Tasmanian Sandstone Quarries Pty Ltd v Babylon Projects Pty Ltd - [2018] SADC 28

District Court of South Australia
(Civil: Appeal Against a Master's Decision)
TASMANIAN SANDSTONE QUARRIES PTY LTD v BABYLON PROJECTS PTY LTD
[2018] SADC 28
Judgment of His Honour Judge Slattery (ex tempore)
22 March 2018
SALE OF GOODS - SALE OF GOODS LEGISLATION - FORMATION OF CONTRACT - CONTRACT OF SALE OF GOODS - CONTRACT
Application for a minor civil review. The Magistrate found that a contract for sale by sample under s 15 of the Sale of Goods Act 1895 was made but that the sandstone supplied by the applicant did not match the sample.
The issue on review was whether any contract was formed between the applicant and the respondent for the supply of sandstone. The applicant claims that a contract was made without reference to a sample. The respondent denies that any contract was formed with the applicant.
Held:
No contract was formed between the applicant and the respondent for the supply of sandstone. There was no contract for sale of sandstone by sample under s 15 of the Sale of Goods Act 1895. The judgment of the Magistrate is rescinded. The application was commenced out of time and even though no time point was taken, no extension should be granted to the applicant. The application is dismissed.
Sale of Goods Act 1895 (SA) s 15, referred to.

MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - JUDICIAL REVIEW
Magistrates Court Act 1991 (SA) ss 38(6) and (7); District Court Civil Rules 2006 (SA) s 279A; Limitations of Actions Act 1936 (SA) s 48, referred to.

TASMANIAN SANDSTONE QUARRIES PTY LTD v BABYLON PROJECTS PTY LTD
[2018] SADC 28

This is an application for minor civil review brought pursuant to s 38(6) and (7) of the Magistrates Court Act 1991 (SA) (MCA). It arises out of a minor civil action heard in the Magistrates Court.
Under s 38(7) MCA I may inform myself as I think fit and I am not bound by the rules of evidence. I may rehear evidence taken before the Magistrates Court. From my reading of the transcript before the learned Magistrate, there was some evidence led before the Court but for reasons I set out below my approach here has been to rehear the whole of the evidence. In determining the matter I may affirm the judgment or rescind it and I may substitute a judgment that I consider appropriate. In hearing and determining the review I must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms. That is the approach that I have used in this matter.
This matter was previously heard before Mr Gumpl SM on 16 March 2017. I have reviewed the ex tempore judgment delivered by the learned Magistrate. The first two paragraphs of the judgment do not assist my deliberations here and to a large extent are not relevant. The relevant issues are the questions before the Court and the resolution of them having regard to the evidence.
In his judgment, his Honour said that he preferred the evidence given by the representatives of the respondent, Babylon Projects Pty Ltd. His Honour then said that the fact that the plaintiff/applicant had not bothered to pursue the matter for four years is relevant; his Honour does not say why such a fact was relevant or to which particular aspect of his Honour’s determination. He then says it is likely that the plaintiff/applicant has manufactured a questionable invoice but, again, his Honour does not say why or on what basis he formed that view. His Honour then said that this was clearly a sale by sample and it was clearly conditional; again, his Honour does not say why. A sale by sample normally falls to be considered under s 15 of the Sale of Goods Act 1895 (SA). In turn this requires an examination of the parties’ contractual position. The judgment of the learned Magistrate provides no information on that topic including who entered the agreement, its terms and the obligation to provide the sample and when. His Honour then says at [4] that he has regard to s 15 of the Sale of Goods Act and the plaintiff's failure to comply with same; he does not say why.
His Honour then says that for all of the reasons that are contained in the chronology, which is not in any documents that I have been able to find and certainly is not a document before me, his Honour finds the chronology reasonable, credible and preferable to the plaintiff/applicant's version of events, the claim is dismissed. I will assume that the chronology his Honour is there referring to is the chronology of the evidence. I will also assume that this is the same chronology that has been led in evidence before me. His Honour dismissed the plaintiff/applicant’s claim.
