One Stop Supply Shop Pty Ltd v Jase Investments Pty Limited (Civil Dispute)

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

ONE STOP SUPPLY SHOP PTY LTD v JASE INVESTMENTS PTY LIMITED (Civil Dispute) [2016] ACAT 48

XD 1163/2015
Catchwords: CIVIL DISPUTE – non-payment of invoices – hospitality supplies – whether there was a breach of contract

Cases cited:Briginshaw v Briginshaw (1938) 60 CLR 336
Davy v Garrett [1877] 7 Ch D 473
Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599
Rejfek v McElroy (1965) 112 CLR 517
Wentworth v Rogers (No 5) (1986) 6 NSWLR 534
Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361

Tribunal: Senior Member H Robinson

Date of Orders:  23 May 2016
Date of Reasons for Decision:         23 May 2016
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL       )          XD 1163/2015

BETWEEN:
ONE STOP SUPPLY SHOP PTY LTD
Applicant

AND:
JASE INVESTMENTS PTY LIMITED
Respondent

TRIBUNAL: Senior Member H Robinson

DATE:23 May 2016
ORDER

The Tribunal Orders that:

The respondent pay to the applicant within 28 days of the date of this order:
(a)$2993.58 in satisfaction of the amount due under the invoices;
(b)$19.00 to cover the out of pocket expenses for the ASIC search;
(c)interest of $208.03; and
(d)$280.00 for the filing fee.

………………………………..
Senior Member H Robinson

REASONS FOR DECISION

This is a debt application brought by the applicant, One Stop Supply Shop Pty Ltd against the respondent, Jase Investments Pty Limited.

Parties

The applicant operates a cleaning and hospitality supply business based in Fyshwick in the Australian Capital Territory. The respondent operates a 64 room motel and conference facility in Queanbeyan in New South Wales.

Process

The applicant filed its application with the Tribunal on 12 October 2015. The respondent filed a response on 5 November 2015.
The matter was the subject of an unsuccessful preliminary conference on 9 December 2015, during which directions were made for the filing of witness statements and submissions. Both parties filed material in compliance with these directions.
The matter was heard on 2 March 2016 and 23 March 2016. The applicant was represented on both occasions by an employee, Mr Nick Konstantinovits and the respondent by its directors, Mr Allan Carpenter and Mrs Jenny Guo Fang Carpenter.
Three witnesses gave witness statements in support of the applicant and were cross examined by the respondent’s representatives: Mr Klim Taseski, Mr Dean Vasileski and Mr Laurence Rousell. Mr and Ms Carpenter provided witness statements in support the respondent and were cross examined by the applicant’s representative. Ms Jennifer Ward provided oral evidence and was cross examined by the applicant’s representative.
A final witness, Ms Lareigh Fife provided two witness statements, one in support of the applicant and one in support of the respondent. She was called as a witness by the applicant and was cross examined by the respondent’s representative.

The Issues

The applicant’s case was straightforward. Mr Konstantinovits tendered copies of a series of ‘invoices’[1] from the applicant to the respondent, with the following dates and amounts on them:
[1] I have used the word ‘invoices’ in parentheses because there was, during the course of the hearing, some discussion over whether these documents were ‘invoices’ or ‘delivery dockets’. Witnesses used the terminology interchangeably. Given that the documents listed the goods that were allegedly delivered, the amount payable, an ‘invoice no’ and the EFT details for payment, in my view they are invoices, and that is the word I will use in these reasons. However, the terminology is, ultimately, of little relevance to these proceedings
(a)23 January 2015 - $86.50
(b)28 January 2015 - $341.00
(c)6 February 2015 - $154.00
(d)11 February 2015 - $217.80
(e)20 February 2015 - $40.30
(f)6 March 2015 - $77.00
(g)13 March 2015 - $127.60
(h)18 March 2016 - $218.00
(i)25 March 2015 - $196.54
(j)26 February 2015 - $559.30
(k)1 April 2015 - $327.80
(l)8 April 2015 - $55.00
(m)15 April 2015 – 642.74
(collectively, ‘the invoices’).
The applicant contended that these documents accurately stated items delivered to the respondent’s hotel and that they had not been paid. It sought recovery of the amount owing.
For its part, the respondent agreed that the invoices are not paid. It has offered to part pay $1000.00, but denies liability for the remainder. As best I can determine, its position may be summarised as being that it is not required to pay the invoices because:
(a)the contract was vitiated by fraud;
(b)some goods delivered were not ordered, other goods that were ordered were not delivered; and
(c)all (or perhaps most) of the goods listed on the invoices were delivered in circumstances that were in breach of an essential term of the contract or contracts between the parties.
Given the way in which these proceedings unfolded, and the evidence relied upon by the respondent, it useful to quote the following more fulsome, and contextualised, explanation of the respondent’s position, as set out in the witness statement of Mr Carpenter:[2]
[o]ne disappointing aspect of operating a Motel is that people are always attempting, and sometimes are successful at, stealing from the business. [This includes] ... guests... staff [and] collusion between Suppliers and Staff.
...
The only way that we can reduce the amount stolen from us is to set out systems that prevent the opportunity for theft and fraud. Customers, employees and suppliers all are required to follow these systems.
In the case of One Stop Shop, they had found a method of stealing and were determined not to allow a system that would prevent that from occurring.
The system that I attempted to put in place was for all deliveries to be to laundry and housekeeping in the mornings, such that Jenny Ward could check. This would require the delivery van to drive around to the back of the Motel, rather than delivering to the front door and transporting the products upstairs to Housekeeping.
Over time that system collapsed as delivery drivers didn’t get Jenny Ward to check if before 2pm, and delivered to reception regardless of the time of day. We believe that between 2pm and 2:30pm was deliberately targeted for delivery, as this is the Receptionists [sic] busiest time of day with the afternoon shift receptionist starting work at 2:30pm and guests commencing check in at 2pm. The receptionist’s diligence in checking would be minimal. Also, products at the time of delivery were positioned such that the receptionists’ ability to see over the counter to check delivery was impeded. They were taking the word of the delivery driver that delivery matched the invoice.
[2] Exhibit R4, Statement of Mr Allan Carpenter
In other words, Mr Carpenter said that he had implemented a ‘system’ for the delivery of goods (‘the system’) that was designed to minimise theft or fraud. There no dispute that this system was not adhered to by the applicant’s staff. The issue were whether the system formed a term of the contractual arrangement between the parties and, if so, what consequences, if any, flow from the breach of it.

