RecycleIT Now Ltd v Parrani Group Pty Ltd

[2022] NSWDC 305

District Court

New South Wales

Medium Neutral Citation:	RecycleIT Now Ltd v Parrani Group Pty Ltd [2022] NSWDC 305
Hearing dates:	13 July 2022
Date of orders:	1 August 2022
Decision date:	01 August 2022
Jurisdiction:	Civil
Before:	Ainslie-Wallace ADCJ
Decision:	See [53]
Catchwords:	JUDGMENT- breach of agreement- sale of goods.
Cases Cited:	Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Category:	Principal judgment
Parties:	RecycleIT Now Ltd Parrani Group Pty Ltd
Representation:	Self-represented
File Number(s):	2021/192011
Publication restriction:	None

Judgment

1. The plaintiff sues the defendant for breach of an agreement relating to the provision of goods by the defendant and for which the plaintiff paid in advance. The plaintiff contends that while goods were delivered, their ascribed value was less than the price paid and seeks repayment from the defendant of the difference between the price paid and the value of the goods received.

2. The plaintiff company, RecycleIT Now Ltd deals in the recycling, refurbishing and reuse of outdated information technology equipment. As part of that business, from time to time it purchases outdated equipment already refurbished to sell on to its customers. The company is registered and conducts its business from the United Kingdom.

3. The defendant company, Parrani Group Pty Ltd is registered in Australia and it acts, in effect, as a broker of refurbished information technology equipment, purchasing the equipment from various suppliers and selling it on to third party purchasers.

4. There was no dispute as to how the defendant conducts its business. The defendant receives information from its various suppliers about what refurbished equipment is available to be purchased by third parties. This information is then shared by the defendant on a number of online forums which are accessed by prospective purchasers.

5. An interested purchaser contacts the defendant and identifies which goods it wishes to purchase. The defendant and purchaser then agree on a price for the goods identified. The defendant then issues what was referred to as a “pro forma” invoice in the amount of the agreed purchase price. This invoice must be paid in full before the goods are ordered, packed and shipped to the purchaser.

6. Once the payment is received, the defendant’s supplier packs and ships the goods to the purchaser. The supplier raises an air waybill in relation to the goods shipped which is emailed to the purchaser by the defendant together with a final invoice reflecting the goods shipped.

7. On delivery to the purchaser, the consignment is assessed for any relevant taxes or duties payable based on the air waybill which the purchaser pays, and collects the goods.

8. In about mid May 2020 the Managing Director of the plaintiff, Robert Doherty approached the defendant about the supply of refurbished equipment to sell on to the plaintiff’s customers in the UK. The dealings between Mr Doherty and Usman Paracha, the Managing Director of the defendant, were conducted by WhatsApp or Linkedin, copies of which were in evidence. After preliminary matters were sorted out, the plaintiff began placing orders with the defendant for the provision of equipment.

9. Between 3 June 2020 and 30 October 2020, the plaintiff says that in various tranches it placed orders with the defendant to the value of £827,925. The defendant sent to the plaintiff 16 pro forma invoices in respect of the orders in a total amount of £827,925. Each pro forma invoice was paid in full by the plaintiff before the goods were delivered.

10. In this case, the refurbished goods were provided by a supplier of the defendant in the United Arab Emirates. The goods identified in the 16 preliminary invoices were shipped to the plaintiff by the defendant’s supplier. The supplier raised an air waybill in respect of each consignment which was emailed to the plaintiff by the defendant. The goods having arrived in the United Kingdom, VAT and other taxes were levied on the goods by reference to the value of the goods in the consignment as identified by the air waybill. The VAT and other charges were paid by the plaintiff and the goods collected.

11. At about the time that the goods were consigned, the defendant created and sent to the plaintiff a final invoice which itemised the goods in the consignment and their value.

