Zoumis v Zoumis No. DCCIV-01-1432

Nick ZOUMIS v Theo ZOUMIS
[2003] SADC 72
His Honour Judge David
Civil Jurisdiction

The plaintiff and the defendant are brothers. The plaintiff claims the sum of $28,000 for a debt owed by the defendant to him. That debt is admitted by the defendant. The defendant however counterclaims in an unrelated action for the sum of $62,068.00. The defendant agrees that if his counterclaim is successful the amount of the judgment should be reduced by $28,000 to reflect the plaintiff’s claim which has been admitted. The matter therefore proceeded before me on the counterclaim which was disputed. It was agreed that it was appropriate that the defendant should be dux litis.
The Defendant’s case on the counterclaim
It is undisputed that the defendant who from a young age was involved in photography had a 30% interest in a business called Photomatic Australia Pty Ltd from 1992. In August of 1998 he bought the whole of that business. From that time he moved from South Australia where he was living to Sydney for the purposes of running that business. By deed of assignment made on 15 November 2001 (Exhibit D11) Photomatic Australia Pty Ltd assigned the debt which is the subject of the counterclaim to the defendant personally.
The business involved the operation of a number of automatic photograph booths throughout Australia and in particular in South Australia. There were some 17 booths in South Australia. A booth allowed customers to purchase either portrait photos or passport photos of themselves by inserting coins into a machine. It is alleged by the defendant in his counterclaim that during the period from February 1999 to November 2000 the plaintiff was employed by the defendant to do specific tasks in relation to those booths. Among those tasks was the collection of monies from each of the booths that had accumulated and the banking of that money. It is alleged that during that period the plaintiff failed to account for the sum of $62,068.00. The defendant’s case is that records which were compiled by the plaintiff and another employee, Mr William Chilton, clearly showed that the plaintiff misappropriated the amount of the claim when collecting monies from the booths instead of banking that money. It is alleged that the plaintiff was the only person during that period who had access to the machines and that he was the only person who had the job of collecting that money during that period of time. I turn to the defendant’s case in more detail.
The defendant gave evidence that when he went to Sydney in August of 1998 he left the running of the business in Adelaide to Mr William Chilton, a technician, to his brother Nick (the plaintiff) and to his son Evan who helped out with some jobs. In November of 2000 he had a suspicion after talking to his bank manager that his brother was misappropriating money from the machines. This caused him to come to Adelaide at that time. He gave evidence that he had phoned William Chilton and ordered him to put padlocks on the machines. This was duly done. No money was collected from the machines until shortly after he came down to Adelaide. In the presence of Chilton, the plaintiff and his son Evan he visited a number of the machines and collected the money which had accumulated. On counting the money it was found that despite the padlocks being put on the machines there was still a shortfall. This convinced him that previous shortfalls may have been due to a malfunction in the machines rather than his brother’s behaviour. However he wanted to check the situation again because the padlocks which had been placed on the machines had been done so in the middle of the week and it was still possible that the shortfalls observed after the padlocks were put on could be due to misappropriations by the plaintiff. When the next collections and calculations were done the cash collected showed no shortfall when compared to the meter readings. It is the defendant’s case that ever since that time that has been the case.
William Chilton gave evidence that although he has no formal qualifications he has been an electronics technician for about 40 years. He has been employed by Photomatic photo business for nearly 10 years and his duties were servicing the machines in Adelaide, keeping the equipment running and fixing all the parts. This included all matters mechanical, electrical and electronic. He then gave clear technical evidence about the functioning of the machines. At that time in the period 1999 to 2000 there were about 17 machines. It is agreed that three of those machines were black and white machines and the rest were coloured machines. The significance of that will become apparent. Mr Chilton gave evidence that each coloured machine has 4 meters which are sealed. There is a strip meter which counts every film that passes through the machine. A credit meter which counts the coins. A passport meter which records the number of passport photos taken. A portrait meter which records the number of portrait photos taken. He gave the following evidence as to how the credit meter works (transcript page 74):-
"QTurning to the credit meter, have you had occasion to work with the cash counting mechanisms in the photo machine, do you understand how they work.
AYes
QCan you describe in a general way the way or the steps that the cash counting mechanisms of the machine go through.
AWhen a coin is inserted into the machine, it first goes through the coin mechanism. That’s the separate part that distinguishes it is a true coin and what value a coin it is. When it establishes that, the coin goes down into the cash box and it sends a signal out to the credit box, which is the box with the meters in it, and that receives a signal and, depending on what coin it is, it registers it on the meter, and it counts up the money put in until it reaches the value at which it will vend the photograph at.
