The Carpet Company v Ms
[2019] ACAT 2
•4 January 2019
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
THE CARPET COMPANY v MS (Civil Dispute) [2019] ACAT 2
XD 981/2018
Catchwords: CIVIL DISPUTE – burden of proof – reversal of burden – executed consideration – delay in debt recovery
Subordinate
Legislation cited: Court Procedures Rules2006 Sch 2
Cases cited:Briginshaw v Briginshaw (1938) 60 CLR 336
Chen v State of New South Wales (No 2) [2016] NSWCA 292
Jackson v Lithgow City Council [2008] NSWCA 312
Seltsam Pty Ltd v McGuiness; James Hardie & Coy Pty Ltd v McGuiness [2000] NSWCA 29
Young v Queensland Trustees Ltd (1956) 99 CLR 560
List of
Texts/Papers cited: JW Carter, Elisabeth Peden and GJ Tolhurst, Contract Law in Australia (LexisNexis Butterworths, 5th ed, 2007)
Tribunal:Senior Member H Robinson
Date of Orders: 4 January 2019
Date of Reasons for Decision: 4 January 2019
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 981/2018
BETWEEN:
THE CARPET COMPANY
Applicant
AND:
MS
Respondent
TRIBUNAL:Senior Member H Robinson
DATE:4 January 2019
ORDER
The Tribunal orders that:
1.The respondent is to pay the applicant:
(a)the sum of $1,689 — principal debt;
(b)$148 — Tribunal application fee; and
(c)$98.75 — interest in accordance with the Court Procedures Rules 2006 for the period 13 December 2017 to 4 January 2018.
2.The reasons for this decision are to be published under pseudonyms.
…………. Signed …………
Senior Member H Robinson
REASONS FOR DECISION
1.Who bears the onus of proof to prove that a bill has been paid? That is the question in this unusual case.
Background
2.The applicant is a carpet sale and installation company. In late 2014, the respondent attended the applicant’s store and sought a quote for carpet and installation from it. On 20 November 2014 she paid a deposit of $1,500 by credit card, leaving a balance of $1,689 to be paid. The applicant arranged for an independent contractor (the installer) to attend the respondent’s house and install the carpet, which he did on 8 December 2014. The respondent was content with both the carpet and the installation. That much of the case is agreed. The parties have very different versions of what happened next.
3.On the applicant’s case, the respondent paid only the deposit, and not the remainder of the invoice. The applicant’s debt recovery processes were less than ideal, and so its staff did not notice that the invoice was unpaid for some years, until 2017, when a new debt recovery officer (the debt recovery officer) went carefully over the records and identified this as one of a number of outstanding debts. The debt recovery officer then made active efforts to recover the alleged debt, starting with a telephone call to the respondent on 13 December 2017. The debt recovery officer’s evidence to the Tribunal, which was supported by a file note[1], was that on that date she had a brief telephone conversation with the respondent, in which the respondent advised her that she thought she had paid by credit card at the Belconnen store, and that she would check and call back, but she never did. The debt recovery officer left several other messages on the respondent’s phone on 31 January 2018, 21 February 2018, 8 March 2018 and 15 March 2018. She received no response to any of these phone calls. She also mailed two letters of demand, which also went unanswered. Eventually, these debt recovery proceedings were initiated.
[1] Exhibit A1
4.Under questioning from the Tribunal, the debt recovery officer explained that, to identify the debt, she reviewed all the relevant account keeping and record systems. She “spent hours on it – we’ve got all the records”,[2] including all the banking records and credit card records. She could find no evidence of the payment being made. She explained that debt recovery proceedings had not been commenced earlier because the company had suffered from a computer failure, and lost a lot of information, and she had been overwhelmed for some time getting processes back in operation. She affirmed that the lost information did not undermine this case, as she could go back to the source information, including bank account records.
[2] Transcript of proceedings 9 November 2018 page 9 [41]-[42]
5.The respondent’s case was that she had paid the installer directly. Her evidence to the Tribunal was that after the installer finished laying the carpets, she paid him the outstanding balance in cash. She knew what was owing because she had a copy of a ‘customer acceptance form’[3] dated 25 November 2014 that stated, albeit incorrectly, the amount owed (acceptance form). She said that, after giving the installer the cash, she asked him to sign the acceptance form, which he did.
