Van Zijl v Kuklinski - [2010] WADC 188

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: VAN ZIJL -v- KUKLINSKI [2010] WADC 188

CORAM: WISBEY DCJ

HEARD: 1 & 2 DECEMBER 2010

DELIVERED : 15 DECEMBER 2010

FILE NO/S: CIV 2019 of 2009

BETWEEN: STEVEN VAN ZIJL
Plaintiff
AND
STEPHAN KUKLINSKI
Defendant

Catchwords:

Contract - Oral agreement for sale of plant, equipment and stock - Plaintiff agent for undisclosed principal in respect of some items - Defendant claiming that agreement for storage only

Legislation:

Nil

Result:

Judgment for plaintiff in the sum of $133,280.50 and costs to be taxed

Representation:

Counsel:

Plaintiff: Mr T M Hobday
Defendant: Mr S C M Wong

Solicitors:

Plaintiff: Lewis Blyth & Hooper
Defendant: Curwood & Co

Case(s) referred to in judgment(s):

Nil

WISBEY DCJ: The plaintiff claims the sum of $137,500 for plant, equipment and stock sold to the defendant pursuant to a verbal agreement entered into in or about July 2008.
In the amended statement of claim the particulars of plant and equipment indicate that the majority was owned by the plaintiff, some by Stetan Australia Pty Ltd trustee of the Stetan Trust, and a 15HP granulator by a Peter Laurence. The plaintiff alleges that in respect of the plant and equipment which was not his personal property, he had the authority to sell as agent for the undisclosed principal. It is alleged that it was a term of the agreement that the defendant was entitled to immediate possession of the plant, equipment and stock, and that payment was to be made in or about September 2008. It is further alleged that the defendant took possession of the plant, equipment and stock on or before 30 July 2008, but has failed to pay the purchase price. The claimed amount of $137,500 is said to be the agreed value of $125,000 plus GST.
The defendant denies that he entered into a purchase agreement and pleads that he merely agreed with the plaintiff to store the relevant property at the premises of Recycla‑Plas Pty Ltd, and his residence at Bullsbrook, to enable the plaintiff to perform maintenance on the plant and equipment, and arranged its disposal or alternative storage. The defendant pleads that he took possession of the plant, equipment and stock on that basis.