The applicant’s evidence

Four witnesses were called by the applicant:
(a)Mr Rousell, a delivery driver;
(b)Mr Dean Vasileski, a delivery driver who later became a Business Development Manager;
(c)Mr Klim Taseski, Business Development Manager; and
(d)Ms Lareigh Fife, an employee of the respondent, who was subpoenaed to attend.
Mr Rousell, Mr Vasileski and Mr Taseski all provided witness statements and were available for cross examination. Their witness statements were remarkably similar in content, word for word in places. Their oral evidence was broadly consistent with their statements and, hence, with each other.
All three witnesses gave consistent oral evidence as to how orders and invoices were actioned and notated. Their evidence was that orders were recorded on a computer, and then printed onto an invoice that listed the goods to be delivered. The driver would collect a paper copy of the invoice, attend the stores area in the warehouse to ‘pick’ (collect) the goods, and then place a single tick against each item on the invoice when that item was physically ‘picked’ from the warehouse. Mr Konstantinovits would then read out the goods listed on another copy of the invoice as the goods were loaded into the van, at which time the driver would ‘cross’ each tick next to each picked item on the invoice. Mr Vasileski, at least, said that he would then put a ‘dot’ against the item once it was delivered[3], although this does not seem to be a universal practice, and
[3] Transcript of Proceedings 2 March 2016 page 26, lines 5-14; page 46 lines 15-30
Mr Roussell did not mention doing this. Mr Vasileski described the process as involving a ‘triple check’. This evidence was not challenged.
Some discrepancies emerged in the evidence of Mr Vasileski and Mr Rousell about what happened when the goods were delivered to the motel.
Mr Vasileski stated that upon arriving at the motel, he would unload the goods onto a trolley and take them through reception. The goods would be signed off by “whoever is at the front desk”.[4] This was usually a woman with “curly hair”, whose name he could not remember, but was occasionally Ms Carpenter.[5] Mr Vasileski said he would then take the goods out the back to a room he described as “next to the pool room”.[6] He could not identify this room on a map[7], but described where it was. He did not recall ever delivering the goods anywhere else. He denied ever being given any contrary instructions as to where to take the goods or the people to see about them.[8] He thought the goods were usually delivered at 2pm.[9]
[4] Transcript of Proceedings 23 March 2016 page 18
[5] Transcript of Proceedings 2 March 2016 page 34, lines 10-11
[6] Transcript of Proceedings 2 March 2016 page 22, line 3
[7] Transcript of Proceedings 2 March 2016 page 2, lines 23-24
[8] Transcript of Proceedings 2 March 2016 page 22, lines 27-28
[9] Written statement of Mr Vasileski
Mr Rousell’s evidence was that he would take the deliveries “through the front door” on a trolley and would then leave the items in one or more of several rooms, including a room upstairs that seemed to be specifically for housekeeping[10] and laundry.[11] If that room was locked, he would go through two swinging doors to the back of the kitchen (apparently near the pool). He would also leave goods in the back of the kitchen.[12] He denied ever leaving goods outside the back door.[13]
[10] Transcript of Proceedings 23 March 2016 page 18
[11] Transcript of Proceedings 23 March 2016 page 21, line 23
[12] Transcript of Proceedings 23 March 2016 pages 24 to 25
[13] Transcript of Proceedings 23 March 2016 page 27, lines 5-10
During the cross-examination of Mr Rousell, it was suggested to him by the respondent’s representatives that he was lying about where he left the goods, because he would not be able to deliver to housekeeping, laundry and kitchen because those doors were locked.[14] Mr Rousell denied this.
[14] Transcript of Proceedings 23 March 2016 pages 23, 27-30
The evidence about which rooms were locked and which were not was confusing. I am satisfied that the confusion was created not by any attempt at deliberate deception on Mr Rousell’s part, but rather by different names being used for the same room, and names of rooms also being used to describe goods. For example, ‘chemicals’ were described as ‘laundry’ and teabags as ‘housekeeping’. I do not accept that Mr Rousell was lying, but I do accept that he may have been, at times, confused.
I am also satisfied that the differences in the evidence between Mr Rousell and Mr Vasileski are explained by the different practices adopted by each. I accept that Mr Rousell delivered the goods to different rooms, and Mr Vasileski delivered them all to a place near the pool. The significance of this is considered below.
In his oral evidence, Mr Rousell said that he would put the goods away and then “come back and like see the front desk”[15] on the way out, but “sometimes the girls were there, sometimes the girls were not”.[16] Mr Rousell’s written statement was inconsistent with his oral statement, in that in the written statement he stated he would “show Reigh what stock was for laundry, housekeeping and kitchen” on the way in. When giving evidence in chief, he clarified that she would show the trolley to staff at the front desk before delivering the goods, but did so only after a series of leading and suggestive questions from Mr Konstantinovits[17].
[15] Transcript of Proceedings 23 March 2016 page 18, line 12
[16] Transcript of Proceedings 23 March 2016 page 18, line 18
[17] Transcript of Proceedings 23 March 2016 page 18, line 14-31
This is one example of why leading questions should be avoided. Certainly, that is easier said than done, and even experienced advocates may struggle with this at times. However, as I explained to Mr Konstantinovits (and indeed
