Palazzo Homes Pty Ltd v Palumbo
[2016] WADC 31
•22 MARCH 2016
PALAZZO HOMES PTY LTD -v- PALUMBO [2016] WADC 31
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WADC 31 | |
| Case No: | CIV:660/2014 | 8 MARCH 2016 | |
| Coram: | STAUDE DCJ | 22/03/16 | |
| PERTH | |||
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for the plaintiff Third party claim dismissed | ||
| PDF Version |
| Parties: | PALAZZO HOMES PTY LTD ALESSANDRO PALUMBO GAVIN YOUNG |
Catchwords: | Contract Loan agreement Advances made against unearned commissions No appearance of defendant at trial |
Legislation: | Nil |
Case References: | Nil |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
ALESSANDRO PALUMBO
Defendant
GAVIN YOUNG
Third party
Catchwords:
Contract - Loan agreement - Advances made against unearned commissions - No appearance of defendant at trial
Legislation:
Nil
Result:
Judgment for the plaintiff
Third party claim dismissed
Representation:
Counsel:
Plaintiff : Mr C S Gough
Defendant : No appearance
Third party : Mr D G Price
Solicitors:
Plaintiff : Mills Oakley
Defendant : Not applicable
Third party : D G Price & Co
Case(s) referred to in judgment(s):
Nil
- STAUDE DCJ:
Introduction
1 The plaintiff engaged the defendant as a sales consultant in its home building business in 2007. It was agreed that the plaintiff would pay the defendant a commission of 3% of the value of any new home sold by him.
2 On 31 July 2007 the plaintiff and the defendant entered into an agreement in the following terms, expressed as an acknowledgement of debt and memorandum of agreement:
1. Palazzo Homes Pty Ltd has agreed to lend and I have agreed to borrow the sum of $7,000 per month as and from 1 September 2007 for a period not exceeding 12 months and a total not exceeding $84,000 ('the accruing debt').
2. I will apply any proceeds received by me from my previous employer Plunkett Homes (1903) Pty Ltd until all commissions owing have been paid, in reduction of the accruing debt immediately upon receiving any such sums.
3. I will apply any such portion that Palazzo Homes Pty Ltd deems appropriate in its absolute discretion from time to time of future commissions earned from Palazzo Homes Pty Ltd in reduction of the accruing debt.
4. In the event that my employment is terminated that the accruing debt shall be repayable to Palazzo Homes Pty Ltd immediately upon demand less any commissions which I may be due at the time of ceasing the said employment.
5. This document shall be legally binding upon me as and from the date of execution.
3 Pursuant to that agreement the defendant was paid monthly amounts of $7,083, payments being made from 30 August 2007 to 2 December 2008 (the advances). The last four payments were pursuant to a further agreement in the same terms that was entered into on 3 September 2008. The two agreements will be referred to as the loan agreements.
4 The defendant ceased to work as a consultant for the plaintiff in December 2008. By letter dated 3 March 2011, the plaintiff gave notice to the defendant in the following terms:
With reference to the acknowledgment of debt and memorandum of agreements signed with Palazzo Homes Pty Ltd on 31 July 2007 and 3 September 2008 respectively we require all loans and/or advances made to you from 4 September 2007 to 3 December 2008, a period totalling 16 months, for a grand total of one hundred and thirteen thousand three hundred and twenty-eight ($113,328) to be repaid immediately.
We attach a schedule showing all loans/advances made from 4 September 2007 to 3 December 2008 and a copy of the relevant agreements for your reference.
5 The plaintiff's claim is for the sum of the advances made pursuant to the loan agreements and interest from the date of the demand.
6 It is not in dispute that the defendant failed to repay the amounts advanced pursuant to the agreements for any amounts, and that the defendant did not earn any commissions as a sales consultant for the plaintiff.
7 In its statement of claim the plaintiff pleads that the defendant was paid more than the agreed sum of $7,000 per month, i.e. $7,083 per month, by mistake. The evidence of the plaintiff's financial controller, Mr Alfred Lim, was that he understood that the monthly advance was to be based on an annual figure of $85,000 which accounts for the defendant being paid slightly more than was agreed.
8 The plaintiff claims that the sum of the overpayments is recoverable on the basis that the amounts were paid by common mistake. Alternatively, the plaintiff claims restitutionary relief.
Non-appearance of defendant at trial
9 The defendant did not appear at the trial, having notified the court in a written outline of submissions that he had decided not to return to Western Australia for the trial. The defendant lives in Italy. The defendant did not seek an adjournment of the trial and did not apply to appear or to give evidence by video-link.
10 It is a matter of public record that the defendant was formerly a legal practitioner in this State. The fact is admitted in documents filed in this action. He was represented in these proceedings until 19 February 2015 when he lodged a notice of intention to act in person.
11 The defendant's outline of submissions contained statements in the nature of evidence. Those statements were not regarded by me. I was also bound to disregard the defendant's request that the court 'investigate' the plaintiff's claim with a view to finding that the loan agreements were a sham. It is not for the court to put the defendant's case to the plaintiff's witnesses.
12 The effect of the defendant not appearing at trial is simply to put the plaintiff to proof of its claim. Had the defendant not been a former legal practitioner, the court would have been minded to adjourn the trial of its own motion in order to ensure that the defendant understood that his defence to the claim and his third party claim could not be made out by written submissions unsubstantiated by evidence. However, the defendant can be taken to know that much.
