Rimex Wheel Pty Ltd v Wulff [No 2]
[2019] WASC 198
•12 JUNE 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RIMEX WHEEL PTY LTD -v- WULFF [No 2] [2019] WASC 198
CORAM: VAUGHAN J
HEARD: 5 JUNE 2019
DELIVERED : 5 JUNE 2019
PUBLISHED : 12 JUNE 2019
FILE NO/S: CIV 2013 of 2018
BETWEEN: RIMEX WHEEL PTY LTD
Plaintiff
AND
JOHN ANTHONY WULFF
Defendant
Catchwords:
Assessment of damages - Turns on own facts
Legislation:
Nil
Result:
Damages assessed
Category: B
Representation:
Counsel:
| Plaintiff | : | F Xue |
| Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | CX Lawyers |
| Defendant | : | No appearance |
Case(s) referred to in decision(s):
Rimex Wheel Pty Ltd v Wulff [2018] WASC 180
VAUGHAN J:
(These reasons were delivered orally at the conclusion of the hearing. They have been edited to correct matters of grammar and infelicity of expression. Authorities and other references have also been footnoted rather than appearing in the body of the reasons.)
Introduction
The plaintiff makes application for assessment of damages following default judgment having been entered in its favour, against the defendant, on 5 December 2018.
The plaintiff relies on:
(1)an application dated 1 April 2019;
(2)a memorandum to support waiver of conferral dated 1 April 2019;
(3)a statement of claim dated 15 August 2018;
(4)the affidavit of Adam Hirst sworn 14 June 2018;
(5)the affidavit of Fei Fei Xue sworn 1 April 2019; and
(6)the affidavit of Adam Hirst sworn 28 May 2019.
There has been no appearance by the defendant. The defendant's non‑appearance is consistent with the defendant's failure to participate in the proceedings since July 2018. However, pursuant to orders made 1 April 2019 the plaintiff has effected service of the application and the materials relied on in support of the application on the defendant. An affidavit of service of Emerald Petrie affirmed 11 April 2019 has been filed. This establishes that service was effected on 7 April 2019. The documents served include the orders made 1 April 2019. Those orders provided for the fixing of the time and date of the assessment of damages.
Originally the assessment was listed for hearing on 1 May 2019. At that time, however, it became apparent that the plaintiff's proof was deficient in one aspect. Counsel for the plaintiff sought and obtained an adjournment to today, 5 June 2019. However, I ordered that the order providing for the adjournment be personally served on the defendant.
There is a further affidavit of Emerald Petrie, affirmed 8 May 2019, which proves personal service on the defendant of the orders of 1 May 2019. Those orders were accompanied by a letter from the plaintiff's solicitors. The letter informed the defendant that the matter had been listed for hearing on 5 June 2019 at 10.00 am.
Accordingly, I am satisfied that the defendant was given notice of the hearing for assessment of damages. Indeed, the defendant has twice had personal service informing him that the plaintiff is proceeding with an assessment of damages. The defendant has chosen not to participate. The hearing has therefore proceeded in his absence.
Factual and procedural background
These proceedings were commenced on 14 June 2018. At that time the plaintiff made an urgent ex parte application for a freezing order. I granted a freezing order for reasons that were delivered on 18 June 2018.[1]
[1] See Rimex Wheel Pty Ltd v Wulff [2018] WASC 180.
In my reasons I summarised the factual position as follows:
7Rimex is the Australian incorporated subsidiary of an overseas parent. It is a manufacturer of wheels and wheel assemblies. Its Western Australian operations are carried out in Welshpool.
8Mr Wulff was employed as Rimex's Perth branch manager.
9In mid‑May 2018 Rimex became aware of some potentially irregular financial activity when it received a demand for outstanding money from an entity named Runabout Metals. Demand was made as to what was said to be a short delivery of scrap metal. Runabout Metals was then unknown to Rimex. On investigation it became apparent that over a five month period Mr Wulff had diverted scrap metal and brass belonging to Rimex, sold it to Runabout Metals, and received proceeds of some $59,503.62.
10The connection between the sale activity and Mr Wulff was established as Runabout Metals provided Rimex with proof of payment into a bank account which was the same bank account into which Rimex paid Mr Wulff's salary. Also, on 15 May 2018 Mr Wulff asked Rimex's assistant account manager to pay an invoice said to be an invoice from Runabout Metals. Mr Wulff requested that the invoice be processed that day as it was well overdue and 'we [Rimex] need to place another order with them in the next few days'. The invoice was in the amount of Runabout Metal's overpayment to Mr Wulff. Runabout Metals' director confirmed that the invoice was not issued by it.