Mr Carpenter) on several occasions during this proceeding, interrupting a witness or asking them to confirm a contentious assertion as correct undermines the weight that can be given to that witnesses’ evidence. The consequence here is that, while I do not doubt that Mr Rousell attempted to give honest answers, I cannot be satisfied that his evidence was not, at least inadvertently, contaminated by the commentary from Mr Konstantinovits. This makes it very difficult for me to entirely accept Mr Rousell’s evidence about the process he adopted or about his interactions with ‘Reigh’ or the other ‘girls’ at the front desk. Fortunately, for reasons set out below, I do think that Mr Rousell’s evidence on this point is fundamental to the case.
Both Mr Vasileski and Mr Rousell gave sworn evidence that they had always delivered the goods to the motel that were stated on the invoice, and that they had not stolen any goods or ticked off as delivered goods that were not. Both also denied knowing anything about the ‘system’ that Mr and Ms Carpenter said they put in place. They maintained this position under cross examination. I have no reason to doubt the honesty of either witness on these accounts.
Mr Taseski gave evidence that he was responsible for taking and arranging orders from the applicant. His evidence was that he dealt with Jenny Ward in housekeeping. Mr Taseski said that orders could arise through him visiting the motel, or could be phoned in. He gave evidence that when he visited, he would meet with Ms Ward, and they would take a “walk around” during which time she would have a look and see what was needed in the laundry, the storeroom and the restaurant.[18]
[18] Transcript of Proceedings 2 March 2016 page 45, line 15
Mr Taseski said he did not know where the goods were delivered.[19] His evidence was that he never received any complaints from the respondent about services provided to the motel.[20] He adamantly denied ever “taking an order on his own” – that is, ordering something without the agreement of Ms Ward or a representative of the respondent.[21] His evidence was largely undisputed. Again, I have no reason to doubt Mr Taseski’s honesty.
[19] Transcript of Proceedings 2 March 2016 page 45, line 24
[20] Transcript of Proceedings 2 March 2016 page 45, line 28
[21] Transcript of Proceedings 2 March 2016 pages 47-48
The final witness for the applicant was Ms Lareigh Fife, who at all relevant times was employed by the respondent as a receptionist at the motel. Ms Fife worked mornings, finishing around 3pm.
Ms Fife signed two short witness statements in these proceedings – one dated 21 December 2015 that was filed by the applicant, and one dated 9 January 2016 that was filed by the respondent. There are some differences between the statements. In particular, in the December statement, Ms Fife attested that:
I have viewed the following invoices and can confirm that all items were delivered in full and placed in their appropriate storage areas by the 1 stop Shop Delivery Driver.
She also confirmed signing several of the invoices.
In her January statement, Ms Fife repudiated the December statement, claiming that it was, “not true” and “signed...under duress” because she had been threatened with a subpoena if she did not. She did not specify what parts were “not true”.
The consequence of this conflicting evidence was that Ms Fife was in fact subpoenaed to give evidence.
In her oral evidence, Ms Fife explained that the December statement was not accurate because:
...when the items were delivered, I didn’t actually see most of the items. He [the delivery driver] did point them out to me, but when he delivers them, that was usually my busiest time of day, getting everything ready, start of checking time, so I didn’t know if they were all there.[22]
[22] Transcript of Proceedings 23 March 2016 page 6, lines 6-20
Ms Fife also gave evidence that the deliveries typically happened after 2pm, that being the busiest time of the day. Under questioning, she elaborated further:
the delivery driver would come in around that time, hand me the delivery docket. He would point to things on the trolley and then take them past reception up to the back of the motel near the elevator or wherever he took them. I wasn’t sure because, yes, I was at reception, and then he would leave after I signed the delivery docket.[23]
[23] Transcript of Proceedings 23 March 2016 pages 9-10
She was adamant goods were delivered after 2pm on all but one or two occasions. When questioned by Mr Konstantinovits as to whether she had been ‘coached’ on this aspect of her evidence, Ms Fife denied this said that
[24] Transcript of Proceedings 23 March 2016 page 11; lines 37-38
Mr and Ms Carpenter had refused to discuss the matter with her.[24]
Ms Fife agreed, consistent with the first statement, that it was her signature on the majority of the invoices.
I understand and appreciate that Ms Fife was worried by the idea of attending the Tribunal. While that is no excuse for signing an inaccurate statement, I am satisfied that she did not understand the context or consequences of doing so. In any case, notwithstanding her inconsistent written statements, I am satisfied that Ms Fife gave honest and accurate oral evidence in relation to the method by which the goods were delivered, and the usual time of their delivery. It is not in dispute that she signed the majority of the invoices. I accept her frank oral evidence that she did not really check the goods, beyond taking the delivery driver at his word. I am satisfied that Ms Fife did not know where the goods should be delivered, and therefore could not give evidence on that issue anyway. Her evidence further confirms that the delivery drivers came through reception, rather than going around the back.

