Westgyp Pty Ltd v Northline Ceilings Pty Ltd

[2018] WASC 244

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

CITATION:   WESTGYP PTY LTD -v- NORTHLINE CEILINGS PTY LTD  [2018] WASC 244

CORAM:   VAUGHAN J

HEARD:   11 - 13 JUNE 2018

DELIVERED          :   15 AUGUST 2018

FILE NO/S:   CIV 2552 of 2016

BETWEEN:   WESTGYP PTY LTD

Plaintiff

AND

NORTHLINE CEILINGS PTY LTD

First Defendant

GIUSEPPE CRUPI

Second Defendant

Catchwords:

Contract law - Whether contract formed - Contractual construction - Whether director personally liable for company debt

Competition and consumer law - Misleading and deceptive conduct - Australian Consumer Law s 18 - Whether representation made

Legislation:

Competition and Consumer Act 2010 (Cth), sch 2

Result:

Action dismissed

Category:    B

Representation:

Counsel:

Plaintiff	:	M Curwood
First Defendant	:	No appearance
Second Defendant	:	A P Hershowitz

Solicitors:

Plaintiff	:	J King Legal
First Defendant	:	No appearance
Second Defendant	:	Forbes Kirby Lawyers

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

Australia and New Zealand Banking Group Ltd v Manasseh [2016] WASCA 41

Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 291

Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1

Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153

Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336

Brogden v Metropolitan Railway Co (1877) 2 App Cas 666

Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304

Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd (1989) 21 NSWLR 160

Coast Reo Pty Ltd v O'Brien [2006] NSWSC 1098

Crane Distribution Ltd v Yang [2016] NSWSC 620

EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23

Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640

Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523

Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471

Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95

Fazio v Fazio [2012] WASCA 72

Fox v Percy [2003] HCA 22; (2003) 214 CLR 118

Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm)

Hendriks v McGeoch [2008] NSWCA 53; (2008) Aust Torts Reports 81‑942

Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110

Kriketos v Livschitz [2009] NSWCA 96; (2009) 14 BPR 26,717

Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44

McGuiness v Norwich and Peterborough Building Society [2011] EWCA Civ 1286

Meates v Attorney-General [1983] NZLR 308

Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357

Morrison v Town of Victoria Park [2007] WASCA 164

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104

Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449

Nowlan v Marson Transport Pty Ltd [2001] NSWCA 356; (2001) 53 NSWLR 116

Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451

Palmer v Dolman [2005] NSWCA 361

Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789; (2014) 101 ACSR 233

Re Swan Services Pty Ltd (in liq) [2016] NSWSC 1724

Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd (1985) 9 ACLR 909

Seeley International Pty Ltd v Jeffrey [2013] VSCA 288

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165

Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125

White v Overland [2001] FCA 1333

VAUGHAN J:

1. Overview of claims for determination and outcome

1. The plaintiff, Westgyp Pty Ltd (Westgyp), supplied plastering products to Northline Ceilings Pty Ltd (Northline Ceilings), a company associated with the second defendant, Giuseppe Crupi (known as 'Joe' Crupi).  Westgyp claimed to have done so under the terms of a 2009 credit application to which Mr Crupi was a party as a guarantor.

2. Westgyp brought proceedings to recover an outstanding amount of $858,776.71 together with certain costs.  By virtue of a charging clause Westgyp claimed that it was entitled to an equitable charge over Mr Crupi's interest in certain properties.

3. Mr Crupi claimed that the debt arose under the terms of a subsequent credit application, signed on 30 March 2012, which he had not guaranteed.

4. I have concluded that Mr Crupi is correct as to the operative credit application.  It is the terms of the 2012 credit application that governed the supply of the goods that are the subject of the outstanding debt.  The guarantee in the 2009 credit application does not extend to those supplies or the outstanding debt.  And, so far as Westgyp sought to rely on the 2012 credit application against Mr Crupi in the alternative, I have determined that Mr Crupi signed that instrument solely as a director of Northline Ceilings and not in a personal capacity.

5. Westgyp brought a further alternative claim against Mr Crupi alleging that he engaged in misleading or deceptive conduct.  I have concluded that the misleading conduct claim fails as Westgyp did not establish its pleaded case.  Specifically, Westgyp was unable to establish that Mr Crupi engaged in an aspect of the conduct on which Westgyp relied to contend that Mr Crupi conveyed a false representation to it.

1. The nature of the case and the issues for determination

1. The parties' pleaded cases

1. Westgyp pleaded that from about 2007 it supplied plastering products at the request and for the benefit of Northline Ceilings.[1]  Mr Crupi was at all times the sole director of Northline Ceilings.[2]

   [1] Third Amended Statement of Claim dated 7 June 2018 (Statement of Claim) par 2A.

   [2] Statement of Claim par 2(b).

2. By its statement of claim Westgyp referred to three credit applications: the first dated 24 January 2007,[3] the second dated 9 December 2009[4] and the third dated 30 March 2012.[5] 

   [3] Statement of Claim par 2B.

   [4] Statement of Claim par 3.

   [5] Statement of Claim par 5A.

3. Little needs to be said about the 2007 credit application.  While its terms were pleaded[6] the 2007 credit application was not relied on to found any liability on the part of Mr Crupi.  Rather, Westgyp primarily relied on the 2009 credit agreement.[7] 

   [6] Statement of Claim par 2C.

   [7] Statement of Claim par 19. This was confirmed by counsel for the plaintiff at ts 14, 24.

4. Westgyp pleaded that by the 2009 credit application: (1) Westgyp agreed to supply plastering products to Northline Ceilings, which agreed to pay Westgyp's invoices; and (2) Mr Crupi agreed to guarantee and indemnify Westgyp as to Northline Ceilings' indebtedness.[8]  Otherwise the terms of the 2009 credit agreement were pleaded at length.[9]  The terms included clauses dealing with liability for collection costs (cl 9 of the primary agreement) and a charge by Mr Crupi as to all of his real property interests to secure his liability under the guarantee and indemnity (cl 1(vi) of the guarantee).

   [8] Statement of Claim par 3.

   [9] Statement of Claim pars 4, 5.

5. Mr Crupi admitted that there was an agreement in terms of the 2007 credit application.  He also admitted its terms.[10] 

   [10] Amended Defence of Second Defendant dated 26 October 2017 (Defence) par 1A.

6. Similarly, Mr Crupi admitted an agreement in terms of the 2009 credit application but claimed that the guarantee was limited to the amount of $150,000.[11]  This limitation was not advanced in Mr Crupi's written submissions and was abandoned in opening.[12]  Importantly, however, Mr Crupi pleaded that both the 2007 credit agreement and the 2009 credit agreement had terminated and were of no further force and effect, or alternatively, that he was discharged from liability under those agreements.[13]  As to the 2009 credit agreement, the basis for this was explained by reference to the 2012 credit application. [14]

   [11] Defence par 2.

   [12] ts 27.

   [13] Defence pars 1A.5, 2.7, 2A.5, 3 ‑ 6, 7.2.

   [14] Defence pars 2.7, 2A.5, 3 ‑ 6, 7.2.

7. The pleaded case for Mr Crupi was that in March 2012 Westgyp informed Northline Ceilings that it was required to make a new credit application.[15]  Thereafter, on or about 30 March 2012, Northline Ceilings executed the 2012 credit application.[16]  The execution of the 2012 credit agreement was said to have been witnessed by John Hutton, a representative of Westgyp.[17]  However, Mr Crupi expressly declined to guarantee and indemnify Westgyp for any debt arising from supply of product under the new 2012 credit application.[18] 

   [15] Defence par 3.

   [16] Defence par 4.

   [17] Defence par 4(ii).

   [18] Defence par 5 (1^st par 5).

8. In particular it was said by Mr Crupi that: (1) the personal guarantee and indemnity forming part of the credit application was not executed by him;[19] and (2) the personal guarantee and indemnity agreement forming part of the credit application was crossed out by him.[20]

   [19] Defence par 5(i) (1^st par 5).

   [20] Defence par 5(ii) (1^st par 5).

9. Mr Crupi pleads that Westgyp received the executed 2012 credit application in that form on or around March or April 2012.[21]

   [21] Defence par 2A.2.

10. Mr Crupi contends that by reason of the execution and subsequent acceptance of the 2012 credit application:

    (1)he is not a party to any guarantee and indemnity agreement with Westgyp, the 2009 credit agreement (including the guarantee and indemnity under it) being of no further force and effect as having been terminated by agreement;[22] and

    (2)the further supply of plastering product by Westgyp to Northline Ceilings was to be on the terms and conditions of the 2012 credit application rather than the 2009 credit application such that Mr Crupi was discharged from liability under the guarantee and indemnity in the 2009 credit application.[23]

    [22] Defence par 5 (2^nd par 5).

    [23] Defence par 6.

11. Although denying that it had received and accepted the 2012 credit application on or about 30 March 2012,[24] Westgyp pleaded the effect of cl 2(d) of the 2012 credit application.[25]  The terms of cl 2(d) are set out more fully below.[26]  Westgyp pleaded that, on its proper construction, cl 2(d) of the 2012 credit application imposed liability on Mr Crupi as a principal debtor, concurrently with Northline Ceilings, for any goods supplied on credit.[27]  Mr Crupi denied that construction.[28]

    [24] Statement of Claim pars 5A, 5D.

    [25] Statement of Claim par 5B.

    [26] See par 142.

    [27] Statement of Claim par 5D.

    [28] Defence par 2A.4.

12. Westgyp pleaded that in the period 11 September 2015 to 5 July 2016 it supplied plastering products to Northline Ceilings for which, as at 5 July 2016, there was an outstanding balance of $858,776.71.[29] 

    [29] Statement of Claim par 6.

13. Westgyp says that in June 2016 it appointed Client Management Systems Australia Pty Ltd (CMSA) as its debt collection agent to make a demand for payment of the outstanding amount together with collection costs and interest.[30]  The collection costs were quantified at $87,974.85 as debt collection commission[31] and $4,950 in lodging various caveats.[32]  

    [30] Statement of Claim par 16.

    [31] Statement of Claim par 17.

    [32] Statement of Claim par 18.

14. Westgyp sought to recover the $858,776.71 and the collection costs, totalling $92,924.85, together with interest and costs.[33]  Further, relying on the charging clauses (under both the 2009 credit application and the 2012 credit application) Westgyp sought a declaration that it was entitled to an equitable charge over Mr Crupi's interest in certain properties together with consequential orders for judicial sale or the appointment of a receiver.[34]

    [33] Statement of Claim par 19; prayer for relief.

    [34] Statement of Claim par 19; prayer for relief par D(c).

15. Against the possibility that it might fail in its primary claim based on the 2009 credit application, and the alternative claim under the 2012 credit application, Westgyp also pleaded a misleading or deceptive conduct claim against Mr Crupi.[35]

    [35] Statement of Claim pars 7 ‑ 15.

16. Westgyp pleaded that the post‑11 September 2015 supplies were not used by Northline Ceilings but instead by a company called Northline Commercial Ceilings and Partitions Pty Ltd (NCCP).[36]  NCCP was a company in which Mr Crupi was the sole shareholder; Mr Crupi's son, Nathan Crupi, was the sole director.[37]  Mr Crupi did not plead to these allegations and they are taken as having been admitted.[38]

    [36] Statement of Claim par 8.

    [37] Statement of Claim par 8.

    [38] Rules of the Supreme Court 1971 (WA) O 20 r 14.

17. It is common ground that NCCP did not hold a credit account with Westgyp.[39]

    [39] Statement of Claim par 9(1); Defence par 9.

18. Westgyp contended that, by making orders to it for product on credit in circumstances where the goods were to be used by NCCP, and there was a failure to inform Westgyp of that fact, Mr Crupi represented that the product was being supplied to Northline Ceilings for use by Northline Ceilings in its business.[40]  That representation was denied.[41]

    [40] Statement of Claim par 11.

    [41] Defence par 11.

19. Westgyp said, however, that the alleged representation was made in trade or commerce and was false, or alternatively, to the extent that it was as to a future matter, was made without reasonable grounds.[42]  Westgyp pleaded that the alleged representation induced it to supply the product on credit at the request and direction of Mr Crupi.[43] It was pleaded that the conduct was misleading or deceptive and that, by reason of a contravention of s 18 of the Australian Consumer Law (ACL), Westgyp had suffered loss and damage.[44]

    [42] Statement of Claim pars 12, 14.

    [43] Statement of Claim par 13.

    [44] Statement of Claim par 15.

20. Mr Crupi denied the various elements of the misleading conduct claim.[45]  Among other things, Mr Crupi asserted that there was a meeting in January or February 2015 at which Westgyp, by its director Matthew Hudston, had agreed that Westgyp would deliver goods ordered on Northline Ceilings' credit account to NCCP.[46]

1. Summary of the issues for determination

   [45] Defence pars 8 ‑ 12.

   [46] Defence par 8.4.

1. The parties filed a statement of agreed issues.  There was some overlap between the issues as expressed by the parties.  The parties' statement of agreed issues did not commence by addressing the central issue of whether there was an agreement in terms of the 2012 credit agreement. 

