Tsopanos v Kormez
[2013] VCC 1916
•9 December 2013
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-13-00884
| MARY TSOPANOS | Plaintiff |
| v | |
| BURHAN BRIAN KORMEZ | Defendant |
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JUDGE: | HIS HONOUR JUDGE LACAVA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12 and 13 November 2013 | |
DATE OF JUDGMENT: | 9 December 2013 | |
CASE MAY BE CITED AS: | Tsopanos v Kormez | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 1916 | |
REASONS FOR JUDGMENT
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Subject: CLAIM FOR MONEY PAID
Catchwords: Money paid by plaintiff to third parties at defendant’s request – whether paid gratuitously and in furtherance of relationship – whether paid in accordance with a common understanding or convention
Legislation Cited: Prostitution Control Act 1994
Cases Cited:Lumbers v W Cook Builders Pty Ltd (in liq) [2008] 232 CLR 635; Hendersons Automotive Technologies Pty Ltd (in liq) v Flaton Management Pty Ltd (2011) 32 VR 539
Judgment: Judgment for the plaintiff.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C Northrop | Ella Gorenstein |
| For the Defendant | Mr C Morgan | Horvat Legal |
HIS HONOUR:
1 The plaintiff commenced this proceeding by writ on 26 February 2013. She claims the sum of $218,401.95, being the total sum of 19 payments made by her to other third parties for and, at the request of, the defendant. The first payment was made on 4 June 2007 and the final payment on 10 July 2009.[1] The cause of action is for money paid.
[1]Plaintiff’s Court Book (“PCB”) 4 – Statement of Claim, paragraphs 1 to 9
2 In his Defence, the defendant denied the allegations made by the plaintiff that she had made 19 payments to third parties at his request.[2] However, the defendant later admitted the fact of the payments.[3] At trial there was therefore no dispute about the fact of the 19 payments having being made by the plaintiff. The plaintiff gave evidence, which I accept, that she made each of the payments at the request of the defendant. I will deal with the plaintiff’s evidence later. The plaintiff’s case was therefore a very straightforward claim for money paid.
[2]PCB-8 – Defence and Counterclaim, paragraph 1
[3]Compare Notice to Admit and Notice of Dispute, Exhibit A, PCB pages 22 to 28
3 The contentious part of this case concerned the defendant’s Defence and Counterclaim which is best described as a “moveable feast”. It is necessary to explain why that is so.
4 In his Defence, the defendant pleaded that he and the plaintiff “were partners in a de facto marriage between 2003 and 2008” and that they “cohabited from 2005 to 2008”.[4] At trial the defendant amended the dates to read “between 2003 and 2010”. There is a logical inconsistency in that which is pleaded however, and putting that to one side, for reasons later stated, I find the pleading is not made out on the evidence.
[4]PCB 8 – Defence and Counterclaim, paragraph 1(a) and (b)
5 The plaintiff gave evidence that she was introduced to the defendant in 2003 and she went to work for him as a receptionist in his business of an escort agency in South Melbourne known as Millennium Bar & Bistro in 2003.[5] The defendant was then a married man with family and lived with them at his home in Greenvale. The plaintiff gave evidence that she and the defendant initially had an employer/employee relationship and they were good friends which developed into a sexual relationship in about February/March 2008. Thereafter, the plaintiff gave evidence the defendant would stay with her at her house one, or perhaps two, nights per week. Otherwise he was driving his truck or continued to live at his Greenvale home.
[5]It was also conducted in other business names not here relevant
6 In evidence, the defendant agreed he first met the plaintiff in about 2003 and that the relationship between himself and the plaintiff was at first that of employer/employee. After about three years (which would not have been before 2006 at the earliest), the relationship became sexual. He gave evidence the relationship was “casual – friends – pretty close”. He said the relationship held together until mid to late 2010, when it ended.
