Snel Investments P/L v View Management P/L - [2008] SADC 172

District Court of South Australia
(Civil)
SNEL INVESTMENTS P/L v VIEW MANAGEMENT P/L
[2008] SADC 172
Reasons for Decision of His Honour Judge Clayton (ex tempore)
12 December 2008
REAL PROPERTY
Contract for the sale of land. Purchaser claimed cost of replacing fixtures alleged to be present at the time of an inspection prior to signing contract but which were missing at settlement.
HELD: Purchasers evidence not accepted. No factual basis for the claim.

SNEL INVESTMENTS P/L v VIEW MANAGEMENT P/L
[2008] SADC 172

The plaintiff claimed the sum of $11,631 in the Magistrates Court, being the cost of a small building which it constructed for the defendant. The defendant acknowledges that it owes that money, however, in a counterclaim which brought the action within the jurisdiction of this Court, the defendant claims damages for breach of contract or in the alternative damages for wrongful conversion. There is also a reference to a breach of the Trade Practices Act 1974.
The plaintiff sold to the defendant a property at the corner of Winterslow and Peachy Roads, Elizabeth West. The contract, which is dated 15 September 2006, provided that ‘the Land’, which was the subject of the contract, included all improvements and fixtures. Settlement on the contract occurred on 3 October 2006.
The defendant’s case is that when the property was inspected prior to the execution of the contract there were some bus-bars and a data rack console installed on the premises. A bus-bar is a type of rail which carries electric current from one side of the building to the other and enables power sources to be attached at convenient places. A previous owner of the building had used bus-bars to power machinery used in the manufacture of jeans.
The defendant complains that after it took possession of the premises, neither the bus-bars nor the data rack console were on the premises.
Paragraph 13 of the counterclaim alleges that, after execution of the contract and prior to the settlement date and without permission or authority of the defendant, the plaintiff and/or its agents caused the bus-bars and data rack console to be removed from the buildings. It is alleged that the plaintiff wrongfully deprived the defendant of the use and possession of the said bus-bars and the said data rack console and has converted the same to its own use. It is alleged that the defendant first became aware of the removal after the settlement date which, as I have said, was 3 October 2006. The counterclaim seeks $73,004.70 for the cost of materials to replace the bus-bars and associated equipment and $25,000 for the installation of the materials. A further $8,000 was sought for the replacement cost of the data rack console but that claim has now been abandoned.
The claim for the bus-bars could spawn a number of difficult issues; issues such as whether they were fixtures or not. However, it is possible for the claim to be determined on one simple basis: that is, whether the bus-bars were installed when the property was inspected by the defendant prior to the contract being signed. If the bus-bars were not present on the property at the time of inspection by the defendant then there is no basis for the counterclaim.
Evidence was given by David Harold Van Der Kley, he is a construction manager employed by a company associated with the defendant. He is a qualified carpenter and joiner. He said that he first visited the property between April and July 2006. He was asked to attend with Mr Kevin Weeks because Mr Weeks was looking to buy the property. They carried out an inspection which took about an hour and a half. He said they had a look at everything that was there. He described the internal layout of the building and differences between the western side and the eastern side. In particular he described the services to each area. Mr Van Der Kley said that there were no bus-bars in the eastern area but in the western area there was a row of 10 bars. When asked how he knew that he said ‘Because we actually counted them, had a look at them. The electrician was most interested in them because we were thinking about later on what we could actually do with the bus-bars and rearrange them’. The electrician to whom he referred was John Iannella.
Mr Iannella was also present on the occasion of Mr Van Der Kley’s first inspection. Mr Weeks was not called to give evidence, having regard to the dispute which has arisen in this case. Perhaps he should have been. No explanation has been given for his absence.
Mr Van Der Kley presented as a competent person and a reliable witness. If there had been no other evidence, I would have been prepared to accept what he said. He said he had not encountered bus-bars before. He gave evidence of a very specific conversation in which he and Mr Iannella discussed the bus-bars and that Mr Iannella said that to get them installed in a factory at that time would cost a small fortune.
Mr Van Der Kley returned to the building in around October of 2006. He said that on that occasion the bus-bars in the western area were missing, so were fire extinguishers, combination deadlocks and a data rack. All the bus-bars, bar one, had been removed. He said it looked like somebody had pulled them out with an axe because the wiring left a little bit to be desired.
Mr Van Der Kley gave evidence that immediately after the second visit he telephoned Mr Tassone, the chief financial officer of the Weeks Group of Companies, and reported that the bus-bars were not there.