2. Based on the pleaded cases, and having regard to the parties' statement of agreed issues, I summarise the issues for determination as follows:

   (1)Did Westgyp and Northline Ceilings enter into an agreement in terms of the 2012 credit application such that, after about 30 March 2012, the terms of that agreement governed the supply of goods by Westgyp to Northline Ceilings?[47]   (Issue 1)

   [47] Statement of Agreed Issues dated 31 May 2018 (Agreed Issues) par 2.

   (2)If yes to Issue 1:

   (a)Does the guarantee and indemnity under the 2009 credit application continue to apply to the post-30 March 2012 supply of goods by Westgyp to Northline Ceilings in any event?[48]  (Issue 2(a))

   [48] Agreed Issues pars 1, 4.

   (b)Alternatively, does the agreement in terms of the 2012 credit application nevertheless impose any personal liability on Mr Crupi to pay to Westgyp amounts owing by Northline Ceilings?[49] (Issue 2(b))

   [49] Agreed Issues pars 3 ‑ 4.

   (3)If no to Issue 1 (meaning that an agreement in terms of the 2009 credit application agreement governed the post-30 March 2012 supply of goods by Westgyp to Northline Ceilings), does the guarantee and indemnity under the 2009 credit application continue to apply to the post-30 March 2012 supply of goods by Westgyp to Northline Ceilings?[50] (Issue 3)

   (4)In authorising or making orders to Westgyp for the plastering products on credit, did Mr Crupi engage in misleading conduct in contravention of s 18 of the ACL by reason of which Westgyp suffered loss and damage?[51]  (Issue 4)  Various sub‑issues arise as to the misleading conduct claim.

   (5)If Mr Crupi is liable to Westgyp:

   (a)Is he liable for the debt collection commission; and, if so, in what amount?[52]  (Issue 5(a))

   (b)Is Westgyp entitled to maintain the caveats it has lodged in relation to the properties in which Mr Crupi holds an interest?[53]  (Issue 5(b))

1. Elaboration on Issue 1: Westgyp's contention that the 2012 credit agreement was a fabrication

   [50] Agreed Issues pars 1, 4.

   [51] Agreed Issues par 5.

   [52] Agreed Issues par 6.1.

   [53] Agreed Issues par 6.3.

1. It will not be apparent from my recounting of the parties' pleaded cases that there was a contest between them as to the authenticity of the 2012 credit agreement.  But whether the 2012 credit agreement was a fabrication was a central issue at trial.

2. The issue emerged in Westgyp's opening.

3. Having pre-read the witness statements Westgyp intended to rely on, I raised with counsel for Westgyp in his opening whether Westgyp was alleging that the 2012 credit agreement was not executed on or about the date that it bears, ie whether Westgyp was alleging that the 2012 credit agreement was a fabrication.[54]  Counsel informed me that his intention was to test the relevant witnesses, Mr Crupi and Mr Hutton, as to the date the document was executed, how it was executed and where it went.  It was said, however, that counsel did not have a basis to open the case on the basis that the 2012 credit agreement was a fabrication.[55]

   [54] ts 8, 9.

   [55] ts 9.

4. I suggested to counsel for Westgyp that this was unsatisfactory: it appeared that Westgyp were trying to have it both ways; and the second defendant ought to know from the opening whether he was facing a case of fabrication.[56]  Counsel sought an opportunity to take further instructions.[57]  That was provided.  At the conclusion of his opening counsel for Westgyp was provided with a 25 minute adjournment to take instructions.

   [56] ts 9, 10.

   [57] ts 9.

5. After the adjournment counsel for Westgyp informed me that Westgyp did not accept that the 2012 credit application was signed on 30 March 2012.  In answer to my question of whether Westgyp was contending that the document was a fabrication counsel informed me that there was no contention that the signatures were a fabrication, but that it was contended that 2012 credit application was not created on the date that it bears.[58]  Essentially, as was later put in the cross‑examination of Mr Crupi,[59] it was Westgyp's case that the 2012 credit application was not signed until mid-2016 (although Mr Hutton was only cross-examined on the basis that he was asked to sign the document on a date later than 30 March 2012).[60]

   [58] ts 22.

   [59] ts 207, 211.

   [60] ts 237.

6. At trial I had reservations about whether Westgyp's contention that the 2012 credit application was a fabrication had been adequately disclosed before the commencement of trial.

7. I am unable to identify the contention as having been advanced in Westgyp's written opening submissions.  The most that is said appears in par 8 of those submissions:

   Westgyp's position on issue 2 [equivalent to my Issue 1] is that no contract was made in terms of the 30 March 2012 document.  Even if it is found that the 2012 Credit Application came into its possession as alleged by Mr Crupi, Westgyp did not accept the terms of the document, in so far as it purported to exclude the operation of the guarantee and indemnity from Mr Crupi.  In a contractual sense, if the execution of the 30 March 2012 document constituted an offer, Westgyp did not accept that offer.  (emphasis added)

8. Issue 2 as formulated by the parties in their Statement of Agreed Issues was expressed in neutral terms: whether the parties entered into an agreement as contained in the 2012 credit application.

9. Before the trial commenced, apart from what might be surmised from a pre-reading of Westgyp's witness statements, the only indication that there was a contest as to the date of execution of the 2012 credit agreement arguably appeared in par 5A of the statement of claim.  There Westgyp pleaded that:

   On or about 19 August 2016 [Mr Crupi] provided [Westgyp] with a copy of a document purportedly executed by [Mr Crupi] entitled 'Application for Credit 30 Day Account' and dated 30 March 2012 ('2012 credit application').  (emphasis added)

1. Accordingly, on a close reading of the pleading it is apparent that Westgyp identified that the 2012 credit application was only purportedly dated 30 March 2012.

2. It is regrettable that Westgyp did not more fulsomely identify that there was to be a challenge to the authenticity of the 2012 credit agreement, ie that there was a seriously contested issue as to whether the document was a fabrication.  A party should take steps to ensure that the other parties to the dispute are aware of the issues arising in the litigation.  In that regard passing reference or 'quietly leaving footprints' is insufficient.[61] Issues are not to be kept hidden but are to be clearly identified.[62]  That is all the more so where the allegation is one of fabrication.

   [61] White v Overland [2001] FCA 1333 [4].

   [62] Nowlan v Marson Transport Pty Ltd [2001] NSWCA 356; (2001) 53 NSWLR 116 [28] (see also [29] ‑ [30], [44] ‑ [46]).

3. While I had misgivings as to whether the fabrication contention was adequately disclosed, when counsel for Westgyp advanced the case in cross-examination, and there was the inevitable objection on the part of counsel for Mr Crupi,[63] I ruled that the issue could be pursued.  The issue was identified, albeit very late, in the plaintiff's opening.  But that is not to say that the delay in the proper disclosure of the issue is without consequences.

   [63] ts 207 ‑ 211, 225.

4. With the benefit of hindsight there are other witnesses that Mr Crupi might have been expected to call in support of his case as to execution of the 2012 credit agreement on 30 March 2012.

5. The first of those is Danny Chan.  In 2012 Mr Chan was the external accountant for Northline Ceilings.  Mr Crupi's evidence was that one of the reasons he was not prepared to give a personal guarantee in executing the 2012 credit agreement was that Mr Chan counselled him against doing so given the nature of the jobs Northline Ceilings was doing at the time.[64]  Mr Hutton also gave evidence that Mr Chan was present during the meeting between him and Mr Crupi at which the 2012 credit agreement was executed.[65]

   [64] Exhibit 16A par 30.

   [65] ts 219, 231.

6. The second person who might have been called was Mr Crupi's wife.  Mr Crupi's evidence was that it was his wife who had found the 2012 credit agreement in mid-August 2016.[66]

   [66] ts 183, 203 - 205, 207, 211.

7. In ordinary circumstances the failure on the part of Mr Crupi to call Mr Chan and his wife may have led to a Jones v Dunkel adverse inference.

8. Counsel for Mr Crupi submitted that the circumstances in which the fabrication issue emerged meant that I should not draw any such adverse inference from the non-calling of Mr Chan and Mr Crupi's wife.[67]  I accept that submission.  Until the fabrication issue fully emerged in the course of Westgyp's opening (after I required clarification as to the case being advanced) it was not readily apparent that there was a matter that Mr Crupi was required to explain or answer as to the timing of the execution of the 2012 credit application.[68]  In preparing for trial Mr Crupi and his legal representatives would not have thought it necessary to obtain witness statements from Mr Chan or Mr Crupi's wife.

   [67] ts 291 ‑ 292.

   [68] Cf J Heydon, Cross on Evidence (11th ed, 2017) [1215].

9. Similarly, to the extent that much of Mr Crupi's relevant evidence on the execution of the 2012 credit agreement was first elicited in cross-examination rather than appearing in his witness statement, there is again an explanation for that in the way the fabrication issue emerged.  I will not give that evidence any lesser weight simply because it first fell from Mr Crupi in the course of cross-examination.

1. Matters not in issue

1. A number of things were not in issue.

2. Mention has already been made that Mr Crupi did not press his pleaded case that the guarantee under the 2009 credit application was limited to $150,000.  In addition, Mr Crupi admitted in his defence that there was never a written notice of termination of that guarantee.[69]  Initially, by his opening submissions, Mr Crupi appeared to seek to depart from that admission.[70]  But in opening counsel for Mr Crupi accepted that it was not open to him to argue that the 2012 credit application constituted a written revocation as required by the 2009 credit application.[71]

   [69] Defence par 2A.5; Statement of Claim par 5E.

   [70] Second Defendant’s Submissions dated 5 June 2018 par 28.

   [71] ts 36.

3. In addition to its pleaded case as recounted above, Westgyp had pleaded that, as the goods used by NCCP were not applied for the benefit of Northline Ceilings, the goods were ordered by Mr Crupi on his own behalf and he was liable to pay their purchase price.[72]  Counsel for Westgyp did not open on that basis.  In closing counsel for Westgyp informed the court that the claim for liability on this basis was not pressed.[73]

   [72] Statement of Claim par 20.

   [73] ts 292.

4. Finally, although the authenticity of the 2012 credit application was hotly contested, Westgyp accepted that John Hutton had authority to receive credit applications such as the 2012 credit application from Westgyp customers.[74]  It was said, however, that Mr Hutton was not authorised to approve them;[75] and nor was he permitted to witness their execution.[76]

   [74] ts 21.  Mr Hudston confirmed this in cross-examination: ts 45, 46, 104.

   [75] ts 21.

   [76] ts 49.  A Westgyp email dated 26 March 2012 (sent to Mr Hutton among others) confirmed that Westgyp staff were not to witness credit applications and they were to be independently witnessed: Exhibit 1.10.

1. The witnesses

1. Approach to evidence

1. There was a substantial contest as to three factual matters.

2. First, as discussed earlier, Westgyp disputed that the 2012 credit application was signed by Mr Crupi and witnessed by Mr Hutton on the date that it bears, being 30 March 2012.  Westgyp contended that the document was a fabrication.  Second, almost as a counterpoise to the first matter, Mr Crupi contended ‑ albeit in the alternative ‑ that Westgyp had received the 2012 credit application after it was signed but had deliberately disregarded it because the new guarantee had been struck through.[77]  Third, there was a dispute about whether Mr Crupi disclosed to Westgyp that orders being made by Northline Ceilings on its credit account with Westgyp were for the benefit of NCCP.

   [77] ts 23, 25, 26, 68 ‑ 70.

3. The contemporary materials are of some assistance in resolving the second issue.  They are, however, of limited assistance as to the first and third issues.  There, apart from my views as to the credibility and the reliability of the witnesses, I must predominantly look to the objectively established facts and the apparent logic of events.[78]

   [78] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 [31].

4. To the extent that some witnesses gave evidence based on recollection (in at least one case - that of Mr Crupi - as to one critical aspect refreshed 'recollection' that I consider to be reconstruction rather than true recollection) there are the usual difficulties in determining the reliability of the recollection of events which occurred a number of years ago.  There is a view that in the trial of a commercial case the best approach in such circumstances is to place little, if any, reliance on witnesses' recollections of what was said in meetings and conversations.[79]  I acknowledge the doubt that necessarily attends the recollection of conversations many years in the past.[80]  But it does not follow that the correct starting point is to simply place little reliance on oral recollection.  Rather, I should assess that evidence in light of its inherent probabilities in the context of the objectively established facts.

   [79] Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm) [15] - [22] (especially [22]).

   [80] See eg Fazio v Fazio [2012] WASCA 72 [42] - [43].

5. The approach of Black J in Re Swan Services Pty Ltd (in liq)[81] is apposite:

   In assessing the evidence in this case … I am conscious of the importance of the credit of witnesses where there is, in respect of some issues, inconsistencies in the oral evidence.  I also recognise that the credibility of a witness and his or her veracity may be tested by reference to the objective facts proved independently of the testimony given, in particular by reference to the documents in the case, his or her motives and the overall probabilities.  I have also had regard to Atkin LJ's observation … that 'an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour'; substantially the same view was taken by Keane JA in Camden v McKenzie [and] by Leeming JA (with whom Barrett JA and Tobias AJA agreed) in New South Wales v Hunt … (citations omitted)

   [81] Re Swan Services Pty Ltd (in liq)[2016] NSWSC 1724 [6]. See also Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789; (2014) 101 ACSR 233 [10] - [11].