QWhat are the types of coins a colour machine can take.
AIt would take 50 cent pieces, dollar coins and $2 coins.
QIs there a standard setting for the reaction of a credit meter to coins.
AYes. It clicks, clicks on four – it does four clicks for a dollar.
QIs that setting something you can affect.
AThat’s set, I can’t change that.
QIt comes from the manufacturer with that set.
AThat’s how we get the credit boxes.
QIf it clicks four times per dollar, does it click any other amount for other types of coin.
AIt clicks two for 50 cent pieces and eight for $2.
QIs the two clicks for a 50 cent able to be altered by you.
AI can’t change that.
QIs that fixed from manufacturer.
AThat’s fixed.
QAnd eight clicks for $2, is that able to be changed by you.
ANo.”
He gave evidence that the passport meter and the portrait meter record one “click” each time a passport is vended and one “click” each time a portrait photo is vended.
Mr Chilton gave evidence that when the defendant went to Sydney in late 1998 the plaintiff for a certain period of time commenced collecting the cash from the booths. He gave evidence that cash was collected on two days a week. The recording of the information of how much cash was collected was done by the meter readings being written down from the four meters. Those readings were then compared to the cash collected. He gave the following evidence as to how that was done when the plaintiff was collecting the cash (transcript page 80):-
"QAt the time Nick Zoumis commenced collecting, did you have a practice with Nick Zoumis as to how the information would be collected.
AHe’d go around and collect the cash in separate bags I suppose, and write down the meter readings on a back of a film or a piece of paper or piece of cardboard from what I remember. He’d count the money, and then he’d see me on Fridays with all the pieces of paper and I had a form which I made on my lad’s computer and I’d write down all the meter readings and the amount of cash that he’d wrote down on his piece of card or – and I’d add them up and write down the expenses that had to come out of it, like Nick’s wage and petrol, my wage, petty cash for the week, and all these had been recorded on the sheet and a balance produced which would be what was to go into the bank.”
The sheet upon which the details were recorded was in a pre‑printed form prepared by Mr Chilton which is set out in Exhibit D1. By looking at these records over the period of the time which is the subject of the claim, it can be worked out how much cash was received at each booth each week. Mr Chilton said that can be done in a number of ways by referring individually to each meter but the only really reliable meter according to his evidence is the credit meter. Mr Chilton gave evidence that that was because the credit meter was the only meter which actually counted money as it went in. The strip meter counted the number of photos vended and the other meters counted the number of portrait photos vended and the number of passport photos vended. However Mr Chilton gave evidence and there appears to be no dispute that they are very unreliable guides as to how much money was taken because they are operated by a function of pressing the buttons by the customer and this is open to fault. However the credit meter relies upon the insertion of coins and for each dollar four “clicks” are recorded and the amount of money received each week can be calculated by dividing the number of clicks for that week by four. Mr Chilton then went on to give evidence that he had carefully checked the documents that were prepared from 8 February 1999 until the 9 November 2000 and there is a shortfall of $62,068.00. It has been agreed however that those calculations included an amount of $22,970.00 calculated from boxes which did not have a credit meter and are therefore based on calculations involving the other three meters. As I have indicated there is clear evidence that those figures are unreliable.
In cross-examination it was put to Mr Chilton that he himself not only prepared the forms which are the basis of Exhibit D1 but read the meters and was present when the plaintiff collected the money. Mr Chilton denied that assertion. Although he filled out a number of forms contained in Exhibit D1 he gave evidence that the figures were obtained from the plaintiff. He said that the plaintiff provided him with the details of the meter readings and the money collected by filling in separate pieces of paper which he gave to Mr Chilton. All Mr Chilton did was to tidy up the paperwork by transposing those figures onto forms which he had prepared. In other words the information on those forms was obtained by the plaintiff and given to Mr Chilton.
Mr Chilton gave evidence that in November of 2000 the defendant rang him up saying he wanted to put padlocks on all of the machines. Padlocks were sent over from Sydney and were put on the outside of the machines by Mr Chilton and Evan Zoumis, the son of defendant. He gave evidence of an occasion when they went to a number of locations after the padlocks were put on and took out cash and recorded the meters and when trying to match the cash with the credit meters there was still a shortfall. He gave evidence that they were relieved because this indicated that since the shortfall existed after the padlocks were put on it might indicate that any previous shortfall was not due to the dishonesty of the plaintiff. The exercise was repeated on a subsequent occasion and it was found that there were no shortfalls. The plaintiff was not involved in the second of those exercises. Since that time further collections were done from the machines with padlocks on them over a period of 6 to 9 months and once again there was no shortfall. Mr Chilton gave evidence that since the events in November of 2000 there has never been any variation between the cash collected and the credit meter readings.
