Tasmanian Sandstone Quarries Pty Ltd v Anthony Homes Pty Ltd - [2018] SADC 23

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Minor Civil Review)
TASMANIAN SANDSTONE QUARRIES PTY LTD v ANTHONY HOMES PTY LTD
[2018] SADC 23
Judgment of His Honour Auxiliary Judge Clayton
15 March 2018
ADMINISTRATIVE LAW
Magistrates Court Act 1991 s 38, referred to.
Wilczynski & Anor v District Court of South Australia [2016] SASC 51; Nunkuwarrin Yunti of SA Inc v A L Sealy Constructions Pty Ltd (1990) 72 SASR 21, considered.

TASMANIAN SANDSTONE QUARRIES PTY LTD v ANTHONY HOMES PTY LTD
[2018] SADC 23

This is the review of the judgment in a minor civil claim. The Applicant, Tasmanian Sandstone Quarries Pty Ltd, carries on a business for the extraction and supply of sandstone products. The Respondent, Anthony Homes Pty Ltd, carries on business as a builder.
The Applicant's business involves quarrying stone in Tasmania and then transporting that stone to South Australia. Upon arrival in South Australia the stone is sorted according to its colour gradient and then sawn prior to supply to the building industry.
In September 2015 Anthony Homes, which was engaged in the construction of a property at 16 Rogers Street Goodwood, placed an order for the supply of 45 m² of 248 mm x 470 mm diamond cut sandstone that was to be a mixture of colour gradients 1, 2 and 3. The price was $6,050 inclusive of GST.
The grading of sandstone is a system devised by Mr Calabrese, the director of the Applicant. The lightest stone is graded 1 and the darkest is graded 12.
When Mr Scardigno placed the order for the stone in about September 2015 Mr Calabrese advised that he did not have any stone of the required colour gradients in stock, although he did have a pallet of suitable stone for another customer. That order was for stone in colour gradients 1, 2, 3 and 4. Mr Calabrese advised Mr Scardigno that because that other order was not required immediately the stone was available for purchase by the Respondent. Mr Scardino attended at the Applicant's business premises and after inspecting the stone placed an order. The stone was delivered on 23 September 2015. An invoice (Exhibit P1), in the amount of $6,050, had been delivered to the Respondent the previous day.
Shortly after the stone was delivered Mr Scardigno contacted Mr Calabrese and complained that some of the stone was too dark and requested that the darker stone be changed for a lighter colour. The Applicant accepted a return of the dark stone and searched to find lighter coloured stone to satisfy the Respondent’s requirements.
Mr Calabrese gave evidence before the learned Magistrate and before this court that the replacement of suitable stone involved opening numerous pallets, inspecting the stone on the pallets, pulling out lighter coloured stone and then cutting the stone before repacking the pallets he had opened. He told this court that process took himself and another person one week.
On 9 December 2015 the Applicant issued a 2nd invoice (Exhibit P2) for $6,000 plus GST of $600 for the replacement of the stone. Exhibit P2 reads:
To replace 140 pieces of tiles. To replace number 1 with number 2. We had to open 8 pallets to find the colour number 2 and size 470. 2 day's work. $6,000 GST $600 … Total $6,600
The Respondent did not pay the invoice which is Exhibit P1 promptly. After the invoice which is Exhibit P2 had been issued, a total of $12,650 was said to be owing by the Respondent to the Applicant. An amount of $5000 has been paid, leaving a balance which is the subject of this minor civil claim.
Mr Scardigno gave evidence that his company had been contracted to build a house faced with sandstone. The client had seen a house faced with the sandstone which he required. Mr Scardigno was referred to the stonemason who had performed that work and the stonemason in turn referred Mr Scardigno to the Applicant.
On 24 September 2015, the day following the delivery of the stone, Mr Scardigno sent the following text message to Mr Calabrese:
Hi Rito,
The sandstone was delivered to our Goodwood job yesterday with thanks.
We've come across some dark pieces of stone (maybe colour 6 or 7 and more brown then (sic) yellow).
We would like these dark pieces replaced with something in the colour range 1 to 3 ½ please.
On 28 September Mr Scardigno sent another text message to Mr Calabrese requesting him to attend on-site to inspect sandstone which Mr Scardigno considered was the wrong colour. The Applicant agreed to exchange the stone as requested. The Respondent returned the unwanted stone to the Applicant’s yard and brought the replacement stone back to the job site.
The first invoice was not paid immediately. Mr Scardigno said that he had sent a cheque to the Applicant but for reasons which he could not explain that cheque was not banked by the Applicant.
The replacement stone had been delivered in late September and the 2nd invoice (Exhibit D8) was sent on 9 December 2015.
