Powlett v Archibald
[2014] VCC 405
•7 April 2014
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
BUILDING CASES
Case No. CI-13-03145
| RACHAEL POWLETT | Plaintiff |
| v | |
| KEVIN ARCHIBALD AND PETER WEIS | First Defendant Second Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 24, 25, 26, 27 February 2014 | |
DATE OF JUDGMENT: | 7 April 2014 | |
CASE MAY BE CITED AS: | Powlett v Archibald & Anor | |
MEDIUM NEUTRAL CITATION: | [2014] VCC 405 | |
REASONS FOR JUDGMENT
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Subject: CLAIM FOR DAMAGES RELATIVE TO ARRANGEMENTS FOR REMOVAL, DELIVERY AND RE-ERECTION OF HOUSES
Catchwords: Claim and contract for breach relative to contracts for relocation of houses – allegations of misleading and deceptive conduct – separate contracts for removal, transportation and restumping of houses – one person contracting for first two contracts – second person contracting in the third contract – whether these persons liable as partners for all obligation – total failure of consideration as to one of the contracts of the third class.
Legislation Cited: s24AA Wrongs Act 1958; ss5(1), 13, 14 Partnership Act 1958; s36 Evidence Act 2008; Schedule 2 Competition & Consumer Act 2010; Penalty Interest Rates Act 1983
Cases Cited: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 and Equuscorp Finance v Glengallan Investments Pty Ltd (2004) 218 CLR 471; Jones v Dunkel (1959) 101 CLR 298; Challenger Property Asset Management Pty Ltd & Anor v Stonnington City Council & Anor (2011) 34 VR 445; Television Broadcasters Ltd v Ashton’s Nominees Pty Ltd (No 1) (1979) 22 SASR 552; Australian Joint Stock Bank v Steel (1890) 7WN (NSW) 59a ; Keith Spicer Ltd V Mansell [1970] 1 WLR 333; Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; Bill Acceptance Corporation Ltd v GWA Australia Ltd (1983) 50 ALR 242; Pantelopoulos v TAC (unreported) 7 September 1995; Lake Koala Pty Ltd v Walker [1991] 2 Qd R 49; Lyndel Nominees Pty Ltd v Mobil Oil Australia Limited (1997) 37 IPR 599; Parkdale Custombuilt Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; Houghton v Arms (2006) 225 CLR 553
Judgment: (1) For the plaintiff in the sum of $1,688.50. (2) Costs reserved.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | In Person | |
| For the Defendants | In Person |
HIS HONOUR:
Background
1 Ms Powlett bought a relocatable house in 2005, which she had moved from Officer to 60 Grenville Street, Daylesford, where it was re-assembled and prepared for rent. By 2007, she had fitted it as “boutique” weekend accommodation. The venture was very successful and traded under the name “Rachael’s Retreat”.
2 By 2011, Ms Powlett was on the lookout for one or more further relocatable houses to erect on the balance of her allotment at 60 Grenville Street, Daylesford. On 14 April, she saw an advertisement in the “Trading Post” for a relocatable house situated in St Arnaud. The advertisement described the house as a “three bedroom Edwardian farmhouse with exquisite leadlight windows…” The house was said to be “in excell condition”. The advertisement concluded, “Call Kevin 0411 103 745 for details”. “Kevin” is Mr Kevin Archibald, the first defendant in this proceeding. She sent a text to Mr Archibald and was telephoned by Mr Peter Weis, who is the second defendant. Mr Weis sent an email on 15 April 2011, which included photographs of the house at St Arnaud and an agreement for signature. The agreement provided a purchase price, inclusive of relocation and restumping, on final site of $77,000. The package of agreements was comprised of three separate agreements ─ the first for the sale of the house, the second for the transportation of the house and the third for the restumping at the relocated site. They were all covered by a document styled “information sheet” which was under the heading of Kevin Archibald. The address shown on this letterhead was “Office: 5 Russo Place, Kilsyth, Vic, 3137”. The information sheet stated in bold type that it must be “read in conjunction with the accompanying three agreements”. The information sheet stated:
“…neither I nor Peter Weis are registered builders…”
The letter continued:
“The purchasing parties to these agreements will need to obtain their own permit in order to relocate the house to their property”.
It said:
“Therefore, you should make your own enquiries as to your rights and responsibilities regardless of the format of your permitting the relocation. [sic] That is to say, whether you do it as an owner/builder or engage the services of a registered builder.”
The sheet continued, saying that Mr Archibald ─
“… as transporter is responsible for engaging the services of a registered builder (at his own cost) in order to obtain any necessary permits and carry out works required to legally remove the house from its site. The cost of these works will never exceed $4,000, therefore, the amount of money apportioned to carry out those works as contained within the transport agreement does not exceed $4,000.”
The letter stated:
“The signatories to this letter take no responsibility whatsoever in regards to you obtaining the said permit to relocate the house to your property.”
It also said that the undersigned ─
“… takes no responsibility for the accuracy or otherwise of any information supplied to the purchasers whether verbal, written or implied including any plans.”
The letter concluded, “Your sincerely”, with the names Kevin Archibald immediately below the sign off and Peter Weis to the right. Ms Powlett says that she signed and returned this agreement, but did not receive a signed version from either Mr Weis or Mr Archibald. The print produced to me at the hearing was unsigned.
3 Before committing to the purchase, Ms Powlett travelled to St Arnaud and inspected the house in company with her son. A meeting in Daylesford was arranged for Ms Powlett to meet Mr Archibald and Mr Weis. She paid a “holding” deposit of $500 in cash to Mr Archibald. On 18 April, she paid $1,500 as a further deposit on the purchase. Also on 18 April, she spoke to her mother and obtained a loan of $23,000 which would make up the balance of the “deposit” on the house. This was remitted directly to the account of Mr Archibald as a loan from Ms Powlett’s mother to Ms Powlett. The money was remitted in a series of instalments having regard to the dealing limits on the computer banking system.
4 On 19 April, Ms Powlett paid a further $13,000 to Mr Archibald against a receipt issued by Mr Weis. The same day, Ms Powlett telephoned Hepburn Shire Council, the responsible authority for planning matters in Daylesford, for guidance as to how to obtain the necessary planning permit.
