Reveruzzi T/A City Homes v Stoilov - [2009] SADC 41

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
REVERUZZI T/A CITY HOMES v STOILOV
[2009] SADC 41
Judgment of Her Honour Judge Shaw
7 April 2009
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - AMOUNT
Claim by plaintiff for outstanding sum pursuant to building contract - defendant denied claim. Held - Plaintiff's claim dismissed.

REVERUZZI T/A CITY HOMES v STOILOV
[2009] SADC 41
Introduction

This is a claim by the plaintiff for payment in relation to building work performed for the defendant. The defendant was unrepresented at the hearing.
The plaintiff is an individual carrying on business as a builder, under the registered business name, “City Homes”. The defendant is the owner of property situated at Lot 51 McMurray Avenue, Seaton (“the land”).
The parties entered into a building contract dated the 17th day of March 2005 (“the contract”), whereby the plaintiff agreed to build a house (“the contract works”) for the defendant on the land for the sum of $276,760.00. The plaintiff claimed that there were four variations to the written contract resulting in a total contract sum of $282,757.00. Prior to the payment of the fourth progress payment under the contract, the defendant repudiated the contract and therefore, the plaintiff was unable to complete the contract. The defendant took possession of the land and the contract works and arranged for the completion of the works.
The plaintiff claimed that the defendant had made three of the agreed four progress payments pursuant to the contract and had paid for two of the variations under the contract. The plaintiff’s case was that the defendant also had received a number of credits in relation to the contract works. The plaintiff claimed that the defendant had paid a total sum of $210,703.61.
The Plaintiff’s Claim
The plaintiff claimed that the defendant was indebted to him for the total sum of $72,053.39. The sum of $55,152.00 was the amount owing under the fourth progress payment. The balance related to losses that were suffered because the contract was halted for non-payment of the fourth progress payment[1]. The plaintiff issued Progress Claims Certificates dated 3 April 2005, 27 July 2005, 27 July 2005, 22 September 2005 and 28 November 2005[2]. On each of these Progress Claims Certificates (except the certificate dated 28 November 2005), the plaintiff noted the date and amount of payment received. In relation to the Progress Claim Certificate dated 28 November 2005[3], there was no record of a payment having been received. The plaintiff issued a final notice, dated 7 December 2005, whereby the plaintiff demanded payment of the outstanding sum of $56,104 from the defendant[4].
[1]    Transcript p80
[2]    Exhibit P5
[3]    in Exhibit P5
[4]    Exhibit P9
The plaintiff pleaded that on 4 January 2006, he lodged a Notice of Lien with the Registrar General at the General Registry Office pursuant to the Worker’s Lien Act, 1893, against the interest of the defendant in the land in respect of the sum owed to the plaintiff.
The Defence
By his Amended Defence, the defendant contested a number of the variations and claimed credits in relation to the building works. The defendant alleged that the plaintiff had failed to perform certain building works required to be completed under the contract.
In addition, the defendant contended that he had paid the plaintiff a total sum of $247,605.00. The defendant alleged that he did not owe the plaintiff any further amounts under the contract, the variations or otherwise.
The defendant alleged that his payments to the plaintiff included cash payments and that he received a signed acknowledgement from the plaintiff in respect of certain payments that he made to the plaintiff.
There was a dispute between the parties in relation to the authenticity of the writing and signatures on the copies of Progress Claims Certificates in Exhibit P6.
THE PLAINTIFF’S CASE
The plaintiff gave evidence and called his book-keeper and a handwriting expert.
Plaintiff’s Evidence
The plaintiff gave evidence that he conducted a business called City Homes. He entered into the contract with the defendant. In addition, a number of written variations were agreed to. He identified Progress Claim Certificates, upon which he had recorded the receipt of payments for work done and the date of the receipt of the payment[5]. He identified various progress payments which had not been received. He gave evidence that he did not receive a part-payment of a progress payment before the work was completed. He said that he would not ask someone to pay him in small amounts for a payment, such as the fourth progress payment, before he had performed the work. He said he believed that it was illegal to ask for payments before he performed the work. He denied that the defendant paid him the sum of $1,200 in April of 2005. He denied that he had received the payments particularised in paragraph 25 of the defendant’s Amended Defence.