6. Westgyp's contention that the 2012 credit application was a fabrication was a serious allegation.  Mr Crupi and Mr Hutton gave detailed evidence as to the circumstances in which the 2012 credit application was signed and witnessed.  As will be seen, in contending that the 2012 credit application was a fabrication, Westgyp, by its counsel, necessarily contended that this evidence constituted a deliberate falsehood and an attempt to deceive the court.

7. Having regard to the seriousness of the allegation, in determining whether the 2012 credit application was a fabrication and Messrs Crupi and Hutton gave deliberately false evidence, the Briginshaw principle applies.  I must feel an actual persuasion of the occurrence or existence of the relevant facts.[82]  The nature and seriousness of the allegation is relevant to its proof.[83]  Reasonable satisfaction as to the allegations cannot be attained by inexact proofs, indefinite testimony or indirect inferences.[84]

   [82] Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, 361 ‑ 362, 363.

   [83] Briginshaw v Briginshaw (361 ‑ 362, 363); Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449, 450.

   [84] Briginshaw v Briginshaw (362).

8. But proof on the balance of probabilities does not require certainty or the positive exclusion of all hypotheses.  It suffices if the circumstances raise 'a more probable inference' in favour of what is alleged, ie the evidence gives rise to a reasonable and definite inference rather than conflicting inferences of equal degrees of probability.[85] 

   [85] Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1, 5. See also Palmer v Dolman [2005] NSWCA 361 [39].

9. The evidence must be evaluated as a whole.[86]  A coincidence of circumstances is capable of revealing greater significance on each individual circumstance than it might have had by itself.[87]  The true picture is derived from an accumulation of detail ‑ the overall effect of the detail not being necessarily the same as the sum total of the individual details.[88]

1. Plaintiff's lay witnesses

   [86] Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125, 141.

   [87] Seeley International Pty Ltd v Jeffrey [2013] VSCA 288 [45] (see also [43], [48] and generally [42] ‑ [51]).

   [88] Transport Industries Insurance Co Ltd v Longmuir (141).

1. Westgyp called four lay witnesses: Matthew Hudston, Tony Trajcevski, Louise Avni and Dorothy Fischer (referred to as Lea Fischer).

Matthew Hudston

1. Mr Hudston was a central witness for Westgyp.

2. Mr Hudston was unusually hesitant in reading the oath.  In examination‑in‑chief, when asked to review his witness statements, Mr Hudston took considerable time to re‑read the statements.  Perhaps that is because, as Mr Hudston freely accepted, the statements reflected the language that his lawyers used, not his own words.[89]  Without intending any disrespect, my impression is that Mr Hudston was a relatively unsophisticated business proprietor whose skills were predominantly practical and who relied on others for administrative and professional expertise and support.  This does not mean that there is any reason to doubt Mr Hudston's evidence.  To the contrary, I mention these observations to rebut the suggested adverse inference that I was asked to draw as to the reliability of Mr Hudston's evidence.

   [89] ts 91 ‑ 93.

3. In cross‑examination Mr Hudston was inclined to answer robustly but, in my assessment, truthfully ‑ in the sense that Mr Hudston genuinely believed what he was saying was true.  That is not to say that Mr Hudston did not indulge in a degree of advocacy in his responses.  On occasions, Mr Hudston was able to see where the cross‑examiner was going with the examination, and Mr Hudston tailored his answer accordingly.[90]

   [90] See eg ts 43.

4. It was submitted that I should find that Mr Hudston's evidence was generally unreliable.[91]  In cross‑examination the following matters were apparent:

   (1)Mr Hudston was prepared to speculate on matters rather than confine himself to matters that he knew, eg the reason why Mr Crupi's drivers licence did not appear on a credit application[92] and whether the 2012 credit application was in fact signed on 30 March 2012.[93] 

   (2)Mr Hudston gave inconsistent evidence about whether Westgyp made a claim on its QBE Insurance Group Ltd debtors' insurance in relation to Northline Ceilings.[94]

   (3)Mr Hudston's evidence that Northline Ceilings' orders came in by email, phone or in person[95] was inconsistent with evidence he gave, by affidavit, on a summary judgment application that the orders were all oral.[96]

   (4)Mr Hudston had refused to return a duplicate certificate of title to a property in the name of Mr Crupi's daughter, Bianca Crupi, notwithstanding that solicitors for Ms Crupi had sought its return.[97]

   (5)Mr Hudston in his witness statement had adopted the words of his lawyers rather than using his own words.[98]

   [91] ts 254.

   [92] ts 53 ‑ 54.

   [93] ts 55 ‑ 56.

   [94] ts 72 ‑ 75, 108 ‑ 109.

   [95] ts 79.

   [96] Exhibit 4 par 6.

   [97] ts 87 ‑ 89.

   [98] ts 91 ‑ 93.

5. I accept that Mr Hudston was not a witness of perfect recollection.  Few witnesses are.  Mr Hudston freely accepted that, on details like the precise time during 2015 to 2016 when Westgyp sought that Mr Crupi execute a fresh credit agreement, he did not know the dates.[99]  That imprecision as to specific dates, to my mind, explains Mr Hudston's evidence that QBE Insurance Group Ltd approved Northline Ceilings' debtors insurance in 2011[100] despite having earlier acknowledged that Westgyp did not take out the QBE debtors' insurance until May 2012.[101] 

   [99] ts 57.

   [100] ts 111.

   [101] ts 103.

6. Contrary to the submission of counsel for Mr Crupi, I do not accept that I can simply discard Mr Hudston's evidence as being generally unreliable.  I accept that it was unsatisfactory in particular respects.  For example, I do not give any weight to Mr Hudston's speculation.  But I do not consider that such unnecessary conjecture bespeaks general unreliability on the part of Mr Hudston.  Rather, I consider that Mr Hudston was giving way to a genuinely held belief that ‑ as Mr Hudston said in cross‑examination ‑ Mr Crupi had lied to him[102] and he, Mr Hudston, had been deceived.[103] 

   [102] ts 87.

   [103] ts 84.

7. It follows that it is, in my view, necessary to give distinct consideration to the reliability of Mr Hudston's evidence so far as it concerns the factual matters that were in contest.

Tony Trajcevski

1. Tony Trajcevski is Westgyp's operations manager.  He has been employed by Westgyp since its incorporation.  Mr Trajcevski gave evidence as to when he became aware of the 2012 credit agreement (not until 22 August 2016) and the 2015/2016 dealings between Westgyp and Northline Ceilings.  Mr Trajcevski also gave evidence that he knew nothing of the existence of NCCP before this proceeding was commenced.  Otherwise Mr Trajcevski gave evidence as to conversations with Mr Crupi concerning the difficulties he, Mr Crupi, was experiencing in being paid by Diploma Constructions (WA) Pty Ltd (Diploma) and an attempt, supposedly in 2015, to obtain execution of a new credit agreement and guarantee from Mr Crupi.

2. Mr Trajcevski gave his evidence in a straightforward and responsive manner.  He made appropriate concessions where they were called for.[104]  There was an attempt to impugn Mr Trajcevski's evidence by suggesting that the Westgyp affidavit of discovery, which was sworn by Mr Trajcevski, was deficient.  It is true that there were a number of relevant documents that were not discovered.  Documents were produced by Mr Hudston on the morning of the second day of trial following a call by counsel for Mr Crupi.  But I am satisfied that Mr Trajcevski did his best to locate all potentially relevant documents ‑ and in particular sought to identify all Northline Ceilings credit applications ‑ and the additional documents were simply overlooked.[105]

   [104] See eg ts 124, 125, 127.

   [105] ts 125 ‑ 126.

3. Mr Trajcevski was a credible and reliable witness.  I accept his evidence.

Louise Avni

1. Louise Avni was the director of CMSA, a company which has since been wound up.  At the relevant time CMSA provided credit risk management, receivables and debt collection services to Westgyp.  CMSA commenced doing so in 2007.[106]  Ms Avni gave evidence as to the process employed and her 2016 dealings with Mr Crupi once demand was made for money due by Northline Ceilings to Westgyp.

   [106] ts 135.

2. Among other things, Ms Avni confirmed that there was no record of the 2012 credit application having been received by CMSA in 2012.[107]  Ms Avni only received the 2012 credit application from Mr Crupi's then solicitors on 19 August 2016 after a telephone conference between her and the solicitors a couple of days earlier.[108]

   [107] Exhibit 14A par 2.

   [108] Exhibit 14B par 4.

3. Ms Avni informed the court that at the relevant time CMSA was not a licensed debt collector under the Debt Collectors Licensing Act 1964 (WA).[109]  Ms Avni had earlier given evidence, in cross‑examination, that if Westgyp did not recover its collection costs in these proceedings then, as far as she was concerned, she did not get paid a cent.[110]  That was an appropriate position to take and Ms Avni is to be commended for her no‑nonsense approach.  Ms Avni impressed me as being professionally competent and precise in her evidence.  I accept her evidence in its entirety.

Dorothy Fischer

[109] ts 145.

[110] ts 138.

1. The final witness for Westgyp was Dorothy Fischer.  Ms Fischer is the person in charge of accounts receivables at Westgyp.  She has held that position since August 2014.  Apart from verifying a Debtor Transaction Inquiry running sheet maintained by Westgyp as to Northline Ceilings,[111] Ms Fischer's evidence consisted of little more than recounting attempts to have Mr Crupi sign a new credit agreement.  There was no serious attempt to impugn the veracity of any of Ms Fischer's evidence and I accept it.

1. Second Defendant's lay witnesses

   [111] Exhibit 1.51.

1. Mr Crupi called three witnesses: himself, Nathan Crupi (his son) and John Hutton.  Mr Hutton did not provide a witness statement and appeared pursuant to a subpoena.

Joe Crupi

1. Joe Crupi was cross‑examined at some length.  While, for reasons I will come to, I accept that the 2012 credit application was not a fabrication, there were aspects of Mr Crupi's evidence that were unsatisfactory.  It is not possible to accept that Mr Crupi's evidence was generally reliable.  In certain respects I do not accept that Mr Crupi was a witness of truth.

2. As counsel for Westgyp established in cross‑examination:

   (1)In July and early August 2016, Mr Crupi accepted that he was personally liable for Northline Ceilings' debt to Westgyp.[112]

   (2)Mr Crupi had forgotten about the 2012 credit agreement until his wife found the document (apparently shortly before it was provided to Mr Crupi's then solicitors, Tan & Tan Lawyers).[113]

   (3)Mr Crupi could not remember signing the 2012 credit agreement at all until his wife found it in mid‑August 2016.[114]

   [112] ts 181 ‑ 184, 204.

   [113] ts 182 ‑ 183.

   [114] ts 186.

1. Despite this evidence, in his witness statement Mr Crupi purported to give a very precise account as to his recollection of the circumstances of his meeting with Mr Hutton at which the 2012 credit agreement was executed.  Mr Crupi stated:

   A short time after I received the [16 March 2012 letter] and to the best of my recollection, on about 30 March 2012, Mr Hutton came to see me at [Northline Ceilings] offices, located at … 

   I recall that Mr Hutton came after work, because we both had somewhere to be that evening.

   I sat down with Mr Hutton and he asked me to (sic) the 2012 Credit Application which had been attached to the [16 March 2012 letter].

   Mr Hutton said to me words to the effect that the 2009 Credit Application would no longer apply and [Northline Ceilings] had to sign the 2012 Credit Application.  He said that he (sic) [Westgyp] was updating its agreements as part of its expansion and all customers were required to the sign the 2012 Credit Application.

   Although I had received the [16 March 2012 letter] before Mr Hutton came to see me, I had been very busy and had not had a chance to look at it properly.

   Prior to signing the 2012 Credit Application, I discussed with my accountant, Mr Chan, whether I should again guarantee the obligations of [Northline Ceilings] to[Westgyp].  He said to me that in his view I should not do so given the nature of the jobs [Northline Ceilings] was doing at the time.  He counselled me against signing the personal guarantee contained within the 2012 Credit Application …

   I made a decision not to sign the 2012 Personal Guarantee and Indemnity, as [Northline Ceilings] was doing big jobs with larger exposure and would require higher credit limits than [Northline Ceilings] had previously needed and for which I did not wish to be personally liable.

   I said to Mr Hutton that I would not sign the 2012 Personal Guarantee and Indemnity.

   Mr Hutton said to me words to the effect that everything was in order and I should only sign what I was comfortable signing.

   In Mr Hutton's presence, I crossed out with a pen the terms of the 2012 Personal Guarantee and Indemnity contained in the 2012 Credit Application and signed the rest of the 2012 Credit Application.

   …

   I handed the signed 2012 Credit Application back to Mr Hutton, who signed the 2012 Credit Application as a witness and said words to the effect that he would take the 2012 Credit Application back to the office of [Westgyp] for processing.

   After Mr Hutton left [Northline Ceilings'] offices I did not have any further discussions about the 2012 Credit Application with him.[115]

   [115] Exhibit 16A pars 25 - 36.