5 Ms Powlett made a further payment to Mr Archibald of $5,000.
6 Ms Powlett said she received a request from Mr Weis stating that he and Mr Archibald would start work on the St Arnaud house on 12 May. It was said that a payment of $5,000 was due on the house purchase and $10,000 on the transport agreement. According to Ms Powlett’s calculations, these amounts had already been paid.
7 She continued liaising with the planning department at Hepburn Shire Council. On 30 May, she was advised by the planning department that she would need to submit a new planning application to authorise the move of the St Arnaud house to the front of No 60 Grenville Street. She lodged a planning application for this purpose on 2 June 2011. On 28 June, Ms Powlett contacted a mortgage broker to raise a loan to fund the subdivision of 60 Grenville Street and to meet other costs.
8 By this time, Ms Powlett had begun negotiations with Mr Archibald and Mr Weis relative to obtaining a second house, with a view to putting the St Arnaud house at the front of her allotment and the other house at the rear. Meanwhile, Ms Powlett continued liaising with the council relative to the material in support of her planning permit application. She was required to provide, amongst other things, a copy of a current title search. Ms Powlett said that she received favourable indications from the mortgage broker so she made contact with a builder, Mr Josh White.
9 On 4 August 2011, Ms Powlett says she had discussions with Mr Archibald and Mr Weis as to the purchase of a further relocatable house, this one from a site in Niddrie. By 8 August, Ms Powlett was speaking to the council about putting the house from St Arnaud on the rear of the allotment with the house from Niddrie to be placed at the front. On 12 August, she accepted the proposals of Powercor as to the works necessary to obtain a three lot plan of subdivision at 60 Grenville Street to accommodate her proposals.
10 About the same time, she raised a loan of $23,000 from her former partner, Mr Strong, for subdivisional costs, made contributions to the local water authority relative to the subdivision and made payments to the electricity utility, Powercor, for the construction of a pit outside 60 Grenville Street. She bought ducted heating and insulation for the house from Niddrie, which she planned to offer for rent under the title “The Rex”. On 26 August, the application for subdivision was approved.
11 On 27 August 2011, Mr Weis emailed a package of agreements which included threefold agreements for both the St Arnaud and the Niddrie house. The price for the St Arnaud house remained at $77,000, inclusive of Goods and Services Tax, and the price for the Niddrie house was at $55,000, inclusive of Goods and Services Tax. Meanwhile, on 22 August 2011, Ms Powlett paid $13,500 for a public open space contribution, which was a condition of the planning permit for subdivision.
12 The agreement for the St Arnaud house was signed and dated 19 August 2011. The information sheet included a manuscript signature by Mr Weis of the same date. Ms Powlett signed an acknowledgement of receipt of this information sheet, also with effect from 19 August. The agreement to sell the house for removal was signed by Ms Powlett as purchaser and by Mr Weis “for K Archibald”. Mr Archibald was shown as the “seller”. The second agreement, namely, the agreement to transport the house, showed Ms Powlett as purchaser and Mr Archibald, “c/o 5 Russo Place, Kilsyth”, as the transporter. There was a signature by Mr Weis “for K Archibald”. The agreement to restump was made between Ms Powlett and Mr Weis. Mr Weis signed, apparently on his own behalf. The payment schedule included a receipt for some three payments totalling $15,000. There was a signature of Mr Weis, presumably to operate as a receipt. The information sheet, once again, showed Mr Archibald’s address as “Office: 5 Russo Place, Kilsyth”. The information sheet attached to the Niddrie house contracts showed his address as “c/o 5 Russo Place, Kilsyth”. The signatures were applied in the same way on this contract and the payment schedule acknowledged receipt of a deposit of $15,000 with a signature of Mr Weis next to that acknowledgment.
13 Meanwhile, Ms Powlett continued with the steps necessary to complete her plan of subdivision and to make title to the property available for mortgage purposes to a bank. Mr Weis continued to ask for money. Ms Powlett, however, noted that by 8 September, she was, according to her calculations, ahead of schedule and making payments, yet no work had been done either on the St Arnaud house or on the Niddrie house. A further $1,500 was remitted by Ms Powlett’s mother to Kevin Archibald on 16 September 2011.
14 There were delays in raising the loan through the mortgage broker. Eventually, the loan application was taken to the Adelaide Bank and, on 17 October 2011, a loan of $100,000 was approved by the bank. Ms Powlett told Mr Weis of that approval on 24 October.
15 On 9 November 2011, Ms Powlett paid a further $45,000 to Mr Archibald, in two payments of $22,500, funded from her loan.
16 Even although the “information sheet” places the responsibility for permits entirely on the shoulders of Ms Powlett, Mr Weis agreed that he did take that responsibility upon his own shoulders and so, on 10 November 2011, she began furnishing Mr Weis with documents which would be necessary to obtain a permit from the relevant building inspector, the first document relating to the bushfire attack level for the property. On 15 November 2011, she emailed Mr Weis a copy of the soil report for 60 Grenville Street. The same day, she furnished him with copies of title for both of the proposed houses. On 18 November, she arranged for her gardener to give the land and the adjacent road reserve a very close cut to facilitate delivery of the house.
17 On 27 November 2011, Ms Powlett received an email from Mr Weis covering a large volume of correspondence, including correspondence that appears to relate to another transaction and other customers. At the close of this bundle was a reference to an attachment which included a fee proposal from a Mr Justin Giannikos to obtain an energy rating as part of the regulatory controls.
18 On 5 December 2011, the house from Niddrie was delivered to Daylesford. By this time, the planning permits had not been obtained for the St Arnaud house, which was to be placed at the front of the allotment. Meanwhile, the house from Niddrie was placed for storage on industrial land owned by Mr Comelli. The planning permit relative to the house from Niddrie was issued by the council on 2 November 2011. The planning permit for the erection of the house from St Arnaud, at what was then designated as 60A Grenville Street, Daylesford, was issued on 3 January 2012.
19 Meanwhile, on 5 December 2011, a further $15,000 was paid by Ms Powlett and, at the same time, Ms Powlett arranged for a further grass cut.
