| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : THI & ORS -v- QUADWEST DEVELOPMENTS PTY LTD [2010] WADC 127 CORAM : BIRMINGHAM QC DCJ HEARD : 11 AUGUST 2010 DELIVERED : Delivered orally on 20 AUGUST 2010 typed from tape and edited by Trial Judge FILE NO/S : CIV 2142 of 2009 BETWEEN : HUYNH HUON THI NGUYEN LOI VAN
TRAN TUYEN VAN
TRAN DAU THI
Plaintiffs
AND
QUADWEST DEVELOPMENTS PTY LTD (ACN 113 060 861)
Defendant
FILE NO/S : CIV 3863 of 2009 BETWEEN : HUYNH HUON THI NGUYEN LOI VAN
TRAN TUYEN VAN
TRAN DAU THI
Plaintiffs
AND
QUADWEST DEVELOPMENTS PTY LTD (ACN 113 060 861)
(Page 2)
FILE NO/S : CIV 1858 of 2010 BETWEEN : HUYNH HUON THI NGUYEN LOI VAN
TRAN TUYEN VAN
TRAN DAU THI
Plaintiffs
AND
QUADWEST DEVELOPMENTS PTY LTD (ACN 113 060 861)
Defendant
Catchwords: Summary judgment - Turns on own facts - Conditional leave to defend Legislation: Nil Result: Conditional leave to defend in each action Representation: CIV 2142 of 2009 Counsel:
Plaintiffs : Mr A J Prentice
Defendant : Mr S G Leslie
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Solicitors:
Plaintiffs : Mossensons
Defendant : Talbot Olivier
CIV 3863 of 2009 Counsel:
Plaintiffs : Mr A J Prentice
Defendant : Mr S G Leslie
Solicitors:
Plaintiffs : Mossensons
Defendant : Talbot Olivier
CIV 1858 of 2010 Counsel:
Plaintiffs : Mr A J Prentice
Defendant : Mr S G Leslie
Solicitors:
Plaintiffs : Mossensons
Defendant : Talbot Olivier
Case(s) referred to in judgment(s):
Associated Bulk Carriers Ltd v Koch Shipping Inc (The Fuohsan Maru) [1978] 2 All ER 254
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
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1 BIRMINGHAM QC DCJ: There are three applications for summary judgment before me for determination.
Background 2 The plaintiffs carry on a café business known as Rhodes Island Café on the ground floor of 239 Adelaide Terrace, Perth. 3 The defendant has, since early 2007, been carrying out a re-development of the property located at that address. It is common ground that the defendant's works have the capacity to adversely affect the business carried on by the plaintiffs, such that pursuant to a deed dated 23 February 2007 the parties agreed that the defendant would compensate the plaintiffs in respect of the reduction to their turnover of the business caused by the defendant activities during the period of construction. 4 The deed provided that such loss be calculated by reference to the difference between the actual earned monthly income as certified by the plaintiffs' accountant and an agreed average monthly income for the corresponding months for the preceding two calendar years. 5 Pursuant to the deed, at the end of each calendar month, the plaintiffs provided to the defendant a tax invoice for the sum claimed by way of loss as certified by the plaintiffs' accountant, Mr Du. The defendant is required to pay the invoiced amount within seven days of receipt of the invoice. 6 The liability to pay the compensation commenced in February 2007. 7 Claims in respect of monies said to be due from February 2007 to and including May 2008 have been the subject of arbitration before the Honourable Robert Anderson QC resulting in an award in favour of the plaintiffs. 8 The plaintiffs claimed entitlement for the period from June 2008 to October 2008 was the subject of District Court action number CIV 3229 of 2008. On 19 March 2010 his Honour, Judge Eaton entered summary judgment in favour of the plaintiff in the sum of $86,290.38 in respect of the loss claimed. That judgment is presently under appeal. 9 By this action the plaintiffs seek summary judgment in respect of the compensation as a result of the reduced turnover for the six month period from November 2008 to April 2009 in the total sum of $129,130.44. (Page 5)
10 In related proceedings, namely CIV 3863 of 2009 and CIV 1858 of 2010 the plaintiffs seek to recover compensation in respect of the periods from May 2009 to November 2009 and December 2009 to May 2010 in the sums of $199,910.56 and $209,079.68 respectively. 11 As the matters in issue, save for the amounts claimed each month, are identical, the applications for judgment were heard on the basis of the claim in relation to this action for the period November 2008 – April 2009 such that the decision made in relation to this matter should apply mutatis mutandis to the other actions. That said however, as will be apparent for these reasons, I have considered the papers and materials filed in each application separately. 12 Summary judgment procedure is designed to deal with those cases which are not fit for trial at all. Accordingly, the power to enter summary judgment should be exercised with great care. If it is not possible to say without doubt on the whole of the material that there is no question to be tried, leave to defend should be granted: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99. Further, even where the only issue is the quantification of damages, the Court may not give judgment for part of the damages and give leave to defend as to the balance unless that part for which judgment is given is ascertained and indisputably true. Unless the Court can give judgment for a certain or ascertainable sum, the defendant should have leave to defend: Associated Bulk Carriers Ltd v Koch Shipping Inc (The Fuohsan Maru) [1978] 2 All ER 254 at 263, 266. 