Miraki v Griffith and Anor

District Court of NSW|2020-06-12

INTRODUCTION

By Amended Statement of Claim filed 2 May 2018 the plaintiff seeks damages for goods that she asserts she has paid the defendants for but has not received.
The trial ran before me on 11 and 12 June 2020. Counsel and solicitors appeared before me in court. The first and second defendants appeared via Audio Visual Link. The second defendant was unrepresented. The second defendant is the father of the first defendant.

BACKGROUND

The second defendant, Dominic Griffith ('Dominic'), operated a company known as Dominic Gerard Group De Luxe Ltd ('the company'). His son, the first defendant, Joshua Griffith ('Joshua'), assisted his father in respect of transactions executed by the company with its customers, including the plaintiff.

THE DISPUTE

On 3 June 2016, Barton paid $39,043.52 into an overseas account as requested by Joshua. This payment, it is accepted by the parties, was paid into Dominic's New York account. It is particularised at paragraph 8(a) of the Amended Statement of Claim.
On 1 July 2016, Barton paid $39,603.14 into an overseas account as requested by Joshua. This payment, it is accepted by the parties, was paid into Dominic's New York account. It is particularised at paragraph 8(b) of the Amended Statement of Claim.
On 5 August 2016, Barton paid $37,633.25 into an Australian account in the name of Joshua Griffith. This payment, it is accepted by the parties, was paid into an account held by Joshua. It is particularised at paragraph 8(c) of the Amended Statement of Claim.
It is asserted by the plaintiff that she has paid for Versace home furnishings which she has not received, as per paragraphs 6, 7 and 8 above. She states that Joshua promised her a full refund for these goods. The plaintiff has not received those goods, nor has her money been refunded, hence this litigation.
There are additional amounts that have been paid to the defendants that Counsel for the plaintiff sought to include as part of the claim. An application to re-open the plaintiff's case was made during the closing address of counsel for the first defendant. The application was refused as the plaintiff's counsel had opened his case on the basis that the only amounts he sought were the three indicated above (paragraphs 7, 8 & 9) and based on that opening, counsel for the defendant had conducted his case, and in particular his cross-examination of the plaintiff. Additionally, it was confirmed several times by the plaintiff during her cross-examination that these were the only amounts claimed. I formed the view that the application to re-open the plaintiff's case at almost the conclusion of the trial would not be fair to the defendants and was not in accordance with sections 56, 57 and 58 of the Civil Procedure Act 2005 (NSW). The application was refused.

THE PLAINTIFF'S CASE

The plaintiff asserts that the defendants were in business together and that all the requests for the monies to be transferred into the accounts were made by Joshua. In accepting those payments, the plaintiff asserts that Joshua has affirmed his participation in the contractual relationship, if any existed.
It is not controversial that the plaintiff has made requests for delivery of the goods between November 2016 and March 2017.
The plaintiff asserts that the money she paid was in consideration for the Versace homewares and once it was received it was for the benefit of both defendants.
The plaintiff's case further asserts that the plaintiff did not know until 18 September 2016 that Joshua was under 18 years of age at the time of contracting. It is submitted that the plaintiff had been induced by his conduct into believing he was an adult and relied on the contract that formed the basis of their mutual relationship, and that it would now be unconscionable for Joshua to claim that he is a minor and thus not able to enter into a binding contract. The plaintiff submits that the last of the three payments was made after Joshua turned 18.
The plaintiff submits that it is Joshua that owes the money, the subject of the dispute, as it was Joshua who received the money. She then asserts that Dominic is liable if I find that Joshua and Dominic were operating a business together as one was acting as the agent of the other and were accordingly jointly and severally liable.

