Unic SA v Connor
[2000] QSC 499
•22 December 2000
SUPREME COURT OF QUEENSLAND
CITATION: UNIC SA v Connor [2000] QSC 499 PARTIES: UNIC S.A. RCS GRASSE B 958 806 408 -
SIRET 958 806 408 00034 APE 295 E
(plaintiff)
v
PENELOPE JAYNE CONNOR(defendant)
FILE NO/S: SC No 2381 of 1997 DIVISION: Trial Division PROCEEDING: Civil Trial DELIVERED ON: 22 December 2000 DELIVERED AT: Brisbane HEARING DATES: 2, 3 and 5 October 2000 JUDGE: Atkinson J ORDER: The defendant pay the plaintiff 1,212,425.93FF CATCHWORDS: CONTRACT – PARTIES – plaintiff claims 1, 212,425.93FF for coffee machines and parts it supplied to defendant – defendant claimed that the plaintiff contracted with a separate legal entity after 2 years - whether plaintiff contracted with defendant or another company – whether original contract terminated when company began paying defendant’s debts.
ANZ Banking Group Ltd v Cawood [1987] 1 QdR 131, considered
Creamoata Ltd v The Rice Equalisation Association Ltd (1953) 89 CLR 286, considered
European Asian Bank Aktiengesellschaft v Katsikalis [1988] 1 QdR 45, consideredCOUNSEL: RJ Oliver for the plaintiff
DA Savage for the defendantSOLICITORS: McInnes Wilson for the plaintiff
Herd & Janes for the defendant
ATKINSON J: UNIC SA RCS GRASSE B 958 806 408 - SIRET 958 806 408 00034 APE 295 E (“Unic”) is a French company which was established in 1928. As part of its international business it sells coffee machines. Its president for the last 12 years has been Jean-Pierre Levi.
In 1991 Unic commenced dealing with Barry and Penelope Connor and Kona Coffee Company. Mr Connor had been the proprietor of the business name Kona Coffee Company but ceased to be its proprietor in 1982. Kona Coffee Company then had a corporate proprietor associated with the Connors until 19 August 1987 when Penelope Connor became its proprietor. She remained the proprietor of Kona Coffee Company until 1 January 1996 and then again from 1 April to 1 July 1998.
In this action, Unic claims the sum of 1,212,425.93 French Francs for coffee machines and parts which it supplied to Penelope Connor between 21 February and 28 June 1994 pursuant to an agreement made in or about February 1992 between Unic and Penelope Connor, then trading as Kona Coffee Company, to sell coffee machines and parts for coffee machines on a running account. Penelope Connor submits that an entirely new contractual agreement was entered into between Unic and another legal entity, Kona Pty Ltd, in or about February 1994 and therefore the defendant, Penelope Connor owes the plaintiff, Unic, nothing.
In order to resolve this difference it is necessary to look at the history of dealings between the parties and the contractual arrangements which they entered into. This history necessarily involves findings of fact based on the documentary evidence and the affidavit and oral evidence given at the trial.
The trial was the hearing of a managed case. Directions were given before the trial that the parties file bundles of documents and that the evidence‑in‑chief of the witnesses be by way of affidavit. On application by the defendant the court acceded to an application that her evidence and that of her husband, Barry Connor, who was the other witness for the defendant, be given on the telephone from the Bahamas where the defendant and her husband now reside. The plaintiff’s evidence was given by its president Jean-Pierre Levi whose evidence‑in‑chief was on affidavit but who was present in court for cross‑examination.
Mr Levi gave his evidence in an extremely candid and straightforward way. Where the passage of time had dimmed his memory he frankly conceded that. Although English is not his first language, his evidence was reasonably clear. Unless indicated otherwise, I have accepted his evidence. The evidence of the defendant and her witness fell into an entirely different category. Barry Connor who gave evidence for the defendant was evasive, non‑responsive, often replied after long pauses and from time to time contradicted evidence to which he had sworn in his affidavit. He was entirely without credit and I would be inclined not to accept any of his evidence except where it is clearly supported by documentary evidence. Mrs Connor, the defendant, was keen to portray herself as a naive housewife unskilled in business matters who at all times relied upon her husband. However the evidence shows that she conducted a business where, by her own exertions, she earned over $1 million a year. The reality was at odds with the pretence to which she affected as she gave her evidence. Her evidence was not worthy of belief except where it was supported by documentary evidence. Even so, the documentary evidence had to be treated with some care because as will be seen, some of it was intended by Mr and Mrs Connor to mislead the plaintiff.