2. It is implausible that, having forgotten about the 2012 credit agreement until it was found by his wife in mid‑August 2016 and accepting that he could not then remember signing it at all, Mr Crupi was able in 2018 to give such a precise account of the alleged circumstances of the signing of the instrument.  As Mr Crupi was unable to recall signing the document at all in July and August 2016 it beggars belief that he could give detailed evidence as to the circumstances of its signing on 30 March 2012 in 2018.  It is seldom that memory improves with the passage of time.  I do not accept that Mr Crupi is an exception to the usual truism that memories fade.  When confronted by the cross‑examiner with the obvious incongruity in his evidence, Mr Crupi merely said 'some things you remember in life and some things you don't'.[116]  That response was utterly unconvincing.

   [116] ts 186.

3. I do not accept that Mr Crupi has any independent recollection of the circumstances in which he executed the 2012 credit application.  I do not accept Mr Crupi's evidence as to what he says occurred at the meeting.

4. It tells against Mr Crupi's credit that he sought to suggest that he had an independent recollection of the circumstances of the 30 March 2012 meeting at which the 2012 credit agreement was signed.  That is compounded by the fact that Mr Crupi had earlier sworn an affidavit, in defence of a summary judgment application, which also purported to recount the circumstances of the meeting.[117]  Mr Crupi's unreliability as concerns this part of his evidence is also demonstrated by an apparent inconsistency between his oral evidence before the court and the affidavit.  In cross‑examination Mr Crupi disputed knowing that the 2012 credit application would need Westgyp approval.[118]  But the affidavit evidence acknowledged that approval was required ‑ although Mr Hudston was alleged to have said it would be a formality.[119]

   [117] Exhibit 17 pars 12 - 17.

   [118] ts 187.

   [119] Exhibit 17 par 17.

5. There were three other aspects of Mr Crupi's conduct that were unsatisfactory and told against his credit (and in some respects his reliability) as a witness.

6. First, Mr Crupi gave evidence that he only became aware of the winding up application against Northline Ceilings three or four days or a week prior to the order being made.[120]  It was said further that Mr Crupi's accountant had hidden the application from him.[121]  However, it was established from a print out of records maintained by the Federal Court of Australia that the winding up application had been adjourned some five times over the period of June to September 2016.[122]  When that was put to Mr Crupi he said that he made his accountant attend two of the court hearings.[123]  Mr Crupi also confirmed that he knew of the various hearings.[124]

   [120] ts 169, 213.

   [121] ts 170.

   [122] Exhibit 20.

   [123] ts 214.

   [124] ts 214.

7. Accordingly, the earlier evidence by Mr Crupi that he did not become aware of the winding up application until shortly before the order was made was, I consider, something offered up to the cross‑examiner knowing it to be untrue in an attempt to cast Mr Crupi as a wronged party.

8. Second, counsel for Westgyp took Mr Crupi to the report as to affairs (RATA) he certified to be correct in relation to Northline Ceilings.[125]  Mr Crupi admitted that the RATA was wrong in particular respects[126] although he denied signing it knowing it to be false.[127]

   [125] Exhibit 1.47; ts 170 - 176.

   [126] ts 174 ‑ 176.

   [127] ts 175.

9. Third, Mr Crupi was taken to a series of caveats Mr Crupi's wife had lodged against various properties in which Mr Crupi held an interest (as also caveated by Westgyp).[128] The caveats were lodged on 12 March 2018 by the solicitors who are Mr Crupi's solicitors in these proceedings. Mrs Crupi claimed to be the beneficial owner of the interest of Mr Crupi in the land by virtue of s 79 of the Family Law Act 1975 (Cth) and by virtue of a constructive trust. The caveats were supported by a statutory declaration made by Mrs Crupi. Unusually, however, the caveats were also supported by a statutory declaration made by Mr Crupi.

   [128] Exhibit 1.65; ts 193 - 197.

10. Mr Crupi was questioned about whether the lodgement of the caveats had anything to do with these proceedings or with Westgyp's claim.  Mr Crupi denied that they did.[129]  But Mr Crupi then went on to directly contradict his own evidence.[130]  The relevant passage reads:

    Now, has the caveat that your wife has put on that you have supported got anything to do with these proceedings or Westgyp's claim? --- In no formal manner.  It's just an interest.  She has got an interest in the properties.

    So the lodgement of those caveats in March this year had nothing to do with this court case? --- No. No.

    Why did it go on there then?  --- Why did it go on?  Because I felt that if something has to happen and with the court case I feel personally obliged to give my wife after bearing my children and being a mother to my children she has got every right to have something.  (emphasis added)

    [129] ts 196.

    [130] ts 196.

11. The cumulative effect of the matters referred to in pars 75 to 86 is that I do not accept Mr Crupi's evidence except where I state positively in these reasons that it is accepted.  That acceptance is limited to circumstances in which the evidence is uncontroversial, constitutes an admission or is corroborated, for example by a contemporaneous document, objective fact or ‑ as to the execution of the 2012 credit application not occurring in 2016 ‑ the evidence of Mr Hutton.

John Hutton

1. Mr Hutton was a former employee of Westgyp.  He was employed by Westgyp between 2009 and October 2012.  Mr Hutton accepted that his employment did not end on good terms.[131]  Indeed, following Mr Hutton's departure Westgyp threatened him with legal action.[132]  That was averted by the giving of undertakings on the part of Mr Hutton.[133] 

   [131] ts 224.

   [132] Exhibit 1.13.

   [133] Exhibit 1.14.

2. As will be seen, Mr Hutton gave evidence as to the circumstances in which the 2012 credit application was signed.  Mr Hutton also gave evidence that he took the completed document back to Westgyp and subsequently had a discussion with Mr Hudston about it.

3. It is appropriate to defer full consideration of Mr Hutton's credit and reliability until I address Issue 1.  For now it suffices to record that counsel for Westgyp submitted that I should reject Mr Hutton's evidence.  It was said to be implausible and a remarkable reconstruction.[134]  I reject that submission.  For the reasons I provide in addressing Issue 1, I accept that Mr Hutton was a credible witness whose evidence was generally reliable.

Nathan Crupi

[134] ts 270 ‑ 271.

1. Nathan Crupi was an unimpressive witness.  I appreciate the dangers in rejecting a witness' testimony based on demeanour.  But it is necessary to record that, in giving his oral evidence, Nathan Crupi was apprehensive and appeared to be uncomfortable.  Although his cross‑examination was relatively short he was fidgety throughout.

2. Nathan Crupi's evidence was only of substantial importance insofar as it was adduced to corroborate Joe Crupi's evidence that he, Joe Crupi, had informed Mr Hudston about NCCP and Mr Hudston, for Westgyp, had agreed that Northline Ceilings could use its credit account with Westgyp to purchase goods for NCCP.[135]

   [135] Exhibit 23 par 13.

3. As will be seen, I do not accept that evidence.  It is appropriate, however, that I defer the reasons for so concluding until I deal with Issue 4.

1. A detailed account of the facts

1. I turn now to an account of the facts.  In doing so I am making factual findings based on the evidence adduced at trial.  Where, however, the factual findings are the subject of serious contest, I will defer making factual findings until I specifically address the relevant issue.  In particular, Westgyp's contention that the 2012 credit agreement is a fabrication is considered as part of Issue 1; and whether Mr Hudston was informed that supplies to Northline Ceilings were to be on-supplied to NCCP is considered as part of Issue 4. 

1. The parties

1. Westgyp is a company.[136]

   [136] Statement of Claim par 1; Defence par 1.

2. Matthew Hudston is Westgyp's sole director.  Since about 2006 Westgyp has supplied ceiling and plaster products to the construction industry in Western Australia.  Westgyp took over an earlier business commenced in about 2001 which Mr Hudston operated as a sole proprietor.

3. Northline Ceilings was incorporated on 4 July 2006.[137]  Joe Crupi was at all times the sole director of Northline Ceilings.[138]  Northline Ceilings provided ceiling fixing services.  It worked on both commercial and residential projects.

   [137] Agreed Facts par 1(a).

   [138] Agreed Facts par 2.

4. NCCP was incorporated on 15 January 2015.  At all times Joe Crupi was the sole shareholder of NCCP; Nathan Crupi, Joe Crupi's son, was the sole director of the company.[139]  Joe Crupi gave evidence, which I accept as the matter is uncontroversial, that he and Nathan set up NCCP.  NCCP was incorporated to establish Nathan Crupi in the construction industry.  Once NCCP was stable it was intended that Joe Crupi would retire from the business and Nathan Crupi would run NCCP on his own.[140] 

1. Westgyp's supply of product on credit

   [139] Agreed Facts par 6.

   [140] Exhibit 16A pars 40 - 41.

1. At all relevant times Westgyp had a credit approval system in place.

2. In 2012 the process for approval of credit applications was that, upon receipt of a completed credit application, a copy of the application was sent to a credit receivable manager, CMSA.  CMSA provided a recommendation to Westgyp as to whether the applicant should be approved for credit.  CMSA did so having investigated the creditworthiness of the intended customer.  The final decision on whether to supply a customer was a matter for Mr Hudston.

3. In 2012 Ms Avni was the director of CMSA who carried out the credit management services for Westgyp.  Ms Avni gave evidence as to the process carried out by CMSA on behalf of Westgyp.  A system was in place whereby:

   •on receipt by Westgyp, completed credit applications were sent to CMSA;

   •CMSA performed a credit check on the applicant and any guarantor ‑ this involved searching any property registered in the relevant names; and

   •based on the result of the investigation CMSA provided a recommendation as to whether the applicant should be approved for the supply of product on credit.

4. CMSA retained the credit applications which Westgyp had sent it over the years 2009 to 2012.  There were some 116 such credit applications.[141]

   [141] Exhibit 14B par 5.

5. Mr Hudston gave evidence that it was Westgyp's policy to reject credit applications in which guarantees had not been executed unless other acceptable arrangements had been made to ensure payment.[142]  Mr Hudston was not cross‑examined on that evidence.  I accept that Westgyp, through Mr Hudston, had such a policy in 2012.  It is inherently likely that a business such as Westgyp's would have such a policy.  Why else would it require the submission of credit applications including personal guarantees?  And Mr Hutton confirmed that it was Westgyp's policy to require a guarantee.[143]  But the fact that this was Westgyp's policy does not mean that this is what occurred in all instances.

   [142] Exhibit 3A par 9.

   [143] ts 234.

6. Westgyp maintained a record of the credit applications it obtained from its customers.  The credit applications, even those that had been superseded with later applications, were kept in a safe.[144]  There was evidence that Westgyp employees had to sign a record whenever completed credit applications were removed from the safe.[145]  However, it was not clear whether this was the practice in 2012.

   [144] ts 47.

   [145] ts 59.

7. A number of Westgyp's contemporary documents from 2012 referred to the completed credit applications it had to hand and those which were outstanding.  Insofar as these documents refer to Northline Ceilings they are not consistent.  I refer to these documents further in addressing Issue 1.

1. The relationship between Westgyp and Northline Ceilings

1. According to Mr Hudston, Northline Ceilings' business had been a customer of his business since about 2004.[146]  In 2004 neither Westgyp nor Northline Ceilings had yet been incorporated.  Accordingly, I infer that Mr Hudston's original plaster product supply business dealt with some other business associated with Mr Crupi.  This is not controversial.  Mr Crupi confirmed in his witness statement that he had known Mr Hudston and had business dealings with him since about 2003.[147]

   [146] Exhibit 3A par 2.

   [147] Exhibit 16A pars 5, 9.

2. Mr Crupi suggested in evidence that he and Mr Hudston were quite good friends before the dispute leading to these proceedings.[148]  Mr Hudston was more guarded, saying that he and Mr Crupi had a good working relationship.[149]  Mr Hudston explained various vacations that he and his wife had attended with Mr Crupi and Mr Crupi's wife as being trips on which a number of the Westgyp's customers had attended with those trips being paid for by one of Westgyp's suppliers.[150]

   [148] Exhibit 16A par 6.

   [149] Exhibit 3B par 2.

   [150] Exhibit 3B par 3.

3. It was, however, the case that Mr Hudston and Mr Crupi each had a 50% share in a horse.[151]  Accordingly, I find that Mr Hudston and Mr Crupi had a personal relationship that extended beyond their business dealings on behalf of Westgyp and Northline Ceilings.

   [151] Exhibit 16A par 7; Exhibit 3B par 3.

4. Westgyp supplied plastering products to Northline Ceilings on a running account.  Orders were usually made over the phone but they were also made in writing and in person.  The products as ordered were either collected on behalf of Northline Ceilings or delivered by Westgyp to building sites as instructed by Northline Ceilings.  All orders were entered on Westgyp's computer system.  Invoices addressed to Northline Ceilings were generated from that information.

5. Westgyp continued to supply Northline Ceilings throughout the period 2007 to mid-2016.[152]  Westgyp only stopped making supplies of product to Northline Ceilings around the end of June or early July 2016.[153]

   [152] Exhibit 16A pars 14, 21, 38; ts 52, 57, 68.

   [153] ts 69.

6. The annual sales made by Westgyp to Northline Ceilings fluctuated over time.  Included in the Trial Bundle were Westgyp sales records which recorded that the annual sales to Northline Ceilings were as follows:[154]

   [154] Exhibit 1.54.

