harper sent Breen two slightly different emails on 7 November 2016. The first, at 9:30am, said:
Please find attached of the order for Aus open that we both agreed to work together.
Basically we are split this amount in half (50%) to purchase or this items, we both will be entire own all of the products after the Aus Open finish too.
We also we share 50% of the rent that we are going to make from Aus Open rentals too.
The second email, sent a minute later at 9:31am, was slightly reworded. I have underlined relevant differences from the email sent at 9:30am:
Please find attached of the order for Aus open that we both agreed to work together.
Basically we are split this amount in half (50%) to purchase or this items from the supplier, then we will own all of the products (as listed) after the Aus Open finish too.
We also will share 50% of the rentals that we are going to make from Aus Open rentals too, the amount is not confirm yet though.
The handwritten document attached to the 9:31am email identifies 196 chairs of 7 types. It sets out the cost of the chairs in Euros, and in Australian dollars at the then prevailing exchange rate – a total of $60,855.25.
Giving his evidence, Harper said that when he wrote ‘the amount is not confirm[ed] yet though’ in this email to Breen, he meant that at the time he did not have any contract with Fera or Slide, and that he did not know how much money the Australian Open venture would make.
Breen denied in evidence that she knew that the amount of money to be made from the chairs agreement was uncertain. She said she thought that Harper’s statement in this email – that ‘the amount is not confirm[ed] yet though’ – meant that the amount to be earned was not confirmed ‘down to the dollar’.
Breen discussed the proposal to invest with Kelly, and decided to go ahead with it. She transferred $30,427.62 to Natty’s bank account on 7 and 8 November 2016.
Natty paid Slide – or entities associated with Fera – for the chairs.
Slide purchased the chairs.
Subsequently, Slide rented 164 chairs to the Australian Open, and was eventually paid $16,356.80 for their hire.
After the Australian Open occurred, Harper unsuccessfully tried to contact Fera a number of times, seeking details of what had been earnt, and payment.
Breen, similarly, chased up Harper for what she considered due to her, and was told he was having difficulty getting information, and any payment, from Fera. Breen sent a number of text messages to Harper following up payment.
On 9 February 2017, Breen’s partner Kelly sent an email to Breen as a proposed draft of an email that she could send to Harper. Although she did not send the email – saying she preferred to try to talk to Harper – it is contemporaneous evidence at least of what Kelly at that time considered had transpired, from his discussions with Breen. He said he got the information set out in this email ‘via’ Breen and that they were issues that had developed over two to three months. The references to ‘Mario’ are to Mario Fera. The email said:
Hi darling, something like this for Natty??
Maybe mull it over for a few days and hold off until the styling job next week is installed?
…..
Hi Natty,
Given our recent discussions about Mario and the Aus Open project, I'm concerned that the situation has the potential to turn ugly for us both. To clarify things I've detailed below my understanding of what has transpired to date and my thoughts on where we go to from here:
Your summary note and email to me on the 7th Nov 16 give the break-up of the 50/50 joint investment you and I would make in the chairs for the Aus Open Total $60,855.25
The intention was to hire these to Mario's company who had the 2017 ATO contract. While yet to be confirmed, your expectation was that the $60,855.25 investment would return us approximately double this amount in hire charges payable by Mario' company to us at the completion of the Aus Open, which we would split 50/50 and that we would together retain ownership of all chairs again on a 50/50 basis for likely hire to future events.
I accepted your offer to co-invest in this project and on the 7th & 8th November 16 I eft'd you 2 payments totalling my 50%, being $30,427.62
The chairs arrived in adequate time and have been made available and used by Mario at the Aus Open and you have indicated that Fera has now been paid by the ATO for this work
I understand that at this point Mario is not aware that I am a co-investor in the chairs
As of today, we have not been paid by Mario for the supply of the chairs and it appears Mario is being elusive/ evasive in terms of finalising the specifics of the project. The chairs have been returned to us and are currently stored at your warehouse.
To bring this unresolved issue to a head I propose the following:
To avoid complicating this prematurely, I will in the first instance leave you to finalise the particulars of the hire and payment with Mario directly.
If the matter is not resolved to our mutual satisfaction by 1st March 17 then this will necessitate a meeting between Mario, yourself and Shaun as my representative.
