International Plasterboards Pty Ltd v Dunn [2010] NSWSC 340 (15 April 2010)

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International Plasterboards Pty Ltd v Dunn [2010] NSWSC 340 (15 April 2010)

Last Updated: 4 May 2010

NEW SOUTH WALES SUPREME COURT

CITATION:
International Plasterboards Pty Ltd v Dunn [2010] NSWSC 340
This decision has been amended. Please see the end of the judgment for a list of the amendments.

JURISDICTION:
Equity

FILE NUMBER(S):
2009/287918
2009/288213

HEARING DATE(S):
12 - 15 April 2010

JUDGMENT DATE:
15 April 2010

PARTIES:
2009/287918
International Plasterboards Pty Ltd (P)
Virendra Pty Ltd t/as Larry Dunn Interior Linings (D)
2009/288213
International Plasterboards Pty Ltd (P)
Larry Francis Dunn (D)

JUDGMENT OF:
Hamilton AJ

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
S K Hill (P)
D W Rayment (Ds)

SOLICITORS:
CBD Law (P)
MCW Lawyers (Ds)


CATCHWORDS:
TRADE AND COMMERCE [80] – Trade practices and related matters – Consumer protection – Misleading or deceptive or unconscionable conduct – Character and attributes of conduct – Representations – Need for clarity.

LEGISLATION CITED:
Trade Practices Act 1974 (Cth) ss 52, 87

CATEGORY:
Principal judgment

CASES CITED:
Global Sportsman Pty Ltd v Mirror Newspapers Ltd [1984] FCA 180; (1984) 2 FCR 82
Legione v Hately [1983] HCA 11; (1983) 152 CLR 406
Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387
Watson v Foxman (1995) 49 NSWLR 315

TEXTS CITED:


DECISION:
Defendants not entitled to rely on representations under the Trade Practices Act or as founding an estoppel.



JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION


HAMILTON AJ

THURSDAY, 15 APRIL 2010

2009/00287918 INTERNATIONAL PLASTERBOARDS PTY LTD v VIRENDRA PTY LTD t/as LARRY DUNN INTERIOR LININGS

2009/00288213 INTERNATIONAL PLASTERBOARDS PTY LIMITED v LARRY FRANCIS DUNN

JUDGMENT

1 HIS HONOUR: There are before me two actions arising out of the supply of plaster board and other building materials by the plaintiff to two defendants, in the one case Larry Dunn and in the other case Virendra Services Pty Ltd (“Virendra”). This is a company incorporated by Mr Dunn in 1999 for the purpose of carrying on the business he was conducting in which the goods supplied by the plaintiff were used. The principal of the plaintiff was and is Mr Con Apoifis. The materials which were supplied by the plaintiff to the two defendants were supplied to the plaintiff by an organisation known as Lafarge.

2 The evidence shows that Lafarge was already in 1999 making to the plaintiff allowances of various types described as rebates. However, it was not until 2005 that Lafarge developed a scheme whereby it would allow rebates for bulk purchasing to significant customers either directly or through the plaintiff.

3 The plaintiff’s case is that some $434,000 is owing by Larry Dunn to the plaintiff. Some $49,164.07 was claimed against Virendra, but the plaintiff has conceded that it should not recover two items of $2,310 and $19,880 respectively against Virendra. As well as claiming the outstanding amount against Virendra, it claims that amount also against Mr Dunn under a guarantee of Virendra’s obligations executed by Mr Dunn.

4 The first issue in contest is whether the $434,000 was incurred by Larry Dunn or Virendra. The second issue is whether a representation was made about the allowance of rebates that leads to the defendants’ liability to the plaintiff being reduced by the non-allowance of those rebates. The third issue is an issue as to whether the amounts claimed as mentioned above are sufficiently established.

5 I should say at once that the decision in this case as to who was the purchaser is made the more difficult by the casual and slack conduct on both sides as to the contractual relations between them, which is perhaps somewhat surprising in view of the fact that they were dealing with each other in goods of millions of dollars in value.