12. Oliver Birch, the Financial Director of the plaintiff, said that on receiving each consignment of goods, he checked each against the air waybill and the final invoice to ensure that what was delivered was what was identified in the final invoice. He said that he would confirm receipt of the shipment and the contents with a director of the defendant, Mr Laurain Durrani. That communication was by emails, copies of which were attached to Mr Birch’s affidavit. On one or two occasions Mr Birch noted discrepancies between what was in the final invoice and what was shipped and he raised those matters directly with Mr Durrani.

13. Mr Birch said that the value of the goods shipped as shown in the final invoice tallied with the value of the goods identified in the air waybill raised by the supplier.

14. Of the 16 invoices in respect of which the plaintiff paid £827,925 in advance, the relevant air waybills and final invoices referrable to the delivered goods totalled £589,560.

15. Mr Birch said that on becoming aware of the shortfall, he and Mr Doherty asked the defendant to send further goods to, in effect, make up the difference between the amounts paid on the preliminary invoices and the value of the goods shipped or, failing that, for the defendant to repay the difference to the plaintiff. Their efforts were unsuccessful.

16. The plaintiff’s case is that the defendant owes it the difference between the amounts paid on the initial invoices and the final invoices, some £238,364 together with interest

17. The defendant disputes the plaintiff’s contentions both as to the value of the goods ordered and as to the value of the goods received.

What was the value of the goods ordered by the plaintiff?

18. The defendant asserts that contrary to the evidence of Mr Birch, pro forma invoices totalling £1.3m were provided to the plaintiff on which £827, 925 was paid by the plaintiff and goods to the value of £793,000 were delivered to the plaintiff.

19. It is difficult to understand how these figures are calculated because the evidence of Mr Paracha was unclear.

20. Mr Paracha contended that the plaintiff’s orders were reflected in 25 not 16 invoices. The additional 9 invoices were said to relate to goods ordered and paid for by the defendant, anticipating further orders by the plaintiff. Mr Paracha asserted that these goods were despatched to the plaintiff and were never paid for.

21. No air waybill or final invoice reflecting the completion of the sale and delivery of the goods referred to in the additional 9 invoices formed part of the defendant’s evidence.

22. The plaintiff denied receiving the goods referred to in the additional invoices and denied asking the defendant to purchase the goods in anticipation of an order. Further, the plaintiff pointed to the absence of the usual documentation and the defendant’s usual practice of not ordering goods until the pro forma invoice issued by it had been paid in full in support of its assertion that these goods were not ordered or received. There is considerable force in this argument.

23. In a WhatsApp conversation between Mr Doherty and Mr Paracha on 30 November 2020, Mr Doherty raised with Mr Paracha that the defendant was holding “circa 280K pre-paid” and asks that further goods be despatched to account for that sum. Mr Paracha denied that he had money for goods not delivered. In many conversations between Mr Doherty and Mr Paracha over the following weeks into the new year, Mr Doherty attempted to have Mr Paracha send the supporting documents to reconcile the orders.

24. On 25 January 2021, Mr Paracha told Mr Doherty that the warehouse sent “excess goods to [the plaintiff]” which, he says have not been paid for (Affidavit Mr Doherty page 80). Mr Doherty responded:

How can you think they’ve sent excess goods? We have everything logged, they’ve put on the pallets what you invoiced, in fact on one pallet there was actually 15 (roughly from memory) short which we reported and was logged, Oliver has sent over on numerous occasions up to date summary, it’s never been disputed, that also matches with goods through customs, neither you or me can get round that system.

25. Many conversations later, on 27 January 2021 (Affidavit Mr Doherty page 84), Mr Paracha asserted that the plaintiff’s orders are reflected not in 16 but 24 invoices. Mr Doherty’s subsequent requests for copies of those invoices for the extra goods, including the “ … make, model and quantity…” of the goods said to have been sent to him were unanswered.

26. The plaintiff’s evidence of its system supported by its records demonstrate that for each purchase and subsequent delivery, the defendant sent by email an air waybill, produced by the supplier, which showed the value of the goods shipped and the defendant sent a final invoice detailing the goods sent and their value.

27. I do not accept that the goods referred to in the additional 9 invoices were sent to the plaintiff or that they were ordered by the plaintiff and have not been paid for.