20 Immediately after Christmas, on 9 January, Ms Powlett and Mr Weis debated by email on the question of whether Ms Powlett was due to pay a further $7,450. Ms Powlett says she was up to date with her payments and that she had not been credited with certain cash payments which she had made. Ultimately, however, she paid the $7,450 on 14 January.
21 From the middle of January, for about a month, Ms Powlett says she made repeated attempts by telephone to contact either Mr Weis or Mr Archibald, but that their phones invariably rang out.
22 On 20 February, Ms Powlett spoke to Mr Justin Giannikos, a consultant from whom an “energy rating” was required to enable a building permit to be issued for the St Arnaud house. It will be recalled that a “fee proposal” relative to his consultant’s fees was attached to a lengthy email, including irrelevant material which Ms Powlett received some months previously. She did not notice the attachment and did not open it. In effect, it seems that, without having received payment, Mr Giannikos had taken no further action. On the same day, viz 20 February 2012, Ms Powlett emailed plans for the St Arnaud property to Mr Giannikos. She followed up with the permit for subdivision and the planning permit for the erection of the St Arnaud house on the front block. Again, on the same day, she sent an email to Mr Weis advising him that she had ordered energy ratings for both of the houses and a soil test for the St Arnaud house. She complained about being unable to make contact with him or Mr Archibald by telephone. Eventually, she spoke later that day to Mr Weis, who told her that he had not even started obtaining building permits for either house. Ms Powlett was annoyed and said that she would take the matter in hand, which she did. She paid a $375 consultancy fee for the energy rating. On 27 February 2012, having obtained the telephone number of the building surveyor from whom it was intended to obtain the permit, she spoke directly to him. The surveyor, Mr King, said that he had received no documents relative to either house. She forwarded further material to Mr King, including a soil report, on 28 February 2012 for which she had paid $495. Over the next week or so, Ms Powlett continued the process of liaising with utilities and authorities, assembling material and providing it to Mr King. A proposed meeting between Ms Powlett, Mr Weis and Mr Archibald in Bendigo was cancelled by Mr Weis.
23 By 20 March 2012, Mr King had provided a list of items needed to obtain the building permit. Ms Powlett told Mr King that she did not want to pay the $1,400 fee or pay the $5,000 bond until all of the information which would enable the permit to be issued was available and she had received a firm date from Messrs Weis and Archibald.
24 On 30 March 2012, Mr Weis emailed Ms Powlett with a proposal for a different house to be substituted on the front block of the allotment instead of the house from St Arnaud. This substitute house would cost $100,000 and a further payment would be required. Ms Powlett did not accept this proposal.
25 By the middle of April 2012, Ms Powlett was insistent on firm start dates. A number of attempts to schedule meetings with Messrs Archibald and Weis proved unsuccessful.
26 On 26 April 2012, Ms Powlett said that she paid another $2,000 relative to insurance. She said that insurance was never ordered. Meanwhile, on 30 April 2012, the registration as a registered builder of Mr Neville Tolliday was suspended. Mr Tolliday was the registered builder intended to take a supervisory role in the removal and re-erection of the two houses. Ms Powlett said she discovered this only later and was not informed at the time. The effect was that, unless a substitute builder were engaged during the period of suspension, it would have been illegal for either of the two houses to be relocated to Daylesford. Ms Powlett said, on the same day, she paid another $200 for a grass cut.
27 At some stage in April 2012, Mr Weis confessed to Ms Powlett that the St Arnaud house had been “lost”. That is, it had been sold to somebody else and could not then be obtained. Given that Ms Powlett had already made payment for the structure itself, she demanded a refund. Mr Weis said that there was no money available to effect a refund and the refund could only be achieved by Mr Archibald and himself selling more houses. He sought Ms Powlett’s assistance for them to do that. Ms Powlett said that on 14 May 2012, Mr Weis informed her that the owner of the St Arnaud house had had a change of heart. This led Ms Powlett to believe that the house may yet arrive. In the event, it never did.
28 Ms Powlett continued with preparations for the arrival of the Niddrie house. Mr King told her that he would need a plan setting out the stump layout and construction detail. On 21 May 2012, she sent Mr King the bushfire attack level report for the Niddrie house. She was continuing to press Mr Weis as to a date for the installation of this house.
29 By the beginning of June 2012, Mr Weis promised the imminent arrival of the Niddrie house which, it will be recalled, was already located on industrial land in Daylesford. On 13 June 2012, the $5,000 bond and the fee for the permit inspection were paid by Ms Powlett, with the building permit therefore issued on 13 June. Repeated attempts to arrange for the relocation of the Niddrie house to its new location at 48 Grenville Street in the second half of June proved unavailing. Ms Powlett’s account is that this was simply because of non-performance on the part of Messrs Weis and Archibald. She made numerous arrangements for her own excavation contractor (Darren) to attend to assist, but ultimately nothing was achieved. According to Mr Weis, the problem was that June was a very wet month and the relocation of houses is a process that should occur in summer, and, for a variety of reasons, it simply proved impossible to relocate the Niddrie house onto the wet ground.
30 No refund had been made for the money paid for the St Arnaud house.
31 Ms Powlett continued to press for delivery of the Niddrie house and for a refund of the monies paid for the St Arnaud house. Ms Powlett said that, without any income generated from the houses which she proposed to offer for lease, she was financially embarrassed and having difficulty making loan payments to Adelaide Bank, her mother and her ex-partner. She had to take work as a painter on a building site to try to keep afloat. The painting work finished on 23 November 2012 and the following month she commenced a process of seeking hardship relief for her borrowing.
32 She said that on 17 January 2013, Mr Weis sent an email promising relocation of the Niddrie house and calling for a further cut of the grass on the land and on the nature strip, which Ms Powlett arranged. To save money, she arranged to rake the grass off herself because stump holes had been dug. The process of removing the grass is very slow and labour intensive; it cannot simply be slashed.
33 By this time, Ms Powlett was receiving increasing pressure from the various lenders, including the bank, her mother and her former partner. In March 2013, she said she made an inquiry at the Victorian Civil and Administrative Tribunal and found that some nine proceedings had been taken against Messrs Archibald and Weis in that tribunal.