If this meeting fails to resolve the matter then we will escalate immediately with the aim being to seek legal judgement against Mario for full payment. To effect this you will need to compile and present all records of your communication with Mario, including diary notes and quotations etc.. Let me know if you have a solicitor who you have used for commercial disputes in the past or if we need to search around for a suitable one over the next couple of weeks so as to be prepared to engage them promptly if required.
As mentioned previously, I am comfortable with making contact directly with representatives of the ATO if deemed of benefit to us in resolving this/ bringing pressure to bear on Mario
To make this clear, I am not willing (for us) to forego full payment for the hire of the chairs based on promises of future hire work with Mario.
Natty it's best if we keep our correspondence on this matter in writing from this point on
On 10 February 2017, Fera sent an email to Harper attaching two tax invoices in connection with the furniture order for the Australian Open.
Harper responded:
I don’t have any money to pay this until I get pay from Aus Open stuff though. That’s why I try to see you so many times.
Fera replied:
The Aussie Open stuff will never cover it though Natty.
On 14 February, Breen emailed Harper:
I have been patiently waiting for a payment from you of $60,000. I note you are also in possession of 30,000 worth of chairs belonging to me. ($90,000 in total outstanding).
I understand Mario has been paid for our job, so I can see no reason for the delay in payment to myself as per the agreed deal between you and myself.
Harper told her he was going to meet Fera to try to find out what had been earnt from the venture.
On 15 February, Breen messaged:
I’m thinking it might be best for Shaun and I to attend the meeting with Fera tmw to help you get this resolved.
I want this brought [to] a head asap, otherwise I feel it could drag on and turn into something ugly. If you need us to be there let me know.
Harper replied by sms:
Up to u Lisa but I can tell u now he won’t see u I have already tried to see him in the two Wks.
There are more expenses that u have not paid for eg gst freight which I already did since last year for the entire order too. You do not want to know anything about the downside of it apart from your share. I am the only one is dealing with it.
Harper then said, in a further sms:
You will get your 30K back straight after my meeting whether what the outcome with Fera that I am going to have ok…
Just in case if you can’t do od in one day maybe all of them By Fri
Harper gave evidence that he finally met with Fera to discuss the chair venture on 16 February 2017. He asked Fera how much money they had made from the Australian Open and asked when he would get paid. Fera told Harper that he did not have any paperwork with him, and could not show Harper any documents at that time. He told Harper that the amount that had been earned through the Australian Open was less than he expected. He said he was taking a 50% commission out of the income that would be earned. Harper had not expected such a high commission to be taken, given that previous arrangements had involved commissions of 10-15%.
Fera showed Harper a payment slip. Harper took a photo of the payment slip but Fera told him to delete it, which Harper did. Harper then wrote down on pieces of paper the information on the payment slip which Fera had showed him. He produced these pieces of paper to the Court on his second day of giving evidence. (He had not discovered them previously. I accept his evidence that he had put them in an old file relating to the Australian Open and only remembered they were there after giving evidence in chief about this meeting with Fera.)
On 16 February, Harper met with Breen and Kelly at Natty’s warehouse. The conversation went for 15 minutes or longer.
Harper told Breen and Kelly that he did not have any information in relation to how much money ‘we make’ on the Australian Open, or how many chairs were rented out. He said that there were a lot more expenses than he had banked on, that the deal had not made as much money as he thought and that Fera had charged him ‘so much more commission’ than he had anticipated. He produced six or seven invoices which Kelly took photos of.
Harper said he offered Breen two options:
· The first option was to stay involved in the chair venture. This meant sharing whatever losses eventuated and sharing all of the expenses for the chairs (including freight, GST and labour costs).
· The second option was that Harper would take the loss on the deal and pay Breen back her $30,000, and that would be the end of it.
Harper’s evidence was that he understood that Breen took the second option (although in evidence he said the ‘first option’, it was clear from context that he meant the second option.)
He gave evidence that Breen said ‘that is great’ when he offered to repay her the money. He also agreed she said that it was not enough, and that (possibly) she said ‘we’re not happy’, and that just getting the money back was not the deal that had been agreed.