The plaintiff company is a company registered in France which has specialised in the manufacturing of coffee machines for over 60 years. It sells its coffee machines internationally. As I have observed, the president and chairman of the board of directors of Unic is Jean-Pierre Levi who resides in Nice in France. The defendant was between 19 August 1987 and 1 January 1996, and 1 April to 1 July 1998 carrying on business in the registered business name, Kona Coffee Company. She now lives in the Bahamas.
Mr Levi’s first contact with Kona Coffee Company was in November 1991 in Milan in Italy when he met with Barry Connor. At that meeting they discussed the ordering of coffee machines and made arrangements for a coffee machine to be sent to Australia by the plaintiff. On his return to Australia, Mr Connor, styling himself as the Operations Manager of Kona Coffee Company, wrote to Unic on 4 November 1991, enthusiastically confirming the arrangements made between them for Kona Coffee Company to purchase a Unic coffee machine for 7,100 FF to be paid for upon receipt, after approval. Arrangements were made for training by Unic of Kona Coffee Company’s service manager and details were given of the bank account of Kona Coffee Company, being bank account number 389301011 at the ANZ Bank in Springwood. Kona Coffee Company was given the client number 110009 by Unic.
Unic then engaged an agent, Dun & Bradstreet, to obtain credit reference checks on Kona Coffee Company. Dun & Bradstreet reported that Connor declined to give them further information. Subsequently Mr Levi received a facsimile from Barry Connor on behalf of Kona Coffee Company regarding enquiries made at that at office by Dun and Bradstreet and Le Credit Lyonnais. Mr Connor suggested to Mr Levi that if he required information, he should advise Mr Connor to enable Kona Coffee Company’s accountant, Mr Bill Haddock, to give the information required. In the course of this letter Mr Connor said that in 1987 Kona Coffee Company was “taken over completely by Penelope J Connor who is the Sole and Absolute Proprietor and the person completely responsible for the business trading”. This representation is supported by the business records of Kona Coffee Company. Upon receipt of that facsimile dated 18 November 1991, Unic agreed to provide coffee machines and components to Penelope Connor trading as Kona Coffee Company as ordered upon Unic’s usual credit terms (“the contract”).
On 24 January 1992, Unic confirmed receipt of 7,100 FF from Kona Coffee Company and made arrangements for technical training in Nice for Mr Connor and Kona Coffee Company’s service manager. Trading continued between the plaintiff and the defendant on amicable commercial terms under the contract referred to in the previous paragraph. On 31 March 1992, for example, Mr Connor on behalf of Kona Coffee Company in the course of confirming shipments of 30 Diva and 4 CTEV machines, informed Unic that they had “had no problems with the Diva machines, all installations are very easy and all customers think the Diva machines are fantastic”.
On 15 April 1992, in a facsimile signed by Penelope Connor as proprietor of Kona Coffee Company, she discussed orders for machines and expressed complete satisfaction with the high standard of Unic’s machines. On 7 May 1992, on Kona Coffee Company letterhead, Mrs Connor ordered 20 Diva machines for airfreight shipment and 20 for seafreight shipment. The 20 were sent by airfreight on 27 May 1992 and the rest a week or so later.
On 4 June 1992, Unic sent a letter by facsimile transmission to Kona Coffee Company about Kona’s failure to pay for the airfreighted machines as invoiced. On 5 June 1992, Mr Connor said a bank transfer had already been made and expressed further satisfaction with the machines.
On 29 September 1992, Mr Connor on behalf of Kona Coffee Company wrote to Mr Levi saying that he had not transferred any funds to Unic and asserted that the reason was because of the poor exchange rate of the Australian dollar against the French Franc but that he would be making a bank transfer for the total amount outstanding within 10 days. He expressed continuing satisfaction with the Unic machines. This satisfaction was repeated in phone calls made by Mr Connor to Mr Levi during May 1993. However, payment by Kona Coffee Company remained slow. On 10 May 1993, Unic wrote to Kona Coffee Company about 130,529 FF which was outstanding from an invoice dated 15 January 1993. The material shows that the sales of the coffee machines had been very strong but that, in spite of that, Kona Coffee Company had had difficulty in making timely payment.