The respondent’s evidence

The witnesses for the respondent were Mr and Ms Carpenter and Ms Jennifer (Jenny) Ward. Ms Carpenter is the director of the respondent and the executive manager of the motel. Mr Carpenter is also a director of the respondent and the general manager of the motel. Ms Ward is a long term employee with responsibility for housekeeping.
In her written statement, Ms Carpenter outlined that the respondent had commenced using ‘Cleaning World Hospitality Supplies’ some six years ago for the supply of cleaning chemicals, guest room consumables and restaurant consumables. Her point of contact was a man called ‘Steve’. Steve would deal with Ms Ward for housekeeping and laundry, and would check kitchen supplies personally. The relationship worked well and she was happy with the service.
Around the end of 2014, there was a change in the ownership and personnel of the Cleaning World, which became a business conducted by the respondent. Sometime thereafter, the relationship between the applicant and the respondent took a downward turn. Ms Carpenter describes this in her written statement as follows:
The morning delivery of supplies was discontinued and afternoon delivery commenced. The items delivered were not consistent with the orders. The delivery dockets did not match what had been delivered...
These issues were not resolved in a permanent manner with complaints being dealt with for perhaps a week and then reoccurring and continuing until another complaint.
I personally witnessed supplies constantly delivered to the hallway at the rear of the Kitchen and in some instances left at the doorway of the Motel.
The invoicing was out of control as short items not delivered remained on invoices for payment and oversupplied items had to be picked up and deducted from invoices.