7 I accept the evidence of the plaintiff that at best she shared a casual sexual relationship with the defendant from about February/March 2008 until some time in 2010. I reject any suggestion by the defendant that his relationship with the plaintiff was other than a casual sexual one. It certainly could never be described as “a de facto marriage” at any stage and, nor could it be said that the parties “cohabited” within the proper meaning of that word as pleaded. I regard that which is pleaded by the defendant in paragraphs 1(a) and 1(b) of the Defence and Counterclaim as sheer nonsense designed to mislead the Court. What is pleaded in the Defence is not made out on the evidence, not even the defendant’s own evidence.
8 Both counsel accept that my decision in this case largely depends upon what I make of the evidence of the only two witnesses being the parties to the action. On every critical factual issue in this proceeding I prefer the evidence of the plaintiff to that of the defendant. The plaintiff was more direct in the giving of her evidence and in most instances her evidence is corroborated by some documentation.
9 The defendant on the other hand was evasive and, when pressed, resorted to saying he could not remember or, that he paid money to the plaintiff in cash. He also resorted to giving evidence on critical issues that were never pleaded. Another ploy adopted by the defendant when it suited was to assert that he had no access to records that might verify his evidence. He asserted these records to be in the possession of the plaintiff. He never once identified what these records might be or, how it came about that the plaintiff had possession of them. There was no complaint of lack of discovery by the plaintiff and, the defendant never identified what documents he previously held that were relevant to the issues.
10 I concluded that much of the defendant’s evidence was simply made up in the witnessbox. I formed the clear view that the defendant was a totally unsatisfactory witness. In running I had cause to warn him on at least two occasions that whilst there was no running transcript of the evidence, the hearing was being video recorded and, that I might have to consider referring the video to prosecuting authorities to have the defendant dealt with for perjury. I was forced as a matter of fairness to warn the defendant of the possible consequences should he be dealt with for perjury in the evidence that he gave before me. Mr Morgan conceded in his final address that much of his client’s evidence was unsatisfactory.
11 The plaintiff gave evidence that at the time she met the defendant in about 2003, both were operating their own respective escort agency businesses. Both were licensed to do so under the provisions of the Prostitution Control Act 1994 by the Business Licensing Authority (“the BLA”). The defendant agreed. The plaintiff’s business was known as “Sarrons” and “Accent Ladies”. The defendant was operating an escort agency known as “Millennium Escorts” and “Natures Delights” at premises owned by him at 9/37-39 Albert Road South Melbourne.
12 In about 2003, the defendant employed the plaintiff as a receptionist in his business. In the early years the relationship between the two was always that of employer/employee. The plaintiff was living at her premises in Richmond. The defendant was living with his wife and family at Greenvale. These facts are common ground.
13 The plaintiff gave evidence that in 2007, a letter arrived at the defendant’s business from the BLA. She opened the letter in the defendant’s absence. The letter advised the defendant had to shut down his business immediately and his license to conduct his escort agency business had been cancelled occasioned by his conviction in this Court of a cancelling offence. The letter was soon afterwards shown to the defendant and discussions followed between the plaintiff and the defendant as to what to do. The plaintiff, who had little or no money, agreed with the defendant to buy his business for $50,000.00 payable by a deposit of $5,000 and thereafter 45 monthly repayments of $1,000.00. She also agreed to lease the premises owned by the defendant from which the business was conducted for a period of five years at a monthly rental of $1,516.00. The defendant’s solicitor prepared a contract for the sale of the business and a lease.[6] Schedule A to the Contract of Sale lists the assets being sold as “plant, equipment, fittings and other assets $50,000.00”. There is no value attributed to “Goodwill”.[7]
[6]PCB 32-60 inclusive
[7]PCB 59
14 The plaintiff gave evidence, which I accept, that she paid the defendant the $5,000 deposit in cash the next day after the contract was signed. The undisputed evidence is that the plaintiff took over as owner of the defendant’s business from 1 April 2007 and entered into possession of the defendant’s premises under the terms of the lease. The plaintiff gave evidence, which I accept, that thereafter she paid the monthly payments under the contract and the rent. The defendant gave evidence the deposit was never paid and neither were any other payments under either the lease or the contract. I accept the plaintiff’s evidence and reject the defendant’s evidence. Until this proceeding, there was never a demand of the plaintiff by the defendant for monies owning to him by the plaintiff under the terms of either the lease or the contract for the sale of the business. The demand in this proceeding is by set off and counterclaim. The proceeding was never initiated by the defendant.
