Moneytech Finance Pty Ltd v Diamond Made Pty Ltd

The plaintiffs' case against the sixth defendant

1. The case against Mr Osborne, the sixth defendant, as pleaded in the statement of claim filed on 16 December 2015 can be summarised as follows.
2. Moneytech, Diamond Made and Diamond Made Trading entered into a financing facility on or about 13 March 2015 whereby Moneytech would make payments to Diamond Made for invoices issued by it to third parties with such debts owed to Diamond Made being assigned to Diamond Made Trading.
3. In accordance with the financing facility Moneytech opened an account for Diamond Made to which payments were credited and advances debited. Pursuant to the financing facility Diamond Made issued written requests to Moneytech requesting payments for the services rendered to its customers. The written requests included a request in relation to the sixth defendant, Andrew Kent Osborne t/as Pizza Pasta Please Campbelltown, on 26 March 2015.
4. From time to time Diamond Made would issue assignment notices to its customers in relation to the invoices for the goods and services provided to them directing each customer to make all payments to the Invoicing Entity.
5. Diamond Made, on behalf of Diamond Made Trading, issued an invoice to the sixth defendant, "Andrew Kent Osborne t/as Pizza Pasta Please Campbelltown", in the amount of $757,308.16. On 26 March 2015 Diamond Made emailed and posted an assignment notice in writing to "Andrew Kent Osborne t/as Pizza Pasta Please Campbelltown".
6. As at 25 May 2015 Mr Osborne was liable to pay the Invoicing Entity the amount of $757,308.16 by virtue of assignment of the debt by Diamond Made and the invoice issued by Diamond Made to Mr Osborne.
7. On or about 3 July 2015 Mr Osborne made a payment to the plaintiff in the amount of $235,000.00.
8. As at 6 October 2015 Mr Osborne was liable to pay the Invoicing Entity the sum of $490,000. It is alleged by the plaintiffs that he breached his obligations under the assignment notice in that he failed, refused, and/or neglected to make payment to Diamond Made Trading.
9. On 23 June 2017 Button J gave leave to Moneytech to amend the statement of claim in a number of significant respects: Moneytech Finance Pty Ltd v Diamond Made Pty Ltd [2017] NSWSC 836.

The amended statement of claim

1. An amended statement of claim was subsequently filed on 10 July 2017. In addition to the second plaintiff being added, the plaintiffs' case against Mr Osborne, as pleaded in the amended statement of claim, as well as the amount said to be owed by him, changed and can be summarised as follows.
2. On or about 1 April 2014 Mr Osborne, as a landlord, appointed PPP, as a tenant, as his disclosed agent for the purposes of entering into a contract for a fit-out at Shop 1, 2-4 Rennie Road, Campbelltown ("First Lease").
3. On or about 1 October 2015 Mr Osborne appointed PPP as its disclosed agent for the purposes of entering into a contract for a fit-out in respect of the First Lease at Shop 1, 2-4 Rennie Road, Campbelltown ("Second Lease").
4. Paragraph 19Q of the amended statement of claim is as follows: "19Q. On a date unknown to the First Plaintiff and Second Plaintiff, PPP Campbelltown Pty Limited entered into a contract with the First Defendant for the provision of Goods and Services for the premises at Shop 1, 2 - 4 Rennie Road, Campbelltown NSW (Pizza Paste Please Fit-Out Contract). Particulars (i) PPP Campbelltown Pty Limited entered into the Pizza Pasta Please Fit out Contract as the disclosed agent, or alternatively undisclosed agent, for the Sixth Defendant. (ii) Further particulars of the contract for the provision of Goods and Services by the First Defendant to the Sixth Defendant's disclosed agent or alternatively undisclosed agent, PPP Campbelltown Pty Limited, at the Sixth Defendant's premises, will be provided after discovery."
5. The amended statement of claim further pleads that Mr Osborne is liable to pay all amounts due under the PPP fit-out contract up to the fit-out contribution and additional amounts, with the fit-out contribution particularised as the amount of $210,000 plus GST under cl 26.1 (being $231,000 inclusive of GST) in the First Lease and the amount of $450,000 inclusive of GST under cl 26.1 in the Second Lease.
6. It is further pleaded that on a date unknown to the plaintiffs, Diamond Made provided services pursuant to the PPP fit-out contract at Shop 1, 2-4 Rennie Road, Campbelltown and that further particulars would be provided after discovery. Pursuant to the terms of the PPP fit-out contract Mr Osborne, but for the assignment, would have been liable to Diamond Made for $750,000 or alternatively $681,000.
7. It was further pleaded that on or about 25 March 2015 Diamond Made requested payment from Moneytech of the amounts for the goods and services that Diamond Made provided to Mr Osborne or to PPP as agent for Mr Osborne ("Osborne Request"). Pursuant to this request Moneytech paid the sum of $750,000 to Diamond Made by way of electronic transfer at various dates, namely 26 March 2015, when the amount of $350,000 was transferred; 8 April 2015, when the amount of $150,000 was transferred; and 27 April 2015, when the amount of $250,000 was transferred.
8. The plaintiffs' case is that the assignment from Diamond Made to Diamond Made Trading occurred when Moneytech made each of the payments to Diamond Made as all debts and/or invoices that were owed to Diamond Made by third parties were assigned to Diamond Made Trading.
9. Diamond Made issued notice of the assignment to Mr Osborne on 26 March 2015 directing him to make all payments to Diamond Made Trading in relation to the invoices with respect to the goods and services rendered or to be rendered by Diamond Made to Mr Osborne.
10. The plaintiffs' case is that Mr Osborne is bound by the assignment to Diamond Made Trading and that payment by Mr Osborne to Diamond Made, Diamond Made Group, Mr Corkery or Mr Schlebush did not discharge the debt that is owed to Diamond Made Trading.

Particulars

1. On 18 September 2018 the plaintiffs' solicitor provided particulars of paragraph 19Q of the amended statement of claim as follows: "1. The Pizza Pasta Please Fit-Out Contract was partly written and partly implied. 2. In so far as the Pizza Pasta Please Fit-Out Contract was partly written: a. On 17 July 2014 and 4 February 2015, the First Defendant issued a quotation, in writing, to PPP Campbelltown Pty Ltd (ACN 161 690 928) (PPP), as actual or ostensible agent of the Sixth Defendant, in the sum of $757,308.16. See attached copy of the written quotation. PPP was an agent of the Sixth Defendant, pursuant to two (2) Leases entered into between PPP and the Sixth Defendant, for the purpose of entering into Fit-Out Contract at the Property, Shop 1,2-4 Rennie Road Campbelltown NSW (Property). Lease 1 commencing 1 April 2014 and Lease 2 commencing 1 October 2015. See attached copies of Leases (front pages). The quotation by the First Defendant to PPP was for the work described in the specification in plans "D13146", being the drawing at Schedule 2 - Licence Area of the Lease 1 and Lease 2. b. Between February 2015 - March 2015, the quotation was accepted by PPP, as actual or ostensible agent of the Sixth Defendant. The Plaintiffs also rely on the fact that work was done (email communications were exchanged) and payments were made in connection with the contract as evidencing the existence of a contact. Even in the absence of evidence of acceptance by of evidence of acceptance by communication or conduct, the plaintiffs will establish that a contract came into existence at some point during that period. c. On 26 March 2015, the First Defendant issued a tax invoice to the Sixth Defendant. Tax Invoice no 0000238 in the sum of $757,308.12. See attached tax invoice. The tax invoice was issued by the First Defendant to the Sixth Defendant in accordance with the Sixth Defendant's instructions on 2 January 2015. See attached email from the Sixth Defendant to the First Defendant and PPP. 3. In so far as the Pizza Pasta Please Fit-Out Contract was it is implied by the conduct of the First Defendant, PPP, as agent of the Sixth Defendant, and/or the Sixths Defendant, being …"
2. A number of specific documents are then identified in the particulars letter said to support the plaintiffs' case that there was a PPP fit-out contract. I shall refer to most of those documents in my summary of the evidence below.
3. Mr C D Wood appeared for the first and second plaintiffs. He opened his case consistently with the particulars. The plaintiffs' case is that a contract in the amount of $757,308.16 was entered into between Mr Schlebush as agent for Mr Osborne and Diamond Made to fit out the Campbelltown premises which led to the creation of invoice 238. Diamond Made assigned that unpaid invoice to Diamond Made Trading and Moneytech provided $750,000 to Diamond Made.
4. Mr Robertson, appearing for Mr Osborne, also gave a brief opening. He confirmed that the case his client was to meet was that, consistent with the particulars provided, the plaintiffs' case is that on 17 July 2014 and 4 February 2015 Diamond Made issued a quotation, in writing, to PPP as actual or ostensible agent of Mr Osborne in the sum of $757,308.16 which was subsequently accepted by PPP as agent of Mr Osborne on a date prior to 26 March 2015. The authority to do so came from the first of two leases entered into between PPP and Mr Osborne.
5. Mr Robertson submitted that the factual issues for determination in this matter are: 1. Was there a contract between Mr Osborne and Diamond Made in the amount of $757,308.16? 2. If PPP did not have authority to enter into the 757,308.16 contract, did Mr Osborne ratify the contract after it was made? 3. If not, is Mr Osborne otherwise estopped from denying any contract? That is, was their ostensible agency established? 4. If the court is satisfied that there was a valid contract then was there a lawful assignment of the debt to the second plaintiff? 5. If not, was there an equitable assignment of the debt? 6. Assuming that there was a contractual debt which was assigned can the plaintiffs establish how much of that debt remains unpaid?
6. The sixth defendant also provided to the court a convenient summary of the key persons associated with the dispute. Those persons are identified as follows.
7. The persons associated with the plaintiffs: Mark Cameron is the Chief Commercial Officer of Moneytech and the direct supervisor of Daniel Dean. Daniel Dean is a former Business Development Manager for Moneytech. Sonja Sandral is the General Manager of Moneytech.
8. The persons associated with Diamond Made and/or Diamond Made Group: Charley Corkery was the sole director of Diamond Made and Diamond Made Group. He was also guarantor of Diamond Made and Diamond Made Group's obligations to Moneytech Finance. Suzanne Haberfield was the General Manager of Diamond Made and Diamond Made Group.
9. Matt Maley was an employee of the firm known as LendingPost and acted as broker to Diamond Made.
10. Persons associated with PPP: PPP was the tenant of Mr Osborne as trustee for the AKO No 2 Trust. Bianca Slabacu was the General Counsel of MINMXT Group (including PPP) at material times. Morney Schlebusch was the Director of PPP at material times and Nichole Schlebusch was the Marketing and Communications manager for PPP at material times.