Ms Carpenter stated that she and Steve became frustrated and Steve advised her he was ceasing work for the company. Mr Taseski became the new contact. He did not introduce himself to her.
After the service did not improve, Ms Carpenter made the decision to stop the service in mid 2015. She explained the reason for this as:
incorrect supplies constantly delivered; delivery invoices not signed by staff; equipment removed to prevent use of stock; excess stock not removed and credited to account. Supplies possibly not delivered but invoiced[25].
[25] Written Statement of Ms Carpenter
The action that precipitated the current proceedings was the refusal by the respondent to pay the full amount of thirteen invoices issued by the applicant and spanning the period 23 January 2015 to 15 April 2015.
Crucially, Ms Carpenter did not provide any detailed evidence as to what precise items were incorrectly delivered, or not delivered, or what items she asked to be collected.
Ms Carpenter was also critical of the respondent’s drivers for leaving goods in inappropriate locations. She provided the Tribunal with a photograph of a corridor, which she contended was the storage area/pool room referred to by the applicant’s witnesses. It was, she contended, not a storeroom but a “public emergency area” and hallway to which anybody could get access.[26] She also suggested in her statement that on occasions some stock was simply left outside[27].
[26] Transcript of Proceedings 23 March 2016 page 37
[27] Written statement of Ms Carpenter
Ms Carpenter gave evidence that the actual amount of stock delivered over the twelve months leading up to the termination of the contract has declined and that the her bookkeeper, ‘Candace,’ had trouble reconciling the invoices and the supplies. Unfortunately, the bookkeeper was not called to give evidence, and the relevant records were not available.
When asked about whether she had complained to the respondents about the discrepancies, Ms Carpenter explained that she had understood her bookkeeper was liaising with the respondent[28]. She agreed under cross examination that she had not seen any correspondence between her bookkeeper and the applicant.[29] She could not point to any occasion where she had expressly advised the respondent of the alleged ‘system’.
[28] Transcript of Proceedings, 23 March 2016, page 41, items 37-40
[29] Transcript of Proceedings 23 March 2016 page 41
I accept Ms Carpenter gave honest evidence. Clearly, she was frustrated with the service she was receiving from the respondent, particularly in relation to where they were leaving the goods. She was affronted that the new business development manager had not introduced himself to her. She was frustrated with the applicant, concerned about deliveries and wanted her book keeper to sort the records out. However, the lack of detail as to what items on the invoices she says were not delivered was unhelpful in the context of these proceedings.
Mr Carpenter also filed a written statement and was cross-examined. The allegations he makes against staff, guests and the respondent in his written statement are set out above.
Mr Carpenter’s evidence was that he mainly did “back of house” work[30]. He was not involved in the delivery process. In response to questions from the Tribunal as to why there was no clarity as to what goods were and were not delivered, he said that it was “extremely difficult”[31] to identify what had been supplied to the motel. When I asked why the actual goods were not checked against the invoices, Mr Carpenter said that the invoices were not the only documents that recorded transactions between the applicant and the respondent, and that there were additional “monthly statements” that set out what had been delivered and what had been returned.[32] However, when asked by the Tribunal why these monthly invoices were not in evidence, he clarified the monthly invoices were only given by “some suppliers”, that he was not “100 percent sure” that the respondent was one of them.[33]
[30] Written Statement of Mr Carpenter
[31] Transcript of Proceedings 23 March 2016 page 64
[32] Transcript of Proceedings 23 March 2016 page 66, lines 5-19
[33] Transcript of Proceedings 23 March 2016 pages 66-67
In highlighting this evidence, I do not suggest that Mr Carpenter was dishonest. Rather, it was plainly apparent – and indeed, he did not deny this – that Mr Carpenter did not have a good grasp of the motel’s day to day management and accounting practices. He left much to Ms Carpenter, Ms Ward and other staff.
Mr Carpenter had no direct evidence of any of the incidences of fraud alleged in his witness statement. He could not point to any particular incident of alleged theft. Indeed, he could not point to any specific items that were paid for but not delivered. When asked if the invoices contained goods that he did not receive, his initial response was “possibly”.[34] When further questioned by the Tribunal as to which items were in dispute, he said it was “extremely difficult” to know and that his bookkeeper was trying to sort it out.[35]
[34] Transcript of Proceedings 23 March 2016 page 55, line 19
[35] Transcript of Proceedings 23 March 2016 page 64, line 1-5
Ms Ward was the Respondent’s final witness. I am satisfied that she gave honest and forthright evidence. She confirmed that she hardly saw the delivery drivers or checked the invoices/delivery dockets, and goods were usually left in the “hallway”. She “knew what she had ordered” so rarely needed to check the goods against the invoices. Her evidence was that she ‘occasionally’ found that something was missing, but denied ever receiving goods that she had not ordered.[36] After some further (again, unhelpful) suggestively leading questions from Mr Carpenter she agreed that some goods had been delivered by the applicant after the respondent had changed to another company, but she did not give an example of this happening prior to the cancellation of arrangements with the respondents in mid-2015.
[36] Transcript of Proceedings 23 March 2016 page 73, lines 10-16
Under cross examination from Ms Konstantinovits, Ms Ward attested that when she found something missing, she would contact Steve.[37] When asked what happened after Steve left, she could not remember[38].
[37] Transcript of Proceedings 23 March 2016 page 76, line 12
[38] Transcript of Proceedings 23 March 2016 page 76, lines 25-29
Ms Ward locked the upstairs storeroom when she left between 2pm and 3pm. She never locked the hallway[39].
[39] Transcript of Proceedings 23 March 2016 page 75, line 28
Ms Ward stated that she had advised Steve to take the delivered goods elsewhere, but did not talk to anyone after Steve left.[40] To her recollection, only one company delivered to the storeroom upstairs[41].