34 This proceeding was commenced on 20 June 2013.
35 By the time the final hearing came on before me in February 2014, the St Arnaud house had never been delivered and its former owner, Mr Patton, gave evidence that he had sold it to another buyer, who had removed it from his family’s land. The Niddrie house remained on industrial land owned by Mr Comelli in Daylesford. Mr Comelli was demanding its removal, but would not release the house without the payment of some thousands of dollars for storage fees. Photographs showed that the Niddrie house was now in a ruinous state. It was common ground between the parties that, if this house were to be reinstated, all plaster would need to be replaced. A quote from a contractor consulted by Ms Powlett costed this at $21,560. A further $3,300 would be required for the reinstatement of insulation which had been destroyed. Exposure of the house had led to rotting of bearers. Ms Powlett’s quotation for repairs was $24,253. Ms Powlett says that, without the hope of income from the houses, she has been unable to make mortgage payments for 12 months and applications for further hardship relief have been dismissed. The result is an economic catastrophe for her.
36 Mr Weis had suggested that the hearing of this matter be adjourned to enable the Niddrie house to be delivered. Ms Powlett made inquiries of the other persons who would be involved in this process and concluded that she could have no confidence in the proposal. She did not agree to an adjournment. Mr Weis renewed this offer at the conclusion of the trial. I canvassed the possibility that I might delay delivering my judgment for a period of four weeks to see if delivery of the Niddrie house could be achieved so that this new element could be factored into the determination. Ms Powlett who, perhaps understandably, had lost confidence in Messrs Weis and Archibald did not take up this suggestion.
The position of Mr Archibald
37 The evidence in this case shows that all administrative elements of these transactions were undertaken by Mr Weis. He it was who engaged in the telephone and email exchanges with Ms Powlett. He said that he generated the agreements which were signed from his laptop computer. It is his signature which appears on these documents in the manner which I described above. Mr Archibald seems to have signed nothing.
38 On the other hand, all monies seemed to have been deposited into Mr Archibald’s account. Mr Weis said that he had no authority to operate Mr Archibald’s account.
39 Mr Weis told me that he had expertise in cutting up and moving houses. The relocation process entails the engagement of a cartage contractor who provides the jacking equipment to lift the house onto the relevant trailer and then conveys it to the new relocation. The restumping process, if matters ever get that far, is intended to be carried out by Mr Weis. Mr Weis formerly held a restricted registration as a builder, which was allowed to lapse in 1999. In those circumstances, one may ask what abilities and expertise does Mr Archibald bring to the table? Yet, it is Mr Weis’s case that, save in the very final stage of the process, which has not been reached in either case, it is Mr Archibald who is the principal contracting party in all respects and the recipient of all money.
40 I myself did not set eyes on Mr Archibald. The court’s registrar received a letter dated 19 November 2013 over what purported to be Mr Archibald’s signature stating as follows:
“ I had several heart attacks on/about 11/09/2013 while at Warrnambool. I was then transferred to Geelong Hospital where after 4 weeks of stabilising my diabetes, etc I underwent a quadruple bypass on 7/10/2013. I was then transferred to Whitehaven Retirement Home for respite care.
I am currently at Whitehaven Retirement Home and expect to be here for some time yet while I fulfil my appointments and recuperate.
My health is such that I am not up to instructing my solicitor, let alone attending the Directions Hearing on 22/11/2013.
I respectfully request that these court matters be adjourned for 3 months pending my recovery.”
The letter enclosed material relative to the provision of various pharmaceuticals from a pharmacy in Leopold, attendance at the Geelong Hospital Outpatient Clinic and residential care provided by Whitehaven Retirement Home in Newcomb, a suburb of Geelong. There was also material indicating an appointment at the Geelong Cardiology Practice at Geelong Hospital on 27 November 2013. In response to this material, Judge Anderson, presiding at a directions hearing on 22 November 2013, noted the receipt of the material and ordered inter alia that, provided Mr Archibald filed with the court on or before 4 December 2013 inter alia an affidavit “setting out the present state of his health … the proceedings as between Ms Powlett as plaintiff and Mr Archibald as defendant will be stayed until he has recovered …” The affidavit was, in fact, filed on 5 December 2013. Mr Archibald swore that he was receiving respite care at Whitehaven Retirement Home and recovering from open heart surgery, high blood pressure and Type II diabetes.
41 The result was that at trial Mr Weis was present but Mr Archibald was neither present nor represented. The case proceeded against Mr Weis alone.
42 I should observe a matter which I did not put to Mr Weis in the course of the hearing because it had not come to my attention, namely, that the signature “K Archibald” on the letter to the registrar dated 19 November 2013 is obviously written by Mr Weis. I reach that conclusion by comparing that signature with the signature appearing on the contracts relative to the two relocatable houses the subject of this proceeding. I also observe that the signature is materially different from the signature which appears on the affidavit sworn on 5 June by Mr Archibald. Without seeking to exhaustively canvass the various differences between the two signatures, the signature on the letter renders the capital ‘A’ in his name in the same form as a lower case ‘a’ in ordinary cursive writing, but double the size of a lower case ‘a’. The signature on the affidavit, which I believe is the genuine signature, employs an orthodox capital ‘A’ formed by two lines running generally vertical but leaning toward one another and meeting at the top, with a single horizontal line joining them a little below the halfway mark.
43 Were it not for the fact that Ms Powlett gave evidence that she actually met Mr Archibald, I might have been driven to the conclusion that he is some sort of phantom. His address on contractual documents is variously given as “c/o 5 Russo Place, Kilsyth” or “Office: 5 Russo Place, Kilsyth”. The medical material sent to the registrar nominates Mr Archibald’s address as “5 Russo Place, Kilsyth”. Mr Weis said that Mr Archibald has had no fixed abode since the death of his partner some years ago and is now an “itinerant”. Mr Weis says that he resides in motels or sometimes in houses marked for relocation pending the move. 5 Russo Place, Kilsyth is Mr Weis’s residence. Mr Weis said that it belongs to his daughter. It was the residence of Mr Weis’s mother and was bequeathed to Mr Weis’s daughter. Mr Weis has been bankrupt twice, with the more recent bankruptcy lasting five years apparently because of delays in the provision of the relevant statement of affairs. The bequest was made to Mr Weis’s daughter to protect the house from falling under the control of Mr Weis’s creditors. Mr Weis said he was not actually bankrupt at the time that the bequest took effect.