Breen and Kelly told Harper they wanted to go to ‘talk’ to Fera to ‘get some answers’. Harper gave them Fera’s details but said he did not want anything to do with suing him, as he had been down a legal route before and lost a lot of money.
Breen said Harper had said:
Look, I’ve got all these bills to pay. Don’t you worry, I will give you your 30K back and you’ll be lucky to get out of this deal and just take your money back because I’m left with all these bills and I’m having to deal with this. You should be lucky that you’re getting your money back on this deal.
Breen denied that Harper had provided the two options to her at the meeting. She denied that she had said it would be ‘great’ to get her money back, although she agreed she was happy to get her $30,000 back.
Both she and Kelly said that Natty said at the meeting that he would give the $30,000 back, ‘and that’s the end of it’. And that Breen said: ‘That’s not the end of it.’
(Kelly also gave evidence that he said that returning the money was one of three parts of the deal Breen and he had struck. As Breen did not give evidence that this was said by Kelly, and it was not put to Harper in cross examination that Kelly had said this, I am not satisfied on the balance of probabilities that Kelly said this at the meeting.)
Harper gave evidence that, after the meeting, and after repaying the money, he believed that he owned all of the chairs since Breen had accepted his offer to repay her contribution.
Breen gave evidence that after the meeting, and the payment, she thought she was still entitled to the chairs.
The day after the meeting – 17 February 2017 – Natty transferred $20,000 to Breen. The notation in the bank transfer stated:
Transfer other bank, netbank Oz refund, Lisa, minus $20,000.
Breen sent text messages to Harper over the next few days following up getting the remainder of the $30,000.
She did not mention her belief that repayment of the $30,000 was only ‘the first step’, or that she was maintaining any further claim over the chairs or at all in relation to the chairs agreement in any of those messages.
The final $10,000 was transferred by Harper on 18 February, and arrived in Breen’s bank account on 20 February 2017. The notation in the bank transfer stated:
Transfer other bank, netbank Oz refund, Lisa, minus $10,000.
After their meeting with Harper, Breen and Kelly had gone to see Fera on 17 February; and Kelly had talked to Fera again on 21 February.
Later on 21 February (the day after the full $30,000 had been repaid) Kelly sent an email to Harper, copied to Breen. The email claimed an equal share of the chairs – in addition to the $30,000 paid – and said that Breen would be willing to make an adjustment to the 50/50 split to compensate for freight and duty costs associated with importing the chairs. The email said:
Hi Natty,
After having the opportunity to speak with Mario Fera last Friday and again today in more detail, I need to raise the following issues with you for further discussion:
Aus Open Chairs Project/ Investment-
There is a significant difference between the basics of the deal that you offered to Lisa and that which Mario claims were the basis of your arrangement with him.
· In summary your offer to Lisa: Co-invest with you the amount of $60,000 ($30,000 each) to purchase approximately 400 chairs, all of which were to be hired by the Aus Open. At the conclusion of the Aus Open you expected that your initial investment of $60,000 would result in approximately double this amount in hire income, which you would share equally. Ownership of the chairs would also be shared equally for possible joint future rental. You expected Mario would levy a 10-15% commission on Aus Open proceeds and there was also the cost of freight / import duty to allow for.
· Whereas Mario claims that the total number of chairs required was roughly half of the 400 you ordered and his commission would be 50%. He is adamant about this and is prepared to sign a statement to this effect.
When we met last week you claimed that it was Mario who had in effect altered the deal from what was originally proposed and this is the reason the return on the project was looking grim. Despite this you were not willing to pursue Mario and have since repaid Lisa the initial $30,000 and laid claim to 100% of the chairs.
Natty, based on this the most reasonable conclusion we can draw is that you have overstated the profitability of this job at the outset in order to entice Lisa to invest $30,000 which would allow you the extra cash to purchase a larger volume of high quality chairs at an exceptional price and that you were fully aware of what the likely result of the Aus Open would be. As such, you have progressively lowered Lisa's expectations of the results as time has passed.
Mario indicated also that the freight invoices (including GST & duty) remain outstanding.