The evidence

The plaintiff

From about August/September 1997 until June 2008 the plaintiff operated a plastic recycling business, Elite Plastic Recyclers. From about 2001 the business premises was situated at 6 Church Road, Maddington. The plaintiff operated on his own account until 2008, when presumably for tax reasons the business was taken over by Stetan Australia Pty Ltd as trustee of the Stetan Trust. Stetan Australia Pty Ltd was registered on 18 July 2007 and the plaintiff is the sole director, secretary and shareholder (exhibit 1). There was no change in the nature of the business activity, and only part of the plant and equipment was transferred to the company.
Some time early in 2008 the plaintiff came into contact with a business broker, Alan Donelly, who indicated that he was selling Recycla‑Plas and enquired as to whether the plaintiff was interested in selling Elite Plastic. Initially he was reluctant to do so, but then made a decision to sell the factory land, and business, and engaged Alan Donelly as his agent. Although the plaintiff was seeking a package sale, the agent introduced a company Wilford Plastic and Canvas Co Pty Ltd which was only interested in purchasing the land, and the plaintiff agreed to a sale of the land separately, settlement occurring on 31 July 2008. As a consequence, the plaintiff was required to give vacant possession by that date, and having entered into a contract to sell the land was left with the plant, equipment and stock.
The plaintiff stated that in or about mid‑July he was contacted by the defendant who advised that he was interested in buying his plastic waste, and some of his plant. The plaintiff told him that he was only interested in selling the plant, equipment and stock as a total package, and that he could have the plastic waste. In the result the plaintiff told the defendant that he could have the plastic waste, and the defendant arranged to send a driver over. The plaintiff invited the defendant to call and inspect the plant and equipment, and when the defendant arrived the following day, the plaintiff realised they had met a few years earlier. The plaintiff again told the defendant that he was not prepared to sell the items of plant and equipment individually. The defendant requested and the plaintiff gave him a list which had been provided to the agent. They went through the list and the plaintiff explained which items were available. He told the defendant he wanted $125,000 and was not going to budge on price. The defendant told the plaintiff that he would not have any money until the sale of Recycla‑Plas, which was the subject of negotiations with Claw Environmental. Whilst they were talking, the defendant's driver was walking around the yard. The plaintiff explained to the defendant that he had agreed to let the purchaser of the factory have the forklift for a couple of weeks, and that the large granulating machine belonged to one Steve Shearer of PGS which was on loan to him, and which the defendant could use but not purchase. They walked around the factory, identifying the various items of plant and equipment on the list. The plaintiff told the defendant that the shredder was not operational as it needed new washers fitted, but that if a deal was concluded the plaintiff would fix it, and that all the other plant and equipment was operational. The defendant indicated that he was happy with the price and confirmed that they had a deal 'and we shook on it'.
The defendant stated that the Claw Environmental purchase would eventuate, and that he was expecting the sale to go through by August/September. He would be in a position to pay the plaintiff in September/October. When the plaintiff asked what would happen if the purchase did not eventuate, the defendant stated that he had land in Bullsbrook that he was subdividing, and would be able to organise funds by that means. The plaintiff told the defendant that he would have to remove the plant and equipment by 31 July 2008 to facilitate vacant possession. At the conclusion of the discussions, the plaintiff assisted the defendant load the truck.
When the plaintiff's attention was directed by his counsel to the question of GST, he stated that he had indicated to the defendant that the price was $125,000 plus GST, but it is to be observed he did not make reference to GST until that time.
Over the following weeks the defendant removed the plastic waste and the plant, equipment and stock by truck, the plaintiff's impression being that it took something of the order of 20 loads. When asked what he would have done had he not reached agreement with the defendant, the plaintiff stated that he was going to ask Peter Laurence from Palamino Plastics, or one Brett Morrison, to provide storage at their premises, and/or was contemplating acquiring a couple of containers for storage.
Following removal of all the plant and equipment, the plaintiff and the defendant agreed to catch up in September concerning payment, and to enable the plaintiff to repair the shredder.
In early September the plaintiff rang the defendant to arrange to repair the shredder, but when he arrived at the defendant's premises the shredder was surrounded by other equipment and could not be worked on. The plaintiff's recollection was that the defendant was changing the blades on the PGS granulating machine and was working on the silenator because the bearings had apparently collapsed. A conveyer was attached to one of the defendant's machines. The defendant told the plaintiff that he was still waiting on an offer from Claw Environmental but indicated he could pay the plaintiff something like $1,000 or $2,000 per month. The plaintiff left a box of parts that he had taken to fix the shredder, with Nilla Kuklinski, the defendant's wife, undertaking to return in a couple of weeks. Upon his return the plaintiff spoke to a person named Max who claimed that not all of the plant and equipment on the list had been received, and considered there was only about $110,000 worth of plant and equipment. The plaintiff told him to talk to the defendant. Max suggested they were going to put an offer in writing to the plaintiff.
The plaintiff paid Peter Laurence from Palamino Plastics $8,000, being the allocated price of the granulator sold to the defendant.
Not having been paid, the plaintiff rang the defendant in or about December 2008 seeking payment, and was advised that Recycla‑Plas was considering an offer. At about that time that the plaintiff's wife took over negotiations with Nilla Kuklinski. The plaintiff eventually got WA Tooling to repair the shredder.
In cross‑examination the plaintiff stated that of the 20 truckloads to which he had referred, at least 14 were of plastic waste.
The plaintiff's attention was directed to (exhibit 6), being the real estate and business profile prepared by Alan Donelly in which the valuation breakdown was $120,000 for plant and equipment, $10,000 for stock and materials; or $175,000 for plant, equipment, stock and goodwill. The schedule of plant and equipment attributed separate values to the various items totalling $122,550. He agreed that having contracted to sell the factory premises in June 2008, he had an obligation to remove the plant and equipment by 31 July 2008, although his understanding was that he may have been able to negotiate a delay of vacant possession.
The plaintiff stated that during their first telephone discussion the defendant indicated that he was the owner of Recycla‑Plas, but the plaintiff denied that he intended to contract with it. He asserted that the list of plant and equipment in the statement of claim did not include everything that was sold to the defendant.
The plaintiff acknowledged receiving a letter from Recycla‑Plas Pty Ltd dated 21 April 2009 signed by Nilla Kuklinski, making an offer to purchase some of the listed plant and equipment for $15,520 (exhibit 7) and confirmed his response dated 6 May 2009 (exhibit 8). He agreed that the list of plant and equipment in the Alan Donelly document (exhibit 6) which recorded a total value of $122,550 included more items than were allegedly transferred to the defendant, but would not agree that $125,000 was not a fair price for the items allegedly sold. When it was put to the plaintiff that he attempted to transfer a Mitsubishi Triton utility to the defendant, he stated that he did not do so intentionally, and the matter was not further pursued in cross‑examination.
The plaintiff agreed that at the request of the defendant he met with two other men, one of whom was named Brian, at Recycla‑Plas premises in Maylands in early 2009 and was asked to demonstrate the plant and equipment to them, as they had expressed interest in buying some of it. He confirmed that the forklift which he had made available to the purchaser of the premises had been subsequently collected by the defendant as a result of an arrangement between the plaintiff and Nilla Kuklinski.
The financial statements for the Stetan Trust for the year ending 30 June 2009 were received in evidence as (exhibit 9).
In re‑examination the plaintiff's attention was drawn to a photograph of the silenator or granulator which he said was coloured grey at the time it was taken by the defendant, but which had since been repainted white.