Factual findings – what happened?

[40] Transcript of Proceedings 23 March 2016 page 97, line 43

[41] Transcript of Proceedings 23 March 2016 page 80, line 11

Despite the degree of acrimony between the parties, the evidence of the witnesses is broadly consistent, or at least reconcilable.
The applicant and the respondent had a standing arrangement whereby goods were ordered, delivered and then paid for pursuant to 30 day payment terms.
The relevant goods were either ordered through the applicant’s Business Development Manager, or phoned through to the warehouse. Orders were listed on an ‘invoice’. The invoice had some minimal terms on it as follows:
(a)The respondent retained title of the goods until they are fully paid for;
(b)Payment terms were 30 days; and
(c)“No claims recognised unless made within 7 days on stocked lines only. Buy in items are non returnable”.
Other than this, there was no written contract between the parties.
The applicant had a process in place in its warehouse to ensure that the correct goods were delivered. This involved an ‘invoice’ being generated on the computer system. The delivery driver would then take the invoice and ‘pick’ the goods on it from stores. As he picked the items, he ticked them off on the docket. The goods were next loaded into the delivery truck. Mr Konstantinovits would then call out the items on the invoice and they would again be “ticked” again before the driver left the shop.
I am satisfied that this system minimised errors, even if it did not entirely eliminate them.
Deliveries to the motel were usually made in the afternoon, at least during the relevant period during which the invoices were issued. I accept that the applicant’s drivers regularly arrived between 2pm and 3pm, which was when the receptionist, usually Ms Fife, was busiest.
Upon arriving at the motel, the applicants’ delivery drivers loaded the goods on a trolley and pushed them through the front office to a back room. The driver had the staff member who was at the front desk sign the invoice where possible – Mr Vasileski did this when arriving, and Mr Rousell when arriving or when leaving, depending on who was at reception. The driver would typically point the goods out to Ms Fife while they were on the trolley, but she did not review them on an item-by-item basis before signing the invoice.
Mr Rousell delivered the goods to one of a number of areas, depending on which room he could get access to. Mr Vasileski delivered them to what he described as a ‘pool room’ or ‘store room’. I accept the evidence of Mr and Ms Carpenter that this room was, in fact, a hallway, with an emergency exit at one end, and that it was readily accessible to the public. No doubt, this was not an ideal location to deliver goods. It is not clear why the applicant started delivering to this area, except maybe for convenience. Nonetheless, it is also apparent that Ms Ward, and probably other staff, collected those goods and took them to the appropriate area of the hotel. There is no evidence that the applicant’s staff were told to leave the goods anywhere else.
I also accept that Ms Carpenter may, on one or more occasions, have found the goods outside, near the pool. Mr Vasileski and Mr Rousell deny putting them there, and I am not able to make any findings about how they got there. Leaving the goods outside is not satisfactory, but there was no evidence of any loss to the respondent as a consequence, as the goods appear to have been received. There was also no evidence of this issue being raised with the respondent prior to this proceeding.
None of the witnesses, other than Mr and Ms Carpenter, appeared to have been aware of the system implemented by Mr Carpenter, whereby goods were to be delivered through the back or to the store room. This included not only the applicant’s staff, but also the two members of the respondent’s staff who were called to give evidence, being Ms Ward and Ms Fife. That is not to suggest that the system had not been devised – clearly Mr Carpenter had put some thought into it. But it had not been well communicated to either parties’ staff.
There was evidence from Ms Ward that mistakes were occasionally made by the applicant’s staff. When they related to her area of responsibility, she contacted the respondent and sorted things out. That is the only real evidence of any kind of discrepancy between orders, delivery and invoices. There is no evidence whatsoever of a coordinated fraud by the applicant’s staff against the respondent, either to deliver at an inconvenient time, or to charge for goods that were not delivered or deliver goods that were not ordered.
Most significantly, neither Mr nor Ms Carpenter could tell the Tribunal exactly which of the invoiced items were in dispute, or precisely which items they did not order or receive (the one exception being a tub of Warewash, which is considered further below). Moreover, the respondent has not offered a clear explanation for its lack of clarity and records. I accept that the respondent’s business was a busy one, that many suppliers were involved, and that much of the paperwork was left to their bookkeeper. However, the evidence of both Mr and Mrs Carpenter was that they considered the applicant’s deliveries and invoicing to be unreliable for several months prior to the termination of arrangements. It is difficult to understand why, in such circumstances, they did not make a better attempt to reconcile orders and deliveries and keep some records thereof. This leaves the respondent in a very difficult position, because the applicant has credible evidence to support its assertion that each of the invoiced goods were ordered and delivered, while the respondent has little substantial evidence to say that any particular goods were not.