15 The BLA was advised of the sale of the business. It confirmed it had been advised by letter dated 30 July 2007.[8] That letter imposed additional conditions on the licence held by the plaintiff designed to ensure that the plaintiff was at arms length from the defendant so far as the business was concerned.
[8]PCB 312
16 The plaintiff and the defendant remained friends. Their relationship became a sexual one by about March 2008, almost one year after the transfer of the business. The plaintiff gave evidence, which I accept, that for the first ten to eleven months after she acquired the business she paid amounts totalling $2,516.00 per month into the defendant’s bank account. Copies of the deposit vouchers are in evidence and corroborate this evidence.[9] The plaintiff gave evidence that thereafter the defendant requested the plaintiff to pay him the monthly instalment under the contract and the rent in cash, which she did. The defendant gave evidence that the payments made by the plaintiff into his bank account were immediately withdrawn by him and paid back in cash to the plaintiff and that apart from those payments which were made into his bank account, the plaintiff did not pay him any money under the sale of business agreement or under the lease. I do not accept the defendant’s evidence. I accept the plaintiff’s evidence that she paid the defendant the deposit and each instalment under the contract for the sale of business and the rent each month under the lease.
[9]PCB 287-310. A spreadsheet detailing the date of each payment and the amount and the documents verifying payment went into evidence as exhibit C and there was no evidence that showed it was wrong or inaccurate in any way.
17 The plaintiff’s case is not about either the sale of business agreement or the lease. Her claim is for various other amounts paid by her on behalf of the defendant during the course of their relationship. Those amounts total $218,401.95. In his Defence, the defendant denied the fact of the payments by the plaintiff and he denied they were made by the plaintiff at his request. At trial however, the fact of payment of those amounts has been admitted by the defendant consequent upon a notice to admit and a notice of dispute. It is necessary to go through each of those payments however to record the evidence by each of the parties as to the circumstances in which they were paid. I will return to that evidence shortly.
18 By way of Defence and Counterclaim, the defendant pleads that the parties were “partners in a de facto marriage between 2003 and 2010” and that they “cohabited from 2005 to 2010”. As I have already said, I reject the defendant’s evidence as to this issue. But the defendant pleads that during the time that he cohabited or, was a de facto husband of the plaintiff, he “provided numerous financial benefits”. These are particularised as “transferring a valuable business to the plaintiff for a reduced consideration that was never paid” and paying “bills, purchased food and other household items and generally contributed to the household finances … on an equal footing with the plaintiff”.[10]
[10]Defence and Counterclaim, paragraph 1(c)
19 As to the payments made by the plaintiff, the defendant pleads that if such monies were paid, “they were paid gratuitously and in the furtherance of the relationship”.[11] Alternatively, the defendant pleads the payments were made by the plaintiff on behalf of the defendant “in accordance with a common understanding or convention”.[12] It is pleaded that in accordance with this “common understanding” the defendant transferred the business to the plaintiff for a sum much lower than its true value. The pleading asserts that evidence of the true market value of the defendant’s escort agency business will be given at trial and that when it (the business) was transferred to the plaintiff it “was worth at least $200,000.”[13]
[11]Defence and Counterclaim, paragraph 1(i)
[12]Defence and Counterclaim, paragraph 1(j)
[13]Defence and Counterclaim, paragraph 1(k)(iii)
20 At trial no evidence was led as to the market value of the defendant’s business at the time of sale to the plaintiff in April 2007 or at any other time. There is a notice of set off and counterclaim which claims the rent for five years and the whole of the purchase price of $50,000 and asserts the plaintiff paid no money to the defendant pursuant to either the contract or the lease. I reject the defendant’s evidence that he was not paid either the rent or the purchase price for the business by the plaintiff. I reject the defendant’s evidence that any money he did receive from the plaintiff was paid straight back to her in cash. The counterclaim will be dismissed.