THE FIRST DEFENDANT'S CASE

The first defendant's case (Joshua's case) is that he assisted his father with respect to transactions executed by the company with its customers including the plaintiff.
He states that he was at all material times under the control of his father, the second defendant, Dominic.
Counsel for the first defendant asserts that as Barton made the transfers in question, and it is a body corporate which is separate and distinct from the individuals who, from time to time, are its members or directors (here the plaintiff): Walker v Wimborne (1976) 137 CLR 1 at 6-7 (Mason J); Repatriation Commission v Harrison (1997) 24 ACSR 711 at 715-716 (Tamberlain J). On this basis the plaintiff is unable to recover any of the monies paid as she did not pay the money, the company did.
Counsel for the first defendant also asserts that the third payment made into his account was used by Dominic for personal expenses and the expenses of the company, and that Joshua derived no personal benefit from the monies that form the third payment.
Finally, it is submitted by Joshua that as he was a minor at the time the agreement between the company and the plaintiff for the purchase of the home furnishings, the agreement is not binding upon him.

THE SECOND DEFENDANT'S CASE

The second defendant, Dominic, did not participate in the proceedings. He however did observe all of the hearing via AVL. I enquired whether he wished to ask questions of witnesses, tender documents or make submissions at various points in the trial. He indicated that he did not, apart from a statement that he made on the second day of the hearing which I will refer to later.

EVIDENCE

The plaintiff tendered the following exhibits:

Exhibit A: Affidavit of Sepideh Miraki sworn 4 November 2019;
Exhibit B: Documents behind Tab 34 of the plaintiff's Court Book comprising copies of email correspondence between the plaintiff and the first defendant;
Exhibit C: Documents behind Tab 35 of the plaintiff's Court Book comprising Australian Company Registration for Groupe-Luxe Australia Pty Ltd;
Exhibit D: Document (1 page email) behind Tab 36 of the plaintiff's Court Book comprising Constitution of Groupe-Luxe Australia Pty Ltd;
Exhibit E: Bank records;
Exhibit F: Affidavit of Sasa Zekanovic sworn 27 May 2020;
Exhibit G: Email from John Tomaras & Sepideh Miraki to Joshua Griffith dated 19 March 2020.

The first defendant tendered the following exhibits:

Exhibit 1: ASIC Extract;
Exhibit 2: Affidavit of Joshua Griffith sworn 21 November 2018;
Exhibit 3: Affidavit of Joshua Griffith sworn 29 July 2019;
Exhibit 4: Affidavit of Joshua Griffith sworn 14 April 2020;
Exhibit 5: Documents behind Tab 29 of the original tender bundle (pages 141-146);
Exhibit 6: Documents behind Tab 30 of original tender bundle (page 147);
Exhibit 7: Documents behind Tab 37 of the original tender bundle;
Exhibit 8: Documents behind Tab 18 of the original tender bundle - ASICS Search dated 11 March 2020.

The second defendant did not tender any evidence.
The plaintiff gave evidence before me in court on the first day of the trial. She was an impressive witness, and although at times she seemed unable to remember certain details, I accept that she was doing her best and that she was a witness of truth.
Joshua gave evidence via AVL on the first day of the trial. He was also an impressive witness. Where he couldn't remember he said so and I also accept him as a witness of truth.
Dominic did not give evidence. I offered him the opportunity to do so but he declined. I draw no inference from that situation.