The evidence in support of the plaintiffs' case

1. The plaintiffs relied upon two affidavits of Mark Cameron sworn 31 October 2017 and 5 March 2019 as well as two affidavits of Sonja Sandral dated 3 November 2017 and 5 March 2019. A number of objections were made to various paragraphs of those affidavits which led to a number of paragraphs not being pressed. The evidence that was admitted in relation to these two witnesses is as follows.

Evidence of Mark Cameron

1. Mr Cameron is the Chief Commercial Officer at Moneytech. His evidence in his first affidavit was that, as was the normal practice in debtor finance transactions, Diamond Made was introduced to Moneytech by a broker, Matt Maley. At a meeting on 26 February 2015, Mr Cameron claims the processes and relevant documentation in relation to the assignment of debts and/or invoices owed by third parties to Diamond Made, including the name of Diamond Made Trading, were discussed with Mr Maley.
2. Mr Cameron consulted with Moneytech and Mr Corkery on behalf of Diamond Made who selected the name Diamond Made Trading for the Moneytech special purpose vehicle. Mr Cameron states that Mr Corkery did so consistent with Moneytech's usual practice that when setting up "disclosed" customer facilities (ie where Moneytech took direct title to its customer's invoices) Moneytech would allow the customer to choose the entity name.
3. Mr Cameron confirmed in his second affidavit that, having undertaken a search of Moneytech's and Diamond Made Trading's servers, the company never received an email or any contact from Mr Osborne in response to the email dated 26 March 2015 which attached the invoice for $757.308.16. He also confirmed that three payments were made by Moneytech to Diamond Made in respect of the Campbelltown premises being $350,000 on 26 March 2015; $150,000 on 8 April 2015; and $250,000 on 27 April 2015. Finally, Mr Cameron confirmed that since Daniel Dean resigned from Moneytech, he had not spoken with him nor was he aware of his whereabouts. He also noted that he was similarly unaware of Mr Corkery's whereabouts.
4. Mr Wood was permitted to adduce some further evidence from Mr Cameron. This evidence was that the notice of assignment and an invoice were sent to Mr Osborne by a Diamond Made staff member. Both documents were provided by Diamond Made to Moneytech. When Mr Cameron saw those documents he formed the view that it was a request for Moneytech to pay money to Diamond Made. In cross-examination, Mr Cameron was taken through documents showing the so-called "Generic Transaction Details" of certain payments from Moneytech to Diamond Made. In his cross-examination Mr Cameron admitted that Moneytech's and Diamond Made Trading's servers recorded, as Mr Robertson submitted in closing, that the "true buyer" was PPP and not Mr Osborne.

Evidence of Sonja Sandral

1. Ms Sandral is the General Manager at Moneytech. The evidence in her first affidavit is in similar terms to Mr Cameron's. Her evidence was that the 26 February 2015 meeting occurred in the terms stated by Mr Cameron. In her second affidavit she recalled meeting with Mr Corkery in or around 7 October 2015 where, upon being told by Mr Corkery that he had received payments from the customers, she told him he could not pay them because the debts were assigned and the customers still needed to pay. Ms Sandral says that she sought security from Mr Corkery in the form of a caveat over his Tallai, Queensland property.
2. Ms Sandral explains that, during Mr Dean's employment with Moneytech from 5 January 2015 to 15 March 2016, he was the main point of contact in relation to Diamond Made and its customers, including Mr Osborne. Her evidence was that she has not spoken to Mr Dean since 23 May 2016.
3. Ms Sandral was cross-examined about the affidavit she swore verifying the statement of claim. She agreed that as at 15 December 2015, when the statement of claim was filed, she thought that Mr Osborne traded as Pizza Pasta Please Campbelltown. Moneytech had the same understanding at that date.

Other evidence

1. There was very little challenge to the evidence of Mr Cameron and Ms Sandral. Mr Osborne did not seek to dispute that the evidence shows that when Diamond Made provided invoice 238 to Moneytech in the amount of $757,308.16 said to be owed by Mr Osborne, Moneytech advanced $750,000 to Diamond Made and the invoice was then assigned to Diamond Made Trading.
2. I should state from the outset that the provenance of invoice 238 as being payable under what I will refer to as the $757,308.16 fit-out contract is far from clear on the available evidence. Mr Wood accepted that Moneytech was a stranger to the contact that it now seeks to prove and Mr Robertson submitted that the evidence is not capable of disclosing that Mr Osborne was a party to it either. It was common ground that invoice 238 could only have been provided to Moneytech by Mr Corkery from Diamond Made and/or Mr Schlebush from PPP Campbelltown. Neither of these persons was a witness called by the plaintiff in its case. The employee of Moneytech who dealt with Mr Corkery and Mr Schlebush was Daniel Dean. He was not called by either party as a witness. As indicated above, there was affidavit evidence that his current whereabouts are unknown.
3. The plaintiffs' case relied upon available inferences to be drawn from various business records which included leases, quotations and email correspondence. Most of these documents had been produced through compulsory processes leading up to the hearing. Much of the relevant email correspondence was between Mr Corkery, Mr Schlebusch and others employed by companies controlled by these men.
4. The parties respectively drew my attention to a number of documents in the court book and submitted that certain inferences could be properly drawn from them. I propose to refer to all of the documents to which my attention was drawn and some others I consider relevant. However, I do not consider it necessary to note all of the correspondence in evidence. Further, unless there are significant factual disputes, I propose to state the inferences I have drawn from the majority of these documents. Accordingly, I will note the relevant disputes and defer my findings in respect of them until later in my consideration.