6 There is no doubt that in 1996 the contractual arrangements were between the plaintiff and Larry Dunn personally. He was trading under the name Larry Dunn Interior Linings and, indeed, this trading name continued to be used throughout the parties’ relationship, even after the contracting purchaser undoubtedly became Virendra.

7 The defendants’ case is that the transition occurred as far back as 1999 and the plaintiff’s case that it did not occur until 2006.

8 There is no doubt that back in 1996 Larry Dunn filled out an application for credit in his own name; he is clearly described in that document as the principal of Larry Dunn Interior Linings and there is no guarantee of his liability, obviously because he is in any event personally liable.

9 In 1999 he incorporated Virendra. An important conversation occurred at that time which Mr Dunn claims related both to the identity of the purchaser of goods from the plaintiff and to the question of whether rebates would be allowed (“the 1999 conversation”).

10 According to Mr Dunn’s evidence, the 1999 conversation referred to the setting up of the company and contained the statement: “Everything will be under Virendra Services Pty Ltd”, to which Mr Apoifis replied: “OK. Fine”. That portion of the conversation was denied by Mr Apoifis and that denial was never retracted nor in reality cross examined upon. According to his evidence, Mr Dunn then referred to the excess of the plaintiff’s prices over those of other suppliers and enquired as to what Mr Apoifis was prepared to do, to which he says that Mr Apoifis said: “I will pay you rebates we receive from Lafarge for the purchases. This will keep the prices you are paying below the level of our competitors.”

11 Initially Mr Apoifis also denied this and said there was no conversation about rebates before 2005. However, in cross examination he conceded that he did in 1999 refer to the giving of price concessions and that he may well have used the word “rebates”. He could not have been referring to Lafarge’s subsequent scheme to allow rebates to significant customers as this was not in place until 2005.

12 He says that the reference was not only to rebates given by Lafarge but also to discounts which he himself might allow. The evidence suggests that no rebates from Lafarge were ever paid or allowed by the plaintiff to either of the defendants, nor were rebates ever received by the defendants from Lafarge. On the other hand, there is evidence that discounts were from time to time allowed by the plaintiff to the defendants in respect of the price of some items supplied. There is, however, no evidence as to the amount in which those discounts were allowed.

13 Mr Dunn says that the representation as to the allowance of rebates was repeated from time to time over the years from 1999 to 2006. There is no suggestion that at any time the representation concerning rebates was made in any terms more specific or less general than what was said in the 1999 conversation. In fact, Mr Dunn conceded in cross examination that he never even in his mind quantified the amount of rebates that he claims were due until after the commencement of the proceedings.

14 There were further dealings in 2006 between Mr Apoifis and Mr Dunn concerning the identity of the purchaser of the goods from the plaintiff. Mr Dunn says that he was telephoned by Mr Apoifis, who said that he needed to close off the current account and set up a new account for insurance purposes and Mr Dunn said he was happy to do that. Mr Apoifis forwarded a fresh credit application to Mr Dunn and this was made out on 10 November 2006 in the name of “Virendra Services Pty Ltd trading as Larry Dunn Interior Linings”. Mr Larry Dunn is recorded as the principal of that company. What is more, on that occasion, the application being by a company, he filled out and executed the guarantee by which he guaranteed “the due and punctual payment of all moneys which are now or may at any time until we are released be owing to you by the company”. The guarantee was dated 13 November 2006 and apparently on that day the document was sent back to the plaintiff.

15 It should be noted that the invoices that were sent by the plaintiff for goods supplied to the defendants were up to November 2006 directed to Larry Dunn against an account code Dunn. From November 2006 they were directed to Larry Dunn Interior Linings against an account code Virendra. There is no evidence that the defendants in any way protested about or drew attention to the continuation of the direction of invoices to Larry Dunn up to November 2006.

16 Of importance in determining the issues is the oral evidence of Mr Apoifis and Mr Dunn, who were the principal witnesses. I have also had regard to the oral evidence of Ms Avni.