44 I asked Mr Weis whether Mr Archibald was “open for business”, by which I meant willing to accept business by way of purchase orders for relocatable homes. He said that he was. The proposals made before and at trial appear to indicate a Mr Archibald fit to do business. Clearly, this raises the question as to whether the stay granted by Judge Anderson should be continued in all the circumstances. At trial, Ms Powlett submitted that Messrs Archibald and Weis should be regarded as in partnership. As a result, Mr Weis would be jointly responsible for any partnership debt, including the liabilities to her. At common law, partners are jointly liable for the partnership’s debts and other liabilities. An attempt to obtain a judgment against less than all of a number of joint debtors could be met by a “plea in abatement”. Now, however, it seems that separate proceedings may be taken against joint debtors – Wrongs Act 1958, s24AA. There is therefore no fundamental problem in this matter proceeding as it has against Mr Weis without the involvement of Mr Archibald, because of the stay which has been granted to him. It remains to be seen, however, whether the contention of partnership is made out.
The present proceeding
45 The writ commencing this proceeding last year was issued by solicitors acting for Ms Powlett. It claimed relief against both Mr Archibald and Mr Weis. It alleged, first, the making of three representations which, it was said, were made without belief in their truth or made recklessly by the defendant. The first representation was said to be in the “Trading Post” stating the defendants “could provide houses and relocate same to new blocks of land”. The second representation was said to be, “We’ve got this house in St Arnaud … if you want it you will have to put a deposit on it”. The third representation was that “they had a second house located at 4 Gillies Street, Niddrie which they would sell, transport and restump on the plaintiff’s property”. Next, it was said that the making of these representations “constituted misleading and deceptive conduct, contrary to s18 and s4 of the Australian Competition and Consumer Act 2010”. Alternatively, it was said that the representations were made negligently or recklessly. Next, it was said that the defendants had contracted for the sale relocation and restumping of two houses and had failed to deliver. The statement of claim sought damages in the nature of interest, civil compensation and interest under the Penalty Interest Rates Act 1983. Ms Powlett dispensed with the services of her solicitors prior to the first directions hearing and represented herself at trial.
Contractual claim
46 At trial, Ms Powlett concentrated on her contractual claims. She contended that Messrs Archibald and Weis were jointly responsible for the obligations undertaken to her relative to the two houses and were therefore jointly responsible for the damage which she had suffered and jointly responsible to repay the outlays which she had made, for which consideration had totally failed.
47 She contended that Messrs Archibald and Weis should be regarded as partners; but I did not understand her argument to be confined to the law of partnership. I consider first, therefore, whether it could be said that, independently of any partnership issue, Mr Weis could be regarded as jointly liable with Mr Archibald.
48 A decade ago in two seminal cases, Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 and Equuscorp Finance v Glengallan Investments Pty Ltd (2004) 218 CLR 471, emphatically reaffirmed longstanding contractual doctrines to the effect:
(a)that the contents of contractual obligations were to be judged objectively by reference to what the external actions of a contracting party would lead an objective observer to believe had been agreed;
(b)that, in that respect, the signature of written agreement appearing to set forth the entire understanding between the parties had both a symbolic and substantive effect binding the parties to the terms of the written agreement;
(c)that normally the signature of a comprehensive written agreement superseded any pre-existing word of mouth understandings between the parties; and
(d)that therefore it is within the four corners of the relevant written agreement that the terms of the contracting parties’ obligations to one and another are to be found.
These fundamental doctrines are, of course, subject to being overridden by remedies such as rectification and the equitable and now statutory entitlements of courts and tribunals to grant leave against unconscionable conduct. An apparently complete written contract may, of course, be impeached on the basis that it has been induced by misrepresentation, or now under the statutory cause of action of misleading and deceptive conduct. In this case, there is no invocation of unconscionable conduct nor, whilst both misrepresentation and misleading and deceptive conduct are alleged, there is nothing in the statement of claim or in the case made by Ms Powlett at trial which entails an attempt to set aside or effect a statutory modification to written agreements that were entered into.
49 As to each house, there were three agreements in two of which Mr Archibald was shown as the contracting party. In the third, Mr Weis was shown as the contracting party. Mr Weis purported to sign as agent for Mr Archibald on the two contracts which showed him as principal. It is trite law that, where a person contracts as agent for a disclosed principal, it is the principal who is liable on the contract and not the agent. The terms of the contracts for the sale of the relocatable houses and their transport are clear that Mr Archibald is the principal and Mr Weis signs only as agent. Therefore, he cannot, as a matter of contract law, be jointly liable on the contract with Mr Archibald, much less solely liable.
50 Insofar as the general law of contract is relied upon to make Mr Weis liable on the first two of the three contracts in the relevant set, the contention must fail.
Partnership
51 Section 5(1) of the Partnership Act 1958 provides as follows:
5. Definition of partnership
(1)Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.
52 Sections 13 and 14 of the Act provide:
13. Liability of partners
Every partner in a firm is liable jointly with the other partners for all debts and obligations of the firm incurred while he is a partner, and after his death his estate is also severally liable in a due course of administration for such debts and obligations so far as they remain unsatisfied but subject to the prior payment of his separate debts.
14. Liability of the firm for wrongs
(1)Subject to sub-section (2), where by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm or with the authority of his or her co-partners loss or injury is caused to any person not being a partner in the firm or any penalty is incurred the firm is liable therefore to the same extent as the partner so acting or omitting to act.
53 It follows, therefore, that if Mr Weis and Mr Archibald are, or were at the relevant time, carrying on business in partnership, then each would be jointly liable for the whole of the liabilities incurred in the course of their business as partners. It would seem, therefore, that if a partnership be established, the fact that the written agreements do not, save with respect to restumping, mention Mr Weis as a principal contracting party, would not excuse him from joint liability.