DISCUSSION

Counsel for the plaintiff submits that it matters not whether or not there was a contract, nor whether or not the monies were paid by the plaintiff directly or by Barton pursuant to a loan that the plaintiff made to Barton. He submits that the monies were advanced on behalf of the plaintiff as payment for the Versace Home Furnishings.
In Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; (2001) 185 ALR 335; [2001] HCA 68; Gleeson CJ, Gaudron and Hayne JJ held: '[20] … If there is a right to enforce repayment upon the basis of a failure of consideration, it is because, in the circumstances, the law imposes upon the respondent an obligation to make just restitution for a benefit derived at the expense of the appellants.19 If there had been a total failure of consideration, because, for example, there had been a prepayment for goods which were never delivered, the respondent's duty to make restitution would have been clear…'
In Mann v Paterson Constructions Pty Ltd (2019) 373 ALR 1; [2019] HCA 32; Nettle, Gordon and Edelman JJ held: '[166] As the law stands in Australia, as it does in England, New Zealand, Canada and the United States, upon termination for repudiation of an uncompleted contract containing an entire obligation (or, as will be seen, divisible stages) for work and labour done, the innocent party may sue either for damages for breach of contract or, at the innocent party's option, for restitution in respect of the value of services rendered under the contract.214 [167] The availability of restitution, and the form of restitutionary remedy awarded, will depend on the type of enrichment alleged.215 Generally speaking, a personal restitutionary remedy will be assessed as money had and received where the alleged enrichment is the receipt of money; it will be assessed as upon a quantum meruit where the alleged enrichment is the receipt of services; and it will be assessed upon a quantum valebant where the alleged enrichment is the receipt of goods. Where the alleged enrichment takes more than one form, such as the provision of money and services to a party, the other party is entitled to the money paid together with a reasonable sum for the services, subject, of course, to prohibitions against double recovery.216 [168] The "qualifying or vitiating"217 factor giving rise to a prima facie obligation on the part of the enriched party to make restitution is a total failure of consideration, or a total failure of a severable part of the consideration.218 In this context, consideration means the matter considered in forming the decision to do the act: "the state of affairs contemplated as the basis or reason for the payment."219 In many cases the relevant basis will be the benefit that is bargained for. In those cases, "[t]he test is whether or not the party claiming total failure of consideration has in fact received any part of the benefit bargained for under the contract or purported contract".220
It is not controversial that the three sums of money were paid by either the plaintiff or Barton. Similarly, it is not controversial that the plaintiff has not received the Versace Home Furnishings.
I accept that there has been a total failure of consideration; Roxborough v Rothmans of Pall Mall Ltd (supra). The failure of consideration connotes the failure of the state of affairs contemplated by the parties ("a state of affairs that has failed to sustain itself"; Roxborough (supra)). I also accept that the failure does not have to be referable to a contract, it can just be a state of affairs that was unfulfilled; Roxborough (supra).
The real issues are whether the monies were paid by Barton or the plaintiff, whether the monies were paid to the first or second defendant, and whether the first and second defendants were jointly operating a business, and are accordingly jointly and severally liable as one acting as the agent for the other. Consequent upon that, the first defendant being a minor at the time of the contract was purportedly entered is not binding upon the minor unless it is deemed to be presumptively binding under the Minors (Property and Contracts) Act 1970 (NSW) sections 6(1) and 7.
It was submitted by Counsel for the plaintiff that it does not matter whether the monies paid were from the plaintiff or Barton, as the question is "who has the superior claim to the money": Roxborough (supra) per Gleeson CJ, Gaudron and Hayne JJ at [27]. It would therefore be unconscionable for the defendants to enjoy the benefit of the money without making restitution; Roxborough (supra) per Gummow at [104].
Counsel for the First Defendant submits that if the monies were paid by Barton and not the plaintiff, then the plaintiff's case must fail as the company is a distinct and separate entity from its members and directors.
With respect, I am of the view that whether the monies paid to the first and/or second defendants were paid by Barton or the plaintiff is irrelevant. I accept that the plaintiff authorised the payments from the Barton accounts but that they were the consideration for the furnishings which it is agreed she did not receive. I accept that the plaintiff is entitled to restitution of the three relevant sums.
The question then arises to whom were the sums paid, at whose request and for the benefit of whom?
The parties agree that the first two payments were into an account located in America and as such were payments to the second defendant who was residing and working in New York, America at the relevant time.
The third payment was into an account with the name of Joshua Griffith, the first defendant.
The plaintiff's submission is that all three payments were for the benefit of both defendants, and that it is unconscionable for Joshua to now rely on the fact that he is a minor to avoid repayment of the third amount.