13 For the purposes of the summary judgments applications, the plaintiffs rely on: In respect of matter CIV 2142 of 2009: • the affidavit of Mrs Huynh Huon Thi sworn 8 April 2010 together with an affidavit of the plaintiffs' accountant Mr Gordon Du sworn 6 July 2010. In respect of matter CIV 3863 of 2009: • the affidavit of Mrs Huynh Huon Thi sworn 13 April 2010 together with an affidavit of the plaintiffs' accountant Mr Gordon Du sworn 6 July 2010. In respect of matter CIV 1858 of 2010: • the affidavit of Mrs Huynh Huon Thi sworn 23 June 2010 together with an affidavit of the plaintiffs' accountant Mr Gordon Du sworn 6 July 2010. (Page 6)
14 The affidavits of Mrs Thi and Du exhibit copies of the monthly takings sheets said to have been prepared by Mrs Thi and the till tapes relied on as justification for the sums claimed. 15 In answer to the plaintiffs' applications, the defendant relies on the affidavit of Dean Rafferty sworn 10 August 2010 filed in each action. 16 Notwithstanding the judgments and determinations that have been made in relation to earlier claims under the deed, the extant applications must be considered on their merit and in the light of the evidence presented in respect of each application. As each monthly invoice may be treated as a separate action, so must the evidence in support of each application be separately treated. There can be no issue estoppel arising from the earlier judgment or determination in that regard. 17 In support of the plaintiffs' application in CIV 2142 of 2009, Mrs Thi deposes as to the turnover of the business during the period November 2008 to April 2009. The plaintiffs rely on the certificates issued by the plaintiffs' accountant Mr Du - prepared from summary receipts and till tapes said to have been provided to him by Mrs Thi. 18 Mr Du, by affidavit dated 6 July 2010, deposes as to calculation and certification of the earned monthly income for each month from November 2008 to April 2010. He deposes that for the task of certification of the plaintiffs earned monthly income, he relied on the daily summary sheets and till tapes provided to him by Mrs Thi on behalf of the plaintiff. 19 Implicit in Mr Du undertaking the task of certifying the monthly figures is an obligation to independently review the figures produced by the plaintiffs and not blindly accept the figures presented. 20 The defendant by Mr Rafferty in his affidavit of 10 August challenged the amounts claimed by the plaintiffs. Mr Rafferty states that he believes that the plaintiffs are understating the earned monthly income and thereby enhancing the amount claimed from the defendant. The basis for his belief is said to be found in matters arising in the course of the earlier arbitration where, it is alleged, some invoices were not discovered nor payments included in the monthly income. The defendant further says that an analysis of the plaintiffs' records at that time showed that payments by parties for catering services that were recorded in bank statements were not included in the plaintiffs' declared earned monthly income. (Page 7)
21 Mr Rafferty states further that he has observed the plaintiffs café to close by 3.00 pm whereas pre-construction it had traded until 4.30 pm each day. He says that, notwithstanding that the arbitrator in the earlier proceedings accepted that this was a breach of the agreement by the plaintiffs and awarded nominal damages in the sum of $250 per month, such assessment was wrong and that in truth the damage is suffered by the defendant by reason of the plaintiffs' breach of the implied term that they would continue to operate the business at least in the same manner post-construction as it had operated pre-construction may be much greater. 22 The defendant says that if granted leave to defend, it will seek by way of discovery from the plaintiffs, bank statements, records of stock purchases, MYOB data records, bank card records, catering records, corporate records and taxation returns etc, and thereafter have those records analysed by a forensic accountant to establish that the earned monthly income has been overstated by the plaintiffs. 23 Whilst such alleged deficiencies have been canvassed and addressed in respect of the materials and records produced in the earlier proceedings, the documents and records relied upon by the plaintiffs in support of the applications for judgment in the current proceedings give rise to a sense of unease such that the defendant's concerns cannot be summarily rejected. 24 A review of the papers relied on by the plaintiffs in support of the application for judgment reveal a number of deficiencies and inaccuracies such that one could not proceed with confidence to judgment for a sum said to be certain on such material. 25 By way of illustration, I make the following observations.