[5] Exhibit P5
The plaintiff tendered documents[6], which contained writing and signatures below a dotted line on a Progress Claim Certificate, purporting to record the receipt of certain monies by the plaintiff. These writings did not appear on the Progress Claim Certificates produced by the plaintiff in Exhibit P5. The documents in Exhibit P6 had been faxed by the defendant’s solicitors to the plaintiff’s solicitors. The plaintiff denied that certain writings and signatures on the documents in Exhibit P6 were his. He denied for example, that he had received payment of the sum of $55,152, and denied that he had written on or signed the Progress Claims Certificate dated 28 November 2005 as an acknowledgment of the receipt of this amount.
[6] Exhibit P6
The defendant cross-examined the plaintiff about the circumstances of particular payments. The plaintiff was asked about the invoicing for and payment of the work in relation to the pouring of the footings. The plaintiff stated that the amount paid in relation to the first payment for the footings was written on his copy of the payment when he received the cheque. He did not recall where it was paid. He recalled that he did receive a payment whilst he was building another house at Mile End. He said that those monies related to a payment which was deficient by $342.00. He could not recall his location at the time that he received the other cheque payments.
The defendant asked the plaintiff whether he had received payments in cash. The plaintiff gave the following evidence:
Q.    Have you received any cash from any of your clients as a payment.
A.    No.
Q.    Never.
A.    No. They are such big payments.
The plaintiff went on to state:
Q. To be clear, you were being asked if you have ever received cash in payment for your jobs, no matter what the amount.
A.    No.
Q.It is not just big amounts. The question relates to smaller amounts as well. You have never received cash not even as part payment of any job.
A.Perhaps sometimes, you know, if people want to pay a deposit of $1,000 or $2,000 and they haven’t got a cheque book they pay that in cash but they ask for a receipt obviously and I gave them a receipt.
And further:
Q.During the period from when we started to sign the contract to when we finished, did you receive any cash payment from me whatsoever.
A.Well, the difference, you gave me $400 cash which was the difference and one of the variations you paid cash, I think it was $3,700, they are the only two payments you paid.
Q.You have received cash.
A.Only in two occasions.
Q.That $3,710 would that show up in your bank statement that that was deposited.
A.Well, it may not show.
Later, he stated:
Q.You have said that it may not be in your bank statement, is that right. The cash, the $3,700.
A.No, I don’t think it was put in there because I just probably pay the bricklayer I think If I remember right. So, that’s why it wasn’t cashed in my account. The bricklayer, I was owing him money and I just paid him. I think Mr Stoilov knows that too, that I gave it to the bricklayer.
And further:
Q.What Mr Stoilov has put to you was you said earlier you did not receive any money in cash, now you are agreeing that you did receive $3,700 in cash from Mr Stoilov.
A.I never said that I never received any money. Big payments, not amounts of $50,000. If some occasion people want to pay a deposit before we start the preliminary agreement for them, which means plans and drawing boards, they need to pay 2 or $3,000. They say “We haven’t got a cheque book. If it is okay we pay cash”. If it is 2 or $3,000 and they want to pay cash I don’t have a problem with that. Most of the time it goes straight in the bank. Depends if I go and put the money in the bank and then pay the bricklayer, just go straight to the bricklayer in his case.
MR STOILOV:     He didn’t want a receipt either.
HER HONOUR
Q.Who didn’t want a receipt.
A.Mr Stoilov.
MR STOILOV:     But I have got the receipt here. It is paid 1^st of the 9^th.
This was explained as follows:
Q.The question is, isn’t this you acknowledging receipt of the payment in cash of $3,700 on Exhibit P2, that is what the question from Mr Stoilov is. Is that right. Can you see.
A.    This is not a progress claim. This is a variation.
Q.No, does that refer to the amount of $3,700 in your handwriting. You see how it has got written there $3,710.
A.Yes, that is right.
Q.Is that the amount that you received in cash.
A.Yes.
Q.Is that your handwriting ‘Paid 1 September 2005’ on it.
A.That is right, it is.
Q.So is that you, and you gave that too, having written that you gave that.
A.I was owing money to the bricklayer that was working.