In light of the very limited nature of and the slightly contradictory aspects of the content of the judgment of the learned Magistrate, I have decided to rehear the whole of the evidence in this action. I consider that this is the only way to properly form a conclusion about the merits of the applicant’s claim as well as the legal basis on which it relies.
Having done so, I have concluded that I am unable to affirm the judgment of the learned Magistrate because I consider that his Honour has fallen into error by his reference to s 15 of the Sale of Goods Act. That section reads as follows:
15—Sale by sample
(1) A contract of sale is a contract for sale by sample where there is a term in the contract, express or implied, to that effect.
(2) In the case of a contract for sale by sample—
(a) there is an implied condition that the bulk shall correspond with the sample in quality;
(b) there is an implied condition that the buyer shall have a reasonable opportunity of comparing the bulk with the sample;
(c) there is an implied condition that the goods shall be free from any defect, rendering them unmerchantable, which would not be apparent on reasonable examination of the sample.
I have deliberately set out this section in full because a finding under s 15 of the Act requires a finding that a contract between parties has been formed, which in turn requires a reference to a sample to which the goods supplied under the contract must correspond. There are a number of implied terms in favour of the purchaser. In the judgment of the learned Magistrate there is no reference to these requirements or any findings made upon them.
I am unable to find on the evidence before me that there has been a contract formed, including a contract for sale by sample, upon which the applicant may rely for a cause of action. I will explain my reasoning for that approach below. I am unable to affirm the judgment and my decision is to rescind the judgment and substitute a judgment that I consider appropriate. Notwithstanding that I have not affirmed the judgment, my decision is to dismiss this application.
Before embarking on a review of the evidence, it is necessary to set some background. The applicant is a miner and producer of finished sandstone products. Its principal quarry is in Tasmania. Orders for sandstone products are completed at the quarry and shipped to Adelaide. It has a large display facility in Gilman and performs some stone finishing services there.
The respondent is a developer/builder. The principals are Mr Fabris, an architect, and Mr Fotinos, a builder. Architectural services are provided by Mr Fabris through an associated company but Mr Fabris is also involved in the administration side of the building business.
The builder had a contract to renovate a sandstone fronted villa in Toorak Gardens. This involved putting a sandstone fascia on a new garage area, set back from but contiguous to the front sandstone wall of the villa.
This decision revolves around whether at any time the builder entered into a contract with the applicant for the sale of a quantity of sandstone to cover the frontage of the garage and for repair of the existing frontage of the house.
Mr Rito Calabrese gave evidence before me. He showed to me an invoice dated 9 December 2015 directed to a “John” with no address or other details (Exhibit A1). He used this as his guide about when particular events may have occurred. He said that his first contact with Mr John Fotinos of the respondent was around August 2015. He said Mr John Fotinos came to the Gilman premises on his way to his yacht club. He had a discussion with Mr Fotinos about a job that the respondent was doing at Toorak Gardens that required supply of sandstone product. He was told that when the builders were ready they would call Mr Calabrese and there would be an attempt to match the existing to a sample supplied by Mr Calabrese. Mr Calabrese was told that the house at Toorak Gardens had a sandstone frontage and it would be necessary for a setback addition of a garage to have a matching sandstone frontage. Mr Calabrese knew that he would have to match the colour of the sandstone on the job. He said that very soon after the conversation in 2015 he went onsite and had a look. He said that, as far as he was concerned, the colour of the sandstone on the site matched exactly the type of sandstone he was able to provide which he called a category one sandstone. The existing was very light in colour as was the category one sandstone that he could supply.