[3] Albeit one that all parties now agree was not entirely accurate – the invoice required payment of $1599 at one point and $1,590 at another, but the quote had stated $1,689 was owing. That the total sum was $1,689 was not in dispute
6.The respondent provided a copy of the signed acceptance form to the Tribunal. [4]It bears the notation, by the respondent:
Payment of $1,600 cash provided to the installer as indicated above
[4] Exhibit R1
This notation is signed by the respondent. Beneath it are the words “x Received:” followed by what appears to be a signature. The signature consists of what appears to be a large, flourish-like first initial, perhaps an “S”, a space, and then another large letter that runs into a straight line. No name is printed beneath the signature. It is not dated.
7.The respondent’s evidence was that, having met her obligations, she then forgot about the matter until contacted by the applicant’s representatives. She denied receiving multiple phone calls from the applicant’s agents, but explained that she may have missed them because she was unable to receive calls at work, and upgraded her phone.
8.When asked by the Tribunal how she had so much cash at hand to pay the installer, the respondent explained that she has a boarder living with her in the premises, and that boarder pays her in cash. She described the pile of notes she paid with as being mainly $50s and $20s, in a bundle about 2cm to 3cm high, given to the installer in an A5 envelope. The circumstances under which she had gained the money meant she had no bank records to demonstrate, for example, a withdrawal.
9.The respondent’s evidence was somewhat vague in parts, and I formed the view that she was not an entirely convincing witness. Still, the passage of time may have dampened her recollection of events.
10.The installer was called as a witness by the applicant. He now works for another employer, and lives interstate, so he appeared by telephone. The installer’s evidence was that:
(a)He did work for a number of carpet installers in the Territory.
(b)He did not remember this particular job.
(c)He rarely knew what the outstanding amount was on any job.
(d)However, he was occasionally paid in cash – while this usually only happened in Sydney, he could not be positive that he had never accepted cash for a job in Canberra.
(e)When he took cash, the customer usually asked him to sign the invoice or receipt.
(f)He would then take the cash to the principal company and deliver it to whoever was in the office.
(g)He did all the Canberra jobs personally and never subcontracted work in Canberra.
11.The installer confirmed to the Tribunal that he had seen the signature on the customer acceptance form, and he could confirm that it was definitely not his.
12.The applicant also produced a copy of the installer’s driver’s licence. The signature on the licence did not in any way resemble the signature on the customer acceptance form.
13.I have no reason to doubt the evidence of the installer. Having regard to his testimony and the documents, I cannot be satisfied that the installer signed the customer acceptance form.
14.That leaves several possibilities. One is that the applicant’s records have recorded the wrong installer, and someone else did the job and collected the monies. While possible, having heard the evidence of the applicant, I do not consider this to be very likely. A second possibility is that the respondent forged the signature. This would be a very serious finding to make — indeed, it is essentially a finding of fraud — and such findings should not be made on “inexact proofs, indefinite testimony, or indirect references.”[5]
[5] Briginshaw v Briginshaw (1938) 60 CLR 336 at 361–362.
15.However, before considering this issue further, it is useful to review what needs to be proven, as a matter of law, in a debt recovery case such as this.
What does the law say?
16.This a claim for a liquidated (that is, that a known) sum that is both quantifiable and payable by reason of the applicant’s performance of its obligations under a contract (ie ‘executed consideration’).
17.A claim for the recovery of a fixed sum of this kind is different to a claim for breach of contract.[6] As the High Court explained in Young v Queensland Trustees Ltd (1956) 99 CLR 560 (Young QTL) at [567]:
The common law does not and never did conceive of indebtedness in a sum certain for an executed consideration as a mere breach of contract: it is rather the detention of a sum of money and that was so whether the creditor enforced his demand by an action of debt or by indebitatus assumpsit.
[6] JW Carter, Elisabeth Peden and GJ Tolhurst, Contract Law in Australia (LexisNexis Butterworths, 5th ed, 2007) [37-03]
18.The distinction has a number of practical consequences, the most relevant of which for this proceeding being that where an applicant alleges a debt is due by reason of performance of obligations under a contract, and the respondent pleads a defence of payment, the onus is on the defendant to establish that the debt has in fact been paid.[7]
[7] Young v Queensland Trustees Ltd (1956) 99 CLR 560 [567]-[569]
19.As with other civil proceedings, the standard of proof is the balance of probabilities. The respondent must convince me to a state of ‘actual persuasion of the occurrence or existence of the fact’ that she paid the debt,[8] and that her case is more likely than not.[9]
[8] Seltsam Pty Ltd v McGuiness; James Hardie & Coy Pty Ltd v McGuiness [2000] NSWCA 29 [136] per Spigelman CJ; Chen v State of New South Wales (No 2) [2016] NSWCA 292 [34]
[9] Jackson v Lithgow City Council [2008] NSWCA 312 [9]-[10] per Allsop P
20.This legal position has significant consequences for this case. It is not in contest that there was a contract for the supply and installation of carpet, and that the applicant fulfilled its obligations. The only question is this case is whether the respondent paid the agreed price.