11Mr Wulff was interviewed by Mr Hirst on 16 May 2018 in the presence of Rimex's general manager. In the course of the interview Mr Wulff admitted receiving the funds from Runabout Metals in relation to the scrap metal dealings. A written record of the interview (as created by Rimex) records Mr Wulff as stating:
I'll put my hand up and acknowledge I've done wrong, it progressed into something else.
…
Unfortunately, it got out of control.
John explained where the other money has gone, i.e. a legal dispute ...
The scrap started purely for the company, saw a way to progress his legal dispute through the courts, was mentally in a bad place and this occurred to him shortly after starting …
…
Going out on a limb here, can I ask if I can make this right by RIMEX?
Happy to pay money back, take a pay cut
12Following the interview Rimex terminated Mr Wulff's employment.
13By a 17 May 2018 email to Rimex's general manager and Mr Hirst, Mr Wulff stated:
I sincerely apologise for betraying your trust and take full responsibility for my actions. While I understand my actions can not (sic) be undone I'm genuinely willing to cooperate fully and provide any further infomation (sic) relating to the investigation into my actions …
14Mr Wulff then sent a further email to Mr Hirst on 18 May 2018. Mr Wulff sought to assure Mr Hirst that 'this behaviour is genuinely out of character for me'. Mr Wulff said that he was 'genuinely remorseful' and 'genuinely ashamed of my actions'.
15After Mr Wulff's employment was terminated the scope of Rimex's investigation was expanded beyond the scrap metal dealings to other aspects of Rimex's business that Mr Wulff had influence over. In particular there was consideration of whether certain invoices that Mr Wulff had submitted to Rimex for payment were genuine. There were two such categories of invoices: (1) invoices purportedly from an entity called HD Plasma and Laser; and (2) invoices purportedly from an entity called Full Pen Welding and Inspection Services. Rimex had paid those invoices.
16The evidence included four invoices over the period 19 to 27 April 2018 purportedly from HD Plasma and Laser totalling $31,092.60. There was also a series of emails from Mr Wulff requesting payment of the invoices, often so that goods could be collected. For example, by an email dated 19 April 2018 Mr Wulff attached one of the invoices (for $14,278) seeking that it be processed that day. In its investigation Rimex made contact with HD Plasma and Laser and asked it to verify the various invoices. HD Plasma and Laser informed Rimex that the subject invoices were not its invoices and that the bank account details on the invoices were not its bank details. Also, Rimex employees informed Mr Hirst that, to the best of their knowledge, none of the wheel disc products as mentioned in the invoices had been delivered to Rimex.
17There is a similar body of evidence in relation to Full Pen Welding and Inspection Service. Here, however, there are nine invoices totalling $106,515.97 over the period 23 January 2018 to 19 April 2018. Again there were many emails from Mr Wulff submitting and seeking payment of the invoices.
18Some of Mr Wulff's emails seeking payment of these invoices forwarded purported emails from a 'Reece Douglas' of Full Pen Welding and Inspection Services. The evidence does not allow any conclusion to be reached as to whether Mr Douglas existed; nor whether Full Pen Welding and Inspection Service was a real business. Unlike HD Plasma and Laser there is nothing to suggest that Rimex has been able to contact Full Pen Welding and Inspection Service to confirm that the invoices were fictitious. However, a Rimex employee has informed Mr Hirst that, to the best of his knowledge, none of the products mentioned on the invoices were delivered to Rimex. It was said that the invoices matched some of the jobs Rimex had built on site, ie that an invoice had been created to reflect what Rimex had done.
Those findings were based on the first affidavit of Mr Hirst as is relied on in the application for assessment of damages pressed before me today. Mr Hirst is the plaintiff's national operations manager. In the earlier reasons I noted that, while I accepted the materials in the plaintiff's supporting affidavit, I was not making any final factual determinations. That is no longer the case. Default judgment has been entered and the defendant has presented no material to contradict the materials adduced through Mr Hirst. Accordingly, I now consider the previous provisional factual position to have been finally and conclusively established.
Based on that factual position the plaintiff has pleaded out its case in an unanswered statement of claim dated 15 August 2018.
In summary, the statement of claim:
(1)addresses the status of the parties and their employer and employee relationship;[2]
[2] SOC, [1] ‑ [6].