Q.No, you wrote that on there and then you gave the document to Mr Stoilov.
A.No. No, he just gave me the money and said “I don’t need a receipt”. This is from my own records to make sure, you know, that I got paid and to keep my own records straight but he didn’t want a receipt.
The defendant challenged the plaintiff’s evidence that he did not send an invoice before work was performed. The defendant suggested to the plaintiff that the footings were poured on 3 April 2005, but that the invoice for this work came to the defendant on 3 April 2005. The plaintiff explained this suggested discrepancy by stating that he employed only a “part-time girl” and sometimes documents were prepared earlier but not sent out until later. He said it was normal practice for his book-keeper to prepare the invoice before the work was done but not to send it out until after the work was done.
Ms Beeston’s Evidence
Ms Beeston gave evidence that she worked part-time for the plaintiff as a book‑keeper. She would attend at the plaintiff’s office as and when required. She said that she prepared the progress payments and she left them for the plaintiff to send out when they were ready. She said that she did not process payments. It was the plaintiff who did everything. The plaintiff would record the details of payments received by cheque in the deposit book and then deposit the cheque at the bank. She said that she never saw the plaintiff receive any cash payments in relation to building construction. This was to be compared with rental properties in respect of which he would receive payments in cash. She said she had nothing to do with completing receipts for money that came in. It was the plaintiff who recorded those amounts.
Mr Talbot-Wilson’s Evidence
The plaintiff called Mr Talbot-Wilson, a person with expertise in document examination. Mr Talbot-Wilson expressed the view that certain purported signatures on the documents in Exhibit P6 were the same signatures. He stated that the signatures were a tracing or the like because there was no variation between them. He stated that he could not identify signatures from photocopies.
The Defendant’s Evidence
The defendant gave evidence that his father gave him the block of land on which the contract works took place, so that he could live next door to his mother. His father was present when the proposed contract was discussed with the plaintiff and “the deal was made”. The defendant said that he had made all of the payments to the plaintiff that are particularised in the Amended Defence. He said most of the cash payments were made at the land except for a cheque that was paid at a location on Hanson Road. He said that in his European culture, everyone dealt in cash. The plaintiff did not give him receipts. The defendant kept a record in a notebook of the payments that he made to the plaintiff. He gave the notebook to his solicitor. The defendant said that before the contract was repudiated, certain works had not been carried out. The defendant said that there were no amounts due to the plaintiff for work done up until the plaintiff stopped work.
The defendant said that he saw Progress Claim Certificates for the larger amounts. They were placed in his mother’s letter box at the land. He said that the writing below the line of the documents in exhibit P6 was his, except for the signature and, in relation to the first progress certificate, the figure of ‘55,352’. The defendant obtained a copy of these documents from the letterbox at the land where they were left for him.
The defendant also gave evidence of having received an invoice from the plaintiff prior to the work having been performed. The invoice for the footings was dated 3 April 2005 but the footings were not poured until 8 April 2005.
In relation to the making of cash payments to the plaintiff, the defendant said that he withdrew monies from the bank to make periodic cash payments in order to reduce the burden of the large progress payment that would otherwise be owing on the date stipulated in the contract.
He gave evidence of a specific example of a cash payment. He said that in relation to the payment for the construction of the brick wall, he withdrew cash from the bank and that he paid the defendant the sum of $3,710.00. At the time of the payment, the defendant was sitting in his small truck out the front of the property. After the defendant handed the cash to the plaintiff, the plaintiff counted it. The plaintiff did not give him a receipt. The defendant said he had paid the plaintiff all the monies owed by him to the plaintiff for the works as at the date that the plaintiff ceased work.
The defendant was cross-examined about his banking records, a copy of which was in the possession of the plaintiff[7]. The defendant explained that the records identified the cash withdrawals from his accounts that were used to make the payments to the plaintiff. These payments corresponded with the amounts of the payments which the defendant said he made to the plaintiff and which were particularised in the Amended Defence.
[7] Exhibit P18
The defendant maintained that certain contract works identified in his Amended Defence had not been completed as required under the contract.
The defendant maintained that there was an agreement for the defendant to make cash payments to the plaintiff in relation to the fourth progress payment.