Mr Evan Zoumis gave short evidence that during the time that the plaintiff did the collections from the booths he used to visit the machines for the purposes of cleaning them and maintaining them. He said the machines had a lock on the outside of them and a padlock on the cash box. He gave evidence that he himself had a key to the outside but not to the padlock on the cash box. On occasions while the plaintiff was doing the collections he noticed “out of order” signs on some of the machines in the plaintiff’s handwriting and on some occasions those machines were shown to be in working order.
It is the defendant’s case that the undisputed calculations from the documents produced during the period of the claim together with the evidence of Mr Chilton about the accuracy of the credit meter and the fact that it was the plaintiff and the plaintiff alone who produced the figures which were the basis of the calculations showing the shortfalls leads to the clear inference that money was misappropriated by the plaintiff. I turn to the plaintiff’s case.
Plaintiff’s defence to the counterclaim
The plaintiff gave evidence that he commenced working for his brother (the defendant) in February of 1999. His job from that time onwards was to go around to the photo machines and collect money. He said that although he had worked for his brother’s company on previous occasions he had never collected money before. He gave evidence that when he commenced collecting money William Chilton would come with him and the money was manually collected by both he and Mr Chilton. He gave evidence that during the period from the 8 February 1999 to the 29 March 1999 the handwriting on the sheets which set out the calculations is the handwriting of Mr Chilton. Those sheets are contained in Exhibit D1. He said that on those occasions when Mr Chilton was with him it was Mr Chilton who did the recording of the meter readings. He said the procedure was that after the readings were done and the cash was collected they both went back to the office and Mr Chilton paid the plaintiff the amount of money due to him for wages. He vehemently denied he stole or misappropriated any money from his brother let alone the amount claimed. In cross-examination he denied that he would collect cash from the machines and write down the meter readings on pieces of paper and give those pieces of paper to Mr Chilton. He denied ever having given Mr Chilton pieces of paper. He also gave evidence that although he was with Mr Chilton early on when the money was collected at a later stage he would collect the money alone and take the details home to his wife who would fill in the appropriate forms. This procedure was followed after the defendant had sent him an accounting machine. As I understand his evidence up until about 22 March 1999 Mr Chilton collected the money and they both counted it and after that period when a counting machine became available he and his wife counted the money alone. Before the obtaining of the machine the meter readings were put on strips of paper by Mr Chilton and after the obtaining of the machine the meter readings were put on strips of paper by the plaintiff and on each occasion this information was transposed onto the documents which are the basis of Exhibit D1. That evidence is in contrast to the evidence of Mr Chilton who said that he never did any of the meter readings himself but they were done by the plaintiff. The plaintiff did not call any other witnesses.
Conclusion
Although the evidence of the defendant was not really material because he was not present during the time of the alleged misappropriation I am forced to say that I was not impressed with the demeanour of the defendant and I was not impressed with the demeanour of the plaintiff. Although as far as the issues before me are concerned there is very little conflict between the two I found the animosity between them to be extreme.
I find that Mr Chilton is an honest witness, although his memory is understandably vague in certain areas. However I accept his evidence that he did not record the meter readings as asserted by the plaintiff and I accept his evidence that those sheets which form the basis of Exhibit D1 which contained his handwriting were prepared by material given to him by the defendant. From observing the documentation and in particular Exhibit D1 I am of the clear view that the shortfalls in relation to the money collected by the plaintiff during the relevant period in relation to the credit meter readings are not accidental or incidental. To me they show a clear inference that the plaintiff has misappropriated an amount of the money which he has collected. I draw that inference on the balance of probabilities from a combination of the credit meter readings and the evidence of Mr Chilton and the fact that after November 1999 there is undisputed and clear evidence that the credit meter readings showed no real discrepancies. However I cannot draw the same inference in relation to those shortfalls which are recorded from machines which do not have credit box meters. Consequently the amount of shortfall which has been proved only relates to those shortfalls indicated by the credit meter readings.
Mr Patel for the plaintiff pointed out at least one occasion where the credit meter reading showed that in fact the plaintiff had collected more money than recorded. However that does not cause me to doubt that in looking at the whole of the documentation between February 1999 to November 2000 that the plaintiff has not accounted for approximately $40,000. I emphasise in coming to that figure I have not relied upon the shortfall from those machines which do not have a credit meter. That amount is offset by the plaintiff’s agreed claim of $28,000 which has not been disputed. There will therefore be judgment to the defendant for the sum of $12,000. I will hear the parties as to interest and cost.

[2003] SADC 72

23 May 2003