The Respondent has refused to pay the 2nd invoice on the ground that there was no basis for an additional charge. The Respondent has withheld the amount of $1,050 from payment of the first invoice on the basis that some of the stone is alleged to be affected by mould which requires treatment by the Applicant. The money is being withheld until the Applicant treats the stone to remove the mould. The Applicant has not done that and the Respondent continues to retain the amount of $1,050. Mr Scardigno said he is prepared to pay the money as soon as the Applicant treats the mould.
The Applicant’s claim is that Mr Scardigno inspected the stone before delivery and had therefore accepted the stone. The 2nd invoice is based on the fact that the request for some of the stone to be exchanged involved Mr Calabrese devoting time to locate and cut new stone.
There is an issue as to whether there are been any discussion about the payment of an additional cost for the exchange of some of the stone. Mr Antonio Scardigno, the father of Mr Scardigno, gave evidence that Mr Calabrese told him that there would be no cost involved. Mr Scardigno pointed out that the 2nd invoice is for an amount approximately the same as that charged for the initial delivery.
The claim before the magistrate was a minor civil claim with the consequent jurisdictional and procedural considerations required by s.38 of the Magistrates Court Act 1991 (the Act).
The learned Magistrate observed that the 2nd invoice for $6,600 was unexpected and out of proportion to the task involved in exchanging the dark stone for stone of a lighter colour and that if the Applicant had informed the Respondent of the likely cost of the exchange the Respondent would probably have taken another course. He said [at 12] the Applicant cannot maintain a claim for costs which was never discussed and is contrary to the understanding between the parties.
His Honour made the following findings on the balance of probabilities [at 13]:
·I find the defendant wish to purchase 45 square metres of sandstone from the plaintiff;
·I find the plaintiff made some stone available for inspection by the defendant;
·I find the defendant inspected the stone and accepted the stone as being suitable;
·Upon delivery of the stone the defendant stonemason advised the defendant that some of the stone was the wrong colour and some contained defects;
·I find the defendant requested the plaintiff to exchange some of the dark and unsatisfactory stone for lighter colour stone;
·I find the plaintiff agreed to an exchange of stone;
·I find the plaintiff delivered new stone to the defendant within a few days;
·I find there was no discussion between Mr Calabrese and Mr Scardigno about any cost for the exchange; and
·I find the 2nd invoice was unexpected; and I find the plaintiff’s justification for the account is unconvincing.
His Honour concluded that the Applicant had failed to satisfy him as to the merits of his claim and the claim was dismissed.
The matter comes to this court as a minor civil review. The hearing of a review is governed by s38(7) of the Act. In Wilczynski and Anor v District Court of South Australia and Ors [2016] SASC 51 Doyle J said at [45]:
Under that subsection, the Court may inform itself as it thinks fit and, in doing so, is not bound by the rules of evidence. The Court may rehear evidence taken before the Magistrates Court. The Court may affirm the judgment or rescind it and substitute the judgment that the court considers appropriate. In hearing and determining the review, the Court must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.
The Applicant filed a written argument on the review which concisely sets out its argument. Although the document advised that Mr Calabrese did not propose to adduce further evidence and that he was content to rely upon the existing evidence, when the review began Mr Calabrese did give further evidence.
While the Written Case states that the Applicant’s argument on the review is largely a legal argument, that is not what eventuated at the review hearing. The fundamental dispute is one as to fact.
In the Written Case [at 9] it is asserted that Mr Calabrese had agreed to exchange the dark sandstone but he explained that would involve a lot of extra work. It is submitted [at 10] that "the plaintiff says that it made clear at this point that the extra work would naturally involve an extra charge and that the defendant agreed to this." The Written Case notes that the Respondent denied that version of events and the Magistrate found in favour of the Respondent. The Applicant disputes that finding and argues [at 11] that "it is also simply inherently unlikely that the plaintiff would have undertaken to do the extra work without any discussion as to the extra charge involved, especially when one considers that it was uncontentious that there was ‘a lot of’ extra work involved. This is the main dispute as to the facts in this proceeding."
The Written Case notes that the Respondent initially refused to pay any of the amounts charged but that subsequent to the commencement of the proceedings the defendant paid $5000 on the first invoice. It is clear that the first invoice was not paid promptly. Mr Scardigno said that a cheque had been sent but it was apparently not received by the Applicant. Whether the Respondent had initially refused to pay or whether a cheque went astray is something which I am unable to determine.
So far as the first invoice is concerned the situation is that the Respondent has refused to pay the balance of $1,050 because the Applicant has not remedied the mould problem.
As to the first invoice the Written Case refers to his Honour’s reasons where he said [at 8]:
As for the amount of $1,050 which was withheld from payment of the first invoice (Exhibit 7) the plaintiff (sic) said some of the stone work was affected by mould which required treatment by the plaintiff and the money had been withheld until the plaintiff had attended at the relevant premises and treated the stone so as to remove the mould. The plaintiff has yet to attend to this and so the defendant has retained the amount of $1,050 but says it is prepared to pay the money as soon as the plaintiff attends to treat the mould.