Mr Connor asserted in his affidavit that he became the managing director of Besto No 54 Pty Ltd ACN 060 899 596, then known as Kona Pty Ltd, on 30 July 1993 until it was deregistered in 1998. He asserted in his affidavit that this was done as part of a restructure of the business because of the increase in the sales of coffee and coffee machines and he incorporated this company for the purchase and supply of coffee machines. However, it appears that the real purpose was to ensure that an entity with limited liability for which Penelope Connor would not be personally liable could be said to be the entity which purchased the coffee machines. Mrs Connor says she was a director of Besto No 54 Pty Ltd until 1 January 1994. However, there was no attempt to relay any information about any change in the contracting party to Unic. On the contrary, on 13 September 1993, Mr Connor on Kona Coffee Company letterhead sent a letter by facsimile transmission to Mr Levi confirming an order for 100 Diva machines and for putting forward yet another explanation for the failure to pay moneys owed. He said:
“While I was away I instructed the office to send you funds for all the old accounts which I seemed to have missed. You should have this by now. I have today sent to you FF 200,000. I apologise for the delays, however we have been extremely busy travelling all over Australia visiting trade shows to promote the sales of machines, paperwork has taken a little longer to process because of this, which has also delayed payment for machines to us, but we are really getting on top of this now.”
On 24 September 1993, Mr Connor again wrote on behalf of Kona Coffee Company to Unic saying that Kona had just signed the contract to be the official supplier of coffee and coffee equipment to the World Gymnastics Championship to be held in Brisbane in 1994, that they had been the official supplier of coffee and coffee equipment to the 1982 Commonwealth Games and World Expo 1988 held in Brisbane, and were in the front‑running to be the official supplier of coffee and coffee equipment to the 2000 Olympics in Sydney.
During 1993 Mr and Mrs Connor visited Mr Levi in France. There had been further delays in the payment of outstanding invoices to Unic from Kona Coffee Company and Mr Levi told Mr and Mrs Connor that further delay in payment was not acceptable. Mr and Mrs Connor told Mr Levi about the sales they anticipated. There was no discussion on a change to the contracting entity. Specifically Mr Levi was not told that Mrs Connor would no longer be the person with whom he was contracting and who was liable for the debts. More coffee machines were sent by Unic to Kona Coffee Company as a result of orders placed by Kona Coffee Company.
On 2 November 1993, Mr Levi wrote to Mr and Mrs Connor requiring settlement of the outstanding accounts before a further delivery was made and requiring the planning of purchase orders and payment to be established before the end of the year. Mr Connor falsely asserted that this letter confirmed that he had discussed with Mr Levi the change proposed by him to incorporate Besto No 54 Pty Ltd and allow it to trade in the business of supplying coffee machines. Mrs Connor asserts in her affidavit that she no longer purchased any coffee machines from Unic after that time. Again this assertion appears to be false.
On 21 December 1993, Mr Connor on behalf of Kona Coffee Company wrote to Mr Levi at Unic seeking to explain why the business was not going as well as they said it was going when they were in France. He asked for their order of 25 Diva machines for December to be held until January. He said that he would send money immediately the funds came in from sales of machines. So far as any reorganising of the business was concerned, he merely said that
“Penny and I made changes when we returned to Australia, and we actually had to change some sales staff and replace them. This re‑employment and training really set us back a month as you could imagine it has been very time consuming. We are now definitely back on target with sales and all planned expansions will still happen in 1994.”
These expansions as can be seen from the letterhead were proposed by Kona Coffee Company. There was no mention of any proposed contract between Unic and another entity. Mr Levi was not informed of any such intention on the part of Mr and Mrs Connor.
As at 17 January 1994, Kona Coffee Company owed Unic 942,345.29FF. This represented unpaid invoices dating back as far as June 1993. On 28 January 1994, Unic sent a facsimile message to Kona Coffee Company informing them that the 20 Diva coffee machines remaining on their order of 13 September 1993 and 6 XI2 machines on their order dated 21 December 1993 were ready for dispatch. Unic said that as per their phone discussion with Mr Levi, they were waiting for agreed payment. On 7 February 1994, Unic sent an account to Kona Coffee Company.