CIV 2142 of 2009 26 By par 30 of her affidavit Mrs Thi deposes that at the conclusion of each day's trading the till tape readings of the two cash registers are checked by her and the totals are entered by her in an exercise book. The summary sheets from the exercise book are the source documents recording the turnover which are provided to Mr Du to enable him to certify the sums claimed from the defendant. 27 An examination of the daily taking sheet for the month of November 2008 discloses that the commencing dates have been altered from 1 and 2 November to 3 and 4 November 2008. Given that the records are said to be written at the close of business each evening it is (Page 8)
somewhat surprising that the dates recorded were not sequential and accurate – particularly given that the till tapes that are said to have been recorded are all dated. One is left with the impression that the first two entries of the document have been written at the same time and not on the date stated. Whilst there might be some explanation for this, it is not apparent from the papers nor is anything put forward by way of explanation. 28 The figures for 14 November have been altered. Further, on 19 November, the daily takings figure of $4,912.10 has been reduced by $2,719.20 - seemingly being an amount that has been "over rung" when sales were entered in the till. The amount which that is over rung or how that amount is comprised is not apparent from the till tapes exhibited – said to be the tapes provided to Mr Du for his assessment of the monthly turnover figures. 29 On 25 November a further amount $224 was deducted as being over rung. 30 The till tapes further record that on each day there are a number of "no sale" items entered on the till indicating that the till has been opened whilst no transaction is recorded as having been conducted. The plaintiffs explain these entries as recording the till being opened to obtain change for customers. Such matter was canvassed in the earlier proceedings and the explanation has some force generally. It is of concern however that Mr Du seemingly relies for the purpose of certification only upon the monthly taking sheet as recorded by Mrs Thi and the daily total of the till tapes rather than the till tapes recording all of the transactions for each days trading from which a detailed history may be obtained. A review of the documents annexed as Exhibit C to Mr Du's affidavit reveals that up to 29 "no sales" may have occurred in any one day. 31 In respect of the daily takings sheet for December 2008 (said to have been prepared by Mrs Thi each day), the handwriting of a number of entries is in a different hand or style to that undertaken for November and has seemingly different signatures. To the extent that Mrs Thi has deposed that she alone has completed the document each evening for each month some explanation is required. 32 A similar observation may be made in relation to the monthly total for January 2009 – particularly in relation to the entries for the period 18 to 23 January. On Friday, 23 January an amount of $400.30 is said to (Page 9)
have been over rung and has been deducted from the takings said to have been achieved on that day. 33 For the month of February 2009 amounts are recorded as being "over rung" on 5, 6, 11, 13 February. On each day throughout the whole of the period being examined a number of "no sale" entries are also made. Whilst one can not say that there is no legitimate reason for them occurring, an examination of entire till tape for each cash register for each day is warranted to assist in verification of the amount claimed. Further, whereas the amount certified by Mr Du for February 2009 at p 116 of his affidavit is $20,922.88, the invoice for the lost turnover is for only $19,249. Whilst this is an error in the defendant's favour it underpins the need for the accounts to be closely scrutinised before acceptance. 34 The entries for March 2009 show over rings occurring on 6 and 23 March. Again, sections of the document are written in a different hand and appear to have been created by more than one person - particularly in the later part of the month. As noted earlier, this is important in the context where Ms Thi says that she prepared the document for submission to the accountant each month.