Chronology of events

1. On 6 January 2014 Mr Osborne offered "Hoot Campbelltown Pty Ltd (or nominee)" a 10-year lease from 1 May 2014 of an area described as shop 1, 2-4 Rennie Road Campbelltown ("the Campbelltown premises"). The letter was addressed to Mr Schlebusch and contained references to the need for a fit-out of those premises. From that time there was continued correspondence between Mr Osborne and Mr Schlebusch concerning Mr Schlebusch's commitment to lease the Campbelltown premises to operate a restaurant to be known as "Pizza Pasta Please".
2. On 3 February 2014 Mr Osborne sent an email to Mr Schlebusch seeking confirmation that "the lease document is okay" and noting "I am chasing up the builders [sic] price for you".
3. On 7 February 2014 Mr Osborne sent a quotation for building works from Axiom Contracting Services in the amount of $397,000 to Mr Schlebusch.
4. On 1 April 2014 the lease was entered into over the Campbelltown premises with Mr Osborne as lessor and PPP as lessee under the First Lease. It was accepted during the hearing that PPP was a company set up by Mr Schlebusch in relation to the proposed Pizza Pasta Please business. Mr Schlebusch signed the lease as sole director and sole secretary of PPP.
5. Clause 26 of the First Lease pertained to the fit-out of PPP. A number of definitions were provided in cl 26.1 as follows: "Fit-Out means the Tenant's fit out works to be carried out to the Premises by the Tenant and/or Fit-Out Contractor in accordance with the Plans and Specifications approved in writing by the Landlord, including the external seating area works Fit-Out Contribution means an amount not exceeding $210,000 (GST exclusive) applied to the costs of the Fit-Out in accordance with clause 26."
6. Clause 26.3, headed "Appointment", was in these terms: "(a) The Landlord appoints the Tenant as its agent to carry out that part of the Fit Out up to the value of the Fit out contribution. (b) The Tenant accepts the appointment and the Landlord authorises the Tenant to enter into contracts to carry out the Fit out up to the value of the Fit out contribution on the basis of the tenant being a disclosed agent of the Landlord."
7. Clause 26.12(a) headed "Invoices" was in these terms. "The Tenant's nominated project manager will present to the Landlord the Fit out invoices and a letter certified that the work to which the Fit out invoices relate has been completed together with a letter from the Tenant approving the Fit out Invoices for payment and authorising the Landlord to pay the Fit out invoices at intervals of not less than 20 Business Days during the carrying out of the Fit out."
8. A "Preliminary reflected ceiling plan" was attached to the lease. It was approved by Campbelltown City Council but specified that it was "not for construction purposes". The job number provided on the plan was D13148.
9. Shortly thereafter Mr Corkery, in his capacity as director of Diamond Made, started to be copied into various internal email exchanges of the businesses run by Mr Schlebusch. I am satisfied that during this time Mr Schlebusch informed Mr Osborne that he would be using Mr Corkery's business, Diamond Made, to conduct the fit-out of the Campbelltown premises.
10. On 16 July 2014 Mr Corkery sent an email to Mr Schlebusch with the subject "PPP" stating, "Here is your quote, finally." Attached to the email was a document entitled "Quotation Pizza Pasta Please Campbelltown". A document headed "Quotation" on the letterhead "Diamond Made - Hospitality Project Management and Consultancy" addressed to Morney Schlebush dated 16 July 2014 appears to have been attached to that email. That quotation was the first of the two written documents that the plaintiffs assert comprised the written part of the PPP fit-out contract which gave rise to invoice 238 in the amount of $757,308.16.
11. The quotation from Diamond Made to PPP was described as being valid for 30 days for the project "Pizza, Pasta, Please". The quote was said to be for a "full service fit out". It was also described as being "as per specifications in plans D13146". The quotation then listed 21 separate goods and services to be provided without any individual quotation attached to any of those items. The 21 items were: Demolition, Flooring, Awning, Decking, Cool room/Freezer, Flooring, Ceilings, Walls, General fit out, Hydraulics, Joinery, Windows/Doors, Painting, Air conditioning, Mechanical, Refrigeration, Electrical, Signage, Equipment, Stainless, and Long Service Levy/Certification.
12. Although no individual figures were identified as against any of these categories, they were said to come to a sum total of $688,461.97. After GST of $68,840.19 was added the total was expressed to be $757,308.16. The quotation was signed off by Mr Corkery. The following words then appear in the quotation: "all above prices are exclusive of GST and freight, unless otherwise stated. Timing of supply is conditional upon receipt of purchase order. Payment terms Please note this quote is subject to Terms and Conditions, and is not binding until accepted by Diamond Made Pty Ltd. The attached Terms and Conditions must be signed and returned with your Purchase order Payment due: 40% deposit with purchase order 30% progress payment prior to site work commencing 20% progress payment on completion and hand over 10% final balance payment - 14 days after completion and hand over Dispatch of goods will not be cleared until funds have cleared in Diamond Made bank account Payment terms and finance solutions are available, subject to credit approval and additional creditor fees may apply. Please contact us for more information."
13. Attached to this quotation was a two-page document headed "Diamond Made Pty Ltd Terms and Conditions of Sale". A number of handwritten alterations had been made to the document and initialled by Mr Schlebusch as had the quote. In the signatory section the business name is described as "Pizza Pasta Please" and the quotation is signed by Mr Schlebusch on 6 August 2014 as "Director" of PPP.
14. It was common ground that there is no evidence that this quotation was ever provided to Mr Osborne. It is somewhat surprising that a contract which did not identify how much any of 21 individual items might cost was nonetheless able to be quoted as amounting to $757,308.16 (including GST). I shall return to this issue.
15. On 1 August 2014 Mr Corkery sent an email to Mr Osborne stating, "not sure if you have spoken to Morney yet but he is asked me to request an initial $100K contribution from you." Following this email Mr Osborne sent an email to Mr Schlebusch in the following terms: "Hello Morney, I have received the email below from Charles requesting $100K and whilst I am prepared to do this, it is a deviation from the original intent and a substantial increase in my risk. What I am hoping to obtain prior to doing so, is to discuss with you the present position of your wider group to provide comfort that I won't be left 'holding the bag' as without my faith in you personally as well as your wider business I would not be doing this. My understanding of the present challenges you are facing include too many new projects (Hooters GC, Hooters Townsville and now PPP) substantially drawing all available fronts from cashflow positive businesses (Hooters Parramatta, Penrith, Campbelltown and Margaritaville). The other part is arrangements with prospective purchasers and still further projects on the 'Drawing Board'. My risk with PPP is that the company has no parent Co guarantee and I am yet to receive the bank guarantee ($55,000) under this lease. In addition, the design changes to the building by adding the outdoor deck has resulted in my having to build the car park expansion shall be between $100K-$150k additional expense. Notwithstanding all that, I believe as you do, this business will be extremely successful once operating Today, of the $210,000 incentive, you have drawn down $20,874 which includes July rent. I presume you would like to drawdown August rent as well? With respect to paying the balance, I need tax invoices preferably such that I will own and depreciate items on those invoices (i.e. Bathrooms, Outdoor deck et cetera close bracket. I presume issues faced by your Townsville Builder, could not occur with Diamond made?"
16. The email then went on to discuss further business opportunities after PPP is open. As at the date of this email Diamond Made had not commenced any work on the fit-out and nor had any rent been paid by PPP. I am satisfied that this email reflects that, as at that date, Mr Osborne was still keen to have Mr Schlebusch as a tenant and was prepared to forward some funds to get him started with his fit-out. He was nonetheless concerned as to the progress of the tenancy.
17. On 2 January 2015 Mr Osborne sent an email to Mr Schlebusch and Mr Corkery relevantly in these terms: "Morney and Charles With work scheduled to start on 12 January, there is a significant number of tasks to enable this to occur: 1. Charles to issue deposit invoices to Morney 2. Morney to organise payment ASAP 3. Charles to place orders for long lead items and obtain Engineers report 4. Charles to issue an invoice to Andrew 5. Andrew to contribute funds as agreed 6. Morney to organise bank guarantee for $55k prior to work commencing 7. Charles to finalise CC for PPP 8. Andrew to finalise CC for car park expansion."
18. As at that date work on the fit-out had still not commenced but was anticipated to start shortly. Mr Osborne's tasks were to finalise the construction certificate ("CC") for the car park extension and to "contribute funds as agreed".
19. On 6 January 2015 Suzanne Haberfield, who it was accepted worked for Diamond Made, wrote an email to Mr Osborne which included the following: "Hi Austwide Property Investments, This invoice INV-0000221 for 30,000AUD The amount outstanding of 30,000 AUD is due on 6 Jan 2015."
20. On 13 January 2015 Mr Osborne paid this invoice of $30,000 to Diamond Made. I am satisfied that this invoice and payment establish that the reference to Mr Osborne "contributing funds" in the 2 January 2015 email was a reference to Mr Osborne paying $30,000 to Diamond Made.