It was necessary for the garage on the Toorak Gardens property to have matching quoins. There was also some work to be done on the walls and Mr Calabrese identified this when he went onsite and saw the builder, Mr Fotinos and the owners. At that time he did not take any samples of the sandstone he could supply. He said that he explained that his stone was an existing stone to be supplied to him from Tasmania and he said that he would have to ship the stone over to see the colour. When he was there he scratched the existing stone to best determine whether he could match the colour. When he saw that stone he had scratched, he said it was a category one stone which was very light. It was a whitish stone. He said that is the very colour of the stone now sitting in his yard which he had prepared in Tasmania and for which he makes his claim in these proceedings. There are a number of features of this evidence. Only Mr Calabrese knew of the type and colour of stone that he could provide. The unifying features are that the new stone had to match the existing and no one would know if that was the case until a sampling was seen.
Mr Calabrese said that he told the owners and the builders he could match the colour of the stone. He also told them that the pointing of the existing stone was not good and must be redone. He also said there needed to be a high-pressure clean of the existing sandstone and that water, not acid, should be used in that clean-up. He also said at that meeting that any stone that he would provide would age over one to two years or more. He told the parties present that they would have to pay for the stone but that the builder and the owners would have to pay the stonemason direct. He offered to supervise the work of the stonemason. He had in mind a man called Julio. He says that the owners and the builders immediately said yes to this proposal, as if they were binding themselves to a contract for the supply of the applicant’s sandstone without even having seen a sample and whether it matched. The effect of the evidence was that the respondent and the owner were willing to bind themselves merely on the say so of Mr Calabrese. He said he understood that the whole thing was in his hands and that there was no discussion at all in relation to price or any form of contract. He said that he would give them a price and tell them in the next day or so.
The last part of the conversation, he said, involved the cleaning up of the stone, the identification of the stonemason and the fact that the stone would be in Adelaide in three to four days. That would give some time for particular people to be identified to do the pointing of the existing stone work and the cleaning.
There were two usual contractors he used, one by the name of Julio and one named Joe Placanica. These two were organised and there is no challenge on the evidence that both of them did work on this site. Mr Calabrese, in fact paid Mr Placanica personally for the work that he did. Mr Calabrese said that he received no deposit, that any contract was verbal, there was no writing and there was nothing to indicate what the terms of the contract may be. He said that as far as he was concerned, whatever price he gave by the verbal quote - which was given a day or two later - was the price that was reflected on the invoice, Exhibit A1. He said there was no specific agreement on price. That came after he gave the quotation.
He said that he went back to the site on a number of occasions to do measurements and check the size of the quoins. He said he never took a sample at that time. He denied ever having taken a sample to site and ever having been in any discussion where the question of whether or not his stone would be purchased depended upon the supply of and the consideration of the sample. He also said that he went back to the house on seven or eight occasions when Julio was redoing the pointing and the mortar. He said that when that was half done, Joe Placanica was brought in to do the pressure cleaning and sometime in amongst those activities he saw John Fotinos on site and had a discussion with him. He said that John Fotinos was told during that conversation that the sandstone was ready to bring on site. It had been on a ship to Melbourne and then on rail to Adelaide. He said that John Fotinos did not give any indication at those times that there was no contract for the supply of the stone.
There was a discussion, he said, at that time about price. That discussion occurred between him, John Fotinos and the owners. He said he told them that all they had to do was pay for the stone and that they would have to pay the mason directly. They did not require any form of written quote. All the instructions that he prepared were a part of a document, Exhibit A4, which was sent to Tasmania as instructions to the quarryman to ensure that the correct stone was quarried. It was to be the colour of category one.
Mr Calabrese then said, as a variation - as I understood it - of the original contract, that he received a telephone call from Julio. He reported that a particular stone on the veranda - which I take it to be the side wall of the front of the house - needed to be repaired. Two pieces of stone needed to be provided. There was some discussion about whether the stone itself needed to be provided or that there was to be a veneer. He was instructed, he said, to bring a couple of pieces of stone measuring 470 mm x 250 mm to test for insertion into this existing wall. He delivered those samples and when the stone samples were put into the wall, the owners said that, notwithstanding that Mr Calabrese had received instructions to proceed to supply the stone, that they were now unhappy with the sample.