Financial Year to 30 June 2010	$313,161.08
Financial Year to 30 June 2011	$491,633.28
Financial Year to 30 June 2012	$700,383.75
Financial Year to 30 June 2013	$329,302.15
Financial Year to 30 June 2014	$331,390.95
Financial Year to 30 June 2015	$626,785.32
Financial Year to 30 June 2016	$964,214.10

1. Mr Crupi acknowledged that from the time Northline Ceilings commenced business with Westgyp there was always a credit arrangement in place.[155]

1. 24 January 2007 Application for Credit Account

   [155] Exhibit 16A par 10.

1. The first such credit arrangement that was adduced in evidence was a credit application dated 24 January 2007.[156]  This 2007 credit application was signed by Mr Crupi as a director of Northline Ceilings.

   [156] Exhibit 1.1.

2. The 2007 credit application was a relatively unsophisticated document.  The document was headed 'Application for Credit Account'.  By the credit application Northline Ceilings applied for credit in the form of 30 day trading terms.  Applicants were asked to complete the document in full.  However, the estimated credit limit required was not completed by Northline Ceilings.  Other details were also omitted; for example, the company's date of incorporation and various trading details along with Mr Crupi's driver's licence number and Northline Ceilings' insolvency history.

3. The 2007 credit application was essentially in three parts.  First there was a section for completion of information by the applicant.  Second was the stipulated terms and conditions to be observed by the applicant for credit.  This was to be signed by all directors for and on behalf of the relevant corporate applicant.  Mr Crupi signed as director but did not complete the form by specifying that he was doing so for and on behalf of Northline Ceilings. Third there was a section headed 'Guarantee and Indemnity'.  Among other things, the guarantee and indemnity provided that the guarantor secured his or her liability under the credit application by charging all real property held or acquired while the guarantee and indemnity remained in force with payment under the guarantee and indemnity (cl 1(iv)). 

4. The form of the 2007 credit application did not provide any space for Westgyp to accept or approve the application.  Nor is there any notation of acceptance or approval on the 2007 credit application as completed by Northline Ceilings.

5. Mr Crupi signed the guarantee and indemnity under the 2007 credit application.

6. Mr Crupi gave evidence that, at the time, he was prepared to personally guarantee the obligations of Northline Ceilings to Westgyp.[157]  That appears self‑evident given the execution of the guarantee and indemnity component of the 2007 credit agreement.

   [157] Exhibit 16A par 12.

7. Mr Crupi also gave evidence that he had no recollection of receiving any notification or confirmation from Westgyp that the 2007 credit agreement had been received or approved.[158]  Mr Crupi was not cross‑examined on that evidence.  There was no suggestion in Mr Hudston's evidence-in-chief that Westgyp had a formal procedure in place whereby it informed applicants for credit that a credit application had been accepted.  The highest that the evidence got was that in cross‑examination Mr Hudston asserted that 'we would normally ring or send an email out'.[159]  No such email was adduced in evidence.  But, in any case, counsel for Mr Crupi established that any such notification or confirmation of approval was not done by Mr Hudston.  Mr Hudston had no personal knowledge of what was done beyond asserting that there was a procedure that was in place.[160]

   [158] Exhibit 16A par 13.

   [159] ts 52.

   [160] ts 52.

1. In the absence of any direct evidence on the part of Westgyp, and in circumstances where Mr Crupi was not cross‑examined on his recollection, I accept that neither Northline Ceilings nor Mr Crupi received any notification or confirmation from Westgyp that the 2007 credit application had been received or approved.

1. 9 December 2009 Application for Credit Account

1. It was common ground that the 2007 credit application was superseded by the 2009 credit application.[161]

   [161] Exhibit 1.4.

2. The 2009 credit application was a more sophisticated document than the 2007 credit application.  It was a four page document in three parts.  The cover page recorded that the instrument was an 'application for credit account'.  It required that the applicant 'please complete in full'.  A space was provided for the applicant's name.  Otherwise the cover page recorded that the credit account was for trading terms of 30 days net.

3. Like the 2007 instrument, the 2009 credit application then provided for the various details that the applicant was to insert (page 1), the trading terms and conditions (page 2) and a guarantee and indemnity (page 3).

4. The trading details were completed by Mr Crupi.  In terms of 'the applicant' he inserted his own name.  Then, however, he described the trading name of the applicant as 'Northline Ceilings Pty Ltd'.  A box was ticked indicating that the applicant was a 'sole trader' as distinct from a 'private co', although self‑evidently Northline Ceilings was the latter rather than the former.  As to the space for names and addresses of directors, however, Mr Crupi completed his name, address, date of birth and telephone number.  The estimated credit limit required was completed in the amount of $150,000.

5. The terms and conditions were signed by Mr Crupi as director.  The 2009 credit application stated that he did so for and on behalf of 'Northline Ceilings'.  Mr Crupi's signature was dated 9 December 2009.  The relevant terms and conditions of the 2009 credit application included the following:

   I/We agree:

   …

   5.That no goods will be ordered unless I/we have the capacity to pay invoiced price.

   …

   9.To pay any collection costs (including legal expenses and debt collection commissions) incurred in obtaining payment as an addition to my/our account on a solicitor/client indemnity basis; stamp duties and other expenses payable on these terms and conditions or any credit application, guarantee or other security documents signed by me/us, or on my/our behalf, together with any debt collection commission or costs or dishonoured cheque fees.

   …

   11.To keep the goods supplied by the Company in my control and not attempt to dispose of, or encumber them, other than in the usual course of business.

6. The guarantee and indemnity was also signed by Mr Crupi.  His signature was witnessed by Mr Hutton.  In his witness statement Mr Crupi gave evidence that Mr Hutton provided him with the 2009 credit application on 9 December 2009.[162]  Mr Crupi acknowledged signing the 2009 credit application both as director of Northline Ceilings and personally in respect of the guarantee and indemnity.  Mr Crupi said that at that time he had no difficulty in personally guaranteeing the obligations of Northline Ceilings to Westgyp.[163]

   [162] Exhibit 16A pars 15 ‑ 16.

   [163] Exhibit 16A par 17.

7. The guarantee and indemnity within the 2009 credit agreement provided:

   In consideration of the Company granting credit to me/us, the proprietors/directors described in this application declare and agree as follows:

   1.I/We the persons named and described in this Application guarantee either solely or, if more than one, jointly and severally, to pay the company all monies due and owing and to become due and owing from time to time in respect of credit given inclusive of costs in clause 9 of the Terms and Conditions above and agree to indemnify the Company against any loss of (sic) damages of whatsoever nature incurred by the Company as a result of me/us failing to pay the Company any moneys owing in respect of the supply of goods and service on credit and further agree:

   …

   (ii)That this guarantee and indemnity shall cover all my/our debts to the Company and shall continue in force until the debt is paid in full together with any other amounts due and written notice of termination is received by the Company from me/us from any liability under the guarantee and indemnity in respect of any supply of goods.

   …

   (vi)In order to secure my/our liability under this guarantee and indemnity I/we charge all our real property and (sic) the date of this deed and all real property acquired by me/us including but not limited to, that real property particularised in the Appendix to this guarantee, whilst this guarantee and indemnity remains in force with payment of any amount falling due under the guarantee and indemnity and I/we agree to execute any documents required by the Company to do all such things may be required by the Company to effect such security upon demand at any time.

   …

   (x)This guarantee and indemnity shall take effect as a Deed. 

8. As with the 2007 instrument, the 2009 credit application did not provide any space for Westgyp to accept or approve the application.  Nor is there any notation of acceptance or approval on the 2009 credit application as completed by Northline Ceilings.

9. The evidence did not disclose how the 2009 credit application was returned by Northline Ceilings to Westgyp.  However, it is common ground that the application was received by Westgyp after execution.  Westgyp relied on the 2009 credit application as grounding its primary claim.

10. As with the 2007 credit application, Mr Crupi gave evidence that he had no recollection of having received any confirmation or notification from Westgyp that the 2009 credit application had been received or approved.[164]  Mr Crupi was not challenged on that evidence.  Nor was any specific evidence adduced by Westgyp to suggest that Mr Crupi's recollection was incorrect.  In the circumstances I accept that Westgyp never informed Northline Ceilings that the 2009 credit application had been approved.

    [164] Exhibit 16A par 20.

11. After the execution and provision of the 2009 credit application Westgyp continued to supply plaster products to Northline Ceilings as it had before.

1. 30 March 2012 Application for Credit Account

1. The documents adduced in evidence included a 2012 credit application that was dated 30 March 2012.[165]

   [165] Exhibit 1.11.

2. As mentioned, there is a dispute as to whether the 2012 credit application was signed on 30 March 2012 and received by Westgyp shortly thereafter.  That dispute, and the evidence bearing on it, is addressed when answering Issue 1 below.  For now it suffices to record matters that are uncontroversial. 

3. In mid-March 2012 Northline Ceilings received a letter from Westgyp.[166]  The letter referred to changes at the company including growth from one store to three stores.  The letter went on to provide:

   As part of our expansion we need to review and update our trading terms and agreements.  I am enclosing our new Westgyp Plasterboard Trade Centres Credit Application Form which I will require to be completed in FULL.  It is very important that the document is completed and is independently witnessed.  This process on your part will be greatly appreciated and to avoid any disruptions of supply to your present credit facilities it needs to be done as soon as possible.  It is also a good time to review and update your current Credit Limit.

   Following on from receiving the new Credit Application, you will be contacted by a Westgyp Staff member to confirm that you are in receipt of the Credit Application Form and that it is completed in full, independently witnessed and ready for collection.

   We appreciate your good custom and we apologise for any inconvenience that this necessary measure for our Credit management may cause you.  Should you or your Accounts Payable require our assistance in completing the Credit Application Form then please contact either myself [a Roslyn Gosnell - of the Westgyp Accounts Department] or John Hutton … and we will be only too willing to assist. (emphasis added)

   [166] Exhibit 1.9.

4. Mr Hudston gave evidence in cross‑examination about the circumstances in which the letter dated 16 March 2012 was sent.  A similar letter was sent to all Westgyp customers providing the 2012 credit application for execution.[167]  CMSA had advised Westgyp that changes were required to its pro‑forma credit application.  In particular, it was considered necessary that Westgyp be entitled to charge interest on overdue accounts.[168]

   [167] ts 50.

   [168] ts 41 ‑ 44, 51, 53.

5. The 2012 credit application is a more formal instrument than either the 2007 credit application or the 2009 credit application.

6. Like the 2009 document the 2012 credit application commences with a cover page.  It is then in two parts.  First, a part headed 'Confidential Credit Application Form'; contained within that portion are the 'Credit Account Terms and Conditions'.  Second, a part headed 'Confidential Personal Guarantee and Indemnity Agreement'.  This latter part consists of two pages which have been struck through by Mr Crupi. 

7. The cover page to the 2012 credit agreement records that it is an 'Application for Credit' on a '30 day account'.  A box on the cover page provides instructions for completing and submitting the document:

Completing and Submitting this Document

For your application to be processed, ensure that you have completed and signed both parts of this document:  the Confidential Credit Application Form and the Personal Guarantee and Indemnity Agreement.

Return this document (completed, signed and witnessed) to Westgyp Pty Limited …

1. Similarly, at the commencement of the Confidential Credit Application Form and the Personal Guarantee and Indemnity Agreement there are boxes as follows:

Completing and Submitting this Document

Thank you for applying for credit facilities with Westgyp Pty Limited (ACN 121 180 630), 7 Corbusier Place, Balcatta, Perth WA 6021.  For your application to be processed, it is necessary to complete and sign both parts of this document: the Confidential Credit Application Form and the Personal Guarantee and Indemnity Agreement.  Return this document (completed, signed and witnessed) to Westgyp Pty Limited (ACN 121 180 630).

Important Note

As part of your application for credit, this Personal Guarantee and Indemnity Agreement must be completed and signed by all Directors, Sole Traders and Business Partners in the presence of Independent Witnesses (not Spouses or Family Members).

Spouses of all Directors, Sole Traders and Business Partners are requested to also sign as Guarantors in the presence of Independent Witnesses.

1. The section of the 2012 credit application comprised in the Confidential Credit Application Form extended over four pages. 

2. The first two pages comprised six sections within which information was to be inserted.  Section 1 dealt with applicant details.  Here it was recorded that the business operated as a 'Pty Limited/Limited Company'.  The name of the 'Business/Company' was given as 'Northline Ceilings'.  Section 2 was headed 'Companies, Sole Trader and Business Partnerships'.  There it was necessary to enter details for 'all Directors, Sole Traders and Business Partners'.  Mr Crupi entered his details.  He did so setting out his name, date of birth and residential address.  Mr Crupi also noted that his residence was owned rather than rented.  Section 3, seeking for details as to spouses, was struck through.  Sections 4, 5 and 6, dealing with trade references, history of solvency and financial details respectively, were completed. 

3. The Credit Account Terms and Conditions comprised in the Confidential Credit Application Form extended over two pages with the bulk of the terms and conditions appearing on the page 3 of the Confidential Credit Application Form.  Within those terms reference to the 'Customer' or 'Buyer' meant the party making the application for credit (ie Northline Ceilings).  The terms and conditions were to apply to credit extended by Westgyp and any of its related bodies corporate.  The trading terms were 30 days unless otherwise stated (cl 1(a)).  Importantly, cl 2 provided the following as to overdue accounts:

   (a) Any amount not paid by the due date will, at the discretion of the Supplier, be subject to interest charged at 1.5% per month calculated on a daily basis on any moneys due but unpaid.  Such interest will be calculated from the due date of payment.  The parties agree that this amount is a genuine pre‑estimate of the Supplier's damages and is not a penalty.