28. The evidence of the system employed by Mr Birch in confirming receipt of goods, checking the goods against the air waybill and the final invoice and in correspondence between Mr Birch and Mr Durrani satisfies me that the plaintiff ordered goods to the value of £827,295 and paid for those goods as reflected in the 16 pro forma invoices.

What was the value of the goods received?

29. The defendant’s account as to the apparent discrepancy was something of a moveable feast.

30. In paragraph 7(d) of the the defence it was asserted:

(i) the defendant denies this claim and state that invoices for the sum of £589,560.31 were sent to the plaintiff by its supplier Najam Al Saad an (sic) error. The defendant states that these invoices were forwarded without consulting with the defendant. The correct invoices forwarded after reconciling the accounts…

31. The defendant argued that the plaintiff received all of the goods it ordered at the values identified in the pro forma invoices and for which the plaintiff paid in advance but that the final invoices sent to the plaintiff were incorrect and had been sent to the plaintiff directly by the supplier without Mr Paracha’s knowledge.

32. I do not accept that the final invoices were sent to the plaintiff directly by the supplier. The email correspondence between Mr Birch and Mr Laurain Durrani make that entirely clear. Those emails show that Mr Durrani sent both the relevant air waybills and final invoices by email to the plaintiff in respect of each consignment received.

33. The final invoices on their face, clearly show that they were created by the defendant.

34. Mr Paracha’s affidavit evidence referred to the “the invoice” of £589,560.31 on which the plaintiff relied and after asserting that it was an invoice sent to the plaintiff by the supplier continued:

… I recall that this was sent in error by the Supplier without informing me or notifying the Defendant. This was rectified by the Defendant in due course by providing reconciled accounts to the Plaintiff.

35. In his oral evidence, Mr Paracha continued to claim that the invoices on which the plaintiff relied were “wrong” and said that the supplier had admitted its error to him and had confirmed that the goods consigned to the plaintiff matched the value of the pro forma invoices. In further explanation of the alleged mistake by the supplier, Mr Paracha said:

[the suppliers] …had another company by the name of ITTV Recyclers, something and they have mucked up and sent the wrong paperwork to [the plaintiff’s] accounts was assigned…

36. As to how the suppliers could have made the same mistake, that is, sending final invoices meant for another company on 16 occasions, Mr Paracha asserted that once the incorrect name of the company was in the supplier’s system, it continued to send the incorrect invoices.

37. When asked by Mr Birch why none of the correspondence between Mr Paracha and the supplier explaining the “mistake” was produced to the court, he said they do not speak English and when it was suggested to him that the the air waybills created by the supplier were in English, Mr Paracha said that they were prepared by the freight forwarders and “just signed off” by the suppliers.

38. I do not accept Mr Paracha’s evidence. It is clear on the face of the final invoices sent to the plaintiff that they were created by the defendant not the supplier. Secondly, the email correspondence between Mr Birch and Mr Durrani show that it was the defendant through Mr Durrani who provided the air waybills and final invoices to the plaintiff. Thirdly, the goods and their value identified in the final invoices tallied directly with that identified in the air waybills sent with the goods shipped by the supplier to the plaintiff and each was checked by Mr Birch on receipt.

39. In his affidavit and in his oral evidence, Mr Paracha speculated that the plaintiff had in some way falsified the values of the goods as appeared in the air waybills in order to minimise the VAT payable on the consignments. This evidence must be rejected if for no other reason than the identification of the value of the goods shipped in the air waybills was done by the defendant’s supplier. When this point was put to Mr Paracha by Mr Birch, Mr Paracha responded that he did not see the shipped goods and thus any fraudulent activity in relation to the VAT was not within his knowledge. I reject any suggestion that the plaintiff somehow manipulated the documents to its benefit.

40. I do not accept that the suppliers created the final invoices, that they were sent to the plaintiff by the suppliers in error, mistaking them for another client whose delivered goods were valued at exactly the same amount as Mr Birch’s tally of the goods delivered to the plaintiff. Nor do I accept the other explanations offered by Mr Paracha in attempting to explain the values ascribed in the final invoices. Not one document supported the assertion and I reject Mr Paracha’s evidence on this point.