Counsel for the first defendant submits that at all material times, Joshua was under the control and direction of his father Dominic, and that the third payment was applied by Dominic for his personal expenses and those of the company, and that Joshua derived no personal benefit from the third payment.
I do not accept that the first and second defendants were operating a business together, nor that one was acting as the agent of the other. I accept that Dominic was running and operating the business known as Dominic Gerard Group De Luxe ltd. I also accept that Joshua was simply assisting his father with respect to transactions executed by the company with its customers, including the plaintiff. I accept that Joshua was, at all material times, under the control and direction of Dominic.
I accept that the payments into the American bank accounts were payments for which the second defendant obtained the benefit as it was paid into the account of the company.
The first defendant was resolute in his evidence that he was at all times under the control and direction of his father. He was also firm in his evidence that the emails he sent to the plaintiff with regard to these transactions were done solely at the direction of his father when he was a minor. He was not cross-examined about this by his father.
Joshua further gave evidence that his father treated the American company account as his father's own, which I accept as unremarkable given that he was a minor.
I find that there is no evidence that the first two payments were for the benefit of the first defendant.
The third payment is a somewhat different. It was paid into the Joshua Griffith account at his direction whilst he was a minor. The plaintiff contends that when Joshua obtained his majority he affirmed the contract or agreement with regard to this payment and as such is bound by it.
This proposition needs to be examined in context. He was extensively cross-examined on this point. The submission that the plaintiff relies upon turns essentially to a series of emails between Joshua and the plaintiff. They are contained in Exhibit B.
The email at page 175 of the first court book reveals an email sent on 18 December 2016 at 1.01AM from Joshua to the plaintiff. It reads as follows: "Hi Sepi, We had to fly to Singapore last Thursday my dad has been having some medical problems the last couple of weeks and his health insurance is based overseas and they wanted to treat him here, I'm sorry for the delay in response I understand everything Sepi, I will have the accounting department do a complete reconciliation of your account when they get back from the holidays and we'll arrange a full refund for you early next year, I'd rather just do that Sepi, right now I have to make sure my dad is going to be alright. Hope you and Nav are ok…"
This email is in response to an email from the plaintiff seeking an update on the delivery status of her Versace home furnishings. The evidence of Joshua (T page 55) was that this email was dictated to him by Dominic.
Under cross-examination, Joshua agreed that his father had done the wrong thing in not supplying the plaintiff with the furnishings she had ordered, and agreed that the plaintiff should be paid back (T page 56). He denied however that he had done the wrong thing.
After the cross-examination of the witness by counsel for the plaintiff, the Court adjourned for lunch. Upon returning to the bench I offered Dominic the opportunity to cross-examine Joshua. He declined to do so but stated (T page 58) "I take full responsibility. That's all I'd like to say." Whilst this apparent admission by Dominic as recorded does not have the same import as sworn evidence, it does mesh with the version of events as described by Joshua. His evidence included statements that his father had done the wrong thing, and that his father should give the money back.
The email sent from Joshua to the plaintiff detailed above refers to an offer of a full refund by Joshua. This is in my view fundamentally inconsistent with the proposition that when Joshua reached his majority he sought to continue with the contract.
I accept that there was no affirmation of the contract when Joshua attained his majority, but recognition that his father had done the wrong thing. His evidence shows that he had come to the realisation that the furnishings were not going to be produced, and recognition that the monies that had been paid ought be returned to the person who had paid the money.
I am satisfied that there is not a presumptively binding contract between the plaintiff and Joshua. As such there can be no legal liability upon him to repay the money because it was an act done by Dominic, and to the extent that Joshua was involved in such conduct, he did not receive any benefit from the money paid in any of the three payments. Specifically, with regard to the third payment his conduct was such as to disavow the contract, particularly when the email and Joshua's evidence before me referred to a refund.
I note that when Dominic was legally represented, a defence was filed on his behalf, the matters pleaded therein accords with the version of events given by Joshua and also is consistent with the comment made by the second defendant at page 58.

ORDERS

I make the following orders: 1) Verdict and judgment for the plaintiff against the second defendant in the sum of $116,279.91. 2) Second defendant to pay the plaintiff's costs as agreed or assessed. 3) Judgment for the first defendant. 4) Plaintiff to pay the first defendant's costs as agreed or assessed. 5) Allow the parties 7 days to approach my associate with regard to any claims for interest, or alternate costs orders

Amendments 05 August 2020 - Amended names of legal representatives for the plaintiff and the first defendant DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 August 2020

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