He said that he had written a letter dated 20 November 2005, upon the advice of the Master Builder’s Association. He maintained that he had made the cash payments to the plaintiff between 6 December 2005 and 16 December 2005 as particularised in his Amended Defence.
The defendant accepted that the manner in which payments were made to the plaintiff was not necessarily reflected in the contract. He explained that the interim cash payments were applied to progress payment number four because he took the view that the largest amount of money was needed at the end of the contract period.
The defendant denied that he had forged any of the writing or the signatures on the documents in Exhibit P6. The defendant said that a lien was placed on his property in January. The defendant borrowed money in order to complete the contract works.
Plaintiff’s Submissions
The plaintiff submitted that the court ought to accept the plaintiff’s denials that he had received the cash payments in question from the defendant. It was submitted that the making of such cash payments was inconsistent with the terms of the contract. Further, it was inconsistent with the manner in which other payments under the contract were made and recorded.
It was submitted that the plaintiff was firm in his denial of having signed the receipts in Exhibit P6. His evidence was supported by the handwriting expert. It was submitted that the plaintiff’s usual practice was in accordance with the contract and in accordance with proper business practice.
It was submitted that it was illogical and indeed, inconsistent with the contract for the plaintiff to receive payments before the work was performed. The plaintiff submitted that the evidence of Mr Talbot-Wilson supported the inference that the plaintiff’s purported signatures on the receipts in exhibit P6 had been forged.
The Defendant’s Submission
The defendant submitted that the plaintiff’s claim depended upon his contention that he was not paid in cash. However, in this respect, the plaintiff was shown to be unreliable. Not only did the plaintiff receive at least one cash payment in the sum of $3,960.00 in relation to a variation, but the plaintiff also stated that he used that cash to pay the bricklayer. In those circumstances, the records of the plaintiff could not be relied upon.
Findings
In my assessment of the evidence of the witnesses and in my consideration of the proof of the plaintiff’s claim, I have had regard to the evidence of Mr Talbot-Wilson and the plaintiff’s evidence that certain writing and signatures on the documents in Exhibit P6 are not his. The defendant admitted that some of the writing was his but he denied forging any of the signatures on the documents in Exhibit P6. It is unnecessary for me to resolve the question of how the signatures came to be on the documents in Exhibit P6. However, I am satisfied that the defendant was not responsible for forging the signatures in question.
In my view, the plaintiff was an extremely unimpressive witness. I have no doubt that he is a very astute businessman who has a ‘hands on’ approach to both the building works and the receipt and recording of payments in relation to building contracts. However, in my view, it was plain from the plaintiff’s cross‑examination, that the plaintiff did accept cash payments but did not necessarily deposit those monies in his bank account nor produce records relating to such monies. During cross-examination, the plaintiff acknowledged that he received at least two payments in cash, which would not necessarily show up in his bank account. He said that he used one of the cash payments to pay the bricklayer. In my view, the evidence of Ms Beeston did not support the plaintiff’s case in relation to this issue. Indeed, Ms Beeston was clear that as far as she was aware, the plaintiff never received cash monies for building jobs.
On the other hand, I formed the opinion that the defendant was an honest and candid witness. I accept that he was telling the truth in relation to making the various cash payments to the plaintiff particularised in the Amended Defence. I accept that the defendant trusted the plaintiff to give him appropriate credit for such payments.
I have no confidence that the record of payments relied upon by the plaintiff is either accurate, or more importantly, complete. I am not satisfied that the two cash payments acknowledged by the plaintiff during his cross-examination were the only cash payments received by him. I find that the defendant’s account of the monies paid and credits given is accurate and that the plaintiff’s account is unreliable and indeed, inaccurate. In all the circumstances, I am not satisfied on the balance of probabilities, that I can act upon the plaintiff’s evidence and his documents in order to support the plaintiff’s claim that the defendant owes him the amount that is the subject of the Amended Statement of Claim.
Conclusion

Accordingly, I am not satisfied that the defendant is indebted to the plaintiff as alleged in the Amended Statement of Claim or any part thereof. Therefore, the plaintiff’s claim is dismissed.
Orders
The plaintiff’s claim is dismissed.
I will hear the parties as to costs and any consequential orders.