Mr Connor swore in his affidavit that from February 1994 Kona Coffee Company ceased to supply coffee making machines and that business was taken over by Besto No 54 Pty Ltd. However, a careful examination of the documentation and the evidence does not bear out Mr Connor’s assertion that from February 1994 Unic was in a contractual relationship with Kona Pty Ltd and not Kona Coffee Company.
On 11 February 1994, Unic received a facsimile from Mr Connor on behalf of Kona Coffee Company dated 19 January 1994. No explanation was given for the fact that the facsimile is dated 19 January 1994 but not sent for over three weeks. The memorandum asks for various parts for the machines and then says: “Last Friday I sent your [sic] 50,000 French Franks [sic] this Tuesday 8 February 1994 I sent another 50,000 French Franks [sic] on the Monday 14 February 1994 I will send minimum of 50,000 French Franks [sic] (Then payment for sales is being received). As soon as you can dispatch the 20 Diva and 6 ID2 machines it will be much appreciated.” On the same date, Kona Coffee Company sent a letter to Mr Levi at Unic by facsimile transmission about shipping arrangements.
On 17 February 1994, Unic sent a message by facsimile transmission to Mr Connor at Kona Coffee Company in reply to Kona’s fax received on 11 February 1994. This letter provided:
“As per our letter dated November 2nd, 1993, and our different discussions and faxes, we remind you that it is not possible for us to afford an outstanding account of representing 150 days. We have agreed during your visit that your outstanding account should not overpass 60 days [from the] end of month.
As an exceptional commercial effort, we will dispatch your outstanding order next week, but then it will not be possible anymore to increase the outstanding amount.
We trust on your action and we ask you to let us know your payment schedule in order to decrease subsequently the referenced amount.”
The discussions, faxes and letters referred to did not include any reference to restructuring of the business or changing the trading entities.
Mr Connor swore in his affidavit that once Kona Pty Ltd was ready to trade, he spoke to Mr Levi on the telephone in the middle of February and confirmed that a restructure had taken place and that Kona Pty Ltd was the trading entity for the acquisition, importation and sale of the Unic coffee machines in Australia. However, this did not accord with what I view as the more reliable recollection of Mr Levi.
Mr Connor asserted that all orders for coffee machines were placed by Besto No 54 Pty Ltd, then known as Kona Pty Ltd, from this date. On 23 February 1994, Kona Coffee Company did send a facsimile to Mr Levi at Unic saying that following their telephone conversation of last week they would like to confirm that all orders were to be shipped and invoiced to Kona Pty Ltd. Mr Levi says, and I accept, that he was told by Mr Connor that the change of name did not change anything with respect to the business and trading relationship. He was content to issue invoices as requested as it would not change their commercial relationship and Unic would continue to do business with Mrs Connor, principally through her husband, Barry Connor, as it had from the outset. At no time did he agree to enter into a contractual or commercial trading relationship with a different legal entity. Although Kona Pty Ltd had agreed to pay debts incurred by Kona Coffee Company, Unic retained its contractual relationship with Kona Coffee Company.
Unic then sent invoice 24588 dated 21 February 1994 to Kona Coffee Company, with a sticker over the top of the previous address, addressed to Kona Pty Ltd. The client account was still numbered 110009. The total price of this invoice was 261,520.00FF. As I have observed, Mr Levi, on behalf of Unic, agreed to send the invoice to a different entity but did not enter into a contract with Kona Pty Ltd to sell coffee machines to it. If Kona Pty Ltd paid this invoice, they were paying it on behalf of Kona Coffee Company. Unic did not do a credit search of Kona Pty Ltd which was its normal practice when entering into a contractual relationship with a new entity and the customer number remained the same as did the delivery address at 84 Parramatta Rd, Springwood. The agreement between Unic and Kona Pty Ltd was that Kona Pty Ltd would pay debts to be incurred by Kona Coffee Company but there was no agreement by Unic to release Kona Coffee Company from its liabilities.[1]
[1]cf Creamoata Ltd v The Rice Equalisation Association Ltd (1953) 89 CLR 286 at 326.