CIV 3863 of 2009 35 The papers filed by the plaintiffs is action CIV 3863 of 2009 and in particular the material annexed to the affidavit of Mr Gordon Du sworn 6 July for the period May 2009 to November 2009 are not without problems. 36 By way of example, the tax invoice for November 2009 records a compensation figure of $32,583.77 in the body of the document whereas the total is said to be for $35,583.77 – some $3,000 more. Whilst this error is to the benefit of the defendant it highlights the extent to which the material submitted by the plaintiffs in support of the applications for judgment needs to be viewed with some care. Significantly the monthly takings summary prepared by Mrs Thi said to support such taking as exhibited at p 138 of Mr Du's affidavit, only covers the period up to 24 November. The copy of the same document annexed to the affidavit of Mrs Thi has a like deficiency. Amounts varying from $22 through to $260 were over rung on four occasions during the month. Mr Du's calculation of the tax invoice as certified by him states the earned monthly income was $43,154.10 (p 166) - presumably on the document referred to him by Mrs Thi. In fact the total of the figures contained in the exhibit at p 138 is in the order of $34,311.25. It appears that some part of the (Page 10)
document may be missing or figures inadvertently omitted for the last week of the month however, this is not the time to speculate. 37 This is particularly so in relation to accounts where there have been large amounts said to have been over rung and then deducted such as in May 2009 where on 1 May an amount of $10,103.00 was said to be over rung, $600 on 4 May and $52 on 27 May. That over rung amounts of some $10,700 were deducted from the takings for May 2009, together with the significant number of "no sale" items causes me some disquiet in considering whether the plaintiff is entitled to judgment.
CIV 1858 of 2010 38 In action CIV 1858 of 2010 in respect of the monies claimed for the period from December 2009 to May 2010 similar material as that relied on by the plaintiffs in the two other actions was tendered. 39 A review of the monthly summary sheets, till tapes, invoices and amounts certified by Mr Du is troubling. For example at p 39 of the affidavit of Mr Du - dealing with the monthly summary for December 2009, the handwriting for Tuesday, 22 December is seemingly of a person other than Mrs Thi. The entry for the period on 22 December reveals takings of $15,836.95 together with $652.85 making a total of $16,489.80. Thereafter the sum of $14,749.40 is deducted as a "over ring". There is no supporting document justifying that figure yet it has been certified by Mrs Thi as evidenced by her signature. The signature at the foot of the page however for 22 and 23 December is different to that of Mrs Thi on other entries and seemingly of some other person. On 23 December there was an over ring of $3,305.90 reducing the takings down from $4,558.35 to $1,362.45. Notwithstanding the certification of the shortfall for December 2009 at $42,969.58, the invoice (issued in February 2009) for the period is for $39,532.01. Whilst again this is a variation in favour of the defendant, the $3,000 odd difference is without explanation. 40 Similarly, insofar as the amount certified by Mr Du on 13 February for January 2010 was for $35,761.69 the claim was invoiced on the same date as his certificate in the sum of $32,900.75. No explanation for the difference is apparent. It is important to remember that in each case Mr Du states that he relied upon the till tapes and the monthly summary sheets provided to him by Mrs Thi for the purpose of calculating the earned monthly income for the relevant periods. (Page 11)
41 For February 2009 an amount of $2,268.50 was over rung at the same time as 13 "no sales" entries. 42 The entry for March 2010 is in a different format and hand and is yet said to have been prepared by Mrs Thi. On the entry for Tuesday (undated) but presumably the fourth week of March, an amount of $3,013.30 was over rung. 43 The entries for April 2010 at p 164 of Mrs Thi's affidavit have no day or date entry for 22 and 23 April notwithstanding that the takings figures had been written although not within the lines provided on the lined book. One is left with the impression that those figures have been added at a later time. Further, the handwriting and the figures are significantly different from those in the rest of the document. An examination of the original documents may be of assistance. 44 The handwriting on the summary for May 2010 at p 184 is also in a seemingly different hand to that said to be of Mrs Thi in other documents. 45 All of these entries identified above must be considered against a background where in par 36 of her affidavit in each action, Mrs Thi deposes that: "I hand write the daily takings in an exercise book at the conclusion of each day (the summary sheets). They are the only documents recording turnover and all of those documents in relation to the invoices the subject of this action have been provided to my accountant and the defendant". 46 Whilst the defendant has sought to make much of some findings of the arbitrator in relation to aspects of the documents provided to him and the explanations given it is not necessary that I consider those findings or have regard to them. 47 On the basis of the material put forward by the plaintiffs in support of the applications for judgment, I am not satisfied that the sums claimed by the plaintiffs are so certain as to justify judgment being entered in favour of the plaintiffs and the defendant being denied the opportunity to test the quantum claimed by trial. 48 If the relevant test is whether the defendant satisfies the court that there is an issue or question in dispute which ought to be tried or some other reason for trial, the material presented by the plaintiffs in support of the application for judgment on its face achieves that end. It is significant (Page 12)
