SJD Marketing Pty Ltd v Venn

[2014] VCC 1634

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST

GENERAL CASES DIVISION

Case No. CI-14-00078

SJD MARKETING PTY LTD	Plaintiff
v.
PENNI VENN & ANOR	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	29 September 2014
DATE OF JUDGMENT:	29 September 2014 (revised 30 September 2014)
CASE MAY BE CITED AS:	SJD Marketing Pty Ltd v. Venn & Anor
MEDIUM NEUTRAL CITATION:	[2014] VCC 1634

REASONS FOR JUDGMENT

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Catchwords:             Practice and procedure – Summary judgment application – Alleged payments by first defendant to the defendants in excess of the second defendant’s entitlements as a subcontractor of the plaintiff – First defendant the plaintiff’s book-keeper – Lack of credibility of defendants’ explanation and/or lack of explanation in relation to specific payments – Similar doubts relating to basis each of the defendant’s counterclaims – Leave to defend granted subject to payment into Court of amounts not satisfactorily explained – Rule 22.06(1)(c) County Court (Civil Procedure) Rules 2008 (Vic).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P. Bingham of Counsel	Falcone & Adams Lawyers
For the Defendants	Mr A. Ritchie of Counsel	Belleli King & Associates

HIS HONOUR:

1The plaintiff seeks summary judgment from the defendants pursuant to a summons dated 22 July 2014. The plaintiff is a building company. The first defendant worked for the company as a book-keeper between February 2009 and August 2013. The second defendant is her husband and was a subcontractor plasterer to the plaintiff.

2The plaintiff claims that a series of payments to the defendants between 2009 and 2013 were made in excess of the entitlement of the second defendant and that these payments were made as a result of the actions of the first defendant.

3The payments relate to:

a.cheque transactions totalling $67,553.13;

b.online transactions totalling $98,142.87.

4Although other bases for the plaintiff’s claim were pleaded in the statement of claim, the summary judgment application was pursued by the plaintiff on the basis of a claim in restitution. The defendants have:

a.denied that the cheque transactions were not supported by genuine invoices of the second defendant;

b.admitted that the bulk of the online transactions were overpayments;

c.made payments to the plaintiff totalling $47,634.67 representing:

i.the admitted online transactions overpayments;

ii.less the deduction of $806 said to be the first defendant’s “wages - calculated on the basis of 26 hours owed and not paid”;

iii.less the deduction of amounts for further invoices, the second defendant says the plaintiff has not paid.

5The first defendant has filed a counterclaim seeking payment of employee entitlements totalling $35,397.67 which she says were due to her from the plaintiff in respect of the period she worked as a book keeper. These include amounts for annual leave, personal leave, leave loading and superannuation entitlements.

6The second defendant has filed a counterclaim seeking payment of a number of invoices he says were not paid by the plaintiff. The original counterclaim was for $33,409.10. The second defendant has withdrawn claims of $8,256.60 and $375. The amended counterclaim will be for $24,777.50. The plaintiff concedes that, of this sum, $13,336.84 is owing to the second defendant.

7The principal areas of dispute remaining between the parties are as follows:

a.the plaintiff’s claim as regards cheque transactions totalling $67,553.13;

b.the defendants’ dispute of the plaintiff’s claim as regards online transactions for 3 sums totalling $1,454.05;

c.the first defendant’s counterclaim as regards employee entitlements totalling $35,397.67;

d.the second defendant’s counterclaim as regards the disputed further invoices totalling $11,440.66 (after the plaintiff’s concession as to the sum of $13,336.84).

Cheque transactions totalling $67,553.13

8The plaintiff has given detailed evidence of how the 10 cheque transactions arise. The conclusion from this evidence is that these cheques were paid to the defendants in circumstances where the second defendant had no entitlement to payment. In answer, the first defendant in an affidavit sworn 5 September 2014 said:

a.she was not a party to any fraudulent activity during her employment with the plaintiff as a book keeper;

b.there were instances of similar irregularities resulting from the work of other employees of the plaintiff who had similar responsibilities as she had;

c.all the payments were made in relation to genuine invoices of the second defendant.

9The second defendant did not swear any affidavit material on the issue of whether the cheque transactions related to genuine invoices. The first defendant said that the defendants’ computer had “crashed” and all their accounting records were lost. No explanation was given, however, as to why the defendants, and particularly the second defendant, were not able to provide any details of the work to which his invoices may have related. Further, whereas the defendants have examined each of the 14 items of online transactions totalling $98,142.87 and have been able to identify whether over-payments had or had not been made, a similar exercise was not undertaken in relation to the cheque transactions.

10The lack of any explanation for the defendants’ failure to offer more than the bare denial by the first defendant is unsatisfactory and provides no basis for concluding that the defendants would have a real prospect of succeeding at trial in defending these claims by establishing that there was a genuine basis for the payments.

11It was suggested that, at trial, the defendants may produce evidence of a forensic accountant following an examination of the plaintiff’s discovered documents, and further discovery that has been requested, which might show that the cheque transactions arise from irregularities that are similar to other irregularities in the plaintiff’s accounting records and which might be shown to be unconnected with the second defendant.