(2)pleads out the allegations as to Runabout Metals, namely that:
(a)the defendant sold scrap metal belonging to the plaintiff to Runabout Metals; and
(b)the defendant procured to himself a payment of at least $59,503.62 from Runabout Metals;[3]
(3)pleads out the allegations as to Full Pen Welding and Inspection Service and HD Plasma and Laser, namely that:
(a)the defendant created fictitious invoices directed to the plaintiff; and
(b)the defendant procured payment by the plaintiff to the defendant of the fictitious invoices in amounts totalling $106,515.97 (in relation to Full Pen Welding and Inspection Services) and $31,092.60 (in relation to HD Plasma and Laser);[4] and
(4)alleges a breach of the defendant's obligations as employee causing loss and damage, for which the defendant is liable to account, in the amount of $197,112.12.[5]
[3] SOC, [7] ‑ [8].
[4] SOC, [9] ‑ [14].
[5] SOC, [15], [17] ‑ [18].
An order was made requiring the defendant to put on a defence. The order was not complied with. On 5 September 2018 a self‑executing order was made. It provided for judgment to be entered against the defendant for damages to be assessed if the order to file and serve a defence was not complied with within 28 days after service of the order. The self‑executing order was served on 19 October 2018 pursuant to orders for substituted service made 17 October 2018. It remained the case that the defendant did not file and serve a defence.
On 5 December 2018 default judgment was entered in the following terms:
The court, having ordered on 5 September 2018 that judgment be entered for the plaintiff against the defendant unless the defendant complies with the orders of the court made 1 August 2018 by filing and serving a defence within 28 days after the date of service of the order on the defendant, that 5 September 2018 order having been served on the defendant on 18 October 2018 in accordance with the orders of the court made 17 October 2018, and the defendant having not filed and served a defence in compliance with the orders of the court made 1 August 2018 as at 5 December 2018, orders that:
(1)The defendant pay the plaintiff damages to be assessed.
(2) The defendant pay the plaintiff interest on those damages at the rate of six per cent per annum from 14 June 2018 to the date of judgment.
(3)The defendant pay the plaintiff's costs of the action to be taxed if not agreed.
Assessment of Damages
It is convenient to assess the plaintiff's damages by the three distinct categories of transaction, that is, Runabout Metals, Full Pen Welding and Inspection Services and HD Plasma and Laser.
Runabout Metals Transactions
The defendant converted the plaintiff's property, namely, the scrap metal and brass, in selling those materials to Runabout Metals.
The loss and damage suffered by the plaintiff is the value of the scrap metal and brass so sold.
The plaintiff has not adduced evidence as to the value of the scrap metal and brass. I am, however, prepared to infer that its value is at least as much as Runabout Metals was prepared to pay for the scrap metal and brass. That amount, at least, would have been received by the plaintiff from Runabout Metals for the scrap metal and brass had the defendant not diverted the proceeds to himself.
Mr Hirst's first affidavit satisfactorily establishes that Runabout Metals received, via the defendant, scrap metal and brass the property of the plaintiff, for which Runabout Metals would have paid $59,503.62.
The amount is established by:
(1)the summary of the financial transactions and Recipient Created Tax Invoices as provided by Runabout Metals;[6] and
(2)the Recipient Created Tax Invoices as issued by Runabout Metals to the plaintiffs.[7]
[6] See Adam Hirst's affidavit sworn 14 June 2018, p 49.
[7] See Adam Hirst's affidavit sworn 14 June 2018, p 50 - 56, 58 - 61.
Accordingly, due to the defendant converting the plaintiff's property by selling the scrap metal and brass to Runabout Metals, the plaintiff has suffered a loss of $59,503.62.
Full Pen Welding and Inspection Services
Through the submission of fictitious invoices, said to be from Full Pen Welding and Inspection Services, the defendant has received money from the plaintiff. The extent of the plaintiff's loss is represented by the money that was paid over pursuant to the fictitious invoices.
Mr Hirst's first affidavit established that there were fictitious invoices as follows:
| Number | Invoice Number | Amount | First Hirst Affidavit |
| 1 | Invoice 1002 | $25,080.00 | Hirst page 201 |
| 2 | Invoice 1013 | $7,969.50 | Hirst page 202 |
| 3 | Invoice 1021 | $3,740.00 | Hirst page 203 |
| 4 | Invoice 1025 | $20,240.00 | Hirst page 211 |
| 5 | Invoice 1035 | $14,737.47 | Hirst page 216 |
| 6 | Invoice 1036-1 | $24,750.00 | Hirst page 217 |
| 7 | Invoice 1036-2 | $4,125.00 | Hirst page 223 |
| 8 | Invoice 1052 | $3,388.00 | Hirst page 230 |
| 9 | Invoice 1053 | $2,486.00 | Hirst page 235 |
Those invoices total $106,515.97.