This invoice was accompanied by a letter sent by facsimile transmission to Kona Coffee Company from Unic confirming the delivery of 20 Diva coffee machines and 6 XI2 coffee machines as per their purchase orders dated 13 September 1993 and 21 December 1993. This is consistent with Mr Levi’s view that Unic’s contract was with Kona Coffee Company. This debt was not paid in full and the unpaid part forms part of the plaintiff’s claim against the defendant. There was part payment of 176,224.54FF, so that 85,295.46FF remains outstanding.
On 23 February 1994, an invoice for various parts for coffee machines was sent by Unic to Barry Connor at Kona Pty Ltd with the same address and same client number as before. This invoice was for 4,750.30 FF. Again this debt was not paid and properly forms part of the plaintiff’s claim against the defendant.
On the following day and on 2 and 4 March 1994, Shane Currie from Kona Coffee Company, on Kona Coffee Company letterhead, sent a facsimile to Unic with regard to the orders made by Kona Coffee Company. These goods were sent and an invoice was raised on 8 March 1994 for 1,745.17FF. The invoice was addressed to Kona Pty Ltd/B Connor. This is a good example of the contractual situation. There was a running account between Unic and Kona Coffee Company – pursuant to the agreement reached between them in 1991. Kona Coffee Company placed this order and it was dispatched. The invoice was addressed to Kona Pty Ltd at Mr Connor’s request. This did not relieve Kona Coffee Company from its liability to pay for the goods it had ordered. No payment was ever made for these goods.
Thereafter, correspondence was between Unic and either Kona Coffee Company or Kona Pty Ltd. Invoices for parts and machines were addressed to Kona Pty Ltd but had the same client number and address as the previous invoices to Kona Coffee Company. On 25 March 1994, 14,015.00FF was credited by Unic to client account no 110009 which can be set off against the amounts otherwise owing in this action.
On 18 March 1994, Mr Levi received a phone call which he noted as being from “Kona Coffee” ordering 25 Diva coffee machines. These were dispatched and on 28 March 1994, invoice no 24948 for 220,250.00FF was raised for the coffee machine and transportation costs. For the reasons already set out, this account, which was never paid, is a debt still owed by Kona Coffee Company.
From 19 to 27 April 1994, Mr Levi visited Australia and met with Mr and Mrs Connor. Neither discussed with him any change in trading entity. Rather they reinforced Mr Levi’s belief that nothing had changed in their trading relationship other than a staff restructuring by Mrs Connor. Mr Levi expressed his concern over the lack of payment and Mr Connor gave an explanation that this was due to their leasing rather than selling coffee machines. Mrs Connor told Mr Levi that she was personally guaranteeing all the payments and that she came from a wealthy background. While this statement is ambiguous, it reassured Mr Levi. It could not be construed as an unequivocal representation to Mr Levi that Unic was no longer dealing with Mrs Connor but with a different legal entity.
Mr Connor claimed that Mr Levi took detailed notes on the company structure, method of operation and finances of Kona Pty Ltd, and Mr Levi made no objection to the absence of Kona Coffee Company in their dealings. However, for the reasons given, I do not accept this evidence. The Connors’ actions during Mr Levi’s visit were specifically designed to mislead him into believing that nothing had changed and Penelope Connor was still running the business and paying the bills. On 22 April 1994, for example, Mr Connor sent a facsimile from Kona Coffee Company to Unic’s French office confirming arrangements made with Mr Levi ordering spare parts.
At some time on or after 26 April 1994, Penelope Connor signed 16 Kona Pty Ltd cheques made out to Unic. In her oral evidence, Mrs Connor claimed that she was a signatory to the Kona Pty Ltd account and the only reason she signed the cheques was because they had to be done in a hurry before Mr Levi went to the airport and her husband could not sign them as he was driving Mr Levi to the airport. This explanation seems improbable, its falsity was exposed when it was later conceded by Mrs Connor that Mr Levi only took one cheque home with him to France and the remaining 16 were posted. This in turn directly contradicted Mr Connor’s false evidence that he provided 18 post-dated cheques to Mr Levi before he returned to France. Mrs Connor signed the cheques to maintain the view that she knew was personally held by Mr Levi that she was responsible for the debts and that payments by Kona Pty Ltd of Kona Coffee Company’s debts did not change the contractual relationship between them.