12The plaintiff has made discovery and supplementary discovery, and in support of the summary judgment application, has provided a detailed examination of every transaction in dispute. What the defendants suggest might constitute the work of a forensic accountant was essentially an audit of the plaintiff’s entire accounting records for the four years from 2009 to 2013. There is no basis for suggesting that such an exercise would be appropriate or likely to be permitted.

Disputed online transactions totalling $1,454.05

13The first defendant says that three of the online transactions involved the supply of items ordered personally by her. In each case, she said that this was done with the consent of the plaintiff and that the amount involved was paid personally by her to Mr Dunstan, the managing director of the plaintiff. I am satisfied in relation to these three transactions that there is an arguable defence.

First defendant’s counterclaim

14The first defendant claims that for the four and a half years she worked as a book-keeper for the plaintiff, she was an employee and not a subcontractor.

15There appears to be no dispute that she was paid an hourly rate, that she was paid on invoice and that during the whole of the period she worked for the plaintiff, she was not paid the normal entitlements of an employee which she now claims, such as for annual leave and for superannuation.

16The invoices she rendered to the plaintiff were in the name of a business, “Penny Venn Admin Services”, she quoted an ABN number and she specified the hours worked during a particular period and the hourly rate that was claimed. It appears therefore that, for the entire period that she worked for the plaintiff, the parties operated on the basis that she was a subcontractor. Although it was within the area of her responsibilities, no leave was taken by her, no superannuation payments were made and no PAYE taxation payments were deducted.

17The first defendant has referred to and exhibited the original advertisement for the position, her letter of application and a letter written by the plaintiff apparently as a statement of her earnings for the purposes of a bank loan. In my view those documents are not conclusive either way as to whether the relationship was of an employee or contractor.

18The first defendant in her affidavit material has referred to matters relating to the conduct of her work which she says suggests that she was directed by the plaintiff through Mr Dunston in a way that would be inconsistent with her being a subcontractor. In my view, the material is also equivocal.

19I consider that, in the following circumstances:

a.that the parties have essentially, for four and a half years, acted as if the first defendant was not an employee;

b.that prior to the filing of the counterclaim, the only claim foreshadowed by the first defendant was a claim made by letter dated 21 November 2013 for $806, consistent with her being a subcontractor;

that the basis for the counterclaim is not a strong one.

Second defendant’s counterclaim

20The second defendant has withdrawn one substantial item and reduced a second item of the eight items constituting his counterclaim.

21The plaintiff, in its material, has examined each of the remaining items in some details. The material in response from the second defendant is cursory. In respect of one item, the second defendant now says that he cannot locate the relevant invoice. I consider that, in the circumstances the matters raised by the second defendant by way of counterclaim have little support save for the invoice dated 27 August 2013 for the sum of $15,096.85. This sum has been conceded, as to the amount of $13,336.84, by the plaintiff. In the circumstances, the defendants should have leave to defend in so far as there is reliance upon the total amount of that invoice.

Orders

22Accordingly, I propose to make the following orders:

1. Upon condition that, prior to 4pm on 26 October 2014, the defendants pay into court the sum of $101,410.44 (or otherwise provide security for that sum in a form previously agreed to in writing by the plaintiff) the defendants shall have leave to defend the plaintiff’s claim.

2.If the defendants, by 4pm on 26 October 2014, fail to comply with paragraph 1, there shall be judgment for the plaintiff as follows:

a. against the first defendant that the first defendant pay to the plaintiff the sum of $104,715.49 together with interest pursuant to statute from 8 January 2014 to 26 October 2014;

b.against the second defendant that the second defendant pay to the plaintiff the sum of $95,578.41 together with interest pursuant to statute from 8 January 2014 to 26 October 2014;

c.that the first defendant’s counterclaim and the second defendant’s counterclaim be dismissed;

d.that the defendants pay the plaintiff’s costs of the plaintiff’s claim and the defendants’ counterclaims including any reserved costs and the costs of the plaintiff’s summons filed 22 July 2014 and of the hearing today, to be assessed by the Costs Court in default of agreement.

3.The trial date of 27 January 2015 is reinstated and confirmed, provided the plaintiff, by 12 noon on 1 October 2014, pays the setting down for trial fee.

4.        Reserve costs.

5.        Liberty to apply.

23I have made the orders pursuant to Rule 22.06(1)(c). I have done so because I consider that the condition of requiring the defendants to pay the money into court (or otherwise provide security acceptable to the plaintiff) is appropriate. The material relied upon by the defendants is unsatisfactory for the reasons I have stated. I have deducted from the amounts for which the plaintiff says it would otherwise be entitled to seek judgement, the whole of the invoice for $15,096.85, in regards to which the plaintiff has conceded that $13,336.84 is owing. I have also deducted the sum of $1,454.05 which the first defendant says he paid to Mr Dunston in respect of items 1, 5 and 6 in schedule B.

24I have not required the defendants to pay anything further into court to cover the substantial amounts of interest that have accrued in the plaintiff’s favour, or as security of the plaintiff’s costs of defending the two counterclaims. Because the trial date is not too distant I consider that limiting the payment into court to the plaintiff’s claim as I have indicated, with some deductions where an arguable defence has been shown, should be appropriate to do justice between the parties.

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Certificate

I certify that these 6 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 29 September 2014 and revised on 30 September 2014.

Dated: 30 September 2014

Olivia Bramwell

Associate to His Honour Judge Anderson