13 The trial proceeded in accordance with O31 r 2 Rules of the Supreme Court 1971.
The issues
14 The plaintiff's position is that the defendant was engaged as a self-employed sales consultant, not as an employee, and that the effect of the agreement was to enable the defendant to be paid advances against commissions to be earned. When the defendant's engagement as a sales consultant came to an end in December 2008, the defendant became liable to repay the monies advanced pursuant to the agreements.
15 The defendant has pleaded by way of defence that he was an employee of the plaintiff. He admits signing the loan agreements, but denies that either constituted an acknowledgement of debt or a memorandum of agreement. He alleges that each agreement was created at the request of the third party, Mr Young, then the managing director of the plaintiff, to create a false impression that the defendant was borrowing money from the plaintiff rather than being paid a salary pursuant to an employment agreement; in other words, that they were a sham. The defendant says that the monies paid to him from 1 September 2007 were salary payments made to him as an employee.
16 According to the defendant, he entered an oral employment agreement with Mr Young in July 2007 which was varied when he was requested by Mr Young to perform additional duties, including assisting Mr Young in the performance of his daily duties, working on various pilot projects as suggested by Mr Young, dealing with general client inquiries, and performing a number of daily administrative tasks on behalf of the plaintiff.
17 The defendant alleges, in the alternative, that it was a term of the employment agreement, express or implied, that he would be paid a reasonable remuneration for carrying out the additional work. I construe this allegation to be a claim for a quantum meruit by way of set-off.
18 It is also the defendant's position that prior to the termination of the employment agreement (no date is specified), Mr Young on behalf of the plaintiff orally agreed to release and discharge him from any obligation pursuant to the loan agreements. No consideration is pleaded. Rather, the defendant alleges that the plaintiff is estopped from claiming repayment of the monies on the basis that in reliance on Mr Young's alleged release he continued to provide the additional services to the plaintiff and thereby suffered a detriment.
19 In addition, it is pleaded that there was an agreement made between Ante Jujnovich, a director of the plaintiff, acting on behalf of the plaintiff, and the defendant in or about December 2013 wherein the plaintiff agreed that in consideration of the defendant introducing potential new customers the plaintiff would release the defendant from the obligation to repay the loan amounts. It is pleaded that in or about December 2013 and March 2014 the defendant introduced two potential customers to the plaintiff and was thereby released from his obligation.
Third party claim
20 The defendant issued third party proceedings against Mr Young on the basis that in the event that he had no authority to release him from repayment of the loan amounts, he breached an implied warranty that he was so authorised. He also pleaded that he was the beneficiary of a contract between Mr Young and the plaintiff, a term of which was his release from the debt in question.
21 By reason of the defendant's non-appearance, the third party claim, which had been ordered to be heard at the trial of the action, was not prosecuted.
The trial
22 The plaintiff called Mr Young, Mr Lim and Mr Jujnovich. Each, having been sworn, was permitted to read from a prepared witness statement.
23 Mr Young gave evidence that he was the managing director of the plaintiff for a period of 8 1/2 years, including the period in which, according to him, the defendant was engaged as an independent consultant to sell new homes. He said the agreement with the defendant was that he would earn a commission of 3% for every home sold, payable upon the signing of a contract, the payment of a deposit, and local government approval being granted.
24 The plaintiff constructed homes generally worth $2.5 million and up to $6 million. The sales commission for a $2.5 million home would be $75,000.
25 He said that there was no employment agreement made with the defendant: the defendant was not asked to provide an Australia Taxation Office (ATO) tax file number declaration form or details of his superannuation fund.
26 As to the use of the word 'employment' in the loan agreements, he said that the use of the word 'employment' did not indicate that the defendant was an employee. As far as the plaintiff was concerned the defendant was self-employed.
27 Mr Young denied that the loan agreements were made for the purpose of falsely conveying the impression that the defendant was borrowing money from the plaintiff.
28 Mr Young identified a further agreement in the form of a deed made 31 July 2007 which dealt with the non-disclosure of confidential information. This document described the defendant as a sales consultant and referred to his engagement, as opposed to employment, by the plaintiff.
29 Mr Young said that he discussed with the defendant his lack of sales and reached an agreement with him to end his relationship with the plaintiff. He did not purport to release the defendant from his obligation to repay the loan monies, but he did suggest that if he sold a substantial Palazzo home he could use the commission to repay the debt.
30 Mr Young denied that the loan agreements were varied as alleged by the defendant.
31 Mr Lim gave evidence that he was given an annual figure of $85,000 and paid the defendant $7,083 per month accordingly. He said that the monies advanced to the defendant were treated as a loan in the plaintiff's accounts. He produced bank transaction records of each of the payments made to the defendant.
32 Mr Jujnovich gave evidence of the demand for repayment made by letter dated 3 March 2011. According to Mr Jujnovich, none of the monies advanced to the defendant have been repaid.
Result
33 The plaintiff has proved:
(a) the loan agreements and the sum of the amounts paid to the defendant pursuant to them;
(b) the indebtedness of the defendant;
(c) the termination of the defendant's engagement as an act triggering repayment of the loan debt; and
(d) the defendant's failure to repay the loan debt or any part of it.
34 I am satisfied that to the extent that payments were made to the defendant in excess of the amounts stipulated in the loan agreements, being overpayments of $83, they are recoverable by way of restitution.
35 Accordingly, I am satisfied that the plaintiff should have judgment in the sum claimed of $113,328 together with interest at 6% per annum pursuant to s 32 of the Supreme Court Act 1935 from 3 March 2011 to date, being approximately five years and two weeks, being $34,259.00.
36 As the third party claim was not prosecuted, and there being no evidence in support of the allegations made by the defendant in the third party statement of claim, it is appropriate that the claim be dismissed.
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