21. On 28 January 2015 Mr Osborne emailed Mr Schlebusch advising that his builder for the car park was ready to start and that he "wanted to make sure we are on track with the construction of PPP before we start our work. Any idea when Charles will kick off?" It is clear that Diamond Made had not commenced the fit-out by that date.
22. On that same day Mr Corkery wrote to Mr Schlebusch's lawyer Bianca Slabacu in relation to another property in Mr Schlebusch's portfolio described as "Broadwater". Included in that email is the following: "Yes - DM was always the purchaser of Broadwater. However, it was to fund the purchase from monies paid by Morney for buying into DM".
23. I am satisfied from this and other correspondence I will refer to below that Mr Schlebusch had some form of financial interest in Diamond Made given that he had bought into it. Thus Mr Schlebusch was using a building company in which he had a financial interest to undertake the fit-out at the Campbelltown premises.
24. On 3 February 2015 Nicole Schlebusch, Marketing Director of Mr Schlebusch's companies, sent an email to Mr Corkery stating "we really need the PPP Campbelltown contract discussed today, can you confirm it will be cost +10%? When will the project commence, can I get the timeline?" The contents of this email suggest that Ms Schlebusch wanted a copy of the contract between PPP and Diamond Made for the fit-out of the Campbelltown premises. It is to be recalled that at that time the lease provided that Mr Osborne would contribute $231,000 to the fit-out and had already contributed $30,000 of that amount. It is also an available inference that Nicole Schlebusch believed that the quotation would be for "cost + 10%".
25. In response to this request for the PPP contract, on 4 February 2015 Mr Corkery sent another copy of the quotation referred to at [63] and [64] above under cover of the following email: "Hi Bianca, For your perusal, this is quotation for above fit out - submitted several months ago - approved but not signed off by Morney Kind regards"
26. The quotation attached to that email was in identical terms to the quotation extracted above at [63] and [64] save for the quote date being described as "Thursday, 17 July 2014" rather than "16 July 2014". Furthermore, the terms and conditions of sale attached to this version of the quotation are neither marked up nor signed by anyone.
27. That same day Mr Osborne chased up the bank guarantee for $55,000 Mr Schlebusch had said he would provide to Mr Osborne and Ms Schlebusch emailed Mr Osborne indicating that she had not forgotten about it and that the bank would be coming tomorrow to see them.
28. On that same day, 4 February 2014, Mr Corkery signed a privacy acknowledgement and consent form to Moneytech, the first plaintiff, consistent with an application being made for finance to Moneytech by Diamond Made by that date.
29. On 9 February 2015 Mr Osborne sent an email to Ms Schlebusch chasing up the bank guarantee and noting that the car park expansion was commencing on that day. On that same day Mr Osborne again sent an email to Mr Corkery chasing him up for a start date for the fitout.
30. Also on 9 February 2015 Mr Corkery signed a personal asset and liability statement to Moneytech.
31. On 12 February 2015 Daniel Dean and Mark Cameron from Moneytech signed a letter addressed jointly to Mr Corkery and Mr Schlebusch both said to be of Diamond Made indicating that Moneytech would assist Diamond Made in relation to funding.
32. The evidence is capable of establishing that in this period Mr Osborne was concerned that Diamond Made as builder and PPP as tenant were stalling the commencement of the fit-out of the Campbelltown premises and Mr Osborne had other builders waiting to go. At the same time Mr Corkery and Mr Schlebusch were seeking financing.
33. On 19 February 2015 Mr Corkery wrote to Mr Osborne indicating that although Mr Schlebusch had given him some funds on Tuesday he had then asked for them back.
34. On 24 February 2015 Mr Osborne wrote an email to Matt Morley, who was the broker who introduced Mr Corkery and Mr Schlebusch to Moneytech, in these terms: "Matt Clause 26 defines the $210,000 that I have to contribute to Morney for PPP fitout Regards Andrew Osborne"
35. A copy of the First Lease was attached to this email. This email reflects the fact that in the First Lease Mr Osborne agreed to contribute $210,000 (plus GST) to the PPP fit-out. The available inference is that the broker seeking to obtain financing for Diamond Made through Moneytech was aware that Mr Osborne would be contributing $210,000 to the fit-out to be undertaken by Diamond Made.
36. Sometime in March a confirmed capital agreement was entered into between Moneytech and Diamond Made and Diamond Made Trading.
37. On 16 March 2015 Mr Dean from Moneytech sent an email to Ms Haberfield (Diamond Made) copying in Mr Corkery entitled "next steps". In that email he advised that customers who are going to be financed by Moneytech need to be notified of the assignment change and that somewhere on the footnote of the invoices the words "Diamond Made Pty Ltd has assigned to Diamond Made Trading Pty Ltd (ABN etc) all of its legal and beneficial right, title and interest in and to, invoices and/or debts incurred under your account". In addition new bank account details in the name of Diamond Made needed to be provided.
38. On 16 March 2015 Mr Corkery wrote to Mr Osborne in the following terms: "Hi Andrew Matt is close to finalizing our invoice Finance facility As such, once this is in place, we can invoice up to $2 m and have in our pipeline several projects that will realize this amount I am happy to fund PPP from this cash flow as long as Morney can guarantee payment at end of project Matt is saying that he can definitely arrange this As such please can you confirm amount of your contribution that is available? As I understand it, we have had $30k and there is a further $50k available once Morney provides bank guarantee. Is that correct? Thanks Andrew Kind regards"
39. Consistent with previous evidence I have referred to, this evidence is capable of establishing that as at 16 March Mr Corkery had communicated to Mr Osborne that Diamond Made was about to receive financial assistance which would mean it would have $2 million to finance a number of projects including PPP but that the Bank Guarantee for $55,000 from Mr Schlebusch (as tenant) to Mr Osborne (as landlord) needed to be provided before Mr Osborne would advance another $50,000 of the $210,000 fit-out contribution. There is no reference in that email to any invoice to be issued shortly by Diamond Made to Mr Osborne in the amount of $757,308.16.
40. On 18 March 2015 Mr Schlebusch acted as guarantor to Moneytech for Diamond Made's debt. On 18 March 2015 a general security agreement was reached between Diamond Made and Moneytech.
41. On 20 March 2015 Mr Dean wrote to Mr Osborne in these terms: "Andrew, Thanks for your time today! Can you please confirm your personal ABN, the one that is classed as the Trustee ABN for the AustwideTrust."
42. This email is capable of establishing that Daniel Dean from Moneytech spoke with Mr Osborne that day and needed to obtain some details from him. Mr Osborne replied to that email by indicating that "AustwideTrust" does not exist and that the two entities were himself and AKO No 2 Trust. On 23 March 2015 Mr Osborne wrote a further email to Mr Dean in these terms stating, "Charles tells me require further information. As time is of the essence, why don't you include all the information you are seeking in the next email". Mr Dean replied to this email that day as follows: "Andrew, I sincerely apologise, the goalposts are moving a little too much for my liking at the moment as well. Our insurer Euler Hermes has requested the following information -full names -Date of birth -Driver's license -Address -Contact details Euler will also require the latest financials"
43. On 23 March 2015 Mr Osborne sent an email to Mr Corkery asking for an approximate start date for the fit-out works at the Campbelltown premises as he had to start work on the car park at the same time. Mr Corkery responded to Mr Osborne in the following terms: "Andrew Everything hinges on funds Once we know funds are forthcoming I can work out a schedule that at the moment I would estimate commencement as being the week of Easter"
44. On 24 March 2015 Mr Osborne sent an email to Mr Dean asking whether everyone was satisfied with the information that he had sent to him the previous day.
45. At 3:07 pm on 26 March 2015 Susan Haberfield at Diamond Made sent an invoice to Mr Osborne. Mr Corkery was copied into to that email. The email was in these terms: "Hi Andrew, Please find attached the following invoice for the Pizza Pasta Please Campbelltown project: INV-0000238 Please note that our banking details have changed. Would you kindly advise by way of email that our new bank details have been recorded and updated in your banking system many thanks Andrew. Kind regards Susan Haberfield"
46. Attached to this email was a document on Diamond Made letterhead entitled Tax Invoice. It was addressed to "Andrew K Osborne" at a post-office box in Queensland. The reference on the invoice was "Pizza Pasta Please". The invoice date was 26 March 2015. The invoice was described as being for "Fit Out - as per specification in plans D13146" and was said to be fully payable by 26 May 2015. The invoice was in the amount of $757,308.16 consistent with the quotations sent from Diamond Made to PPP on 16 July 2014 and 4 February 2015.
47. It was common ground that prior to this date there is no evidence of Mr Osborne being aware of this invoice.
48. This invoice differed in a number of respects to the quotations provided to PPP by Diamond Made on 16 July 2014 and 4 February 2015. The differences were that the quotations described the work as a "Full Service Fit Out" as opposed to "Fit Out - as per specification in plans D13146"; the invoice itemised the quantity and unit price of each category of spending (for example, the unit price of joinery or hydraulics); the invoice added new categories, including "Audio Visual" for which $92,882.24 (plus GST) was invoiced.