17 Mr Apoifis I found an impressive witness. He admitted mistakes in his evidence and made concessions against his case when matters were put to him that appeared to require the corrections and the concessions. He listened carefully to the questions, he addressed the questions that were put to him and his readiness to admit error when it seemed to be appropriate conduced to my accepting that he was doing his best to give the Court a true account of relevant events.

18 Mr Dunn was a much less impressive witness. Often he did not address the questions that were asked of him. He was diffuse in the answers that he gave. And the degree of his recollection was not as great as that of Mr Apoifis. Certainly where there is a direct conflict between Mr Apoifis’ and Mr Dunn’s evidence, I find Mr Apoifis’ evidence preferable. This is important in the case of whether there was included in the 1999 conversation reference to Virendra and assent by Mr Apoifis to it becoming the contracting party.

19 As to the first issue there is no doubt that after the 1999 conversation the defendants sent to the plaintiff a written notice announcing the formation of a new company and requesting the addressee to “update your records”. Mr Apoifis denies that he saw that document at the time it was sent. He subsequently conceded that he had seen it at some later stage among the plaintiff’s records. There is no suggestion that there was any response to it. There is equally no doubt that from 1999/2000 Virendra was referred to in comparatively small letters on orders placed on the Larry Dunn Interior Linings account and that payments on the account were received from Virendra by cheque or by bank transfer.

20 I have already commented on the lax nature of the way in which both sides proceeded in relation to the identity of the parties to these contracts under which millions of dollars worth of goods were being traded. The defendants’ case is that as Mr Apoifis knew, as he conceded, that the defendants were now trading under the name of Virendra and that the plaintiff should be taken as contracting with Virendra from 1999 onwards.

21 However, the replacement of one contract between related parties by another is a matter that cannot be effected by the unilateral actions of one party. It seems to me that the actions taken by the defendants in this case both in the sending of the notice and the placement of orders that mentioned Virendra were unilateral actions to which there was no relevant assent on the plaintiff’s part. Payment by Virendra cannot be significant. One person’s contractual debts are frequently paid by another person, particularly where the two persons are an individual and a related company.

22 I have already said that I do not accept that anything was said about Virendra in the 1999 conversation. I should say that, even if I accepted Mr Dunn’s version of that part of the conversation, it was not in terms sufficiently clear to dissolve the contract with him personally and create a replacement contract between the plaintiff and Virendra.

23 It is significant in my view that no objection was raised to the invoices that continued to be issued to Larry Dunn up to the undoubted transition at the end of 2006. It is also significant that on the evidence no question or protest was raised about this on the defendants’ part. As I have said, the matter is not without some difficulty but in my view the contract between Larry Dunn personally and the plaintiff continued in force until the changeover late in 2006.

24 The second issue is as to whether the defendants were entitled to any rebates. The defendants by defences and by a cross claim seek to have effect given to a representation or representations concerning rebates. Although at one stage it was alleged that there was a contractual entitlement to these rebates, in the end the way in which the case was conducted was that the three bases on which these representations might have effect were by way of an estoppel, more probably an equitable estoppel than an estoppel in pais, or through the Trade Practices Act 1974 (Cth) (“the TPA”) s 52, either as a misrepresentation that induced the execution of the guarantee, which should therefore be set side or varied under s 87 of the Act, or as sounding in damages under s 52 of the Act.

25 It is of some importance to note the form in which those representations were alleged to have been made, taking the allegations in the cross claim as an example. The representation in 1999 was that the defendants “would be given rebates for purchases”: par 1A. It was further alleged that between 1999 and 2006 the plaintiff or Con Apoifis “repeated the representations”: par 1C. The only elucidation of the representation is in par (b) of the particulars appended to par 1C, in that it was said that the representation was that the defendants would be given rebates for purchases “so that the prices of the ... goods were not in excess of the average price offered by ... trade competitors”.

26 So far as the representations concerning rebates are concerned, there are in my view grave difficulties about these representations being given legal effect through the channels propounded by the defendants or at all. The representations were in the most general terms in which no rate of rebate was inserted.