that all of the relevant facts and material evidencing the extent to which the plaintiffs' daily takings were affected by the defendant's operations are under the control of the plaintiff. It is apparent from the papers exhibited – upon which Mr Du is said to rely for the purpose of certifying the plaintiffs' monthly takings - that further examination and scrutiny of the plaintiffs' primary source documents is warranted. The defendant would have to elicit by discovery, interrogatories or cross-examination the information that would assist it to identify whether the amount claimed by the plaintiffs has been properly calculated. 49 In my opinion, this is a case where the plaintiffs ought to be exposed to the full investigation that is only possible at trial and it is not appropriate to summarily shut out the defendant from an opportunity to properly test the plaintiffs' claims. 50 Before granting summary judgment the Court needs to be satisfied that there is no reasonable doubt that the plaintiffs are entitled to judgment. Unless the defendant has no case at all it should not be shut out from defending and there ought to be a trial where, as in the present case, there are circumstances to suggest that close investigation is warranted. 51 Even if the extent of the errors that have been identified are not significant, it is apparent that judgment cannot be entered against the defendant for a certain or ascertainable sum and as such the defendant is entitled to leave to defend the respondents claim. See Associated Bulk Carriers Ltd v Koch Shipping Inc (The Fuohsan Maru) (supra). 52 Further, the plaintiffs admit that the defendant is entitled to some offset in respect of damages suffered by reason of the plaintiffs' breach of the implied term of the agreement relating to trading hours. Notwithstanding that the plaintiffs, as admitted by the defendant, are seemingly entitled to a substantial amount of damages in respect of their claim, the precise quantum of the claim cannot be properly calculated or determined with the degree of satisfaction that would enable judgment to be signed. 53 Notwithstanding that my view that the defendant is entitled to leave to defend, it is important to recognise that, subject to the issue of quantification of their claim, the plaintiffs are seemingly entitled to recover a substantial part of the sum claimed from the defendant. So much was quite properly conceded by the defendant's counsel in the course of the hearing. (Page 13)
54 It is further important to recognise also that notwithstanding that pursuant to the terms of the agreement there is provision for the parties to dispute the sum claimed and refer the same to arbitration, the defendant has not availed itself of that process and, indeed, has only filed an affidavit opposing the plaintiffs' claim at the eleventh hour. 55 In the context of a case where: • as acknowledged by the defendant's counsel, the plaintiffs would at trial be entitled to a significant portion of their claim, albeit not precisely quantified at this time; • the defendants unquantified offsetting damages claimed are seemingly relatively modest; • the defendant has not availed itself of the dispute process available under the contract and seemingly sought to delay the resolution of matters in issue with the plaintiffs; and • having regard to the defendants conduct in not seeking to raise issues of dispute until late in the day - its affidavit in opposition to the claim not being filed until very late in the proceedings; I consider that it is appropriate to impose as a condition upon the defendant's right to defend. Such condition will require a sum of money to be paid into court – such sum approximating that part of the sum claimed by the plaintiffs to which the defendant would not have any offsetting damages claim and for which the plaintiffs would seemingly be able to demonstrate at trial, albeit have been unable to verify with the precision necessary that would enable judgment to be obtained at this time. 56 I consider that the appropriate sum that the defendant should pay into court as a condition of its entitlement to defend the claim is in the order of approximately 85 per cent of the sum claimed by the plaintiffs (rounded) in each action. 57 Accordingly, I order that: • In respect of action CIV 2142 of 2009 upon the defendant paying into Court the sum of $110,000 the defendant have leave to defend the claim. (Page 14)
58 I further order that the costs of the applications for judgment be costs in the cause. |