Peter David Laurence

Mr Laurence, the proprietor of Palamino Plastics, has known the plaintiff for about 12/13 years. He agreed that prior to July 2008 the plaintiff was in possession of his 12‑horsepower granulator. He stated that following discussions with the plaintiff in or about July 2008 concerning the proposed sale of Elite Plastic he authorised the plaintiff to sell the granulator.
Mr Laurence confirmed that at the time the plaintiff sold the business, the silenator was grey in colour. Also that he would have been happy for the plaintiff to store plant and equipment at his premises if the plaintiff so required. He agreed that in or about October 2009 the plaintiff paid him for the granulator.

Anastasia Tania Van Zijl

Mrs Van Zijl is married to the plaintiff.
On 1 December 2008 she telephoned Nilla Kuklinski concerning payment for the plant and equipment, the plaintiff having been directed by the defendant to deal with Nilla Kuklinski. Mrs Kuklinski expressed dissatisfaction with the alleged purchase agreement, and denied that the defendant had entered into an agreement to purchase the plant and equipment. Mrs Van Zijl tried unsuccessfully to call Mrs Kuklinski on a number of subsequent occasions.
Following their initial telephone conversation, Mrs Kuklinski faxed Mrs Van Zijl a list of plant and equipment on which she had ticked the items that Recycla‑Plas was interested in purchasing, and marked the items that she claimed had not been received (exhibit 10).

Brett David Morrison

Mr Morrison, a business proprietor and a long‑term friend of the plaintiff, owned a factory unit at Hamilton Hill which was vacant at the relevant time. He stated that he would have allowed the plaintiff to store plant and equipment in the factory unit had he desired to do so.