Mr Van Der Kley gave evidence of conversations with Mr Jack Snel, a shareholder and director of the plaintiff. In the first conversation Mr Van Der Kley said: ‘Jack rang about the bus-bars and said that he did not know too much about it.’ In second and third conversations they spoke again about the bus-bars and Mr Van Der Kley continued: ‘But the fourth conversation was that he rang me and we were talking about the bus-bars and he said that they were never there and someone must have stolen them.’ Mr Van Der Kley said that Mr Snel said that he had better call the police because someone had stolen them.
There was discussion about the alarm code and Mr Van Der Kley continued that Mr Snel then said: ‘If Kevin wants his bus-bars back, he can have them.’ Mr Van Der Kley said in response he then questioned Mr Snel, saying: ‘But you just told me two minutes ago that you did not have bus-bars’ and that when he said that to Mr Snel, Mr Snel said: ‘I think we’d better cease the conversation.’ That was the last time that Mr Van Der Kley spoke with Mr Snel.
Mr Van Der Kley repeated that evidence. He (Mr Snel) said first he said he did not have them. Then he said: ‘If Kevin wants bus-bars, he can have bus-bars back’.
I pause to interpolate the comment that, if correct, that evidence could be interpreted to amount to an admission that Mr Snel had taken the bus-bars.
As I said, Mr Tassone is the chief financial officer of the Weeks Group of Companies. He gave evidence of his conversations with Mr Snel. He told Mr Snel that they were quite happy to pay for the building work but there were other issues. He told Mr Snel that the defendant wanted the bus-bars back and reinstalled. He said Mr Snel mentioned some bus-bars that he had. He did not say that they were the bus-bars which were the ones which the defendant was claiming but said he had bought them in an auction. Mr Tassone said that Mr Snel said that he would offer the bus-bars that he had bought at the auction. Mr Tassone rejected the offer, saying that those bus-bars were no good to the defendant in pieces and they needed to be reinstated like the ones that the defendant had expected. Mr Tassone said that he had no idea what condition the bus-bars which were being offered were in.
Mr Iannella is an electrician who works for 90 percent of the time with the Weeks Group. He gave evidence he first went to the building in July 2006 with David Van Der Kley. He said he: ‘I could see the bus-bars and they were feeding down, obviously, when the machines were there’. He said that: ‘Just commented on that’ and he said: ‘Just things you notice. There were 10 rows of bus-bars, some of it was disconnected, some was live, some was dead’.
He corroborated the evidence of the conversation of Mr Van Der Kley about the bus-bars. That was the conversation to the effect that somebody had gone to a lot of expense putting it all together. He said: ‘There was air lines up there, there was bus-bar, there was all the things you needed to - for the sewing machines’.
When he went back in October, Mr Iannella noticed that the bus-bars were missing. His evidence was that when they first went into the building in October, he said: ‘Oh, we just looked - I was just looking around and I said to Dave “What’s happened to the bus-bars?” He said “I don’t know”. I said “They’re gone”. He said “Well, they were there before” and yeah - it is just by an observation.’ He was asked whether anything else had changed and he said: ‘No, just the bars were gone.’
Mr Iannella presented as a competent witness and, like Mr Van Der Kley, there was no reason, on the basis of his presentation alone, not to believe his evidence.
The case for the plaintiff was quite inconsistent with the evidence on behalf of the defendant. The plaintiff’s case is that the bus-bars on the western side of the building had already been removed at the time when the plaintiff purchased the building itself. That was well before the sale to the defendant or the inspection of the building by the defendant’s representatives. It follows that the plaintiff denies removing the bus-bars, as alleged by the defendant.
Mr Snel gave evidence that the plaintiff contracted to purchase the property in about August 2005. When he purchased the building there were six rows of bus-bars on the eastern side of the building. Those bars belonged to a tenant. Mr Snel purchased those bus-bars at a public auction from the administrator of an insolvent company. There are documents in evidence which establish that purchase.
After purchasing those bus-bars, that is bus-bars on the eastern side, Mr Snel removed them because they affected the head room. Mr Snel was asked whether he could remember whether there were bus-bars in the western area and he replied: ‘I couldn’t recall because I hadn’t worked in that area at all and it is not a small area, you’re talking over 6,000 sq m.’ He said he never had any reason to do anything in that area because it looked fairly clean compared to The Jeans Factory.