   (b)The Customer agrees to pay all the Supplier's reasonable costs & expenses, legal costs and any expenses incurred by the Supplier in connection with recovery of amounts overdue.

   (c)The Customer grants to the Supplier an express legal and equitable charge over the customer's freehold or leasehold property for the amount due on overdue accounts.  The Customer agrees to deliver to the Supplier, within seven (7) days of demand, a properly executed Memorandum of Mortgage in a form approved by the Supplier and which includes a covenant providing that interest may be charged on all outstanding monies at the rate of 1.5% per month calculated on a daily basis on any monies due but unpaid.  Such interest will be calculated from the due date of payment.

   (d)The Company and/or individual person(s) referred to in Section (1) and/or (2) of this application hereby Charge all their Right, Title, Interest (if any) in the property or properties referred to in Section (1) and (2) of this application and also any property or properties that they own currently or may acquire in the future solely or jointly or have or become to have a beneficial interest in, in favour of Westgyp, with the due and punctual observance and performance of all of the obligations of the Customer/Buyer.  Such person(s) acknowledge that Westgyp may at its discretion register and lodge a Caveat(s) on such property or properties in respect of the interests conferred on it under this, clause.  Such registration of a Caveat by Westgyp over the Customer(s) property or properties shall not be challenged by the Customer/Buyer in any way whatsoever, and the Buyer agrees not to take any steps in filing a 'Lapsing Notice' via Landgate to have the Caveat removed, until such time the Buyer has paid all moneys owing by it to Westgyp as claimed from time to time. (emphasis added)

4. Space was provided for applicant signatures.  Under a heading to that effect the following appears:

   Application is hereby made for a credit account.  I agree to be bound by the above terms, and consent to the terms under the Privacy Act 1988, as detailed in Clause 5 of the terms and conditions above.  I acknowledge that the Supplier might in future acquire additional subsidiaries, which may supply Goods to me on credit, and I agree that the above terms will apply to the purchase of those Goods.

5. The Confidential Credit Application Form then directed that all directors, sole traders and business partners were to sign below.  The signature was to occur in front of an 'Independent Witness'.  This was described as not being a spouse or family member.  Mr Crupi has signed the Confidential Credit Application Form at the space indicated for signature by all directors, sole traders and business partners.  The document is dated 30 March 2012.  It is witnessed by John Hutton.  Mr Hutton has also dated the document as 30 March 2012.

6. Mr Hutton's name also appears, in his handwriting, on page 1 of the Confidential Credit Application Form.  It appears opposite a box in which he has completed the 'Application Date' of 30 March 2012.  Mr Hutton's name appears as the relevant 'Sales Representative' from the Balcatta branch.  His mobile telephone number is noted.

7. In cross-examination Mr Hudston recognised the number as possibly being a Westgyp number.[169]  Mr Hutton confirmed that the number was a Westgyp telephone number.[170]  Mr Hutton also gave evidence, which I accept, that he did not retain his Westgyp mobile telephone or his Westgyp telephone number (the one on the 2012 credit application) when he left Westgyp's employment in October 2012.[171]

   [169] ts 53.

   [170] ts 217.

   [171] ts 238.

8. Unlike the 2009 credit application there is no express recognition that the directors, sole traders and business partners sign for and on behalf of any other person.  Mr Crupi has simply signed his name without specifying that he signed for and on behalf of Northline Ceilings.

9. The remaining part of the 2012 credit agreement consisted of the two pages that comprise the Confidential Personal Guarantee and Indemnity Agreement.  As mentioned, it has been struck through.  On the first page the striking out is effected by a series of intersecting diagonal lines.  On the second page there is only a series of parallel lines running from bottom to top.

10. The Confidential Personal Guarantee and Indemnity Agreement was designed to be executed as a deed.  Directly above the space for signature before an independent witness there was a heading stating in capitals 'All Guarantors and Independent Witnesses Sign Below' with a box as follows:

Signing of Personal Guarantee and Indemnity ‑ all Directors, Sole Traders, Business Partners and any other Guarantors.

All Directors, Sole Traders and Business Partners and any other Guarantors complete and sign below as Guarantors in the presence of Independent Witnesses (not Spouses or Family Members).

Spouses of all Directors, Sole Traders and Business Partners are requested to also sign as Guarantors in the presence of Independent Witnesses.

1. The agreement contained a certification that the guarantor had read the terms of the Personal Guarantee and Indemnity Agreement and understood its terms.  In particular, an understanding was expressed to the effect that if the 'Customer' failed to make any required payment, Westgyp may recover the amount of the payment from the guarantor personally.  There was also confirmation that the guarantor understood that Westgyp may, among other recovery rights, take a charge over any real property that the guarantor had a legal or equitable interest in.

2. The terms of the Confidential Personal Guarantee and Indemnity Agreement were consistent with the understandings as so expressed.  The terms recorded that the guarantor had requested Westgyp to supply goods on credit to the 'Customer' (as the Confidential Personal Guarantee and Indemnity Agreement was struck through the relevant 'Customer' was not identified).  However, a space appeared at which the applicant was to insert the relevant business or company name.  The Confidential Personal Guarantee and Indemnity Agreement went on to provide that if Westgyp elected to provide the Customer with goods on credit then:

   1.I [the guarantor] will indemnify the Supplier against any losses, costs, charges and expenses of any nature, which it might incur as a result of any default by the Customer or arising under this Guarantee

   2.I will also be responsible to the Supplier for all outstanding monies due now or at any time in the future for Goods supplied by the Supplier to the Customer from time to time.

   …

   The Guarantor hereby agrees to charge all the equitable interest in freehold or leasehold property.  The Guarantor agrees to deliver to the Supplier, within seven (7) days of demand, a properly executed Memorandum of Mortgage in a form approved by the Supplier and which includes a covenant providing that interest may be charged on all outstanding monies at the rate of 1.5% per month calculated on a daily basis on any monies due but unpaid.  Such interest will be calculated from the due date of payment.

   9.The Company and/or individual person(s) referred to in Section (1) and/or (2) of this application hereby Charge all their Right, Title, Interest (if any) in the property or properties referred to in Section (1) and (2) of this application and also any property or properties that they own currently or may acquire in the future solely or jointly or have or become to have a beneficial interest in, in favour of Westgyp, with the due and punctual observance and performance of all of the obligations of the Customer/Buyer.  Such person(s) acknowledge that Westgyp, may at its discretion register and lodge a Caveat(s) on such property or properties in respect of the interest conferred on it under this clause.  Such registration of a Caveat by Westgyp over the Customer(s) property or properties shall not be challenged by the Customer/Buyer in any way whatsoever, and the Customer/Buyer agrees not to take any steps in filing a 'Lapsing Notice' via Landgate to have the Caveat removed, until such time as the Customer/Buyer has paid all monies owing by it to Westgyp as claimed from time to time.

   If the charge created by this clause is or becomes void or unenforceable, it may be severed from this agreement without any effect on it's (sic) validity; and the Guarantor will not exonerated in whole or part.  Nor will the Supplier's rights, remedies or recourse against the Guarantor or any other Guarantor in any way be prejudiced or adversely affected by such a severance.

1. In closing counsel for Mr Crupi pointed out the oddity of Westgyp's position: Westgyp's primary case was that the 2012 credit application was a fabrication; but, if the court found it was not and instead had contractual effect, Westgyp sought to rely on its terms.[305]

   [305] ts 249.

2. I accept that Westgyp's position is somewhat curious.  But that does not mean that Westgyp is precluded from advancing its alternate case based on cl 2(d).  To the contrary, Issue 1 having been determined in favour of Mr Crupi, the 2012 credit application governed supply of products by Westgyp to Northline Ceilings.  It is plainly open to Westgyp to argue that, properly construed, cl 2(d) of the Credit Account Terms and Conditions nevertheless means that Mr Crupi is personally liable for the outstanding debt in relation to the plaster product supplied by Westgyp to Northline Ceilings.

3. Westgyp, by its counsel, observed that in signing the 2012 credit application Mr Crupi did not signify whether he did so for Northline Ceilings, for himself, or for both Northline Ceilings and himself.  Attention was directed to the terms of cl 2(d).  The reference to 'the Company … in Section (1)' was to Northline Ceilings.  But the additional reference to 'and/or individual person(s) referred to in Section … (2)' was said to be a reference to Mr Crupi, whose name and details appeared in Section 2.  And in its terms cl 2(d) referred to the charging of 'their' (ie parties plural) right, title and interest in the properties referred to in Sections 1 and 2 - one of which was a residential address apparently owned by Mr Crupi.  The juxtaposition of those who granted the charge (ie 'the Company and/or the individual person(s) referred to in Section (1) and/or (2)') and the obligations secured by the charge (ie 'the obligations of the Customer/Buyer') was said to be of significance.

4. Counsel for Westgyp also drew my attention to a number of cases in which similar clauses in a supply contract had been held to make a director liable as a principal debtor concurrently with the corporate entity of which he was a director.

5. Little can be derived from those cases.  They turn on the specific terms of the provision at issue in the prevailing factual context.  For example, in Crane Distribution Ltd v Yang[306] the signatory, jointly and severally with the incorporated body, expressly accepted liability to the supplier for payment as principal debtor of all money owed by the incorporated body to the supplier from time to time.  The wording of the clause was quite different to the terms of cl 2(d).  However, the operative clause in Coast Reo Pty Ltd v O'Brien[307] was very similar to cl 2(d).  Lloyd AJ placed considerable weight on the circumstance that the charging clause referred not only to the incorporated purchaser but also the individual persons mentioned in the preliminary sections of the credit application who also agreed to charge their interests in any property they owned.[308]  But in that case the relevant preliminary section to the application required '[p]articulars of all parties' to the facility; Lloyd AJ thus identified an intention that those individuals named were to be parties to the agreement.[309]  There is no equivalent wording in Section 2 of the 2012 credit application.

   [306] Crane Distribution Ltd v Yang [2016] NSWSC 620. See the discussion at [22] - [39].

   [307] Coast Reo Pty Ltd v O'Brien [2006] NSWSC 1098. See the discussion at [6] - [22].

   [308] Coast Reo Pty Ltd v O'Brien [21] - [22].

   [309] Coast Reo Pty Ltd v O'Brien[20].

6. Also, as counsel for Mr Crupi submitted, in neither case did the natural party signatory deliberately strike through the terms of the guarantee and indemnity associated with the credit application.  In both cases there was simply non-execution of the guarantee.

7. Counsel for Mr Crupi submitted that, on its proper construction, cl 2(d) was not an obligation assumed by Mr Crupi personally and thus did not constitute a charge that affected real property in which he held an interest.[310]  Counsel emphasised that Mr Crupi had self-evidently eschewed any personal liability by striking through the Confidential Personal Guarantee and Indemnity Agreement.[311]

   [310] ts 263.  See generally at ts 263 - 267.

   [311] ts 30, 263, 265 - 266.

8. Essentially the submission was that, in signing the 2012 credit application, Mr Crupi did not manifest an objective intention to be personally bound; and thus he was not a party to the agreement as constituted by the 2012 credit application.

9. Counsel for Mr Crupi otherwise accepted that if Mr Crupi was personally a party then cl 2(d) was in the nature of a charging clause.[312]  Accordingly, the contest between the parties was whether the terms of the Confidential Credit Application Form, in particular cl 2(d) of the Credit Account Terms and Conditions, bound Mr Crupi in his personal capacity.  More specifically it was whether Mr Crupi's signature on the Confidential Credit Application Form was a signature both for Northline Ceilings and for Mr Crupi personally, or alternatively, just for Northline Ceilings.

   [312] ts 267.

10. The question of the capacity in which a person signed a document, like issues of construction in the strict sense, is determined by assessing objective intention on a construction of the document as a whole, in light of the surrounding circumstances to the extent to which such evidence is admissible.[313]  As concerns a commercial document, any question of the capacity in which a person signs must be considered in the relevant commercial setting.[314]

    [313] Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd (1989) 21 NSWLR 160, 174.

    [314] Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd(1985) 9 ACLR 909, 923.

11. The inquiry is not limited to consideration of the signature and any qualification to it.  As was said in Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd:

    Whether a contract has been made, just as the meaning of a contract when made, is to be determined by seeking objectively the intention of the putative parties or parties; that must be so whether the question is whether a contract was made between A and B, whether a contract was made between A and B or A and C, or whether a contract was made between A and B in addition to A and C. To look only at the signature and any qualification thereto, whilst claiming to seek the objective intention of the parties, would be to throw overboard other possible factors relevant to showing that intention.[315]

    [315] Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd (174).