The Written Case observed that the learned Magistrate said nothing more about the first invoice so that it must be assumed that His Honour had accepted the Respondent’s justification as to why the invoice was not paid.
As to the 2nd invoice the written case observed that His Honour found [at 12-13] that the invoice was "unexpected and out of proportion to the task involved in exchanging the dark stone for stone of a lighter colour.”
The Written Case observes [at 24]: “His Honour therefore held the invoice was not due, apparently on the ground that no valid contract was ever formed between the parties in respect of the further work.”
As to the first invoice it was argued that the Respondent’s justification for withholding the outstanding $1,050 is completely without foundation in any legal principle. It is argued that even if the Respondent’s complaint about the mould was well founded the Respondent cannot unilaterally impose conditions on the payment of the contractual sum due, as it has sought to do.
The Written Case argues that the Respondent’s claim about the mould was uncorroborated by any document or expert evidence, and was disputed by the Applicant. It is said that the claim is not the subject of any finding by His Honour other than a finding that the Respondent’s stonemason had told Mr Scardigno that there were unspecified defects with the sandstone, which may be a reference to the mould, but does not in any event amount to a finding that there was indeed any defect in the stone. It was submitted that the Magistrate should have found that the sum of $1,050 was due, that His Honour erred in failing to do so and that this court on the review ought to make that finding.
I think there is merit in the Applicant's argument with respect to the first invoice. There is no evidence before this court of any detriment suffered by the Respondent flowing on from there being mould on the stone. There is no suggestion that the building proprietor has taken any issue with respect to the mould. I accept the Applicant’s submission argument that there is no evidence as to why, how or when the mould developed and there is no evidence about what treatment may be required for the cost of the treatment.
In any event, it was suggested in the Applicant’s Written Case that the mould can be easily removed. That was not rebutted by the Respondent. If it is such that the mould can be easily removed, there is no justification to withhold an amount as significant as $1,050. The only impediment to having someone else treat the mould from the Respondent’s perspective is that the Applicant said this will void any warranty on the stone.
Most importantly, the stones in question were utilised in the construction of the building. If they did not comply with the order they should have been rejected and not used. There was no evidence that Mr Scardigno complained about the mould in the same way that he did with the colour and fissures in the first consignment. The issue of the mould seems to have arisen later when the Respondent was in communication with the Applicant’s lawyers regarding the current action.[1]
[1] T 24-26, 04/12/2017.
In my opinion there should be judgement for the Applicant for the sum of $1,050 on the first invoice.
As to the 2nd invoice the Written Case argues that the Respondent agreed to the second invoice and therefore a valid contract was formed, and the defendant's failure to pay the contractual sum due is a simple breach of contract.
The replacement stone was to replace stone in the initial delivery which did not adequately match the sample or the specification and formed part of the initial contract. There is no basis for any additional charge for the replacement of the first stone. Furthermore the amount charged is completely out of proportion to the nature of the alleged work involved. There is no reliable evidence of the actual hours worked or the hourly rate charged. Mr Calabrese’s evidence to this court that it took two men one week is inconsistent with the second invoice which claims two days.
I accept the evidence for the respondent that there was no agreement to pay for the extra work. Notwithstanding the evidence of Mr Calabrese on this review I accept the evidence of Mr Antonio Scardigno that Mr Calabrese agreed to replace the stone[2] and that Mr Calabrese said there would be no cost to exchange the stones.[3]
[2] T 43, 04/12/2017.
[3] T 44-45, 04/12/2017.
The Written Case argues that if there was no contract between the Applicant and the Respondent in respect of the further work (which is my finding) then the Applicant has a good action in unjust enrichment or quantum meruit against the defendant. Reference is made to Nunkuwarrin Yunti of SA Inc v A L Sealy Constructions Pty Ltd (1990) 72 SASR 21. That argument was not put to the Magistrate. However that argument is rejected by virtue of my finding that the further work formed part of the first contract. As such, there is no basis for claims in unjust enrichment or quantum meruit.
The request to change the stone undoubtedly caused the Applicant extra work as the Magistrate found [at 11], but that work was necessary to fulfil the terms of the original supply contract. It is argued that the Applicant quantified the cost of that extra work at $6,000 plus GST of $600 and there was no evidence to rebut that quantification (Written Case at [36] and [37]). That argument overlooks the fact that the Applicant carried the onus of proof. As I have mentioned, Exhibit P2 which refers to 2 days work is inconsistent with the evidence of Mr Calabrese which as a matter of plain common sense is unacceptable.
The Magistrate found [at 13] that the charge of $6,600 was "out of proportion to the task" and that "the plaintiff's justification for the account of $6,000 is unconvincing." I respectfully agree with the findings of the learned Magistrate.
In my opinion the learned Magistrate was correct in dismissing the claim based on the 2nd invoice in its entirety.
In my opinion the judgement of the learned Magistrate should be rescinded and I substitute judgement in favour of the Applicant for the sum of $1,050.