27 To found an estoppel in pais a representation must be clear: Legione v Hately [1983] HCA 11; (1983) 152 CLR 406 at 435 - 436 per Mason and Deane JJ. Whilst it would seem that wholly or alternatively the estoppel relied on is an equitable estoppel meeting the requirements set out in Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 at 428 - 429 per Brennan J, it seems to me that for such an estoppel to operate, the particular legal relationship sought to be relied on must be defined with clarity in the evidence.

28 Moreover, as was said by McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318 - 319, in relation to misleading conduct under the TPA, where the conduct is the speaking of words in the course of conversation it is necessary that the words spoken be proved with a degree of precision sufficient to enable the Court to be reasonably satisfied that they were in fact misleading in the proved circumstances.

29 It seems to me that this principle applies to the approach to an oral misrepresentation for any purpose and is another reason for expressing the view that there was not sufficient clarity in anything that was said to found an estoppel, to amount to a misrepresentation or to amount to misleading conduct for the purposes of the TPA. It is quite impossible in my view to find with any precision what was said about rebates in the 1999 conversation.

30 Any repetition of the matter concerning rebates after the first conversation in 1999 was made in terms no more precise and perhaps less precise than in the 1999 conversation and it is equally impossible to find precisely what those terms were.

31 Furthermore, there are grave difficulties in accepting that Mr Dunn relied on anything said about rebates in any way that would create a legal obligation. I do not accept that he relied in the requisite way on any representation made to him. This is particularly so in relation to the entering into of the guarantee in 2006 when, although he had had some discounts, for some seven years the representation which he said had been made to him about rebates was not being met. It is in my view impossible to accept that he was relying on any such representation when he entered into the guarantee in 2006.

32 In relation to the claim under the TPA, I should also advert to the fact that the representations relied on were purely promissory. They did not in terms contain a representation as to a present fact nor were they made in circumstances where the promise contained an implied representation of present fact. The fact that a promise is not in fact met when the time comes due for performance does not of itself establish a basis for relief under the TPA: Global Sportsman Pty Ltd v Mirror Newspapers Ltd [1984] FCA 180; (1984) 2 FCR 82 at 88.

33 The conclusion I reach is therefore that nothing that was said about rebates has a legal effect which supports a cross claim by the defendants or provides a defence to the actions brought by the plaintiff.

34 The third and last matter in issue is the question of whether there is sufficient evidence to justify the entry of judgment in the amounts claimed by the plaintiff. The defendant did by a non admitting traverse put these amounts in issue. Attention was drawn to the two amounts of $19,880 and $2,310 that I have already mentioned and, upon these being raised, they were conceded by the plaintiff and will not be included in any judgment given in its favour.

35 The defendants at the heel of the hunt attempted to raise an issue concerning a further $20,000 which a handwritten note on a document appears to indicate may have been misattributed to the Larry Dunn account rather than to the Virendra account.

36 This was not mentioned in the pleading. It was raised very late in the day and, bearing in mind the large mass of transactions and invoices (see Ex D), the plaintiff hardly had any chance to see whether or not this was correct. In any event, in view of the conclusions I have come to, it really does not make any difference to the overall liability of the defendants.

37 It is plain that invoices totalling the amount claimed were forwarded to the defendants. The defendants complained that the plaintiff has not sufficiently proved that goods were ordered or delivered or that the prices attributed to them are correct.

38 In view of the failure to complain about the correctness of the invoices over a long period, up to years, other than in the regards that I have already mentioned, I conclude that the plaintiff has sufficiently established the defendant’s liability for the amounts claimed, subject to the exceptions I have already mentioned.

39 I should say in light of the defendants’ lack of success in the proceedings that Mr Rayment of counsel conducted their case with his usual skill and vigour and that everything was said and done to put their case forward at its highest despite its ultimate failure.

40 Upon being presented with an up to date agreement as to interest I shall give judgment against the defendants for the appropriate amounts. I shall also make orders for costs, the defendants being unable to contend that they are not liable to undergo same.

**********

AMENDMENTS:


03/05/2010 - typographical error - Paragraph(s) 40


LAST UPDATED:
3 May 2010