49. Following receipt of this email and invoice Mr Osborne did two things.
50. First at 5:35 pm that day he forwarded the email and invoice to Mr Schlebusch with the words "Morney - what do I do with this?"
51. Second, the following day, 27 March 2015 he forwarded the email and invoice to Mr Corkery asking "what happens now?" Mr Corkery responded to that email at 10:19 am by stating: "Insurance company has approved you for a limit of $350k. I have told them that it is unrealistic are not acceptable Broker is going back to insurer to see what can be done They have approved another client for $300k - with no background no financials. Just waiting to see. Should know today. Factor company (Dan) requested that we invoice full amount; send you notice of change of bank accounts et cetera and proceed on the expectation that it will be approved in full"
52. The plaintiffs relied upon this email as evidence that even if there was no authority for PPP to contract with Diamond Made on behalf of Mr Osborne ratified the contract by this email and other subsequent conduct. I shall return to the significance of Mr Osborne's response to getting this invoice later in these reasons.
53. There is no evidence of any written correspondence from Mr Osborne to anyone at Moneytech after this time.
54. Moneytech's evidence (as summarised above) is that following the invoice sent to Mr Osborne on 26 March 2015 being forwarded by Diamond Made to it, funds were advanced to Diamond Made.
55. On 27 March 2015 at 11:40 am Mr Osborne wrote to Mr Dean asking "why did the insurance company only approve me for $350k?" There are further emails about Mr Osborne being insured. The next email exchange between Mr Osborne and Mr Corkery appears to have occurred on 7 April 2015. Mr Corkery wrote to Mr Osborne: "sorry - still waiting to hear. Told I would know by COB but have heard nothing." On 9 April 2015, Mr Osborne wrote to Mr Corkery, "Charles - any word yet", to which he replied that day, "Looks as though they will go $500K tops. Waiting on confirmation. Had an email saying that yesterday from Daniel but no action as yet. I am looking at starting in next 7-10 says and have scheduled it."
56. On 24 April 2015 Euler Hermes issued a certificate of insurance which stated that the insured person was Mr Osborne and the entity taking out that insurance policy was Diamond Made. There was no evidence before the court explaining this policy but the inference is available that Diamond Made was required to take out insurance against Mr Osborne as a condition of his funding of Diamond Made's debts. Mr Osborne knew of the insurance.
57. By 16 July 2015 Diamond Made had still not commenced work on the fit-out. On that date there was an email exchange between Mr Osborne and Mr Corkery in which Mr Osborne indicated that he had already paid a Diamond Made invoice for $30,000 back in January 2015. Mr Osborne asked whether if PPP did not "proceed" he would be refunded that amount. Mr Corkery responded by email reassuring Mr Osborne and enquired as to whether Mr Osborne would pay a further $170,000 to ensure that PPP "happened".
58. On 13 August 2015 Mr Dean sent an email to Mr Osborne inquiring as to why the outstanding debts of $522,308.16 had not been paid with a reference to invoice 238. Mr Osborne as the customer was described as "Pizza Pasta Please Campbelltown". There was no written response to this email.
59. On 2 September 2015 Susan Haberfield sent Mr Osborne an invoice for $70,970.35 (INV-0041) on behalf of Diamond Made Group for part payment of the fit-out. Putting to one side the $30,000 contribution to the fit-out paid by Mr Osborne to Diamond Made on 13 January 2015, this was the first invoice rendered by Diamond Made Group to Mr Osborne for work done on the fit-out of the Campbelltown premises.
60. On 14 September 2015 Mr Osborne sent an email to Mr Corkery, Mr Schlebusch and Ms Schlebusch in these terms: "Charles, Morney and Nichole Just a few matters to be clarified to ensure the smooth transfer of funds relating to the construction works at PPP Campbelltown Firstly, given this ongoing dispute with the Money tech, I need a credit note for the attached invoice issued sometime back for $757,308.16. I understand you have this under control but I don't want any outstanding paperwork in my name please Secondly, I'm happy to pay all and any bills you wish however in keeping with our agreement, these will be paid for completed work only. The current attached invoice will be paid however I would like to see more work completed ahead of any payment. Lastly, I'm still waiting on the finalised Signed Leases And Bank guarantee before any payments can be made Should you wish to discuss this, please fill free to call."
61. The "current attached invoice" is a reference to the invoice for $70,970.35 issued to Mr Osborne from Diamond Made Group referred to above. On 14 September 2015 at 9:39 am Ms Schlebusch responded to Mr Osborne's email of that day and, in respect to the first bullet point raised by Mr Osborne, said, "I am not privy to the Money Tech documents so I am unable to assist."
62. This email is consistent with Mr Osborne being aware at that time that there was an ongoing dispute with Moneytech and that he needed a credit note in the amount of $757,308.16 for an invoice "issued sometime back". Although Mr Osborne states his understanding that "Charles, Morney and Nichole" have the "situation" with Moneytech "under control", he wanted the credit note anyway as he did not wish there to be any "outstanding paperwork" in his name.
63. On 18 September 2015 Ms Haberfield sent an email to Mr Osborne attaching an invoice numbered INV-00434 for $70,070 due on 18 September 2015. This was the second invoice rendered by Diamond Made Group to Mr Osborne as contribution to the fit-out of PPP. The payment was transferred into Diamond Made account.
64. On 23 September 2015 Mr Osborne paid Diamond Made Group's first invoice for $70,970.35 issued on 2 September 2015 by transferring it into Diamond Made's account.
65. On 25 September 2015 Ms Haberfield sent a further invoice number INV-00474 in the amount of $87,780 rendered by Diamond Made Group. This was described as being the third progress payment for PPP Campbelltown. On that same day at 8:07 pm Mr Osborne sent an email to Mr Corkery in these terms: "Have you made any progress on the credit note for the $757,308?"
66. That invoice (474) was paid on 8 October 2015 by transferring the funds into the Diamond Made account.
67. On 30 September 2015 the First Lease was surrendered. By that stage there was work being performed on the fit-out and three of the four progress payments had been rendered by Diamond Made Group.
68. On 1 October 2015 Mr Osborne sent an email to Mr Corkery advising that he had paid $20,000 of the second invoice ($70,070) but would have to pay the remaining $50,000 the following day as his bank would not permit him to transfer the full amount in the one transfer.
69. On that same day, 1 October 2015, the Second Lease was entered into between Mr Osborne and PPP Campbelltown for the Campbelltown premises. The lease was to commence on that date for a period of five years with an option to renew for five years. The terms of the Second Lease were identical to the earlier lease save that cl 26 defined "Fit-Out Contribution" as being an amount not exceeding $450,000 (GST inclusive).
70. On 6 October 2015 Ms Sandral emailed Mr Osborne attaching a final demand in the amount of $490,000.
71. Mr Osborne forwarded the final demand to Mr Osborne with the words "I need a credit note for this." This is the third request in writing from Mr Osborne to Mr Corkery for a credit note for the amount of $757,308.16.
72. Mr Osborne subsequently sent a further email that day to Mr Corkery forwarding the attached final demand stating "I need this attended to. I need that credit note!!!" That was the fourth written request by Mr Osborne for a credit note from Diamond Made for the invoice in the amount of $757,308.16.
73. Mr Corkery finally responded to Mr Osborne's emails at 7:03 pm, copying in Mr Schlebusch in these terms "I will go and see them tomorrow and I will have Suzanne issue credit note."
74. On 7 October 2015 at 3:52pm Mr Corkery emailed Mr Osborne in the following terms: "Andrew I have finished my meeting with Sonia from above factoring company I have confirmed that you have paid Diamond Made in full and that there are no outstanding amounts owing Diamond Made now assumes the debt for the balance owing to Moneytech Kind regards"
75. On 8 October 2015 Mr Osborne paid the third invoice rendered by Diamond Made in the amount of $87,780 by transferring it into Diamond Made's account. He then sent an email to Ms Schlebusch copying in Mr Schlebusch noting that he had paid all three invoices that had been raised thus far by "Charles/Diamond Made".
76. On 27 October 2015 a fourth invoice for $97,020 was issued by Diamond Made Group to Mr Osborne. On that same day Mr Osborne sent an email to Mr Schlebusch with the subject "PPP incentive summary" in which he attached a spreadsheet summary of the incentives he had provided under both leases which he summarised as follows: "$225,966.58 has been taken up as rent. This includes November 2015. Rent is next due on 1 December $358,175.79 has been taken up as building costs $2300.76 has been taken up as legal costs There is still $73,556.87 available however prior to opening, we need a further $25,000 as security deposit. I can take the set of the incentive if you prefer. You have the option of providing another $55,000 security deposit in lieu of Morney's personal guarantee. Please advise what you want to do with the security deposit issue as the remaining incentive is insufficient to cover both are any more invoices from Charles."
77. On 12 November 2015 Mr Osborne sent an email to Mr Corkery in the following terms "Charles I'm still waiting on approval from Morney however the amount discussed is $48,556.87 plus GST. He said he would provide the balance to you. If this is paid, that is the end of the landlord's obligations."
78. On 31 March 2016 a demand notice was issued to Mr Osborne by Diamond Made Trading seeking payment of $732,308.16.