The defendant

The defendant is the general manager of Recycla‑Plas Pty Ltd and as at July 2008 was in charge of the day to day running of the factory, and participated in the management of the company. He stated that the company business was recycling post‑industrial plastic waste. He stated that the business basically collected from plastic manufacturers' plastic scrap that was clean and free of contaminants. This was a more profitable commercial activity than engaged in by Elite Plastic, namely recycling of post‑consumer waste, since the latter necessitated a washing plant to remove labels and residue, and manual removal of metal and other annexed material. Consequently, it was labour intensive.
He stated that in July 2008 Recycla‑Plas had significant financial commitments affecting its cash flow, and there was little room for further expenditure. He stated that he visited Elite Plastic premises in July 2008 as a consequence of the plaintiff contacting Nilla Kuklinski regarding the removal of unprocessed plastic waste from Elite Plastic's premises. As a consequence, together with a truck driver George Czerkasow, he visited Elite Plastic's premises in Church Road, Maddington in early July and spoke with the plaintiff concerning removal of the plastic waste. He perceived that the plaintiff required the removal of the plastic as a matter of urgency.
The defendant stated that he visited Church Road on approximately five occasions, basically to transport the plastic waste. On one visit he informed the plaintiff that he had approval from one Stephen Shearer of PGS to collect a granulator which was on loan to the plaintiff.
A third visit by the defendant and George Czerkasow was to collect the PGS granulator, and discuss with the plaintiff problems concerning the state of the plastic waste being removed. Whilst walking around the building with the plaintiff, he was shown a shredder, granulator and conveyor belt which the plaintiff claimed had the capacity to process one tonne of product per hour. This was the silenator, and the defendant indicated to the plaintiff that it was a piece of equipment Recycla‑Plas may be interested in purchasing. After loading the PGS granulator and some plastic waste, the defendant informed the plaintiff that they would not be taking any more plastic. The plaintiff informed the defendant that he was running out of time to vacate the premises, and because the defendant felt sorry for him, he offered to store the plant and equipment at Recycla‑Plas until the plaintiff was able to dispose of it.
The plaintiff told the defendant that he wished to sell his business as a job lot for $125,000, and the defendant responded that the plaintiff would need to show potential purchasers the financial statements, a client list, and demonstrate that the plant and equipment was in working order.
The defendant and Mr Czerkasow visited Church Road on several later occasions in two trucks, and with the help of the plaintiff the plant and equipment was loaded and removed to Recycla‑Plas' premises at 19 Stanhope Gardens, Midvale.
In or about September 2008 the plaintiff visited the defendant's premises when the defendant told him that a Mr Max Evans was to inspect that machinery in respect of which Recycla‑Plas was interested to ascertain whether it would make an offer.
The defendant stated that he met up with the plaintiff again in early 2009 at 12 Railway Parade, Bayswater to introduce the plaintiff to Arthur Halstead and Brian Keys who were interested in purchasing some of the plant and equipment.
The defendant was taken through the list of plant and equipment set out in the statement of claim, and observed that much of it was of no interest to Recycla‑Plas, although some was.
In cross‑examination, when it was put to the defendant that in or around May 2008 Recycla‑Plas was for sale, he responded 'I believe so, yes … I'm not 100% sure how the business was being particularly sold'. It would be surprising indeed if he was not fully conversant with what was taking place. When pressed, he confirmed that before first visiting the plaintiff's premises, he understood that a company, Claw Environmental, had expressed an interest in acquiring Recycla‑Plas. He denied however having contemplated setting up his own business if a sale eventuated. He agreed that he told the plaintiff he had a property in Bullsbrook that may be subject to subdivision and part‑sale.
He asserted that he had agreed to store the plaintiff's plant and equipment because the plaintiff had given him a substantial amount of plastic waste; was putting him under pressure; he felt genuinely sorry for him; and there was a possibility that Recycla‑Plas would be interested in the one tonne per hour granulating line. He reiterated that the plaintiff had asked whether he could bring prospective purchasers to view the plant and equipment that was being stored at Stanhope Gardens, Midvale.
When it was put to the defendant that the silenator had been repainted, he stated 'I really don't know what happened there so I'd only be assuming'. He agreed however that it had been repainted at Recycla‑Plas premises. He agreed that apart from the forklift and the large 50‑horsepower granulator, all of the plant and equipment that was being stored at Stanhope Gardens, Midvale, was shifted to 12 Railway Parade, Bayswater when Recycla‑Plas shifted to that address.
He agreed that he had not requested the plaintiff to collect the plant and equipment before his letter of 12 May 2009, some 10 months after it had originally been received by him.
The defendant agreed that although Recycla‑Plas was interested in some of the plant and equipment, no offer to purchase had been made to the plaintiff between July 2008 and February 2009.

Serhij Czerkasow

Mr Czerkasow, known as George, was as at July 2008 a casual truck driver for Recycla‑Plas. He recalled visiting the premises of Elite Plastic at Maddington some six or seven times to collect plastic waste. On three occasions he was accompanied by the defendant. He recalled being present when the plaintiff and defendant had a discussion, and recollected the plaintiff stating that he wanted to sell his business, and the defendant responding that he would have to supply the financial documentation, introduce the purchaser to the clientele of the business, make sure the plant and machinery was in good working order, and remain on for a period of time with the purchaser to familiarise him with the business. He did not hear any response from the plaintiff. He recalled visiting the plaintiff's premises on one occasion to collect a granulator.