Given this, we do not accept your offer of repaying the initial $30,000 with you retaining ownership of the chairs. To finalise this matter, we will however accept the repayment of the $30,000 and an equal share of the chairs. Further, despite the apparent deception, we are also willing to make an adjustment to the 50/50 chair split to compensate you for the freight/ duty expense. Can you please advise what the correct freight/ duty cost has been for this shipment and provide the supporting paperwork.
Can you also please advise when the freight/ duty invoices have in fact been paid.
Lisa's Furniture Order -
We would like to complete this order directly through Mario. Can you please either call or email Mario to provide your consent for this to occur.
Regards
Shaun
On 7 March 2017, at 1 pm, Kelly sent an email to Harper. Breen knew he was going to send it but said she had not read it before he sent it. It said:
Further to my email below and voice message I left you last Tuesday, noting you have not responded to either whatsoever.
We again maintain the position that you knowingly misrepresented the Aus Open Chair deal to Lisa and as such we are not accepting your solution of merely repaying the $30,000 capital as full and final settlement. We maintain the claim on 50% of the chairs purchased and advise that we are in dispute with your company LeLoft and you personally.
This is also to advise that we will be retaining a number of furniture items from the recently styled and sold 12 Nelson Street, Sandringham (by way of security) that we believe represent similar market value to the 50% of the Aus Open Chairs that you have opted to retain, until such time that the issue of the chairs is resolved. Correcting an error in my earlier email, there was approximately 200 total chairs ordered rather than 400.
Natty you have done the wrong thing here; at best you've been dishonest and deceitful and at worst it is fraud.
What happens next is up to you, this isn't going to resolve itself by you ignoring the problem.
Just over an hour later, at 2.12 pm, Harper emailed back:
Hi Shaun,
I have replied to you when I get back to Mel though, I was away as you know.
As I mentioned to you in the email you need to come in and talk to me face to face there are so many things that you have not been told either.
If you are going to maintain my products which is not right I will take everything out from all Lisa jobs as well.
Lisa has not paid for the freight , gst , labour etc and how can she possibly claim all the stock? It always all about her and she never care about other parties which is totally not fair.
I am dealing with ail this on my own, still did not get pay and I have to pay for all costs etc did she ever wants to know all this? I don't think so.
I will forward an email that I sent to you last week too, my email got hack and I just able to get into my email just now.
I always keep my words shaun and I did pay her back straight away if she is going to claim this items she has to pay for other costs too.
If she willing to do that I am happy for her to take all the stuff otherwise I want all my product back.
I have been helping her since day one which no one else in this industry is willing to do so , if you are talking about honour , friendship and manner I do believe she has more to prove to me though.
I never ignore the problem I always reasons to it which you can see otherwise why I bother to meet up with you guys.
There are two ways traffic shaun its not only Lisa way you should know that too.
Thanks shaun.
At 2.58 pm, Kelly responded to Harper, copying in Breen:
Thanks for the reply Natty, including your email from last week. Obviously we didn't receive that or we would have made a time to again meet with you ... which was our first preference.
Holding some of your stock as security was about our only move in order to get you to the table. All your items will be returned to you shortly in perfect condition.
We want desperately to believe you and somehow be able to resolve this matter fairly. Yes there are always at least two sides to a story, which is why we took the time to understand thoroughly what part Mario had to play in this before taking a firm position either way.
It's clear you massively sugar coated the Aus Open deal to use Lisa's money. Yes you have kept to your word and repaid that, however the whole deal was made under false pretences. Lisa trusted you and you took advantage of that. We couldn't quite work out initially why you would let anyone in on such a lucrative deal, now we understand why.
Lisa is more than willing to pay her way (share the cost of freight / gst etc) but your credibility is shot when it seems you merely just set her up for a fall on this. It's difficult to negotiate now with you in good faith given that.
Analysis
The central premise of Breen’s case was that she had invested $30,000 on the basis of promises made to her by Harper (for Natty) in November 2016 as to what return she would make. She said those promises were not kept, and wants payment of money she therefore says she is entitled to as a debt. She also wants the value of half the chairs paid to her.
I am not satisfied promises were made of the nature claimed. Rather, Breen and Natty entered into a straightforward joint venture agreement, that the two would contribute equally to buy some European chairs from Slide which would be rented out by Slide to the Australian Open organisers. The net profit which came back to Natty would then be divided between the two of them, and they would own the chairs and be able to hire them out in the future and split those earnings.