The no case submission

1. At the close of the plaintiffs' case, Mr Robertson made an application under Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 29.10 that the proceedings be dismissed at this stage for want of evidence. He provided written submissions and a folder of authorities and made oral submissions as well.
2. Mr Robertson cited a number of authorities as being relevant to the test to be applied which I will consider further below.
3. Mr Robertson accepted that if he was unsuccessful in his application then he would be precluded from calling a defence case without leave. He submitted that, unlike the position at common law, the court does not need to consider exercising a discretion as to whether or not to require him to elect not to go into evidence. He then submitted that there was no case to answer for the following reasons.
4. First, it was submitted that the evidence does not support a conclusion that there ever was any contract between PPP (whether or on its own behalf or as agent for Mr Osborne) and Diamond Made between February 2015 and March 2015 in the terms set out in the quotation at the price of $750,308.16. Rather, it was submitted, the evidence is to the contrary.
5. Reliance was placed on the differences between the initial quotation rendered to PPP by Diamond Made and the invoice sued upon. The buyer/customer is different. The scope of works is different. The payment terms are different.
6. Further, the email on 18 August 2015 suggests that negotiations between PPP and Diamond Made had not come to an end as late as August 2015.
7. It was common ground that there was no evidence that the quotation said to constitute the alleged contract was ever actually sent to Mr Osborne.
8. The plaintiffs' argument that there was a valid contract relies on Mr Schlebusch acting as Mr Osborne's agent pursuant to the First Lease. That lease authorised Mr Schlebusch to enter into a contract up to the amount of $210,000 but only if it was expressed to be as an actual agent of Mr Osborne. That did not occur in this case.
9. Mr Robertson noted that the plaintiffs' case as articulated at [11] of its written submissions was that the First Lease authorised Mr Schlebusch to enter into a contract for the fit out that was not limited by any money terms. That is, the plaintiffs' case was that the relevance of the monetary figure was only to limit Mr Osborne's liability to PPP and not as between Diamond Made and Mr Osborne. It was submitted that such an arrangement would be a commercial absurdity.
10. It was submitted that there was no evidence of any express actual agency; that is, PPP did not conclude the contract as Mr Osborne's express actual agent. The First Lease commenced on 1 April 2014. The fit-out contribution was $210,000 and Mr Schlebusch could only act as a disclosed agent. That lease could only be varied by deed (see clause 24.4).
11. Nor could it be said that there was any implied actual agency. It was submitted that there was no evidence supporting the proposition that PPP impliedly had any authority to enter into any contracts on Mr Osborne's behalf other than contracts falling within the express authority conferred by the First Lease. The references to the emails of Mr Osborne contributing funds as agreed and those referring to the incentive are inconsistent with any implied actual agency to go beyond that amount.
12. Nor is there any evidence of ostensible agency in this matter. There is no evidence that Mr Osborne represented to anyone that PPP had authority to enter into a contract to the value of $757,308.16 on Mr Osborne's behalf. Nor, significantly, was any evidence adduced by Diamond Made Trading or Diamond Made that there are never been any such representation made by Mr Osborne.
13. Even if the court was against Mr Osborne in relation to the existence of a contract it was submitted that there had been no ratification of it by Mr Osborne. It was submitted that it would not be open for the court to conclude that Mr Osborne ratified any contract so as to become liable as principal. There is no evidence which would support a conclusion that PPP profess to act on behalf of Mr Osborne when he entered the contract nor is there any evidence of an unequivocal act of ratification.
14. If the court was against Mr Osborne in relation to the existence of a contract creating a debt that it was submitted that there was no lawful assignment of the debt. It was submitted that there was no evidence of an assignment in law in circumstances were s 12 of the Conveyancing Act 1919 (NSW) had not been complied with nor, significantly, was any debt even owing at the time of the assignment of the debt.
15. Mr Robertson conceded that equity will treat as enforceable an agreement to assign for valuable consideration.
16. Finally, it was submitted that Moneytech has no cause of action against Mr Osborne on any view and the proceedings should be dismissed in so far as they are brought by Moneytech. It was submitted that the proceedings in so far as they brought by Diamond Made Trading also fail as there was no contract as alleged and even if there was it was not binding on Mr Osborne as principal. Nor is there any evidence that the full amount of the debt remains outstanding.

The plaintiffs' submissions

1. In response to Mr Robertson's application for dismissal of the proceedings, Mr Wood submitted first that Mr Osborne's case substantially rests on the premise that the pleaded contract is fraudulent. He submitted that, in making such a finding, namely, that his client has been defrauded by someone else, the court should have regard to the gravity of the matters alleged: Evidence Act 1995 (NSW) s 140(2)(c).
2. Secondly, Mr Wood submitted that that evidence of the quotation of 17 July 2014 is comfortably sufficient to draw the inference that it was signed by Mr Schlebusch and accepted by Diamond Made. He submitted that the documentary evidence is comfortably capable of showing that there was a contract for the fit-out work, that Diamond Made was a party to it and that PPP executed it in some capacity, either in its own capacity or in the capacity as the agent for Mr Osborne. Although it may be unclear when that contract came into effect, on Mr Wood's submission the court could safely infer that there was a contract because work was subsequently done and payment was made. It was said to not be fatal to the plaintiffs' case that the terms of that contract may be the unamended version, or may be the marked up version. Any inference was limited to the documents themselves as opposed to the conduct.
3. It was submitted that Mr Osborne must have had the relevant quotations from Diamond Made at some time as they were produced by him during the discovery process.
4. Reliance was placed on the documentation suggesting that Mr Osborne took a direct involvement in the need to fit out the Campbelltown promises from the start and his efforts to exercise some control over the fit-out and commencement of the lease were said to be inconsistent with him being merely a landlord.
5. Mr Wood did not resile from his initial arguments that the scope of the authorisation to act as Mr Osborne's limit extended to a contract in the amount of $757,308.16 but submitted that the better case is that Mr Osborne's subsequent actions fully ratified the contract. Significant reliance was placed upon the absence of any explanation as to why when Mr Osborne received the document on 26 March 2015 he did not contact Moneytech and dispute it.
6. Mr Wood submitted that Mr Osborne is liable as undisclosed or disclosed principal because he has made some payments and there was a notice of assignment.
7. It was submitted that it was a matter for Mr Osborne to call both Mr Schlebusch and Mr Corkery as witnesses as they were defendants in the proceedings and had been sued by the plaintiffs. Reliance was placed upon the fact that the familiarity in the language suggest that at the relevant time Mr Osborne and Mr Schlebusch were on very friendly terms. Despite this it was accepted on behalf of the plaintiffs that when Mr Osborne asked Mr Schlebusch on 26 March 2015 what to do with the invoice that is not consistent with ratification.
8. Reliance was placed upon the reference to D13146 in both the quotation and the invoices being consistent with the fit-out specifications
9. As for the evidence that Diamond Made took out insurance against Mr Osborne it was submitted that it is clear that Mr Osborne is the person being approved for insurance and that the insurance was required by Moneytech.
10. Mr Wood relied upon a number of authorities in support of his case regarding agency and ratification. Those cases included Junker v Hepburn [2010] NSWSC 88 at [41]-[43] per Hammerschlag J; cited with approval in Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd [2017] FCAFC 75 at [148]; McKeand v Thomas [2006] NSWSC 1028 at [76]; Quarante Pty Ltd v The Owners of Strata Plan No 67212 [2008] NSWCA 258 at [109].
11. Mr Wood further referred to the Full Court of the Federal Court's decision in McIntyre v Gye (1994) 51 FCR 472 at 480 where Davies, Burchett and Gummow JJ made the observation that once a debtor has received notice of an equitable assignment of a legal chose in action "he cannot safely disregard it; if the debtor pays the assignor in disregard of the notice, then the assignee can require the debtor to pay again". Mr Wood's primary case was that the assignment was in law, but relied in the alternative on it being an equitable assignment.
12. He submitted that Mr Osborne wanted the project to proceed, so he had an interest in making sure that that happened, and so he assisted in causing the insurer to increase his credit limit.
13. It was conceded that the Second Lease could only be relevant to the question of ratification and not as to the creation of the contract per se. On the question of ratification, Mr Wood referred to the Court of Appeal's decision in Leybourne v Permanent Custodians Ltd [2010] NSWCA 78 at [132].