There was a discussion. Mr Calabrese said that he could not match 100-year-old stone on the front of the house and that, even if the stone was too white, as currently might be the case, it would change over time. He suggested ways to “age” the stone. The owners refused the white stone. They wanted to go to another quarry and the order was cancelled. He said that on a number of occasions he tried to persuade the owners to change their minds. Eventually the owners and the builder said that they don't want the stone as it does not match.
Therefore, the essential features of Mr Calabrese's claim is that from at least July/August 2015, he had an order from the builders, as authorised by the owners, to supply a certain amount of sandstone for affixation to the front of the owners’ home for the price which he would charge for that supply. His evidence also was that this stone was to be supplied, installed and paid for without any sample ever having been seen by the owners or the builders, and without them having been given a written quote. Mr Calabrese said that he provided only an oral quotation – implicitly, on his case, this was agreed by the owners, the builder or both. In my view, that version of events is intuitively and inherently unlikely.
As unlikely is the fact that an invoice of 9 December 2015 was delivered. Mr Calabrese said that that invoice was sent in 2015. However, there was no address on the invoice. It is addressed to “John” and the addressee reads “Job:- TOORAK GDNS”. It is not in Mr Calabrese's handwriting; that handwriting appears on the face of Exhibit A4, the instructions to the quarryman in Tasmania.
On Mr Calabrese’s case this is a very important document for a number of reasons. It is used as a contemporaneous guide to when these events occurred. It provides the contract price as the basis of the applicant’s claim. It is addressed to a “John” without a surname, an address or a reference to any contractual document.
The respondent alleges that it is neither genuine nor has any contractual or other effect. The respondent contends that these events occurred in 2012, the document was never delivered to it (most likely because the applicant did not then have a builder’s name to send it to) and so it is no more than an artifice.
Mr Fotinos and Mr Fabris gave evidence on behalf of the respondent. Mr Fotinos said that as the responsible builder on the Toorak Gardens site, he went to Mr Calabrese's Gillman yard in early 2012. He told Mr Calabrese that they were doing a job at Toorak Gardens, that the house had a sandstone frontage, that there was to be a new garage built and they needed to match the sandstone with the existing. As a result of that visit, Mr Fotinos said that a site meeting was organised. The suggestion by Mr Calabrese that Mr Fotinos was somehow on his way to his yacht club was denied by Mr Fotinos. It has, I think, no merit nor credit.
The site meeting with the builder and the owners occurred. At that meeting, Mr Calabrese was asked whether he had stone to match the existing facade and he was asked what he needed to do for a quotation. Mr Calabrese said that he would need to measure the site and then to make inquiries in relation to the procuring of the stone. In particular, the owner asked Mr Calabrese at that meeting whether he had the product, namely a stone that matched the existing facade. Mr Calabrese said that he did.
Mr Calabrese was then asked, in light of the fact that he had a matching stone, to give a quotation to which he agreed. But he did not give a written quotation. All that he did was to later give a verbal quotation of $8000. After receiving that verbal quotation the owners asked that a sample of the stone be prepared. Mr Fotinos also agreed that he was told by Mr Calabrese that the stone had to be measured and cut in a particular way and a particular stonemason should be used. Mr Fotinos also agreed that Mr Calabrese said that the existing stonework should be cleaned and repointed. At that time, when that suggestion was made, the owners asked whether Mr Calabrese had anyone in mind to do that work. He said that he did and he said that if he paid cash, those people would come and do the job. However, Mr Fotinos said that in the same conversation, the owners said that before any stonework could be put onto the walls, that they must be assured that the stonework is seen and matched.
Mr Calabrese was then asked how long it would take for the stone to come from Tasmania and he said about four weeks for delivery. He was then asked to provide a sample to check the consistency of colour. The owners said that, in the meantime, they will do a clean and repoint using the trades suggested by Mr Calabrese. In that process of cleaning and repointing, the stonemason, Julio, suggested that it would be necessary to remove a piece from the veranda wall because of its deterioration.