21 Although the defendant led no evidence as to the value of his business, he did assert in his evidence that the business was valued at “at least $1 million dollars”. He even asserted in evidence that he had a silent agreement with the plaintiff that she would pay him $250,000 in cash payments but that this was never recorded in writing. I reject the defendant’s evidence as to these matters. It was evidence made up by him from the witnessbox. None of it was pleaded in the Defence and none of it was put to the plaintiff when she gave evidence. This is in part why I describe the Defence as a movable feast.
22 In giving his evidence, the defendant I think attempted to convince me that each of the payments made by the plaintiff for his benefit, which she now claims, were paid in a scenario where the plaintiff owed him large sums of money. I reject that argument absolutely, just as I reject the defendant’s evidence upon which it is based.
23 The plaintiff claims for 19 separate payments made by her on behalf of the defendant. For convenience, the payments are listed in a spreadsheet which gives a description of each payment and the page numbers in the plaintiff’s court book where the documents or vouchers relating to those payments is to be found. None of this is in contention.
24 The first payment by the plaintiff was for $1,510 on 4 June 2007 to BMW Financial Services, being a repayment on a lease of a Mercedes in the name of the defendant. The plaintiff gave evidence the defendant asked her to make this payment. The defendant gave evidence that he could not remember the matter. Then he said “she just paid it, she said she had paid it and nothing else was said”. I accept the plaintiff’s evidence she made the payment at the request of the defendant.
25 The second payment was made on 14 February 2008 to American Express. The plaintiff gave evidence the defendant asked her to pay his American Express account which he had used to borrow money for a deposit on a truck. The defendant gave evidence “the plaintiff gave me money to pay the bill. I asked her to pay $10,000 off the credit card so I could have some money for a rainy day”. He went on to say the plaintiff paid the money “because she owed me money – it was never an issue”. I accept the plaintiff’s evidence she paid the amount of $10,000 to American Express on behalf of the defendant and at his request. I reject the defendant’s evidence.
26 The third payment made by the plaintiff was to one Peter Aleksijevic on 6 February 2008. She withdrew funds to purchase a bank cheque payable to “Peter Aleksijevic”, being part of the purchase price of a truck. There were other payments made by the plaintiff for the truck. A further payment was made on 14 February 2008 to Peter Aleksijevic for $33,587.11 and on the same day, a payment to Macquarie Leasing of $33,412.89. These are the fourth and fifth payments claimed by the plaintiff. The plaintiff gave evidence, which I accept, that these three payments were made by the plaintiff at the request of the defendant. The defendant gave evidence the payments were made by the plaintiff on his behalf “because she owed me money” and the plaintiff paid the money “because it was good for me”. I accept the plaintiff’s evidence on this issue. Again, I reject the defendant’s evidence.
27 The plaintiff gave evidence she paid two payments to the defendant’s son, Oscar Kormez, each of $2,500 on 11 March and 11 April 2008. She said the defendant asked her to make these payments so his son could purchase a car. The defendant described the payments as “just something I put aside when I was with her in case of emergencies. … I can’t remember if the money was used to purchase a car … there was money going backwards and forth”. I accept the plaintiff’s evidence on this issue. Again, I reject the defendant’s evidence.
28 The eighth payment made by the plaintiff was $20,000 off a credit card in the name of the defendant at Westpac on 18 August 2008. The plaintiff gave evidence the defendant asked her to pay it for him. The defendant gave evidence “I just asked Mary and she paid it”. There was never any discussion it was a loan. On this issue the evidence of the parties is similar. I accept and act on the evidence of the plaintiff she paid $20,000 off the defendant’s credit card at Westpac following a request from him to do so.
29 The ninth payment made by the plaintiff was on 18 August 2008 when she paid $4,100.00 to Trustworthy Nominees. She said she did so at the request of the defendant. The defendant gave evidence Trustworthy Nominees was “some sort of credit provider” although he said he could not remember why he borrowed money from it. He gave evidence “I didn’t make a record. She owed me money. She paid because she knew she owed me the money. I mean the sale of the business – what was agreed and what was written on paper were two different things – the business was sold for $250,000 not $50,000.00.” I accept the plaintiff’s evidence on this issue. Again, I reject the defendant’s evidence.