Consideration

1. The sixth defendant, Mr Osborne, seeks judgment in its favour at the close of the plaintiff's case. The relevant rule is UCPR r 29.10 which is in these terms: "29.10 Judgment for want of evidence (cf SCR Part 34, rule 8; DCR Part 26, rule 8; LCR Part 21, rule 6) (1) An opposite party may apply to the court to give judgment for the opposite party, either generally or on any claim for relief in the proceedings, on the ground that, on the evidence given, a judgment for the beginning party could not be supported. (2) Such an application may be made at any time after the conclusion of the evidence for the beginning party in his or her case in chief. (3) The court may not give judgment under this rule unless the opposite party satisfies the court that, on the evidence given, a judgment for the beginning party could not be supported. (4) If the opposite party fails to satisfy the court that, on the evidence given, a judgment for the beginning party could not be supported, the opposite party may not adduce evidence or further evidence in the proceedings generally or on the claim for relief concerned, as the case may be, except by leave of the court. (5) If not all opposite parties apply to the court under subrule (1), the court must not deal with any such application before the conclusion of the evidence given for all parties." (Emphasis added.)
2. The test in UCPR r 29.10(1) is whether, based on the available evidence, a judgment "could not be supported". I have had regard to the decision in Hunt v Watkins (2000) 49 NSWLR 508; [2000] NSWCA 229. In that case, Stein JA (Fitzgerald and Heydon JJA agreeing) held at [8]-[10] that a "jury test" is to be applied when determining an application under the relevant District Court rule (which was in substantially the same form as UCPR r 29.10). His Honour held that the "jury test" requires that a judgment by direction should be given in favour of an opposite party if the evidence adduced is such that a verdict by a jury in favour of the beginning party would, if challenged, necessarily be set aside: referring to Mailman v Ellison (Court of Appeal, 25 November 1993, unrep) at 4 per Mahoney JA. In dealing with a submission of there being no case to answer, the question to be decided is whether there is any evidence that is reasonably capable of satisfying the tribunal of fact that the matters sought to be proved have been established.
3. It seems to me to be somewhat outdated to be applying a "jury test" in assessing whether there should be judgment in a civil matter for want of evidence. With the exception of defamation proceedings juries no longer hear cases in the civil jurisdiction of this court. Despite this, I will proceed on the basis that I would only accede to Mr Osborne's application for judgment at the end of the plaintiffs' case if, taking the evidence thus far at its highest, a judgment for the plaintiffs could not be supported in the sense that if challenged on appeal it would necessarily be set aside.
4. It was accepted by counsel that the determination of Mr Osborne's application would finalise the matter. In the event that Mr Osborne was successful the plaintiffs must fail. In the event that Mr Osborne was unsuccessful then Mr Robertson accepted that he would be precluded from calling witnesses in support of a defence case without leave. UCPR r 29.11(4) provides that in such an event he could not adduce evidence except by leave of the court. That is, unlike the position at common law, the court did not need to consider whether or not to require Mr Osborne to elect not to go into evidence. Mr Robertson accepted that it would be a difficult exercise for him to establish that leave ought to be granted in this matter given the basis of the application.
5. It was accepted on behalf of Mr Osborne that the plaintiffs' case should be assessed having regard to inferences to be drawn from the absence of evidence from Mr Osborne. Despite this, it was submitted that no inference adverse to Mr Osborne could fill a gap in the plaintiffs' evidence and no inference favourable to the plaintiffs ought to be drawn in relation to an issue in respect of which one of the plaintiffs' witnesses could have, but was not, asked to address in their evidence-in-chief. My attention was drawn to a number of decisions concerning these principles including Hunt v Watkins; Jones v Dunkel (1959) 101 CLR 298, ASIC v Hellicar (2012) 247 CLR 345 and Commercial Union Assurance v Ferrcom (1991) 22 NSWLR 389.
6. The determination I am required to make does not involve making any findings of credit. Only two witnesses were required for cross examination, Mr Cameron and Ms Sandral. There was no attack on the credit of either of these witnesses on behalf of Mr Osborne, although doubts were raised following the cross-examination of Mr Cameron as to whether the court could be satisfied of the amount of any proved debt still outstanding. The determination of Mr Osborne's application turns on the sufficiency of evidence that is largely in documentary form and invites inferences to be drawn from those documents.
7. The parties relied upon a number of authorities to establish their respective positions. There was no real dispute as to the relevant principles to be applied. It was accepted that the scope of the authority must be established. In Barry Albert Andrews & 4 Ors v Racken Pty Ltd & 7 Ors [2007] NSWSC 1010 White J said at [244]: "I was not referred to any authority in which it has been held that, where an agent with limited authority enters into a transaction on his principal's behalf which exceeds his actual authority, and is not within any ostensible authority, the principal is bound by the transaction to the extent it was within the agent's authority. As a matter of principle, it seems to me that a principal ought to be so bound if the transaction within the agent's authority is a distinct and severable transaction from that which was outside it (Tobin v Broadbent (1947) 75 CLR 378 at 400-401 per Dixon J)."
8. In order for there to be implied actual agency it is necessary to interpret the relationship and dealings of the two parties. In determining whether there has been a grant of implied authority the court will look to the intention of the principal in the grant of authority. Further, an implied grant of actual authority can result from acquiescence in the course of behaviour by persons who have actual authority to delegate, for example, were a board of directors stand by while a single director enters a transaction: Junker v Hepburn at [43] per Hammerschlag J.
9. Where an agent or purported agent acts beyond their actual authority the principal may still be liable if they have made a representation or acted in such a manner as to grant the agent ostensible authority. This doctrine operates in a similar manner to an estoppel by conduct. In order for this principle to apply there must be evidence of a representation by the principal to the effect that the agent had authority to enter into a contract to the disputed amount: see Northside Developments v Registrar General (1998) 170 CLR 146 at 211 per Gaudron J.
10. In the present case the plaintiffs would need to establish a representation made by Mr Osborne to the effect that PPP had authority to enter into a contract to the value of $757,308.16. In addition there would have to be evidence of some reliance by Diamond Made Trading or Diamond Made on that representation: Feldman v GNM Australia Ltd [2017] NSWCA 107 at [100] per Beazley P.
11. As for the plaintiffs' case on ratification of the $757,308.16 contract by Mr Osborne, both parties relied upon the decision in Leybourne v Permanent Custodians Ltd at [131] and [132] where Giles JA, Tobias JA and Sackville AJA said: "[131] A principal can ratify the making of a contract entered into by a purported agent when the agent did not in truth have authority to make the contract on behalf of the principal. The ratification has retrospective effect, and the agent is treated as having had the requisite authority: Union Bank of Australia Ltd v McClintock (1922) 1 AC 240 at 248; [2006] NSWSC 1028 at [81]; Jones v Peters (1948) VLR 331 at 335. [132] Whether the conduct of the principal amounts to ratification is a question of fact, but there should be 'clear adoptive acts' (Eastern Construction Co Ltd v National Trust Co Ltd (1914) AC 197 at 213 per Lord Atkinson); the conduct must be unequivocal (for example, Petersen v Moloney (1951) 84 CLR 91 at 101). It is well expressed in Dal Pont, Law of Agency, 2nd ed at 5.28 - 'The positive acts of the alleged principal may, aside from any express words, constitute sufficient evidence of ratification. This may be so where the fair inference to be drawn from a person's conduct, on an objective basis, is that the person consents to a transaction to which he or she might properly have objected. Put another way, ratification 'is implied from or involved in acts when you cannot logically analyse the act without imputing such approval to the party whether his mind in fact approved or disapproved or wholly disregarded the question'. (citations omitted)"
12. With these principles in mind I turn to consider the state of the evidence at the close of the plaintiffs' case.
13. The plaintiffs' rely upon a number of alternate arguments to establish that there was a contract between Mr Osborne and Diamond Made for the provision of fit-out services in the amount of $757,308.16 based on specified documents and conduct. The difficulty is that the documents and conduct relied upon do not disclose any such contract ever existed, even taking the case at its highest. I am not satisfied that a finding that there was a contract between Diamond Made and Mr Osborne, by his agent PPP, in the sum of $757,308.16, could be supported based on the evidence. To put this another way, I am not satisfied that there is evidence to establish a $757,308.16 contract as alleged by the plaintiffs and thus the plaintiffs case must fail.
14. I have already summarised the evidence in some detail and made a number of factual findings. I do not propose to repeat that evidence beyond that necessary to explain my conclusion. My reasons, based on that evidence, are as follows.

There is no evidence of a $757,308.16 contract between Mr Osborne and Diamond Made

1. This case is described in the pleadings as one of disclosed agency. The plaintiffs assert that the terms of the First Lease authorised PPP to enter into a contract as the disclosed agent of Mr Osborne. The plaintiff relies upon the terms of the First Lease and the terms of the quotations forwarded to PPP by Diamond Made on 16 July 2014 and 4 February 2015 to establish this contract. There are a number of difficulties with seeking to establish any $757,308.16 contract in this way.
2. First, neither of the quotations relied upon by the plaintiff disclose that PPP is acting as the agent of Mr Osborne. Of the two versions of the quotation relied upon to support the existence of such a contract; one is unsigned and the other is signed by Mr Schlebusch as sole director for PPP without any reference at all to Mr Osborne. There is no documentary evidence that PPP entered into any contract in the amount of $757,308.16 as the disclosed agent of Mr Osborne.
3. Second, both of the quotations are in slightly different terms. The first version is signed and marked up and the second one is not and has a different date on it. Mr Schlebusch signed the first quotation which had the amendments. There is no signature on the second quotation nor are there any amendments on it. There is no evidence as to who marked up the first version of the quotation provided. The email from Diamond Made to PPP on 4 February 2015 describes the quotation as being "approved but not signed off by Morney" but the attached terms and conditions are in a different form to the one that had been forwarded earlier and were not "signed off by Morney". There is no other evidence of acceptance of any such contract.
4. Third, the terms of the First Lease authorised PPP to enter a contract as the disclosed agent of Mr Osborne only up to the amount of $210,000 (plus GST). It was conceded on behalf of the plaintiffs that in circumstances where the Second Lease (with the higher fit-out incentive) was not entered into until many months after invoice 238 was rendered means that the existence of the Second Lease is not relevant to determining whether the $757,308.16 contract existed.
5. Fourth, there is no evidence that either of the two quotations from Diamond Made were ever provided to Mr Osborne prior to invoice 238 being rendered on 26 March 2015. Although it is to be accepted that Mr Osborne produced this document many years later as part of the discovery process, there is no contemporaneous evidence to establish that he had it at the relevant time.
6. Fifth, there are significant differences between the terms of the Diamond Made quotations sent to PPP on 16 July 2014 and 4 February 2015 and the terms of invoice 238 issued to Mr Osborne on 26 March 2015. I have extracted some of these differences above at [100] and [135]. One such difference is the buyer/customer; whereas the quotations were sent from Diamond Made to Mr Schlebusch, the invoices were rendered to Andrew Osborne in his name alone. Another difference is the scope of the work. For example, invoice 238 includes $92,882.24 for television and audio that was absent from the quotations. Other items have been removed and other items have been added. As for the payment terms the quotations sent from Diamond made to PPP provide for payment by four instalments of 40%, 30%, 20% and 10% after certain events occur. This is inconsistent with the invoice 238 which demanded the entire amount by 26 May 2015.
7. There are other emails inconsistent with the existence of any $757,308.16 contract. In the email of 4 February 2015 from Ms Schlebusch at PPP requesting the PPP contract, she inquires of Diamond Made whether the PPP contract would be "cost +10%". This is months after the plaintiffs allege a PPP fit-out contract at $757,308.16 was entered into on 16 July 2014 (the first quotation which was signed). There are other emails prior to March 2015 that demonstrate that there are still negotiations as to the amount that Mr Osborne will "contribute" towards the fit-out. All of this conduct is inconsistent with PPP been given carte blanche by Mr Osborne as to the amount of the fit-out. It is also inconsistent with Mr Osborne subsequently agreeing to pay Diamond Made $757,308.16 on 26 March 2015 by acceptance of invoice 238 for work that had not commenced.
8. The plaintiffs' case, as set out in its written submissions, is that the authority to enter into a fit-out contract contained in the leases was not limited by any money amount. On this basis, the relevance of the monetary figure was said only to limit Mr Osborne's liability to PPP and not his liability to the third party, in this case, Diamond Made. I do not accept this submission. Not only is it contrary to the evidence, it makes no sense commercially.
9. To the extent that the plaintiffs rely upon evidence of the limited agency being varied by way of contract or conduct between 1 April 2014 and 26 March 2015, no such evidence was produced and the emails I have extracted above establish the opposite.
10. The above matters satisfy me that the quotations relied upon by the plaintiffs do not prove any disclosed agency agreement between Diamond Made and Mr Osborne in the amount of $757,308.16 for a fit-out.