54 In accordance with the relevant principles, however, is it shown that these individuals were carrying on business in partnership? First, there is no evidence that they carried on their business under a firm name. In cross-examination of Mr Weis, Ms Powlett mentioned a firm name in connection with one or more of the proceedings in the Victorian Civil and Administrative Tribunal. There was no suggestion, however, that Ms Powlett dealt with these gentlemen under any firm name and no document which appeared to indicate that they carried on business under a firm name was produced. Again, no partnership deed has been disclosed, but partnerships may be entered into by word of mouth.
55 It will be noted that the statutory definitions do not require, as an essential element to constitute a partnership, that there be a division of profits as between the putative partners. This has led the editors of “Lindley & Banks on Partnership” (19th Edition) [2-11] 15 to state:
“In the circumstances, it is submitted that the division of profits must now be regarded as no more than a common incident of the partnership relation, rather than a precondition to its existence. Thus, whilst the absence of this characteristic should, in any given case, never in itself be fatal, its presence may point strongly towards the existence of a partnership.”
56 Mr Weis’s evidence was that the services which he performed as factotum for Mr Archibald were remunerated at the rate of $1,500 per week. He said that he acted as an independent contractor for Mr Archibald and not as an employee. He said that he received these payments, though sometimes not always regularly. Ms Powlett called upon him to produce his bank records to establish the correctness of this evidence. I gave him a direction to produce those documents at the next day of sitting, pursuant to s36 of the Evidence Act 2008. On the following morning, he said that he had decided that no further evidence was necessary and therefore he had not produced the document. I reproved him sternly, but, in the circumstances, took no further action. It is well established that failure to produce a document which a party might be expected to put into evidence can lead to the same adverse inference as failure to call a witness which a party might be expected to call in accordance with the principle in Jones v Dunkel (1959) 101 CLR 298; see Challenger Property Asset Management Pty Ltd & Anor v Stonnington City Council & Anor (2011) 34 VR 445. I told Mr Weis that I was minded to draw an adverse inference. Here, the adverse inference would seem to be much stronger than the one which may be derived under the Jones v Dunkel doctrine because what was entailed was not a mere failure to volunteer material but, rather, a defiance of a clear directive from the court. In the circumstances, I believe I should not accept the evidence given by Mr Weis as to the mode of his remuneration. Nevertheless, rejection of his account of these matters falls short of what would enable me to make a positive finding that he and Mr Archibald were engaged in profit sharing, which is a clear, though, as explained above, not indispensable, feature of partnership.
57 The law does countenance the involvement of two separate persons in a common enterprise with separate and distinct obligations and functions without their being regarded as in partnership with one another. In Television Broadcasters Ltd v Ashton’s Nominees Pty Ltd (No 1) (1979) 22 SASR 552, the Supreme Court of South Australia was concerned with an arrangement whereby two companies agreed to undertake the promotion of a tour of Australia by a circus. The tour was unsuccessful and one company sought contribution to its losses from the other company. The claim failed at first instance before the trial judge, Mitchell J, but succeeded on appeal to the Full Court, Hogarth, Jacobs and Mohr JJ. The Full Court considered that the contractual arrangements between the parties required the one company to contribute to the losses of the other. Nevertheless, the Full Court did not disagree with the conclusion by the trial judge:
“I think that the plaintiff and the defendant regarded their respective obligations under the agreement as being separate ones and did not in any way regard the relationship as such as would in law cause it to be a partnership. I find that no partnership existed between them.” ((1979) 22 SASR 552, 566)
On appeal, the three judges of the Full Court said:
“We do not need to consider whether or not there was a partnership between the parties, because even if there were, the provisions of s24(1) of the Partnership Act give way to any agreement, express or implied between the parties, as to the sharing of losses; but if it were necessary for our decision, we would agree with the view of the matter taken by her Honour the learned trial judge.” ((1979) 22 SASR 552, 576)
Here, the division of separate responsibility as between Mr Archibald and Mr Weis was clear and distinct.
58 People who are not partners can nevertheless be dealt with as if they were at the suit of third persons where there has been a “holding out”. An example of this phenomenon is Australian Joint Stock Bank v Steel (1890) 7WN (NSW) 59a. There, an individual who was in the habit of signing cheques and bills of exchange in the name of the firm, `City Iron Works Company’, was held liable for the firm’s debts as if he were a partner. Here, there was no firm name and no holding out.
59 In my view, there was insufficient evidence to establish the existence either of an actual partnership or of a situation where Mr Weis was held out as a partner of Mr Archibald.
60 Ms Powlett did not take me to any decisions or other documents relative to the various matters in the Victorian Civil and Administrative Tribunal involving Mr Weis and Mr Archibald. As I understood her, she invited me to infer that this was evidence that they were in the habit for the last decade of entering into arrangements with consumers such as herself, along the lines of the one here in dispute. I did not understand Mr Weis to deny that this was so. I jokingly said that the two could be regarded as “like Zig and Zag”, but the repeated use of the structure evident in the agreements employed here (if this is what happened) cannot change its fundamental character. There was no evidence they had used any different arrangements in connection with these VCAT matters.
61 In Keith Spicer Ltd V Mansell [1970] 1 WLR 333, a decision of the English Court of Appeal, it was found that, where two individuals were working together in expectation of forming a company which was not ultimately formed, they were not to be regarded as in partnership. Their claim based on partnership failed simply for lack of evidence as, regrettably, does this claim.
Total failure of consideration
62 Can it be said with respect to any of the agreements and questions here that there has been a total failure of consideration for which Mr Weis is accountable? One may immediately exclude the agreements relative to the Niddrie house. The Niddrie house was transported some distance and the case was conducted on the basis that the Niddrie house is Ms Powlett’s property and that she should be entitled against the relevant contracting party for damages relative to its deterioration, etc. So far as the contract for its restumping, it was common ground that some restumping work was done by Mr Weis. In the circumstances, it has proven to be worthless to Ms Powlett but it cannot be said relative to the restumping agreement that there has been a total failure of consideration.