41. It is significant that throughout the correspondence between Mr Doherty and Mr Paracha about whether the defendant had not fulfilled the orders and held on to the plaintiff’s money, there was no mention of the supplier sending incorrect invoices (albeit Mr Paracha asserted that the supplier sent more than was asked for). Nor did Mr Paracha say that the final invoices referred to a different customer.

42. Finally, to accept Mr Paracha’s account of the invoices relating to another company being sent by the supplier in error, would be, as Mr Birch said, to accept that an error occurred 16 times with each delivery of an order and it beggars belief, as does the defendant’s evidence (not previously given) that the suppliers had accepted their fault but no documents were available because they do not speak English.

43. As I have said, the thoroughness of the system employed by the plaintiff in checking and confirming the contents of the deliveries persuades me that the goods reflected in the final invoices were those delivered to the plaintiff and that the total value of the goods received fell short of the invoiced amount paid for those particular goods in advance.

44. Therefore, I am satisfied that the plaintiff ordered and paid for goods to the value of £827,925 from the defendant. The price ascribed to each item to be purchased was agreed between the plaintiff and the defendant and goods as described in the 16 invoices were consigned to the plaintiff by the defendant’s supplier. The value of the goods consigned and received were as itemised on the final invoices and air waybills and totalled £589,560.

The Claim

45. The statement of claim filed on the plaintiff’s behalf contends, in the alternative two causes of action.

46. The first asserts that it was an implied term of the agreement between the plaintiff and the defendant that the price paid for any goods ordered by the plaintiff would be equal to the market value of the goods ordered.

47. This claim can be readily disposed of. There is no evidence that it was a condition, implied or otherwise of the agreement between the plaintiff and defendant that the goods provided were being proffered at market price. Indeed, the conversations between Mr Doherty and Mr Paracha for the defendant made it clear that the price for goods available to purchase were in effect auctioned to the highest bidder amongst the prospective purchasers.

48. Mr Doherty’s evidence did not advance the proposition that the price agreed for any item of group of items reflected market value of those items. I am satisfied on basis of the whole of the conversations preliminary to the commencement of purchase of goods from the defendant that no such term was agreed nor could it be implied. Nor was such a term necessary to give business efficacy to the agreement nor is such a term “so obvious it goes without saying” (see Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 404).

49. In the alternative, the plaintiff pleads a breach of the agreement between the parties and seeks damages in the amount of the difference between that paid and the value of the goods received.

50. The whole of the conversations between Mr Doherty and Mr Paracha establish that as between the plaintiff and the defendant the agreement was that for each order, the goods to be purchased were identified by Mr Doherty, a price per item or group of items was negotiated and the total figure representing that order was agreed which was contained in the pro forma invoice and was paid in advance. The goods received were those ordered but amounted to a value less than that paid for them and as agreed to be the price.

51. I find that the defendant breached that agreement in delivering goods of a value less than ordered.

52. Damages for that breach are claimed by the plaintiff to be the difference between the amount paid and the amount delivered, namely £238,364.94. The plaintiff claimed interest on that sum and at the hearing sought to amend the Statement of Claim to reflect interest up to the date of hearing. Mr Paracha did not object and thus the interest on the sum claimed in accordance with the workings in the Statement of Claim but adjusted up to the date of hearing is £16,020.

Orders

53. I make the following orders:

1. verdict for the plaintiff;

2. I direct that within 48 hours of publication of these reasons the parties agree on an Australian dollar equivalent for the claim plus interest as indicated above and notify the Court of that agreed sum. Thereafter judgment will be forthwith entered for the Plaintiff in that sum;

3. the defendant is ordered to pay the plaintiff’s costs of and incidental to the proceedings;

4. failing agreement under order (2), parties are granted liberty to apply on 24 hours notice for further directions.

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Decision last updated: 01 August 2022