I am not satisfied that the agreement included a term that Natty warranted that it had a contract with Slide, under which Slide had agreed to hire 196 European chairs from Natty and pay it the amount payable to Slide by the organisers of the Australian Open tennis event for the hire of the chairs less a commission to Slide of, at most, 15%.
I am not satisfied a warranty to this effect was given. I am not satisfied that Natty promised Breen that Slide had promised to pay Natty the amount payable by the organisers of the Australian Tennis Open regardless of whether that was ever paid to Natty.
I am not satisfied that such promises were made, either by Slide to Natty, or by Natty to Breen.
Similarly, I am not satisfied that the chairs agreement included a term that Natty would pay Breen half the difference between the hire fees payable to Natty under the Slide contract and the costs incurred by Natty in delivering the chairs under that contract.
Breen’s case was premised on establishing that Harper agreed to pay Breen the amount payable by Slide to him, regardless of whether that amount was ever paid by Slide.
Harper’s evidence that he did not have any dealings with the Australian Open in relation to the rental of the chairs to the Australian Open is significant. Natty relied on Slide for the success of that rental arrangement.
Harper – as he told Breen – did not have any written agreement with Slide in relation to the hire of the chairs. He was not in a position to determine the success or failure of the AO venture. He was reliant upon Slide’s engagement with the Australian Open. Why then would he promise to pay Breen an amount based on what he hoped the Australian Open venture would return – an amount said to be payable – regardless of whether it did return that amount? It is commercially improbable.
It is one thing to hope to make a profit, to estimate what that profit will be, and to agree to share those profits with a joint venture partner. It is another to effectively guarantee profits of a particular nature to that partner.
I have indicated above the difficulties of relying on witnesses’ recollections long after the event of conversations. This is particularly so where notes are not taken.
The sms and emails exchanges between Harper, Breen and Kelly after the chairs agreement was made do not support the suggestion that such promises were made.
They show a hope – at most, an ‘expectation’ – that money would be made on a certain basis.
They do not establish that Natty made promises or agreed to contractual terms of the nature alleged.
I am satisfied that Harper made it clear to Breen in the discussions which led to the chairs agreement that the amount to be earned from the purchase of the chairs and the rental to the Australian Open was not confirmed. His expectation, based on what Fera had told him, was that it would produce a significant return.
Since no promises were made, Breen’s claim to be entitled to any payment based on those promises fails.
That leaves the question of her entitlement to half the chairs or their value.
I am satisfied on the evidence that at the 16 February meeting, Harper (for Natty) offered to repay the $30,000, on the basis that would be the end of the matter so far as his dealings with Breen were considered.
I am also satisfied that he made his offer on the basis that payment of that amount would mean he then owned all the chairs. Kelly’s email of 21 February, 2017 refers to Harper having ‘repaid Lisa the initial $30,000 and laid claim to 100% of the chairs’. There was no evidence of Breen or Kelly talking to Harper between the 17 February meeting and the sending of the 21 February email. It follows that Harper must have laid claim to 100% of the chairs at the meeting when he offered to repay the $30,000 to Lisa.
I am satisfied that Breen accepted the offer of payment without saying that she did so on the basis that she would still own half the chairs after the payment of the $30,000.
Although the $30,000 was slightly less than the $30,427 Breen had paid, Breen and Harper referred to this as ‘repayment’ of the money she had paid. Kelly referred to it as the return of Breen’s ‘capital’. Natty’s bank statement description of the two payments making up the $30,000 which were transferred refer to them as ‘…Oz refund, Lisa…’.
No-one referred to this as some sort of part payment – or the first tranch of payment – of the profits to be made from the Australian Open venture. It was a refund of money Breen had paid by Harper, and accepted as such by her.
After she had been paid, and after she had spoken to Fera – Breen considered Harper had misled her, and she wanted to get the chairs as well as the money. Hence Kelly’s email of 21 February 2017 which said ‘we do not accept your offer’.
Natty says that there was an accord and satisfaction as a result of the February discussion and the $30,000 payment. I am satisfied on the balance of probabilities that there was.