30 The tenth payment made by the plaintiff was $70,000 on 20 August 2008 to one Harry Kucukozdemir. The plaintiff gave evidence the defendant owed the money to Kucukozdemir, who was putting pressure on the defendant to repay him and, the defendant asked the plaintiff to pay the debt, which she did. The defendant gave evidence that “the money went from Mary to Harry who was a friend – he had paid $40,000 to $45,000 to Sensis. $25,000 went to repay a loan that I previously had from Harry – the $40,000 to $45,000 was an expense of the business which may have been incurred when I owned the business – there was no discussion the money was a loan – she owed me money anyway”. I accept the plaintiff’s evidence on this issue. Again, I reject the defendant’s evidence.
31 The plaintiff gave evidence that on 27 August 2009, she paid the final payment on the defendant’s lease from BMW Finance of $26,914.65. The payment was to BMW Finance and represents the eleventh payment made by her. She said the defendant asked her to make this payment. The defendant gave evidence “I gave her $26,000 in cash and she made the payment”. Asked as to the source of the cash given to the plaintiff, he gave evidence “I can’t remember the circumstances – I sold a car – I can’t remember which one – I had some savings set aside as well”. No documentary evidence was called upon to corroborate this evidence. I accept the plaintiff’s evidence on this issue. Again, I reject the defendant’s evidence.
32 Payments 12 to 19 in the plaintiff’s list of amounts claimed are payments to Kenyons solicitors on behalf of the defendant. This was payment for legal expenses which the defendant asked the plaintiff to pay. The defendant gave evidence and agreed the plaintiff had made the payments at his request but he said “every time she made a payment I gave it back to her in cash from my earnings – I could do whatever I liked with the cash.” This evidence is entirely uncorroborated. I accept the plaintiff’s evidence on this issue. Again, I reject the defendant’s evidence as a tissue of lies.
33 The defendant called no evidence that would verify there was a side agreement to sell his business to the plaintiff for $250,000 and not $50,000.00 as stated in the contract drawn by his solicitor. This evidence was never put to the plaintiff in cross-examination. Mr Horvat, who drew the contract and lease, was in the Court instructing and was not called as a witness. I infer he could not have assisted the defendant’s case.
34 In his final address, Mr Morgan criticised the plaintiff and said she could not be accepted as a witness of truth. It was submitted she had lied to the BLA when she advised them she had no dealings with the defendant. It was also said that when examined, her bank statements show deposits of cash approximating the amount of the loan and rent on a monthly basis soon after the plaintiff had paid monthly rent and payments under the contract. This, it was said, also verified the evidence of the defendant that he paid cash back to the plaintiff. I reject both submissions. As I have said, I accept the plaintiff’s evidence and I reject the defendant’s evidence. I agree the plaintiff’s correspondence with the BLA raises some questions of lack of candour. However, I have taken the view that such an approach is with the benefit of a great deal of hindsight. The plaintiff was entitled to take the view that the conditions of her licence from the BLA did not prevent her having a casual sexual relationship with the defendant. That sexual relationship did not commence until almost one year after the plaintiff had taken control of the defendant’s business. It was in that context that the plaintiff made the 19 payments at the request of the defendant.
35 The plaintiff gave evidence that the relationship between her and the defendant broke down in 2010 and she asked the defendant to repay her the money her owed. The defendant gave evidence similar, except he said he told the plaintiff “I don’t owe you, you owe me” or words to that effect. I am satisfied the plaintiff demanded repayment in 2010 of all monies she had paid on behalf of the defendant and he refused.
36 The plaintiff’s claim is for money paid. Mr Northrop, in submissions, relied upon the principles involved in such a cause of action referred to in Mason & Carter, Restitution Law in Australia (2nd edition) at paragraph 116. The principal use of such a cause of action is where one person discharges a debt owed by another at that person’s request. That case is made out on the evidence in each of the 19 payments pleaded.