Reasoning

As a civil claim, the onus is on the applicant to prove its case on the balance of probabilities. That is, it must establish that the respondent is obliged to pay for goods that were delivered to it pursuant to an agreement. This requires that it show that:
(a)there was a contract between the parties pursuant to which it delivered goods to the respondent in exchange for payment;
(b)the applicant has complied with the terms of the contract by delivering the goods as ordered;
(c)the respondent has not paid for the delivered goods; and
(d)accordingly, the respondent owes it a sum under the contract, that sum being recoverable as a debt.
Of these matters, the key issue in this case is (b) – that is, the respondent denies that the applicant has delivered the goods as ordered, or in accordance with the terms and conditions of the contract.

Was the applicant in breach of the contractual terms?

The respondent argued and the applicant appeared to accept that it was a term of the contract (or each contract, as the relationship is perhaps more correctly characterised as a series of contracts) that it should not have to pay for goods that were not delivered. This must be correct – such a term would be implied for commercial efficacy even if not expressly agreed.
However, I am satisfied that, on the balance of probabilities, that the majority of items on the invoices were ordered and delivered.
The applicant’s witnesses gave cogent and consistent evidence of the process used to ensure that the goods were checked before being loaded into the truck. They gave evidence that they delivered the invoiced items. The invoices were signed by the respondent’s staff members. Neither Mr nor Ms Carpenter could identify any individual item that was allegedly invoiced but not delivered, and nor could they point to accounting records, to ledgers, or anything else to overpayments or failed deliveries. Although both gave evidence of errors identified by their bookkeeper, the bookkeeper was not called as a witness and none of her documentation was made available.
I accept that it is possible that, from time to time, some of the invoiced items may not have been delivered. Mistakes happen. However, it was apparent from Ms Ward’s evidence that procedures were in place between staff of the applicant and the respondent and the problems were dealt with. A mistaken delivery of an item would not, without more, be the kind of repudiatory breach that would entitle the Carpenters to rescind the entire contract, or contracts, and refuse to pay for goods delivered.
The second basis for the respondent’s defence is that it was an implied term of the contract that it need not pay for items that were delivered, but not ordered. Again, this is not a contentious proposition. Where goods are delivered in error, the respondent may refuse to accept them, and title to those goods will remain with the applicant, who would be entitled, and indeed required, to collect them upon the respondent’s request.
Although there was some evidence before the Tribunal of the respondents seeking to return items from time to time, there was no evidence of the respondents seeking to return any invoiced item, nor any evidence of the applicants refusing to accept such a purported return.
There was also little evidence to support the allegation that unordered goods were delivered and charged for. The respondent’s representatives identified one potential example of this practice. Both Invoices 55 and 327 showed that 20 litres of Warewash were delivered on both 4^th and the 8^th of a month – that is, within days of each other. Ms Carpenter suggested that it was ‘impossible’[42] to use that amount of Warewash in that time, and that this was a clear example of either double charging, or delivering and charging for items that were not ordered. Under cross examination, Mr Taseski suggested problems with the relevant machinery as a reason why more Warewash may be needed.[43] I can make no findings as to the veracity of this evidence, or Mr Taseski’s capacity to give it.
[42] Transcript of Proceedings 2 March 2016 page 49, item 19
[43] Transcript of Proceedings 2 March 2016 page 49, item 44 to page 50 line 10
Given Ms Carpenter’s insistence that she would never order that much Warewash, I am prepared to accept that, on the balance or probabilities, this was an invoicing or delivery error. I can make no findings as to whether a second item was actually delivered, or whether it was an invoicing error, but I cannot be satisfied, on the balance of probabilities, that the applicant delivered the Warewash. The consequence of this finding is that the respondent was not liable to pay for it.
There is, however, no basis for concluding that a breach of contract of this nature would entitle the respondent to rescind the entire contract or contracts and retain the rest of the goods.
The third basis of the respondent’s defence is that the applicant breached an essential term in the contract, being that the deliveries were to be made only in accordance with the ‘system’ devised by Mr Carpenter.
This term is not in writing and therefore the onus lies on the respondent to prove that this condition forms an actual term of the contract.
What I understand the respondent to be arguing is that:
(a)it was a fundamental condition of the contract that the applicant ensure goods were delivered in accordance with ‘the system’;
(b)the applicant failed to do this in relation to the goods listed on the invoices; and
(c)as a consequence of this, the respondent was entitled to treat the contract as discharged and not pay for the goods on the invoices, or at least for some portion of those goods.
This argument was problematic for a number of reasons.
First, there was no evidence that compliance with ‘the system’ was a term of the contract at all, let alone a term the breach of which would be a basis for termination of the contract. There was no evidence of communication of the term to the respondents in respect of any particular delivery, or more generally in relation to the pattern of dealing between the parties. There was also significant evidence that the respondent’s employees, including Ms Ward and Ms Fife, were not only unaware of the system, but facilitated alternative delivery arrangements.
In such circumstances, I cannot find that compliance with the system was a term of any contractual arrangement between the applicant and the respondent. I certainly cannot find that it is a fundamental term, the breach of which would entitle the respondent to terminate the contract.
In any case, even I were to find that there was a breach of a fundamental or promissory term, all that would do is entitle the respondent to chose to terminate the contract or contracts. This would require an active election by the respondent – something that was not done until mid-2015, well after these invoices were issued. Any such termination can only take effect prospectively, and accrued obligations, such as an obligation to pay for goods that had been properly delivered, would remain unaffected.[44]
[44] Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 at 380 (per Dixon and Evatt JJ)
On no view, on any version of events, would the respondent be entitled to simply keep the goods that it had received pursuant to a contract without paying for them in full. The respondent would be required to identify the unwanted goods, and return them.