On 13 April 1994, the accounts department at Unic had sent to “Kona Coffee Ltd” a statement of prepaid freight on invoices outstanding as at 31 March 1994. This statement itemised the transportation costs owing from the shipments of 8 October 1993, 28 October 1993, 18 November 1993, 21 February 1994 and 28 March 1994. This statement therefore includes freight costs for goods invoiced to both Kona Coffee Company and Kona Pty Ltd. The total amount outstanding was 113,016.50FF. This amount was made out to Unic on an ANZ Bank bank cheque, which does not disclose the drawer, on 26 April 1994. Barry Connor gave this to Mr Levi while he was in Australia to discuss the overdue amounts.
Mr Connor said that a second cheque for $12,500 was given to Mr Levi while he was in Australia. It was a counter cheque handwritten in the name of Kona Pty Ltd, signed by Penelope Connor. This cheque was however dated 10 June 1994 and was not debited from the Kona Pty Ltd account until 27 June 1994. It seems likely that this cheque was post-dated and given to Mr Levi before he left Australia at 10am on 27 April 1994. Later on this date Kona Coffee Company sent an order for spare parts by facsimile transmission to Unic in France.
Before Mr Levi left Australia, an arrangement was entered into whereby Mr Levi would try to establish credit for Kona Pty Ltd with Le Credit Lyonnais to pay for all outstanding debts. On 26 May 1994, Mr Levi wrote to Barry and Penelope Connor to confirm that this arrangement was finalised and that all future payments must be done within 60 days of the end of the month and on the same bank account, being the Kona Pty Ltd bank account. The matters discussed between them are set out in this letter. Nowhere does it suggest that the defendant no longer had any contractual liability.
Meanwhile, Kona Coffee Company continued to order coffee machines. On 28 April 1994, Mr Levi received a telephone order from “Kona Coffee” for 25 Diva machines and 5 Xi2 machines and on 10 May 1994, he received a further telephone order for 5 Diva machines from “Kona”. On 10 May 1994, Unic issued invoice no 25356 to Kona Pty Ltd on client account no 110009 for 304,800.00FF for 30 Diva coffee machines and 5 Xi2 machines which had been ordered. Kona Coffee Company has not paid for these goods. On 16 May 1994, the accounts department of Unic wrote to Le Credit Lyonnais requesting that they cash invoice no 25356 dated 10 May 1994 “in accordance with the agreements which we have made with the company KONA PTY LTD/B.CONNOR”. Similar letters were sent on 7 July 1994 and 25 July 1994 with respect to different invoices.
The defendant relies on this phrase to show that Unic had entered into a new and separate agreement with Kona Pty Ltd and was informing its bank. However, it is not evidence that there was no longer any agreement with Kona Coffee Company. The fact that Kona Pty Ltd had agreed to pay debts of Kona Coffee Company did not, and could not in the absence of an agreement to that effect, relieve the defendant from her liabilities. Mr Levi went to Australia to make arrangements with the Connors to ensure that all outstanding debts were paid and to develop a system of credit so that Unic was not out of pocket if the Connors failed to pay on time. The letter to the bank confirms this credit arrangement with Kona Pty Ltd and gave the new banking details. It is certainly not unequivocal evidence that Unic regarded Kona Pty Ltd as a new trading entity. The agreement referred to in this letter is that set out in the letter from Unic to Barry and Penelope Connor on 26 May 1994, that is “that payment in the future will be done at 60 days end of month on the same bank account, no ACN 060 899 596, ANZ Bank – 28 Redland Bay Rd – CAPALABA Qld – Account KONA PTY Ltd.”
On 26 May 1994, the accounts department of Unic wrote to Kona Coffee Company acknowledging receipt of 16 cheques of 12,500FF each. These cheques were the Kona Pty Ltd cheques, post-dated and signed by Penelope Connor, mentioned previously, which, with the exception of one given to Mr Levi in Australia, were posted to Unic in France. Four of these cheques were eventually dishonoured. After the counter cheque, the first of these cheques that was debited from the Kona Pty Ltd account was on 29 June 1994. There was no suggestion on behalf of the defendant that any payment made by these cheques should be credited to the amount of debt sued for in this action apart from the part-payment already referred to.