21.This is one matter where the balance of proof is a significant consideration. In order to accept the respondent’s position that she has in fact paid, I must be satisfied both that the applicant gave the monies to an agent of the respondent (and, presumably, after that those monies then went astray, whether through deliberate misfeasance, or through negligence or poor accounting).
22.The respondent’s primary documentary evidence that she paid the debt is the signed customer acceptance form. As noted above, I am not satisfied that this document was in fact signed by the installer. I therefore give it no weight. For reasons that will become apparent, I do not need make any further findings about it.
23.The respondent’s other evidence is her oral testimony. As noted above, I found her evidence vague at times. I have some concern about her credibility, and that concern is heightened by her reliance on the unconvincing signed customer acceptance form. Given all the circumstances, I am not convinced, to a level of actual persuasion, that the respondent in fact paid the outstanding sum.
24.The question of who bore the onus of proof was critical in this case — had the applicant been required to prove that the respondent had been in breach of contract by not paying, the outcome may well have been different, particularly given the questions about the chain of custody of any cash payments that were received by installers. It is also often extraordinarily difficult to prove a negative (ie the absence of something), such as a failure to pay. As per the reasoning of the High Court in Young QLT, these practical concerns are why the law approaches debt recovery cases differently to breach of contract.
25.Nonetheless, aspects of the outcome of this case sit uneasily with me. Although I am not satisfied as to the veracity of the entirety of the respondent’s evidence, it is also concerning that a company is pursuing a debt such a significant time after it fell due, with so little evidence, and in circumstances where it has admitted to computer failures. Nonetheless, it is not in dispute that the applicant and its agent performed the work under the contract, and that a debt fell due upon the completion of the work. The law clearly provides that, in such circumstances, the onus is on the respondent to establish that she has paid the debt. She has not met that onus.
26.In concluding, I note that this is another case where a party has been unable to prove their case because of inadequate record keeping. On her evidence, the respondent paid with cash that she had kept in her house. Assuming her evidence is true, had she kept the cash money in a bank so that she had a record of having withdrawn or transferred the funds, or had she produced evidence of accounts or other records, her position may have been stronger. Commercial transactions conducted in cash carry an additional degree of risk.
27.I note that the applicant has sought interest on the debt. The tribunal may, and usually does, award interest on civil debts. This is generally in accordance with Schedule 2 to the Court Procedures Rules 2006, unless an alternative contractual rate is specified elsewhere. The difficulty I have in this case is that there is little evidence before me of any effort to recover the debt between the debt arising in November 2014 and 13 December 2017. Where, as here, the sum is due under a contract, there is no obligation on the applicant to prove mitigation.[10] Nonetheless, an award of interest by the Tribunal is discretionary, and having regard to the circumstances of this case, I decline to order interest for any period prior to 13 December 2017.
[10] JW Carter, Elisabeth Peden and GJ Tolhurst, Contract Law in Australia (LexisNexis Butterworths, 5th ed, 2007) [37-01]
28.Accordingly, the respondent is to pay the applicant:
(a)the sum of $1,689 — principal debt;
(b)$148 — Tribunal application fee; and
(c)$98.75 — interest in accordance with the Court Procedures Rules 2006 for the period 13 December 2017 to 4 January 2019.
………………………………..
Senior Member H Robinson
HEARING DETAILS
FILE NUMBER:
XD 981/2018
PARTIES, APPLICANT:
The Carpet Company
PARTIES, RESPONDENT:
MS
COUNSEL APPEARING, APPLICANT
N/A
COUNSEL APPEARING, RESPONDENT
N/A
SOLICITORS FOR APPLICANT
N/A
SOLICITORS FOR RESPONDENT
N/A
TRIBUNAL MEMBERS:
Senior Member H Robinson
DATES OF HEARING:
9 November 2018
23 November 2018
0
6
0