63 As to the St Arnaud house, it has not been delivered at all. Mr Patton (the owner) gave evidence that whilst in 2010 there was an initial agreement with Mr Archibald or Mr Weis or, perhaps, both of them, that the house would be kept off the market for six months, neither of them followed through and the house was sold to somebody else. Since the house was lost, there was nothing to transport. Consideration for both the sale agreement and the relocation agreement failed completely. For the reasons given above, however, the obligation to repay the monies paid under those agreements rests with Mr Archibald or, at any rate, not with Mr Weis.
64 The restumping agreement is in a different situation. The party contracting under that agreement is Mr Weis. No restumping at all has been undertaken under that contract, so any money paid relative to the restumping contract represents money paid for consideration that has totally failed. Mr Weis said that all monies were paid into Mr Archibald’s bank account. Implicitly, he contended that he was answerable for none of the money because the account was controlled by Mr Archibald. Yet, to the extent that monies were payable to him under the restumping contract were paid into Mr Archibald’s bank account, they were effectively paid to him. He agreed that it was he who directed payment should be made into the Archibald account. Therefore, to the extent that monies had been paid under the restumping contract for the St Arnaud house, those amounts have been paid upon a consideration that has totally failed.
65 The restumping contract is a separate contract. At the very least, it represents a distinct and severable portion of consideration – see Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516.
66 Less than the entire amount demanded under the two contracts, namely $132,000, was paid on Ms Powlett’s calculations, which were not disputed by Mr Weis. The amount paid was $128,950. This represents 97.7 per cent of the total. Given that there does not appear to have been an effective allocation by any party of the payment as between the Niddrie house and the St Arnaud house, I should regard the payments as having been made rateably relative to both arrangements. Therefore, 97.7 per cent of $77,000 is $75,229.
67 Given that the allocations in the contracts allocate the earlier payments to the purchase and then the relocation agreement, the unpaid shortfall, namely, $1,771 should be regarded as being a short payment on the restumping contract. The total amount payable, inclusive of GST under the restumping contract, was $4,950. Therefore, it would seem that $2,179 has been paid relative to the restumping contract for which there has been a total failure of consideration. Mr Weis was responsible to repay that money.
Misleading and deceptive conduct
68 I have referred to the cause of action for misleading and deceptive conduct referred to in the Statement of Claim. The statutory provisions invoked are “Australian Competition & Consumer Act 2010, ss4 and 18”. This reference is presumably intended to be the Australian Consumer Law, which is Schedule 2 of the Competition & Consumer Act 2010 of the Commonwealth of Australia. Clause 18 of Schedule 2 constitutes a re-enactment of what was the well-known s52 of the Trade Practices Act 1974 and provides as follows:
“(1)A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2)Nothing in Part 3‑1 (which is about unfair practices) limits by implication subsection (1)…”
69 Insofar as future matters are concerned, this section must be interpreted by reference to the provisions in Clause 4 of Schedule 2 the Australian Consumer Law Act, which provides:
“(1) If:
(a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and
(b) the person does not have reasonable grounds for making the representation;
the representation is taken, for the purposes of this Schedule, to be misleading.
(2)For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by:
(a) a party to the proceeding; or
(b) any other person;
the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary.
(3) To avoid doubt, subsection (2) does not:
(a) have the effect that, merely because such evidence to the contrary is adduced, the person who made the representation is taken to have had reasonable grounds for making the representation; or
(b) have the effect of placing on any person an onus of proving that the person who made the representation had reasonable grounds for making the representation.
(4)Subsection (1) does not limit by implication the meaning of a reference in this Schedule to:
(a) a misleading representation; or
(b) a representation that is misleading in a material particular; or
(c) conduct that is misleading or is likely or liable to mislead;
and, in particular, does not imply that a representation that a person makes with respect to any future matter is not misleading merely because the person has reasonable grounds for making the representation.”
70 This represents a re-enactment of what was s51A of the Trade Practices Act.
71 The Statement of Claim itself does not elaborate upon the operation of the provisions. Ms Powlett made perfunctory references to misleading and deceptive conduct in the course of her closing submission but did not develop the point.
72 The contention presumably is that the three matters identified as misrepresentations were said to constitute misleading and deceptive conduct and were to be regarded as misleading and deceptive in terms of the provisions of s4 of the Australian Consumer Law.
73 The effect of this provision is that a representation as to future matters is taken to be misleading, unless the person making the representation establishes by evidence that he had reasonable grounds for making the representation.
74 The predecessor to this provision was introduced to deal with the issues exposed by the decision of the Federal Court in Bill Acceptance Corporation Ltd v GWA Australia Ltd (1983) 50 ALR 242, which stated that merely to prove that a person made a promise as to events that would happen in the future, with those events not occurring, did not in itself establish misleading and deceptive conduct. It would, according to the Bill Acceptance Corporation case, have been misleading without a special extender provision such as Clause 4 of the Australian Consumer Law if a representation as a future matter were made in circumstances where the person making the representation, for instance, never intended to carry out a promise which was being made. If all that were established were that a person promised, intending to do it, and later thought better of it, or simply found himself unable to perform, then this would not constitute misleading and deceptive conduct.
75 A ground may be reasonable without being overwhelming and unanswerable or even compelling. So much appears from the decision of Pagone J now of the Federal Court of Australia, formerly of the Supreme Court of Victoria, and then a member of the Administrative Appeals Tribunal of Victoria in Pantelopoulos v TAC (unreported) 7 September 1995, where he said at [17]:
“Relevant dictionary meanings of the word ‘reasonable’ include: ‘1 having signed judgment; moderate; ready to listen to reason. 2 in accordance with reason; not absurd. 3a within the limits of reason; not greatly less or more than might be expected ... c tolerable, fair.’ These meanings doe not suggest a high standard of persuasiveness. The grounds need not be ‘compelling’ or ‘irresistible’ ...”
76 In Lake Koala Pty Ltd v Walker [1991] 2 Qd R 49 Connolly J of the Supreme Court of Queensland held that a vendor of a motel had reasonable ground for representing as reliable a report on the potential of a motel where that report had been prepared by a reputable firm of chartered accountants. In Lyndel Nominees Pty Ltd v Mobil Oil Australia Limited (1997) 37 IPR 599 Wilcox J of the Federal Court of Australia held that Mobil had reasonable grounds for making representations to a franchisee as to his security of tenure despite the fact that what was represented as to the future was ultimately invalidated by a change of policy.