The invoices required payment into a Westpac bank account. Documents obtained by the plaintiff on subpoena establish that the bank account with that number was a bank account in the name of the defendant.[8] Bank statements for the account appear at pages 18 to 34 of Ms Xue's affidavit (unfortunately not in chronological order). Tracking through the bank statements I was able to identify payments being made into the account for all of the invoices with the exception of Invoice 1002. Relevant payments by the plaintiff, received into the defendant's account, appear at pages 27, 28, 29, 32 and 33 of Ms Xue's affidavit.
[8] See Fei Fei Xue's affidavit sworn 1 April 2019, pp 4 - 7.
There was, however, no receipt as to Invoice 1002. This may be because the bank statements commence from 1 February 2018. Invoice 1002 is dated 23 January 2018.
It was this deficiency in proof which necessitated the adjournment of the hearing on 1 May 2019.
Following the adjournment, the plaintiff filed the second affidavit of Mr Hirst. This attaches two documents to prove the $25,080 payment, namely:
(1)the plaintiff's 'payment details' record - this shows the plaintiff making a $25,080 payment to Full Pen Welding and Inspection Services on 25 January 2018; and
(2)the January 2018 bank statement for the defendant's bank account - this shows the $25,080 payment being received into the defendant's bank account on 25 January 2018.
Accordingly, I am now satisfied that there is proof of payment as to Invoice 1002.
The plaintiff has provided proof of payment and depletion of its resources for all of the nine fictitious invoices in relation to Full Pen Welding and Inspection Services.
Accordingly, damages have been proven in the amount of $106,515.97.
HD Plasma and Laser
Through the submission of fictitious invoices, said to be from HD Plasma and Laser, the defendant has again received money from the plaintiff. Again the extent of the plaintiff's loss is represented by the money that was paid over pursuant to the fictitious invoices.
Mr Hirst's first affidavit establishes that there were fictitious invoices as follows:
| Number | Invoice Number | Amount | First Affidavit |
| 1 | Invoice 15129 | $14,283.00 | Hirst page 308 |
| 2 | Invoice 15130 | $8,118.00 | Hirst page 311 |
| 3 | Invoice 15150 | $5,590.20 | Hirst page 325 |
| 4 | Invoice 15172 | $3,106.40 | Hirst page 330 |
Those invoices total $31,092.60.
With the HD Plasma and Laser invoices, Mr Hirst's first affidavit also includes the plaintiff's Westpac payment detail report for each invoice.[9] Notwithstanding proof of payment by that method, the plaintiff has also undertaken the same tracing exercise as was undertaken in relation to the Full Pen Welding and Inspection services invoices. Again the HD Plasma and Laser invoices required payment into an account that proved to be an account in the name of the defendant.[10] Ms Xue's affidavit demonstrates the receipt of each of the four payments into that account of the defendant.[11]
[9] See Adam Hirst's affidavit sworn 14 June 2018, pp 302, 312, 326, 331.
[10] See Fei Fei Xue's affidavit sworn 1 April 2019, pp 8 - 10.
[11] Fei Fei Xue's affidavit sworn 1 April 2019, pp 11 - 12.
Payment into the defendant's account established that there was payment out of the plaintiff's account. Accordingly, the damages in relation to the HD Plasma and Laser invoices have been proven in the amount of $31,092.60.
Conclusion
Damages for the plaintiff's claim have been proven in an amount of $197,112.19 comprising:
(1)Runabout Metals ‑ $59,503.62;
(2)Full Pen Welding and Inspection services ‑ $106,515.97; and
(3)HD Plasma and Laser ‑ $31,092.60.
The statement of claim only seeks damages in the amount of $197,112.12. I suspect there has been some arithmetical error in compiling the statement of claim that explains the difference of seven cents. I should not, however, enter judgment for an amount more than that claimed in the statement of claim. That is all the more so where the defendant has not appeared and I am assessing damages on an undefended basis.
Judgment for damages assessed in the amount of $197,112.12 will be entered for the plaintiff against the defendant.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
EP
Research Associate to Justice Vaughan12 JUNE 2019
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