Nilla Kuklinski

Mrs Kuklinski is a director of Recycla‑Plas. She stated that Maxwell Evans, an electrical contractor from Dalwallinu, was also a director. Her recollection was that Recycla‑Plas shifted from 19 Stanhope Gardens, Midvale to 12 Railway Parade, Bayswater in approximately June 2009. She stated that as at the middle of June 2008 the financial status of Recycla‑Plas was not fantastic, the business having substantial loans of the order of $525,000 for machinery purchased in 2006. She stated that as at May 2008 the defendant was the general manager of Recycla‑Plas but did not have any financial authority, that being her province.
She stated that the plaintiff contacted her in May 2008 wanting to speak to the defendant, and asked her about collecting plastic waste from his yard. As a consequence she arranged for George and the defendant to attend Elite Plastics' premises, and stated that they made approximately eight to 10 trips over a period of several weeks.
She stated that the last load was of machinery, about which she was unhappy because there was a lack of space at the Midvale premises. She was shown exhibit 10 which she described as a list of plant and machinery she obtained from an agent at Alan Donelly's on which she had marked a cross against any item of machinery that Recycla‑Plas would not be interested in; a tick alongside items of machinery that it would consider; and 'not here' against items that were not in the yard. She claimed that she initially got the list because she wanted to take an inventory of what was actually in their yard as they had responsibilities because they were looking after property that did not belong to them. She agreed that she faxed the list to Mrs Van Zijl on 1 December 2008. She recalled having a telephone conversation with Mrs Van Zijl in November 2008 when Mrs Van Zijl alleged that the defendant had agreed to purchase the plant and equipment, and claimed that was the first time she had heard of an agreement to purchase.
When asked why the plant and equipment was shifted to the Bayswater premises, Mrs Kuklinski stated 'well, it was on our yard. So we couldn't just leave it there'.

Conclusions on the evidence

The issue raised by the pleadings for determination is a narrow one – was there an oral agreement entered into between the parties in or about July 2008 for the sale by the plaintiff of plant equipment and stock, and if so, what were its terms.
The plaintiff carries the evidentiary burden of establishing the agreement and its terms on the balance of probabilities.
I found the plaintiff to be a credible witness who essentially gave a consistent account of his dealings with the defendant. He was not prone to exaggeration, and appeared to give his evidence objectively without emotion or argument.
The evidence adduced establishes that there was an agreement entered into between the plaintiff and the defendant for the sale by the plaintiff to the defendant of plant, equipment and stock that had been utilised by the business Elite Plastic.
There is no dispute that the defendant took possession of the plant, equipment and stock referred to in the statement of claim, in July 2008. The defendant states that was because he had agreed to store it for the plaintiff until the plaintiff was able to make alternate arrangements. That would be an extraordinarily generous gesture by the defendant, particularly as he had to organise transportation of the plant and equipment from its original location in Maddington to Recycla-Plas premises at Stanhope Gardens, Midvale, where according to the defendant's wife there were problems with available space. Not only did the defendant transport the plant and equipment to the Midvale premises, but some six months or so later removed it to Recycla‑Plas' new premises at 12 Railway Parade, Bayswater without informing the plaintiff.
There was no request made to the plaintiff to remove the plant and equipment until May 2009 some 10 months after it first came into the possession of the defendant, and significantly the plaintiff was not asked to re‑take possession at the time Recycla‑Plas relocated to 12 Railway Parade, Bayswater. If the position had been as suggested by the defendant, it would be expected that a request would have been made to the plaintiff to collect the plant and equipment prior to the relocation.
The evidence also establishes that whilst at Recycla-Plas premises, one of the items of plant, namely the silenator, was repainted without any authority being obtained from the plaintiff.
The evidence, particularly exhibit 7, confirms that the defendant had an interest in at least some of the plant and equipment.
Having regard to the totality of the evidence I am satisfied that it is more probable than not that there was an agreement for sale between the plaintiff and the defendant. The property in the plant, equipment and stock passed to the defendant at the time of the oral agreement.
I am not satisfied however that the question of GST was considered by the plaintiff, and I find that the agreed price was $125,000 to be paid on or before 1 October 2008. I would allow interest thereon at 3% from 1 October 2008 until 15 December 2010 being a total of $8,280.50.
The plaintiff is entitled to judgment against the defendant in the sum of $133,280.50 and costs to be taxed.