Following this, Mr Calabrese was asked to provide two pieces of sandstone as samples, measuring about 470 x 180 mm and 470 x 250 mm. The two samples were brought to site and were then put deliberately into two particular places on the walls: the first was at the place where Julio had recommended that a piece be removed, which was halfway up the wall adjacent to the garage. The second was on the wall of the garage furthest from that point, that is the far side of the opening to the garage, so it would be able to be assessed in different light conditions. The first point of testing therefore would be in the existing veranda, which had deteriorated and so that the sample could be matched against the existing. The second would be on the new surface so that there could be a colour match comparison from a distance, in different light and looking at the frontage as a whole.
When the samples produced by Mr Calabrese were seen by the owners, it was plain that the colour and the grain were completely contrasting to the existing. The owners would not accept those samples. The builder and so the architect could not recommend their acceptance.
Mr Calabrese was present at a separate site meeting with the owner. At this meeting he was informed that the owner rejected the samples of stone that he had provided because of a mismatch of colour. The conversation became animated. Mr Calabrese became very passionate about the fact that his stone was the best that could be had and that the stone would age and there were methods that could be used to age the stone in the meantime. Mr Fotinos said the owners, who were present, became quite upset with this suggestion and no longer wished to participate in any further discussions. It was made plain to Mr Calabrese that his stone would not be purchased. Mr Calabrese became very argumentative and the owners became quite upset. Ultimately Mr Calabrese left the site.
Nothing was heard from Mr Calabrese until the summons was served some four to five years later. Mr Fotinos saw the invoice, Exhibit A1, being an invoice dated 9 December 2015, some four to five years later. It was only seen in the course of the hearing before the learned Magistrate. It was never received by the builder in 2015 or at any time until trial.
Mr Fotinos said that he had never placed a purchase order for any sandstone with Mr Calabrese, nor had he signed off on any purchase document. He had never accepted any quote and he said that the building contract under which he was operating required him to obtain a quote, to then obtain the owners' acceptance of the quote, and for notice to be given to the supplier of the acceptance of the quote. And all of that was dependent upon the owners’ acceptance of the sample provided by the supplier. He said that it was quite clear, right from the outset, and at the time that he went to see Mr Calabrese in 2012, that nothing would be done unless the owners were completely happy with the stone to be inserted into the front wall, including into the new garage frontage. He said that he told Mr Calabrese that the clients wanted to see the sample and Mr Calabrese said to him that when the stone comes, he would bring some. He did not instruct Mr Calabrese at any time to prepare a shipment of stone to do the work. At all times they were waiting on the sample and Mr Fotinos wanted the sample because the clients wanted it.
After the discussion with Mr Calabrese when the owners told Mr Calabrese that the sample was not acceptable to them, the owners themselves went out and found a supplier. That supplier was Basket Range Sandstone. On 24 April 2012, Basket Range Sandstone rendered an invoice to Babylon Projects for the supply of the sandstone, Exhibit R5.
On a number of occasions, Mr Calabrese has said that this invoice from Basket Range Sandstone is a fraud. He put that proposition to the two witnesses called on behalf of the respondent and it was rejected by them. It is a meritless suggestion. There is no basis to suggest a fraud and I am of the view that there is no fraud. I accept that the Basket Range Sandstone invoice is genuine. I accept the evidence given by Mr Fotinos and Mr Fabris that ultimately, the figure for the supply of the sandstone was some $6462 including GST and that amount was only slightly less than the amount that Mr Calabrese charged on his invoice of 9 December 2015.