Mr Snel gave evidence of the sale of the property to the defendant, which was negotiated by an intermediary. Before the contract was signed Mr Snel offered to meet Mr Tassone on the premises and Mr Tassone told him that would not be necessary, to which Mr Snel responded: ‘Well, I’ve never come across anybody that would buy a property for that amount of money and not want to inspect or talk to me.’ The consideration for the sale was a significant sum. It is probably unnecessary to mention what it was, but it is set out in the contract. At the time there was some discussion about the possibility of the defendant demolishing the building.
Mr Snel said that he kept the property secure between the date of the contract with the defendant and the date of settlement; there was 24-hour security on the property.
An invoice was raised for the plaintiff’s claim for the building work. Mr Snel learned that the Weeks Group froze payment on the invoice and for that reason he contacted Mr Tassone. They had a meeting. Mr Snel asked what the problem was and Mr Tassone said: ‘You’ve taken some property that belongs to us and we want to get paid for it.’ He referred to the bus-bars. Mr Snel said that he had removed bus-bars which he had purchased from the administrator and Mr Tassone said: ‘They are not the bus-bars I’m talking about, I’m talking about the bus-bars on the other side.’ Mr Snel replied: ‘Well, I don’t recall any bus-bars being there.’ Mr Tassone then said: ‘It’s real simple. Forget the invoice and we will forget the bus-bars.’ Mr Snel rejected that offer.
Mr Tassone arranged for Mr Snel to visit the premises with Mr Van Der Kley. Mr Tassone stayed in the office. At the premises Mr Van Der Kley pointed out where bus-bars had been. They could see where paint had been removed on the structure and Mr Snel agreed that something had been removed but said that he had never removed anything.
In subsequent conversations Mr Tassone told Mr Snel that it was highly unlikely that the defendant would use bus-bars. Mr Snel said he had made an offer to give the plaintiff the bus-bars which he had purchased at the auction, in an attempt to reach a commercial settlement of the dispute.
If that is where the evidence rested, the resolution of this case would be very difficult. However, evidence was given by Mr Quagliarella, an employee of the previous owner of the building, that he had, in fact, removed the bus-bars on the western side of the building in December 2004 and shipped them to South Africa. He is impartial and was a good witness. There is no reason not to accept the evidence of Mr Quagliarella.
His evidence is corroborated by photographs. There is a dispute as to the date of the photographs. I regard the date in the index of the defendant’s tender documents as an admission by the defendant. I also have regard to the transcript at pp.12 and 14 and also transcript p.11, which I have read in the course of argument and I will not repeat now.
I find that the photographs were taken - I should say some of the photographs were taken - no later than May 2006. Some of the photographs were tendered by the defendant in support of its case. When they were blown up, the photographs did not support the case of the defendant; but they corroborated the evidence of Mr Quagliarella and they support the case of the plaintiff.
I do not think that the evidence of the use of an axe or the butchering of equipment is any reason not to accept the evidence of Mr Quagliarella. It may be that it makes the evidence of Mr Van Der Kley and Mr Iannella more graphic but it does not detract from the force of the evidence of Mr Quagliarella.
In the circumstances, I reject the evidence of Mr Van Der Kley and Mr Iannella. Their evidence that there were 10 rows of bus-bars on the western side of the building when they carried out the first inspection cannot be correct. It is contrary to objective and independent evidence. No worthwhile purpose will be served by trying to understand whether their evidence was deliberately incorrect or whether it was an erroneous reconstruction based upon the fact that they could see evidence where the bus-bars had been and they therefore assumed that the bus-bars must have been present at the time of the first inspection.
During the course of the case the defendant tried to draw some sinister inference from the conversations that Mr Snel had with representatives of the defendant: Mr Tassone and Mr Van Der Kley. The evidence of Mr Snel puts those conversations into context and provides a logical explanation for them, however, it is really unnecessary to descend to that detail because this case is really decided by the evidence of Mr Quagliarella and the photographs.
My finding that the bus-bars had been removed in about December 2004 makes the conversations between the parties at the end of 2006 or early in 2007 irrelevant. I find that there were not 10 rows of bus-bars in the western side of the building at the time of the inspection by representatives of the defendant. There is no foundation for the counterclaim. The counterclaim will be dismissed. There will be judgment for the plaintiff for the amount of the claim. Is there anything else?
MR BRITTEN-JONES: I seek costs.
MR ROSS-SMITH: No submission.
HIS HONOUR: There will be an order that the plaintiff have its costs to be agreed or taxed.
MR ROSS-SMITH: If it pleases the court.
HIS HONOUR: I thank counsel for their assistance.
COUNSEL: If your Honour pleases.
ADJOURNED 3.49 P.M.