12. In relation to the 2012 credit application the question of objective intention is not immediately obvious.

13. In part this is because the drafting of the 2012 credit application leaves much to be desired.  It does not exhibit the same sort of 'principal debtor' clause as was found in Crane Distribution Ltd v Yang.  In addition, concepts within the instrument are not dealt with consistently.  The applicant for credit is sometimes referred to as the 'Applicant'.  At other times the party making the application for credit is the 'Customer' or the 'Buyer'.  And elsewhere, particularly in cl 2(d), there is reference to the 'Company' in possible contradistinction to the Customer or the Buyer.  Finally, there are four separate charging clauses: cl 2(c) (here arguably confined to existing interests); cl 2(d); cl 8 of the Confidential Personal Guarantee and Indemnity Agreement (arguably confined to existing equitable interests); and cl 9 of the Confidential Personal Guarantee and Indemnity Agreement (which, on its face, largely reproduces the language used in cl 2(d)).

14. I accept, given these matters and the matters raised by counsel for Westgyp and Mr Crupi, that there is ambiguity as to the capacity in which Mr Crupi signed the 2012 credit application.  In deciding the capacity issue it is therefore permissible to have regard to the surrounding circumstances.

15. One such surrounding circumstance is the non-execution of the Confidential Personal Guarantee and Indemnity Agreement.  Indeed, its non-execution and positive striking out, objectively indicative of an intention on the part of Mr Crupi not to be bound by its terms, is likely to be something to which regard could be had even absent ambiguity.  Had both the Confidential Credit Application Form and the Confidential Personal Guarantee and Indemnity Agreement been executed (as was contemplated by the 2012 credit application) they would have been read together for the purpose of ascertaining their proper construction and legal effect.[316]  Conversely, in construing clause 2(d), and in assessing the capacity in which Mr Crupi signed the 2012 credit application, it must be permissible to have regard to the circumstance that Mr Crupi unequivocally refused to accept the obligations under the Confidential Personal Guarantee and Indemnity Agreement.

    [316] EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23 [104].

16. The non-execution of the Confidential Personal Guarantee and Indemnity Agreement assumes additional importance because of the presence of cl 9 within it.  Clause 9 is in virtually identical terms to cl 2(d) of the Credit Account Terms and Conditions (refer to pars 142 and 151 above).  Objectively, it defies logic that Mr Crupi would refuse to accept the obligation under cl 9 of the Confidential Personal Guarantee and Indemnity Agreement but nevertheless pick up the same liability under cl 2(d) of the Credit Account Terms and Conditions.  Thus, if it is assumed that Westgyp is correct in its construction of cl 2(d) - as to which see pars 291 - 294 below - the non-execution of the Confidential Personal Guarantee and Indemnity Agreement is incompatible with an objective intention by Mr Crupi to be personally bound by the 2012 credit agreement.

17. The following matters are also relevant to the capacity issue:

    (1)The applicant for credit is undoubtedly Northline Ceilings.

    (2)Section 1 of the details on page 1 of the 2012 credit application identifies that Northline Ceilings is a company.

    (3)Section 2 of the details on page 1 of the 2012 credit application was completed by Mr Crupi as a director of Northline Ceilings.  The heading to section 2 refers to 'Companies, Sole Traders and Business Partnerships'.  That is broadly reflective of the types of businesses referred to in Section 1.  Section 2 then requires entry of all details for 'Directors, Sole Traders and Business Partners'.  It is only as director that Mr Crupi's details are required.

    (4)Sections 4, 5 and 6 of the details on page 1 of the 2012 credit application only sought information as to Northline Ceilings as applicant.

    (5)The preamble to the Credit Account Terms and Conditions refers to 'your signed application', ie the applicant's signed application.  Prima facie that suggests that the signature on page 4 is for the applicant - the 'party' making the application, being the Customer or the Buyer.

    (6)Mr Crupi's signature on page 4 appears over the heading 'APPLICANT SIGNATURE/S' and the notation that 'ALL DIRECTORS, SOLE TRADERS AND BUSINESS PARTNERS SIGN BELOW'.  Prima facie that suggests that: (a) the signature that follows is for the applicant; and (b) Mr Crupi is signing as a director for and on behalf of Northline Ceilings as an applicant company.

    (7)The text below the heading 'APPLICANT SIGNATURE/S' and above Mr Crupi's signature refers to application being made for a credit account.  The text uses the term 'I' and provides that 'I agree to be bound by the above terms'.  In context the 'I' is Northline Ceilings as the applicant, not Mr Crupi.  That is manifest insofar as the text refers to the 'supply [of] Goods to me on credit' and agreement that the terms will apply to the purchase of those goods.  Only Northline Ceilings as the applicant is applying for credit and purchasing goods.

    (8)The signing page to the Confidential Personal Guarantee and Indemnity Agreement differs from that to the Confidential Credit Application Form.  It provides for execution as a deed and refers to 'Personal Guarantee' and 'Guarantors' on a number of occasions.  The personal capacity in which the instrument is to be signed is self-evident.  That conclusion is fortified by: (a) the use of the personal pronoun 'I' throughout the Agreement to Terms of the Personal Guarantee and Indemnity; and (b) the acknowledgment that Westgyp may recover 'payments from me personally'.

18. It is also relevant that the operative components of the 2012 credit application are in two parts.  Apart from cl 2(d), the effect of which is considered further below at pars 291 - 294, the Confidential Credit Application Form and its Credit Account Terms and Conditions is concerned with the primary liability of the applicant for credit.  It is the Confidential Personal Guarantee and Indemnity Agreement which provides for the liabilities of persons other than the applicant for credit.

19. Accordingly, the surrounding circumstances, and these aspects of the text and structure of the 2012 credit agreement, are consistent with an objective intention on the part of Mr Crupi to sign the 2012 credit agreement solely in his capacity as director of Northline Ceilings rather than personally.

20. Westgyp's case to the contrary was heavily reliant on the terms of cl 2(d) of the Credit Account Terms and Conditions.

21. I have already recorded how Westgyp invited me to read cl 2(d).  Westgyp contended that 'Company' referred to Northline Ceilings but that the 'individual person … referred to in Section … (2)' referred to Mr Crupi (his details having been specified in Section 2).  That submission has a superficial attraction.  But it overlooks that the 2012 credit application is a standard form document that seeks to cater for the variety of trading structures that Westgyp may encounter in its business dealings.  When that is recalled the reference in cl 2(d) to '[t]he Company and/or individual person(s) referred to in Section (1) and/or (2) of this application' takes on a different complexion.

22. The Section 1 details as required by the 2012 credit application are those details relevant to the business of the applicant.  The applicant might not be a company; it may be a partnership (referred to in Section 1 by the firm or business name) or a sole trader (who might also be referred to by a business name in Section 1).  In either case the Section 2 details are then required for those persons in their capacity as an applicant.  Clause 2(d) of the Credit Account Terms and Conditions is then to be read conformably with that structure.  Where the applicant is a company its details are those referred to in Section 1.  But for partnerships or sole traders - where the applicant includes a natural person - the details are found in Section 2.

23. Approaching cl 2(d) in this way does not ignore the subsequent reference within cl 2(d) to the 'Customer/Buyer' (as was said to have significance).  As the applicant, the company or individual person referred to in Section 1 or 2 is one and the same person as the Customer and Buyer.  This reading of cl 2(d) better accommodates the final sentence of the clause which restricts challenges to lodgement of a caveat - but only by the 'Customer/Buyer'.  That suggests that it is the applicant for credit who is caught by cl 2(d).

24. Read in this way cl 2(d) is consistent with the remainder of the Confidential Application Form.  Clause 2(d) is to be read down as being confined in its application to the relevant applicant - who is sometimes the company referred to in Section 1 and sometimes an individual person or persons as referred to in Section 2.  Such a construction of cl 2(d) renders it consonant with the other aspects of the text and structure of the 2012 credit agreement.  It is the construction that is to be preferred so far as it reads cl 2(d) as part of the 2012 credit agreement as a whole and renders the various parts of the instrument harmonious.

25. In coming to this conclusion I have had regard to the circumstance that essentially the same words are used in cl 9 of the Confidential Personal Guarantee and Indemnity Agreement.

26. Westgyp did not raise this as having implications for the proper construction of cl 2(d) of the Credit Account Terms and Conditions.  There are two answers to a contention that cl 2(d) ought not be read down to the applicant for credit insofar as the same words are used in cl 9 of the Confidential Personal Guarantee and Indemnity Agreement.  First, the Confidential Personal Guarantee and Indemnity Agreement was not executed; there is no actual incongruity.  Second, while the same words are used in cl 9 of the Confidential Personal Guarantee and Indemnity Agreement they cannot have the same meaning.  This is a commercial instrument and it must be given a commercial meaning.  It is a commercial nonsense for an applicant, who has a primary liability for the purchase price of the goods supplied by Westgyp, to also assume a secondary liability by way of guarantee and indemnity.  In cl 9 the reference must be to parties named, and executing as guarantor, who are not an applicant.

27. For these reasons I conclude that, on its proper construction, cl 2(d) of the Credit Account Terms and Conditions within the Confidential Credit Application Form is not an obligation assumed by Mr Crupi personally; it does not constitute a charge that affects real property in which Mr Crupi holds an interest.  Having regard to the surrounding circumstances, and the text and structure of the 2012 credit application read as a whole, Mr Crupi signed solely as a director of Northline Ceilings and not in a personal capacity.  In the absence of an objective common intent that Mr Crupi was to be personally bound he is not a party to the 2012 credit application.

28. Issue 2(b) is also disposed of in favour of Mr Crupi, ie in the negative.

1. Issue 3: Assuming, however, that no agreement in terms of the 2012 credit application, does the guarantee and indemnity under the 2009 credit application continue to apply to the post-30 March 2012 supply of goods?

1. Issue 3 does not arise.  I have disposed of Issue 1 in favour of Mr Crupi.  Westgyp and Northline Ceilings did enter into an agreement in terms of the 2012 credit application and the terms of the 2012 credit application govern the supply of goods by Westgyp to Northline Ceilings so far as the outstanding debt is concerned.  For the reasons given in answer to Issue 2(a) the guarantee and indemnity under the 2009 credit application do not apply to product supplied under the terms of the 2012 credit application.

1. Issue 4: Did Joe Crupi engage in actionable misleading or deceptive conduct in contravention of s 18 of the ACL?

1. The misleading conduct claim was described as an 'alternate claim'.[317]  It was alleged that Mr Crupi had falsely represented to Westgyp that its products were being supplied to Northline Ceilings and used by Northline Ceilings in its business.  At trial it was common ground that in fact the relevant goods were on‑supplied to NCCP for use in NCCP's business.  Accordingly, if there was such a representation on the part of Mr Crupi, falsity was established.

   [317] Plaintiff's Submissions par 38.

2. The contested issues on the misleading conduct claim were:

   (1)Whether Mr Crupi engaged in the impugned conduct as pleaded, ie did Mr Crupi make the alleged representation as pleaded?[318]

   (2)If so, was the representation relied on by Westgyp in the sense that it induced Westgyp to supply its products on credit at the request and direction of Mr Crupi?[319]

   (3)What loss or damage, if any, did Westgyp suffer because of the representation?[320]

   [318] Statement of Claim par 11.

   [319] Statement of Claim par 13.

   [320] Statement of Claim par 15.

3. As an initial answer to whether he made the alleged representation, Mr Crupi said that Mr Hudston, for Westgyp, had agreed at a meeting in January or February 2015 that Northline Ceilings could order plaster products for use by NCCP.[321]  Self‑evidently, if that was the case, there could be no representation as pleaded by Westgyp.  Joe Crupi gave evidence in support of the supposed agreement.[322]  That evidence was corroborated by Nathan Crupi.[323]  Mr Hudston denied that there was ever any such discussion, saying that he was unaware of NCCP's very existence until after the proceedings were commenced.[324]

   [321] Defence par 8.4.

   [322] Exhibit 16A pars 48 ‑ 53; ts 162 ‑ 163, 206.

   [323] Exhibit 23 pars 12 ‑ 13; ts 241 - 242.

   [324] Exhibit 3A par 19; Exhibit 3B par 11; ts 79, 82, 84 ‑ 85.

1. For the reasons given earlier I am not prepared to accept Joe Crupi's evidence on contested issues without corroboration.  Accordingly, I turn first to examine whether I should accept Nathan Crupi's evidence.

2. Nathan Crupi's evidence by witness statement was that:

   Around the time NCCP was awarded the contracts by Diploma, in early 2015, I remember Matt attending our office to speak to my father. 

   I was brought into the conversation and was told that Matt had agreed to supply [Northline Ceilings] with goods that would then be passed onto NCCP at no further cost.  There was a handshake by the three of us.  At no point throughout the discussion was there any mention of a credit application.[325]

   [325] Exhibit 23 pars 12 ‑ 13.

3. When questioned in cross‑examination as to what exactly Mr Hudston had said, Nathan Crupi's answer sounded well‑rehearsed.[326]  Nathan Crupi sought to justify his recollections by what had been written in his witness statement rather than what he recalled.[327] 

   [326] ts 241 - 242.

   [327] ts 242.

4. I give little weight to what was said by Nathan Crupi in his witness statement.  For example, while in his witness statement Nathan Crupi referred to conversations with Mr Hudston in which he, Nathan Crupi, and his father told Mr Hudston that Diploma was delaying payment to NCCP, and this was resulting in the late payment of NCCP's creditors including Westgyp,[328] this is not what was said in cross‑examination.  In cross‑examination Nathan Crupi said that he did not speak with Mr Hudston about the outstanding debt.[329]

   [328] Exhibit 23 par 24.