On 14 June 1994, a further order for 60 Diva coffee machines and 10 i2 coffee machines was placed. The order this time was in writing by Barry Connor on behalf of Kona Pty Ltd but no agreement was reached to change the nature of the contractual relationship or the running account and thus the liability of Kona Coffee Company. These machines were invoiced in invoice no 25788 for client no 110009 for 304,800.00FF on 27 June 1994 and invoice no 25796 for client no 110009 also for 304,800.00FF on 28 June 1994. These amounts remain unpaid and are due and owing pursuant to the original contractual arrangement with the defendant.
Mrs Connor’s tax return for the year ending 30 June 1994 discloses that her gross income from “sales of coffee and coffee making equipment” for that year was $1,079,132.00. Her business was shown to be Kona Coffee Company. Even after allowing for expenses, the total income for Kona Coffee Company for that year was $657,562.00.
On 29 August 1994, Unic wrote to Barry Connor at Kona Pty Ltd after they had returned from their summer shutdown saying, “Our bank informs us that all the payments since July 30th have not been made”. The outstanding amounts included the $12,500.00 instalment payments due on 30 July 1994, 10 August 1994 and 20 August 1994 and the 304,800FF payment which was to be paid at the end of July.
Barry Connor replied by fax on Kona Coffee Company letterhead on 1 September 1994. He explained that no bills were sent out to customers and no leases were processed because Penelope Connor was overseas for nearly two months. As a result, very little money was received in July and August and he “actually ran out of money the 1st week of August”. Mr Connor also blamed the rise in international coffee prices, a court ruling which required him to pay the legal costs of a dispute, and the extra money that had to be paid for all previous imports to Australian Customs. This letter demonstrates both the continuing involvement of Mrs Connor in the business, which she denied, and the continuing nature of the contractual relationship with Kona Coffee Company, Mrs Connor’s trading name.
The Export Division of Unic wrote to Barry Connor on 2 September 1994 urging payments to be made and again on 8 September 1994 detailing the outstanding account. The total amount overdue was 1,270,198.43FF, comprising 331,909.27FF for payments due under the special credit arrangement and 938,289.16FF payable for invoices since April 1994.
After this time, correspondence between Unic and Barry Connor or his employees, mostly on Kona Coffee Company letterhead, contained invoices and pleas for payment by Unic and requests for spare parts and orders by both Kona Coffee Company and Kona Pty Ltd. For example, on 22 September 1994, Barry Connor ordered various parts for coffee machines from Unic on Kona Coffee Company letterhead. On 11 October 1994, Tracey Salmond of Kona Coffee Company sent a memo by facsimile transmission telling Mr Levi that Mr and Mrs Connor were on holidays and would not be returning until the following week. On 17 October 1994, Ms Salmond again wrote to Unic on behalf of Kona Coffee Company with regard to new switches for the coffee machine. Unic immediately faxed the required information to Kona Coffee Company.
On 17 October 1994, Unic sent a further statement of the outstanding account which amounted to 1,483,529.03FF. On 17 November 1994, Unic demanded that some payment be made by 21 November 1994. On that date, the outstanding amount was 1,514,881.01FF. Barry Connor told Mr Levi by fax on 23 November 2000 that he had sent 50,000FF by telegraphic transfer. Unic faxed Kona Coffee on 29 November 1994 and 5 December 1994 stating that the transfer had not yet been received by their bank. On 2 December Kona Coffee Company sent a copy of the telegraphic transfer to Unic as requested. On 6 December 1994, Unic confirmed by fax that they had that day received the 50,000FF but if they had not received a significant transfer of money by 15 December 1994, they would be obliged to commence legal proceedings.
After various other promises of payment by Kona Pty Ltd and a return of what were said to be faulty parts by Kona Coffee Company, and a request from Kona Coffee Company for more information about the new switches, on 27 March 1995, Barry Connor wrote purporting to confirm that he would pay 50,000FF that month and 100,000FF per month until the outstanding account was finalised, and would pay for parts and equipment as cash on delivery. Perhaps unsurprisingly, the package of “faulty parts” was never received by Unic. Mr Connor blamed the courier company. On 29 March 1995, another list of purportedly faulty parts was sent by Kona Coffee Company to Unic.