Second issue: Is this contract vitiated by fraud?

The second aspect of the respondent’s case was that it was the victim of a deliberate pattern of fraud or theft orchestrated by the applicant’s employees and staff, who knowingly charged for goods not delivered and/or delivered goods not ordered.
Although not clearly articulated, I understand that the respondent was arguing that the alleged fraud goes to the substance of the contract, and if proven would allow the respondent to treat the contract as discharged.
The onus on a party who is seeking to prove fraud is a heavy one. The allegation must be particularised in a precise and clear manner.[45] As well as proving the facts, there must also be evidence of an intention to commit the acts constituting the fraud. Although a finding of fraudulent misrepresentation does not carry the criminal onus of ‘beyond reasonable doubt’[46], such a finding should not be made lightly. As Justice Dixon famously said in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362:
The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences.
[45] Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 538; Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599 at [43]; Davy v Garrett [1877] 7 Ch D 473 at 489
[46] Rejfek v McElroy (1965) 112 CLR 517
The respondent’s case does not meet these requirements. There was no identification of the staff members allegedly involved in the fraud. There was no evidence of any deceptive state of mind by any staff member of the applicant. There was no probative evidence of the particular invoiced items that were said to be part of the alleged fraud, or of the amount of money paid as a consequence of it. At its highest, the evidence before the Tribunal is that the applicant’s staff did not comply with the respondent’s ‘system’, and that, as a consequence of this, those staff had a greater opportunity to commit fraud. That alone does not prove that anyone actually did.
In short, the evidence presented by the respondent falls far short of the kind of ‘reasonable satisfaction’ I would need to make a finding of fraud. Indeed, it falls well short of the kind of evidence that should be a prerequisite to even making an allegation of this nature, such that, in my view, the allegation is entirely improper.
Accordingly, I find that this allegation is not substantiated and the contract is therefore not vitiated by fraud.

Conclusion

I am satisfied that the second Warewash, being the delivery of 8 April 2014, may have been either invoiced or delivered in error and, accordingly, I cannot find that the respondents are liable to pay for that item.
Otherwise, I am satisfied that, on the balance of probabilities, the respondent ordered, and the applicant delivered in accordance with that order, the items listed on the invoices. I am satisfied that there was an agreement between the parties that the respondent would pay to the applicant the sum listed on each invoice within 30 days of the delivery of the goods listed on that invoice.
Accordingly, I order that:
1.The respondent pay to the applicant within 28 days of the date of this order:
(a)     $2993.58 in satisfaction of the amount due under the invoices, other than payment for the Warewash;
(b)     $19.00 to cover the out of pocket expenses for the ASIC search;
(c)     interest of $208.03; and
(d)     $280.00 for the filing fee.

………………………………..
Senior Member H Robinson
HEARING DETAILS

FILE NUMBER:	XD 1163/2015
PARTIES, APPLICANT:	One Stop Supply Shop P/L
PARTIES, RESPONDENT:	Jase Investments Australia Pty Ltd
COUNSEL APPEARING, APPLICANT	N/A
COUNSEL APPEARING, RESPONDENT	N/A
SOLICITORS FOR APPLICANT	N/A
SOLICITORS FOR RESPONDENT	N/A
TRIBUNAL MEMBERS:	Senior Member H Robinson
DATES OF HEARING:	2 & 23 March 2016

[2016] ACAT 48

23 May 2016

Key Legal Topics

Areas of Law

Civil Litigation & Procedure

Legal Concepts

Jurisdiction

Compensatory Damages

Costs