37 Mr Northrop also relied on the principles expressed by the High Court in Lumbers v W Cook Builders Pty Ltd (in liquidation)[14] and by the Victorian Court of Appeal in Hendersons Automotive Technologies Pty Ltd (in liquidation) v Flaton Management Pty Ltd[15] per Tate JA, where her Honour sets out with approval the principle from Lumbers set out above and the passage from Mason & Carter’s work referred to above:
[14][2008] 232 CLR 635, 664-665
[15](2011) 32 VR 539, 552-553
“[59]Here, while HAT’s case was presented at trial as resting directly on the principle of unjust enrichment, in fact HAT did not seek to base its claim for restitution upon any doctrine of ‘free acceptance’ of a benefit independently of a request having been made. Rather, counsel for HAT argued that the claim for restitution reflected the traditional money paid count, that is, money paid at one party’s request to the benefit of another. So conceived, the claim falls within long-established principles. This was emphasised in Lumbers v Cook when consideration was given to the second of the nine factors identified in Angelopoulos as relevant to a claim for restitution:[16]
[16](2008) 232 CLR 635, 666-7 [89]-[90] (emphasis added, citations omitted).
‘It will be noted that the second of the matters identified was the making of an ‘implied request’ by the Lumbers to the Builders to do the work and to pay money. At once it should be pointed out that, if Builders did whatever work it did and paid whatever money it paid at the Lumbers’ request, Builders’ claim for a reasonable price for the work and for the money it paid would fall neatly within long-established principles. It would matter not at all whether the request was made expressly, or its making was to be implied from the actions of the parties in the circumstances of the case. Builders would have an action for work and labour done or money paid for and at the request of the Lumbers.
And if Builders did work or paid money at the Lumbers’ request, it would also follow that it would be neither necessary nor appropriate to consider any of the other eight factors identified in Angelopoulos in deciding whether Builders could recover a fair price for the work it had done and the amount it had paid for and at the request of the Lumbers. To the extent that Angelopoulos is understood as requiring separate or additional consideration of those other factors, where a plaintiff seeks to recover a fair price for work done at the defendant’s request, or the amount the plaintiff has paid for the defendant at the defendant’s request, Angelopoulos is wrong and should not be followed.’
[60]In a case where a request is made (as here) it is unnecessary to consider the question of whether a ‘benefit’ was conferred at the other party’s ‘expense’, factors considered relevant in Angelopoulos.
[61]While the reasoning of the High Court in Lumbers v Cook supports the conceptual basis of HAT’s claim to be based on the historical count of money paid, it also creates three difficulties for HAT.
[62]The first difficulty was that the allegation that Flaton Management was unjustly enriched at HAT’s expense was no more than a distraction of little or no utility to HAT’s case. The failure to articulate the claim for restitution as a simple money paid count in the pleadings, or in argument at trial, meant that the case proceeded as if the concept of unjust enrichment of a defendant at the expense of a plaintiff was a ‘principle of law which supplies a sufficient premise for direct application in a particular case’. Yet this is precisely the understanding of unjust enrichment that the High Court has rejected. This error in the conceptual basis of HAT’s claim had the unfortunate effect that the trial judge, in the face of the common ground between the parties, set about analysing the case in terms of the very factors that the High Court said should not be understood as requiring separate or additional consideration from the requirement on the money paid count for an implied request to make the payment. The emphasis on unjust enrichment caused the trial judge to focus primarily on the question of whether Flaton Management had received a ‘benefit’ at HAT’s ‘expense’, the very factors considered to be irrelevant to the traditional money paid count.”
38 Applying these principles, I find on the evidence that each of the 19 payments made by the plaintiff pleaded in the Statement of Claim was payment made by the plaintiff of a debt or other obligation on behalf of the defendant. The plaintiff made each of these payments at the request of the defendant. The plaintiff has proved her case. There will be judgment for her on the claim. The counterclaim is dismissed.
39 I will hear the parties on appropriate form of orders and costs.
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