Mr Fotinos as the responsible person for the builder gave evidence about the process by which this sample from Basket Range Sandstone was selected. The owners approached the quarry and obtained some samples. They thought that some matched. An arrangement was made for the representative of the quarry to come to the Toorak Gardens home to present the samples and to assess whether they were a good match. At the time of the presentation of these samples, a decision was made by the owners that a good match occurred and, following that, a quotation was obtained from the quarry, an order was placed and the purchase made. All of this was newly cut stone. Any suggestion that it was second-hand stone is wrong.
Mr David Fabris gave very short evidence. He is an architect who, in the business, is also involved in administration. He said that he is the person who handles invoices and the business had never received a tax invoice from Sandstone Select dated 9 December 2015 addressed to John. He said if that document had come into their business, he would have seen that document and he would have processed it or at least dealt with it.
He also said that there had never been any phone calls from Mr Calabrese, or anyone else, making any claims for outstanding moneys. He said the first the matter was heard of was in mid-2016 when there was a demand from the solicitor for Mr Calabrese. He was present at the hearings before Mr Gumpl and he said that the first time he saw the invoice was at those hearings.
In my opinion what has occurred is that there has been a gross miscommunication between the intentions of the builder and the owners, and Mr Calabrese. I am satisfied, on the whole of the evidence, that there was never any contract between the applicant and the respondent or with the owner for sale by sample of sandstone and therefore s 15 of the Sale of Goods Act has no application. I find that there was no basis for the learned Magistrate to make any finding that there was such a contract.
I am also satisfied that what has occurred here is that Mr Calabrese has taken a far too optimistic and sanguine approach to discussions that occurred in 2012. I reject his evidence that the discussions took place in 2015; plainly, they did not. Exhibit R5, the invoice for the supply of the sandstone from Basket Range Sandstone, discloses the supply had occurred prior to 24 April 2012. I am satisfied that all relevant events occurred in 2012 and an invoice in 2015 on which Mr Calabrese relied to refresh his memory about dates is wrong.
I consider that what has occurred is that Mr Calabrese has misunderstood what has been said and he has been far too optimistic and sanguine about what might have been said to him as constituting a contract.
I find that no contract was formed between the respondent and the applicant for the supply of sandstone by the applicant. I find that whatever was discussed was subject to a number of preconditions. The first, the supply of a quotation; the second, the supply of samples; the third, the review of those samples on-site; and the fourth, and most importantly, the agreement or not of the owners in relation to the samples. Nothing of any contractual nature would be resolved until these four steps were also resolved.
The samples that were supplied by Mr Calabrese were rejected and so no contract was formed.
In light of the circumstances as they existed and in the absence of any concluded contract between the applicant and the respondent, the issue was always whether or not the owners would agree to the samples and then decide to enter into a contractual relationship with the applicant for the supply of sandstone of that quality. That never occurred.
Albeit that I have great sympathy for Mr Calabrese because he has plainly misunderstood the correct legal position, he has been far too optimistic and sanguine about the actual position, he has no contract but he has in good faith sourced and prepared the sandstone. He has no enforceable claim for that. He has paid the pressure cleaner in circumstances where his only claim is against the owners themselves. I would consider it is appropriate that the owners pay Mr Calabrese directly in relation to those matters, but that is a matter for them.
The important thing here is that in the circumstances of this case, I am satisfied for all of these reasons that the judgment of the learned magistrate must be rescinded. I substitute my own judgment: that at no time was any contract formed between the applicant and the respondent on the basis as alleged by Mr Calabrese. I therefore find that on no basis is the debt said to be owed by the respondent to the applicant due and owing.
On the whole of the evidence before me and the inferences arising from the documents, the application must be refused.
The District Court Civil Rules 2006 (SA) s 279A operates upon this review application. It requires that an application for review be commenced within 21 days. This appears not to have happened here but no point was taken. For the sake of completeness, I will assume that an application for extension of time was made to bring this application under s 48 of the Limitations of Actions Act 1936 (SA). One consideration is the prospects of success. There are none, and so no application for extension would be granted.
For all of these reasons, I substitute my judgment for the refusal of the application and its dismissal.