77 In Parkdale Custombuilt Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 198, Gibbs CJ said that words or conduct would be misleading or deceptive if they would “lead into error”.
78 It will be recalled that the fundamental defence relied upon Mr Weis in this case is that, aside from the restumping contracts, he operated at all times as the agent of Mr Archibald; to the extent that there were contractual obligations, they were the obligations of Mr Archibald and not his own. Different considerations apply, however, to the statutory cause of action for misleading and deceptive conduct. If an individual engages in what is otherwise misleading and deceptive conduct, the fact that the individual does so as employee, agent or corporate organ for some principal or employer may mean that the principal or employer is vicariously liable for the misleading and deceptive conduct but, in contrast to the situation in contract, it does not absolve the agent, employee or contractor from personal liability for the misleading and deceptive conduct – see Houghton v Arms (2006) 225 CLR 553.
79 In the present case, as between Mr Archibald and Mr Weis, Mr Weis agreed that he was at all times the point of communication with Ms Powlett. He placed the Trading Post advertisement and responded to queries relative to them, in particular, the query from Ms Powlett.
80 The first alleged piece of misleading and deceptive conduct is what is described in paragraph 3 of the Statement of Claim as the first representation to be found in the advertisement in the Trading Post website to the effect that the defendants could provide houses and relocate same to new premises.
81 The evidence of Mr Patton was that he had reached an agreement with Messrs Archibald and Weis to keep the St Arnaud house off the market for a period of six months. Whilst that period expired before April 2011, the Patton’s house was still available for purchase by the defendant in April 2011. In accordance with the principles stated above, in my view, there were reasonable grounds for that representation.
82 The second representation alleged in paragraph 4 of the Statement of Claim was “we’ve got this house in St Arnaud”, “if you want it you will have to put a deposit on it”. Again, given there had been preliminary discussions between Mr Weis and Mr Archibald on the one hand, and the Patton’s on the other, for the former to purchase the house for removal and that it remained possible for the purchase to be made in April 2011. In my view, there were reasonable grounds for the making of this representation.
83 The third alleged representation was that at a point not specifically identified in time in paragraph 5 of the Statement of Claim, other than it was “following the initial telephone discussion and payment of the deposit in the amount of $5,000”, it was represented that the defendants had a second house at 4 Gillies Street, Niddrie, “which they would sell, transport, and restump on the plaintiff’s property”. This house was in fact acquired. It was transported to Daylesford. It has not been relocated to the plaintiff’s land in the circumstances which I have already described.
84 At the time the statement was made there clearly were reasonable grounds for making the statement and, therefore, this alleged piece of misleading and deceptive conduct has also not been made out.
Misrepresentation
85 The same matters were referred to under the heading of “Misleading and Deceptive Conduct” as fraudulent misrepresentations. According to paragraph 7 of the Statement of Claim, they were “false and…made without belief in their truth or made recklessly”.
86 There is a distinct difference, as the Bill Acceptance case referred to above identifies, between a promise that is made without any intention to carry it out or in the knowledge that there is no ability to carry it out on the one hand, which may constitute a fraudulent misrepresentation and, on the other hand, a promise or representation made which fails to materialise because of supervening circumstances or simply change of mind. The latter, no matter how inexcusable, does not constitute a misrepresentation of the fraudulent type, which will ground a claim for damages.
87 For these reasons, the claim for common law fraudulent misrepresentation fails.
Negligent misstatement
88 Finally, a claim for negligent misstatement was based on the same matters. Given the finding that I have already made that there were reasonable grounds for the making of the statements referred to and relied on as the misleading and deceptive conduct, there was, in my view, no negligence involved, as distinct from breaches of contract.
Relief
89 It follows that the claim fails except for the small sum of money which may be recovered as monies paid on a consideration which has totally failed relative to the restumping of the St Arnaud property.
Interest
90 The writ claims statutory interest. The entitlement to recover the sum on failure of consideration should be regarded as accruing from 1 May 2011. As a liquidated sum it should accrue interest at the relevant rate under the Penalty Interest Rates Act 1983 to the date of judgment.
Costs
91 Ms Powlett sought to recover costs of slightly more than $5,000, which relate to the commencement of the proceeding and also, perhaps, sought to recover certain court fees as costs. In light of the substantive disposition of the matter I will reserve costs, leaving it to the parties to bring the matter before me for argument should either of them desire to do so.
Postscript
92 Since dictating the above, I have received a number of emails. On 7 March 2014, Ms Powlett sent me an email requesting that I “hold off judgment until April 7th”. This was to enable the terms of an arrangement which Ms Powlett had apparently reached with Mr Weis to be carried out. The email included an email from Mr Weis to Ms Powlett embodying a proposal to do a number of things “over the next four weeks”, including paying $5,000 to the Victorian Building Authority to enable the reactivation of a building permit, paying the storage costs on the Niddrie house, transporting the house in sections to Ms Powlett’s property, restumping the structure, rejoining and re-erecting it. These steps were to be under the supervision of a registered builder. There were further details in this proposal to which, in the circumstances, I need not turn. On 1 April 2014, Mr Weis sent an email to Ms Powlett which was copied to my associate, which included the following:
“I’ve now received advice that I should not be making any agreement with you prior to knowing the outcome of Judge Macnamara’s ruling. I have therefore decided to withdraw my offer as of now for the following reasons …”
93 Without traversing the ins and outs of what seemed to be an agreement to resolve at least part of the dispute, it is clear that however one characterises what has taken place, any agreement which had been reached has now broken down. I am therefore delivering my judgment as I had originally dictated it.
94 There should therefore be judgment for the plaintiff in the sum of $1,771. The plaintiff will be entitled to statutory interest under the Penalty Interest Act, the relevant rate being 10.5 per cent per annum. The interest should be calculated from the payment made by the plaintiff in the sum of $7,450 on 14 January 2012. According to my calculation, the interest payable is $509.50 until today’s date, making a total amount payable by the second defendant to the plaintiff in the sum of $1,688.50.
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