   [329] ts 242 - 243.

5. I have concluded on the balance of probabilities that there was never any conversation, in early 2015 or at all, in which Mr Hudston was informed by Joe Crupi that it was intended that Northline Ceilings would pass on to NCCP plastering products as ordered from Westgyp. 

6. To the extent that Nathan Crupi gives evidence that there was such a conversation I reject that evidence.  I do so based on two matters.

7. The first reason for rejecting Nathan Crupi's evidence is the rehearsed way in which Nathan Crupi gave his evidence when questioned about the alleged agreement in cross‑examination.  Nathan Crupi was asked the direct question: 'What exactly did Mr Hudston say?'[330]  Nathan Crupi was unable to provide a responsive answer as would have been the case had he had an actual recollection of the alleged conversation.  Instead Nathan Crupi simply paraphrased what was in his witness statement (that document being before him at the time).

   [330] ts 241.

8. The second reason for rejecting Nathan Crupi's evidence is the unreliable and inconsistent nature of Nathan Crupi's evidence in other respects.  I have already mentioned one difference between Nathan Crupi's evidence in his witness statement and the oral evidence given in cross‑examination.  To that should be added Nathan Crupi's inability to recall that NCCP, a company of which he was the sole director, was wound up voluntarily by its creditors.[331]  The inability on the part of Nathan Crupi to recall any of the creditors to whom NCCP owed money[332] was also incredible.  It demonstrated a lack of any true engagement on the part of Nathan Crupi.

   [331] ts 244.

   [332] ts 244 ‑ 245.

9. It is also relevant that the sort of arrangement the Crupis say Mr Hudston agreed to is contrary to the terms of both the 2009 credit application (Terms and Conditions cl 11) and the 2012 credit application (Credit Application Terms and Conditions cl 4).  The efficacy of the retention of title clause would have been impaired by the arrangement.  In those circumstances it is inherently unlikely that Mr Hudston would have agreed to the proposal. 

10. I therefore accept Mr Hudston's evidence to the effect that the existence of NCCP was never disclosed to him.

11. Had the suggested arrangement been raised with Mr Hudston in early 2015 it is more likely than not that Mr Hudston would have insisted on completion of a credit application on the part of NCCP.  That is what had occurred in similar circumstances in 2007.  Mr Hudston gave evidence that in December 2007 Nathan Crupi and his sister, Bianca Crupi, made a credit application on behalf of an unregistered business.  An ASIC search of NCCP shows that Nathan Crupi was born in November 1990;[333] as at December 2007 he was only 17.  However, the application was supported by a guarantee and indemnity executed by Joe Crupi.  The application was approved and the product was supplied.[334]

    [333] Exhibit 1.53.

    [334] Exhibit 3B par 12.

12. While I have rejected Mr Crupi's defence to the effect that the existence of NCCP was disclosed to Mr Hudston and Mr Hudston agreed to Northline Ceilings on-supplying NCCP, that does not mean that the misleading conduct claim is disposed of in favour of Westgyp.  It remains necessary for Westgyp to establish its pleaded case.

13. The difficulty here is that Westgyp's pleaded case was predicated on it establishing that Mr Crupi ordered the products that were supplied by Westgyp on the credit account of Northline Ceilings.  This follows from par 11 of the statement of claim:

    By making orders to [Westgyp] for products on credit in circumstances where:

    a.the goods that were supplied by [Westgyp] on credit were used by [NCCP]; and

    b.by failing to inform [Westgyp] that the products were being utilised by [NCCP],

    [Mr Crupi], in effect, represented to [Westgyp] that [Westgyp's] products were being supplied to [Northline Ceilings] for use by [Northline Ceilings] in its business (the Representation). (emphasis added)

14. The 'Representation' as pleaded was the conduct that was alleged to have been misleading or deceptive in contravention of s 18 of the ACL.[335]  It was the conduct in the form of the Representation that was falsified and which was said to have induced Westgyp to have supplied its products.  Since at least Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd[336] legal practitioners have been well aware of the necessity to clearly identify the conduct said to be misleading or deceptive.  Here the pleaded conduct was of an alleged Representation by Mr Crupi said to be have been conveyed by the ordering of products in circumstances where it was not disclosed that the products were being used by NCCP.  It was necessary for Westgyp to establish that the Representation as pleaded was conveyed by that alleged conduct on the part of Mr Crupi - including the making of orders to Westgyp in the circumstances as pleaded.

    [335] Statement of Claim pars 12, 14, 15.

    [336] Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357 [5]. See also Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 [32].

15. As to the post-11 September 2015 ordering of product from Westgyp, Westgyp pleaded that Mr Crupi ordered the products, or alternatively, authorised the orders of the products.[337]  The latter was admitted.[338]  But the former, ie whether Mr Crupi ordered the products, was in issue and - as addressed in pars 154 - 161 above - has been resolved against Westgyp.  There was no evidence that Mr Crupi had himself placed the orders.

    [337] Statement of Claim par 7.

    [338] Defence par 8.2.

16. The alleged actionable representation on the part of Mr Crupi is based on him, among other things, making orders to Westgyp.  It not being established that Mr Crupi ordered the products, the misleading conduct case must fail.  Westgyp has failed to establish that Mr Crupi engaged in the impugned conduct as pleaded.  Westgyp has not established that Mr Crupi, by making orders to Westgyp for products on credit in the circumstances as pleaded in par 11 of the statement of claim, made the alleged representation as pleaded.

17. In closing counsel for Westgyp accepted that no accessorial liability case was advanced against Mr Crupi.[339]  After referring to par 7 of the statement of claim it was said that par 11 of the statement of claim ought to have pleaded that the representation arose by Mr Crupi making the orders or authorising the making of the orders; however, it was accepted this was not the pleaded case.[340]  Later it was said that the relevant conduct was not the actual act of undertaking the ordering but rather the non-disclosure that the goods were being used by NCCP.[341]  That is not the pleaded case.

    [339] ts 285.

    [340] ts 286.

    [341] ts 286.

18. The further difficulty with that submission was that in opening counsel for Westgyp had accepted that the misleading conduct case was not one of misleading conduct by silence in the pure sense.[342]  Rather, consistent with the pleaded case, in opening Westgyp said that, in context - including the ordering of product on the Northline Ceilings account - a representation was conveyed[343] that amounted to misleading conduct on the part of Mr Crupi.  Indeed, even after articulating the wider basis on which the impugned conduct was identified counsel for Westgyp accepted - correctly in my opinion - that Westgyp's reliance case could 'only be on the basis of … Mr Crupi's conduct'.[344]

    [342] ts 19 - 20.

    [343] ts 19 - 20.

    [344] ts 287.

19. Having regard to Westgyp's pleaded case, and the manner in which the misleading conduct claim was advanced in opening, I consider that if the representation as pleaded is to be found as conduct attributable to Mr Crupi it was necessary for Westgyp to establish that Mr Crupi ordered the products.  Westgyp did not do so.  I do not accept that Westgyp should be allowed to depart from its pleaded case and Westgyp never expressly invited me to do so.  But even if, as suggested in closing, par 11 of the statement of claim had raised the admitted conduct that Mr Crupi authorised others to make the orders, I would not accept that the Representation as alleged was conveyed.  The alleged Representation does not arise from mere authorisation coupled with non-disclosure that the products were to be used by NCCP.

20. Accordingly, Westgyp's misleading conduct case fails on the first sub-issue.  Westgyp has not established that Mr Crupi, through his conduct, represented to Westgyp that its products were being supplied to Northline Ceilings and used by Northline Ceilings in its business.

21. It is unnecessary to address the other sub-issues.

22. For completeness, however, had there been conduct attributable to Mr Crupi that conveyed the representation as pleaded, there was a prima facie basis for finding that Westgyp's reliance case was made out.  Mr Hudston gave evidence that he understood the Diploma contract was with Northline Ceilings and had he known the actual contracting party was NCCP he would have stopped supply until approval of a credit application as submitted by NCCP.[345]  I accept that evidence.  It is consistent with what occurred in December 2007 as to the supply to the unregistered business conducted by Nathan Crupi and his sister.  In those circumstances, while the question is hypothetical and there was no direct evidence from Mr Hudston as to relying on particular conduct on the part of Mr Crupi, had there been such a representation it would have been materially likely to induce Westgyp to supply the product as requested - thus materially contributing to the loss suffered on Northline Ceilings' failure to pay.

    [345] ts 38.

23. I am also satisfied that the loss is properly quantified in terms of the unpaid price.  Had a credit application been made by NCCP it is likely that Mr Crupi would have had to provide a personal guarantee.  In those circumstances there is nothing to suggest that the debt would not have been paid in full.  In any case, to the extent that Mr Crupi is unable to pay, that is something that would no doubt become self‑evident in the enforcement process.  To the extent that Westgyp's damages ought to be confined, because of a lack of capacity on the part of Mr Crupi to pay, as a practical matter Westgyp will not be able to recover more than that which is available to Mr Crupi.

24. Nevertheless, based on Westgyp's pleaded case I have concluded that Westgyp has not established that Mr Crupi, through his conduct, represented to Westgyp that its products were being supplied to Northline Ceilings and used by Northline Ceilings in its business.  The misleading conduct case fails.  Issue 4 is resolved in the negative in favour of Mr Crupi.

1. Issue 5(a): Are collection agency and caveat costs recoverable?

1. The outcomes on Issues 1, 2(a) and 2(b) are determinative of Issue 5(a).  Westgyp sought to recover $87,974.85 as debt collection costs and $4,950 as to the costs of the lodgement of its caveats.  As pleaded those costs were sought under cl 9 of the guarantee and indemnity in the 2009 credit application.[346]  That creates an insurmountable difficulty for Westgyp insofar as I have resolved Issues 1 and 2(a) against it.

   [346] Statement of Claim pars 17, 18.

2. In any case, as to the debt collection costs, these were costs purportedly incurred (but not yet paid) with CMSA.  CMSA was never a licensed debt collector under the Debt Collectors Licensing Act 1964 (WA). Accordingly, it was not entitled to sue for or recover any commission or other remuneration for or in respect of any service as a debt collector.[347]  In those circumstances, in closing, counsel for Westgyp informed me - quite properly, in my view - that this aspect of the claim was no longer pressed.[348]

   [347] Debt Collectors Licensing Act 1964 (WA) s 13.

   [348] ts 289.

3. The same difficulty may arise as to the caveat costs.  The costs for lodgement of the caveats were paid by Westgyp to CMSA.  But the more fundamental difficulty in relation to the caveat costs is that the claim was made by reference to the 2009 credit application and I have found that the terms of the 2009 credit application do not apply.

4. I acknowledge that cl 2(b) of the 2012 credit application provides for an agreement to pay reasonable costs and expenses incurred in connection with the recovery of amounts due.  However, Westgyp never sought to amend its statement of claim to rely on cl 2(b) of the 2012 credit application (although cl 2(b) was referred to at trial by counsel for Westgyp).[349]  There is a difficulty in relying on it now in circumstances where it was never pleaded.  To take that course would, I consider, inflict a substantial lack of procedural fairness on Mr Crupi.  No evidence was adduced as to whether the costs were 'reasonable'.  Given that the caveats are in a common form, and the task of preparation and lodgement appears on its face to be relatively simple, there is a plausible contention for investigation as to whether the $4,950 claimed is excessive.  But in the absence of pleaded reliance on cl 2(b) there was no need for Mr Crupi to adduce any evidentiary material to address the issue of reasonableness.

   [349] Plaintiff's Submissions par 31; ts 268.

5. In those circumstances I will not consider a possible means by which Westgyp might have sought recovery of the caveat costs outside of its pleaded case.  Moreover, given its failure on Issue 2(b), amendment could not assist Westgyp in its claim to recover the caveat costs as against Mr Crupi.

6. Westgyp has not made out its pleaded case for recovery of the debt collection costs or the costs for lodgement of the caveats.  Issue 5(a) is disposed of in favour of Mr Crupi.  Neither the debt collection costs nor the caveat costs are recoverable in these proceedings.

1. Issue 5(b): Is Westgyp entitled to maintain the caveats?

1. The determination of Issues 1, 2(a) and 2(b) in a manner adverse to Westgyp precludes it from maintaining the caveats it has lodged in relation to the properties in which Mr Crupi holds an interest.  The 2009 credit application does not apply to the outstanding debt; and the cl 2(d) charging clause in the 2012 credit agreement does not bind Mr Crupi personally.  Accordingly, Westgyp is not entitled to the equitable charge it claims over Mr Crupi's interest in the properties.

1. Conclusion and orders

1. Westgyp has failed on the various material issues for determination.  I will order that Westgyp's action against Mr Crupi is dismissed.  Prima facie, costs should follow the event.  However, I will hear from counsel on the precise terms of the costs order.

2. Strictly speaking the caveat proceedings (action CIV 2316 of 2017) are not before me (although the costs of that action are costs in the cause in these proceedings).  However, it would be sensible if the parties were to consider what further orders ought to be made in relation to the caveat proceedings having regard to the determination of this action.  Following conferral between the parties I will, if necessary, hear any application considered necessary to finally dispose of the caveat proceedings.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

AD
ASSOCIATE TO JUSTICE VAUGHAN

15 AUGUST 2018