On 11 April 1995, Mr Levi informed Barry Connor of the new credit and payment scheme with Le Credit du Nord. Le Credit Lyonnais refused to make a new credit operation with Kona Pty Ltd. Kona Pty Ltd were required to make 12 monthly payments of $30,000 each on the 25th of each month. At that time an amount of 1,266,876.80FF was owing. Thereafter Mr Connor used either Kona Pty Ltd or Kona Coffee Company letterhead in his dealings with Unic.
Barry Connor attempted to change the repayment arrangement to $10,000 monthly repayments and order new machines on 20 July 1995 after Mr Levi sent a fax to Mrs Connor reiterating that no new coffee machines would be supplied without prior payment. Mr Connor blamed the unforeseeable problems on dishonest staff which resulted in customers not paying for their coffee machines.
Mrs Connor’s tax return for the year ending 30 June 1995 for Kona Coffee Company showed a much deteriorated financial situation. Drawings of $61,910 exceeded the yearly profit of $7,936.00.
Mr Levi faxed his rejection of Mr Connor’s proposal on 26 July 1995.
“We don’t accept your proposal of monthly payments of 10,000.00AUD because it represents a 40 months delay in settling your outstanding amount. We are expecting a significant payment during August and a formal proposal of monthly payments to settle the remaining amount in a period of 10 months maximum.
We have well noted that you agree on this commitment. If this is not respected, as explained and agreed, we will start legal action in September through our lawyers, KPMG.”
Although Unic received 50,000.00FF as partial payment on or about 4 December 1995, Mr Levi was concerned due to Kona Pty Ltd’s lack of compliance with the repayment scheme. As a consequence, Mr Levi travelled to Australia in early May 1996 to discuss payment of the outstanding accounts. He was presented with a small quantity of faulty parts by Mr Connor.
On 13 May 1996, Mr Levi wrote to Mr Connor advising him that Unic had decided, noting all the representations about payment which had not been met and that no significant payment had been made to reduce the debt, to take appropriate action to recover the debt.
Barry Connor responded on 20 May 1996 by detailing all of the problems they said they had encountered with the Unic coffee machines and offering an alternative payment scheme of a significantly lesser amount. The complaints, in spite of their detailed nature, are redolent of being an excuse for non-payment rather than being genuine. A claim in the defence that the goods were not fit for their purpose or of merchantable quality was discontinued by the defendant at trial. In the following months, Unic continued to receive orders for parts from Kona Coffee Company.
On 18 September 1996, Collins & Stephens, on behalf of Unic, demanded payment by Kona Pty Ltd of $281,083.11 for the price of goods sold and delivered in or about the months of April to September 1994 inclusive within seven days.
A statutory demand was issued on 6 November 1996 for $302,973.05 by Collins & Stephens. It was supported by an affidavit of Jean-Pierre Levi, dated 29 October 1996, where he swears that the debtor was Besto No 54 Pty Ltd (Kona Pty Ltd). He deposed that the amount due was for the price of goods sold and delivered to the company between October 1993 and September 1994.
Much was made of this by the defendant’s counsel in cross-examination. It was put to Mr Levi that the motivating factor behind the application to join Mrs Connor as a party was the report from Collins & Stephens that Mrs Connor had assets. Mr Levi agreed but on re-examination clarified his position by stating that it was not the only factor and “for me the fact that one way or another way [sic] it was always Mrs Penelope Connor responsible”.
An analysis of the history shows that although Kona Pty Ltd agreed to pay certain debts of Kona Coffee Company, the debts remained those of Kona Coffee Company, the trading name of the defendant, and there was never any agreement by Unic to release her from those debts. The contract referred to in paragraph [9] of this judgment was never terminated.
It was conceded by the defendant that there was no procedural bar to the judgment being expressed in foreign currency as that was the currency of the contract.[2] The total of the unpaid invoices less the amount credited is 1,212,425.93FF and judgment should be entered for that amount.
[2]ANZ Banking Group Ltd v Cawood [1987] 1 QdR 131; European Asian Bank Aktiengesellschaft v Katsikalis [1988] 1 QdR 45.
I will hear submissions as to interest and costs.
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