At set out in Lexis Nexis Halsbury’s Laws of Australia (at 30 March 2015) [110-775]
… Promises may be given by the party liable that he or she will satisfy the claim by doing an act, making over a thing or paying an ascertained sum of money, and the other party may agree to accept, not the promise, but the act, thing or money in satisfaction of the claim.
Even if I am wrong about the effect of the $30,000 payment being an accord and satisfaction, I am not satisfied that Breen is entitled to any chairs or that Natty owes Breen anything for the chairs.
Breen argued that the value of the chairs as at the date of trial was $61,979. This was, she argued, more than Natty bought them for, because Natty had been able to get them at a discount from Slide.
Breen sought to prove the current retail value of the chairs in Australia solely by seeking to adduce evidence by way of internet screenshots taken by Breen shortly before trial, from the website of another importer, Space Furniture. However, the screenshots are inadmissible to prove this.
Section 59 of the Evidence Act 2008 (Vic) states:
(1)Evidence of a previous representation made by a person is not admissible to prove the existence of a fact that it can reasonably be supposed that the person intended to assert by the representation.
(2)Such a fact is in this Part referred to as an asserted fact.
(2A)For the purposes of determining under subsection (1) whether it can reasonably be supposed that the person intended to assert a particular fact by the representation, the court may have regard to the circumstances in which the representation was made.
‘Previous representation’ is defined in the Dictionary to the Evidence Act as:
a representation made otherwise that in the course of giving evidence in the proceeding in which evidence of the representation is sought to be adduced.
The screenshots are hearsay evidence because they comprise evidence of a previous representation made by the person who constructed the website, wrote the text and inserted the graphics, that is sought to be tendered to prove an asserted fact – namely, the retail value of the chairs in Australia. Similar asserted representations were rejected as offending the hearsay rule – in the identical s59 of the Evidence Act 1995 (Cth) – by Mortimer J in the Federal Court decision Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd (No 2) [2017] FCA 474 [24]
I reject Breen’s submission that the screenshots were not adduced for a hearsay purpose. The screenshots were adduced for the purpose of proving the truth of the asserted fact that new chairs were sold – as at the date of the screenshots – at the retail prices displayed on the Space Furniture website. They were not adduced merely for the purpose of showing that the representations were made.
I also reject Breen’s contention that the exception in s66A of the Evidence Act applies. It states:
The hearsay rule does not apply to evidence of a previous representation made by a person if the representation was a contemporaneous representation about the person’s health, feelings, sensations, intention, knowledge or state of mind.
The representations in the screenshots as to the retail prices of the items are not contemporaneous representations about any person’s health, feelings, sensations, intention, knowledge or state of mind.
Even if I had found that Breen did not seek to adduce the screenshots for a hearsay purpose, I would in any event have excluded the evidence under s135 of the Evidence Act – as Mortimer J did in Shape Shopfitters at [26] – on the basis that it creates a danger of unfair prejudice to Harper. Breen did not call any witness from Space Furniture or another retailer to seek to establish that the price in those screenshots represented the market retail price for those items and there was no evidence that those items are the same as those purchased for the Australian Open venture.
I would not have attributed any weight to the screenshots given those matters, in any event.
Breen’s claim for damages for the chairs – or the return of any of the chairs – depends on her establishing that, as at the time of trial, the chairs were worth significantly more than they were purchased for.
I am not satisfied of this. I am satisfied that they were worth less than they were purchased for. After they had been rented out to the Australian Open, the chairs were second hand. Some were damaged. The evidence was that some were not even returned to Natty by Slide.
Breen paid $30,427, which was used to purchase chairs. She was repaid $30,000. She has not established that she is entitled to anything else under the chairs agreement.
Conclusion
As set out above, neither side has succeeded in establishing their claim or counterclaim in this case.
I will dismiss the proceeding.
I direct the parties to consider the orders that should be made as a result of these reasons and provide to me consent orders by 4 pm on 26 September 2018. If the parties cannot agree, submissions as to the proposed orders should be filed by each party by that time. If a hearing is required on these matters, it will then be listed.
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Certificate
I certify that these 35 pages are a true copy of the reasons for decision of her Honour Judge Marks, delivered on 14 September 2018 and revised on 3 October 2018.
Dated: 3 October 2018
Zeinab Ali
Associate to Her Honour Judge Marks
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