Conduct of Mr Osborne: implied authority, ratification, ostensible authority

1. In addition to reliance upon the quotation and lease documents, the plaintiffs also rely upon the conduct of Mr Osborne as establishing either implied actual authority or ostensible authority. Such conduct is also relied upon to establish that, even if Mr Osborne was not aware of the contract, he subsequently ratified it. I have considered the evidence of Mr Osborne's conduct and I am not satisfied that it is capable of proving the $757,308.16 contract either, whether in the context of the documents I have referred to above or otherwise. I have reached this conclusion based on the following evidence of Mr Osborne's conduct.
2. First, a number of emails sent by Mr Osborne establish that he was unwilling to pay any of the fit-out amount before any work had been completed: see for example the email on 1 August 2014 where he is reluctant to contribute $100,000 before any work is done. He subsequently only contributed $30,000 for this purpose. This is inconsistent with Mr Osborne ever authorising Mr Schlebusch to enter a contract for nearly four times the amount of the agreed incentive prior to any work being done. The evidence is that the work did not commence until late August 2015.
3. Second, Mr Osborne made it clear to PPP in an email that the incentive of $231,000 was virtually exhausted by the time of the Second Lease. Most of it had gone on unpaid rent. Of the first fit-out incentive of $231,000 in the First Lease, only $30,000 was paid to Diamond Made for the fit-out and still no work had been started by them at that time. This is inconsistent with the existence of any contract between Diamond Made and Mr Osborne in the amount of $757,308.16 that was already payable by that date.
4. The plaintiffs relied upon the conduct of Mr Osborne after receiving the $757,308.16 invoice as suggesting he ratified the contract. It was submitted that by not immediately contacting Moneytech to dispute the invoice there was ratification of the PPP fit-out contract in the amount of $757,308.16 said to be payable by Mr Osborne.
5. I have considered the conduct of Mr Osborne after 26 March 2015. It is to be accepted that there is no written evidence that he approached Moneytech to dispute the bill. However, he forwarded the invoice to Mr Schlebusch that day asking him what to do with it, which is inconsistent with him accepting it was an amount he had to pay. After the email exchanges on that day and the following day there is no further mention of this invoice, again, until Mr Osborne is contacted by Daniel Dean for payment on 13 August 2015. The fit-out had still not commenced by that time. The First Lease was surrendered on 30 September 2015.
6. Following Mr Dean's requests for payment from Mr Osborne, Mr Osborne made four approaches to Mr Schlebusch and/or Mr Corkery seeking a "credit note" in the amount of $757,308.16, being the amount of invoice 238. At no stage did either Mr Schlebusch or Mr Corkery do or say anything to suggest that Mr Osborne was liable to pay invoice 238. This is consistent with the conduct of Mr Osborne who also proceeded on the basis that he was not liable to pay the amount. It was only after Mr Osborne was reassured by Mr Corkery that he had persuaded the plaintiffs that Mr Osborne did not owe anything that Mr Osborne ceased requests for a credit note in the amount of $757,308.16.
7. Not only is there written evidence of Mr Osborne disclaiming any liability for the invoice $757,308.16, there is also evidence that he was reassured by Mr Corkery - the director of the company who rendered the invoice (putting to one side any issue of assignment of it) - that he was not liable for the amount in that invoice.
8. There is no evidence of any representations on the part of Mr Schlebusch that he was acting as agent for Mr Osborne at any time. Nor is there any evidence of reliance by Mr Cameron or Ms Sandral on any such representation. At the time that Moneytech agreed to provide finance to Diamond Made it was labouring under the mistaken belief that Mr Osborne was somehow in charge of or connected in some way with PPP. Invoice 238 created on 26 March 2015 was addressed to Andrew Osborne, and his business was described as PPP. This mistaken belief continued until the amendment of the statement of claim on June 2017. Putting to one side how such a mistaken belief arose, it could not be said that Moneytech acted on any representation that PPP was acting as Mr Osborne's agent. On this basis it could not be concluded that anyone at Moneytech ever relied upon any representations that Mr Schlebusch was acting as the agent of Mr Osborne in the contract.
9. There is no evidence that had Diamond Made Trading, the second plaintiff, known that Mr Osborne had not authorised PPP to enter into the contract they would not have caused the money to be transferred. In any event principles of ostensible agency do not assist the plaintiff in this matter if there is no evidence that a contract existed in the first place.

There was a fit-out contract

1. The evidence suggests that there was a subsequent agreement under the Second Lease between Diamond Made and PPP to complete the fit-out of the Campbelltown premises using the new incentive payment of $450,000. Work was done and payments were promptly made.
2. By the time of the Second Lease on 1 October 2015, a new incentive of $450,000 was offered to PPP by Mr Osborne. Four invoices were subsequently issued to PPP by Diamond Made consistent with that new incentive but paid for by Mr Osborne, consistent with his obligations under cl 26(12)(a) of the lease. The first invoice of $70,970.35 was paid on 23 September 2015; the second payment of $70,070 was paid on 1 and 2 October 2015, the third payment of $87,780 was paid on 8 October 2015 and the final payment of $97,020 under the fourth invoice was paid on 28 October 2015. The emails on 27 October 2015 and 12 November 2015 between Mr Osborne and Mr Corkery show that after those amounts have been paid to Diamond Made there remained a figure of $48,556.87 out of the full amount of the incentive offered in the Second Lease. That amount was transferred to Diamond Made on 13 November 2015. Correspondence from Mr Osborne is consistent with all of the landlord's obligations expiring at that time.
3. The plaintiffs relied upon this work and the payments made as evidence establishing the existence of an earlier $737,308.16 fit-out contract between Diamond Made and Mr Osborne. I am not satisfied that this inference can be drawn given the other contemporaneous evidence regarding this smaller fit-out. Consistent with his obligations under the Second Lease, Mr Osborne paid an incentive amount of $450,000 towards that fit-out. Although there is no written contract to this effect, the emails and conduct I have referred to above and in particular the timing satisfies me that this evidence does not support the existence of any earlier $757,308.16 contract. Further, the payment by Mr Osborne of the invoices rendered by Diamond Made Trading up to the amount of nearly $400,000 in September and October is completely inconsistent with the existence of any earlier obligation to pay Diamond Made $757,308.16 for the fit-out.
4. Similarly, the plaintiffs contend that when Mr Osborne paid these amounts under the Second Lease he was in fact paying Diamond Made/Diamond Made Group instead of Diamond Made Trading under the $757,308.16 contract in error and now has to pay again, this time to the second plaintiff. This submission presumes the existence of the $757,308.16 contract in the first place, a matter of which I am not satisfied.

Missing witnesses

1. I have given consideration to the fact that I have not heard evidence from Mr Corkery, Mr Schlebusch, Mr Dean or Mr Osborne.
2. The absence of any evidence from Mr Corkery and Mr Schlebusch means that I am not assisted in being able to ascertain the provenance of the $757,308.16 invoice. The fact remains that there are a number of irregularities in relation to it.
3. I have already set out above the discrepancies between the two quotations forwarded by Diamond Made to PPP on 16 July 2014 and 4 February 2015 as well is the discrepancies between those quotations and invoice 238. I am not satisfied that the fact that the quotations and the invoice all refer to the same job number, D13148, being the job number referred to on the plan attached to the First Lease, assists in any finding as to the existence of any contract between Diamond Made and Mr Osborne for a fit-out agreement under the First Lease in the amount of $757,308.16.
4. Invoice 238 was provided to the second plaintiff by Mr Corkery as being a valid debt owed by Mr Osborne at a time when he was seeking debt financing from the first plaintiff. There is evidence that Mr Osborne was aware that Diamond Made was seeking debt financing from the first plaintiff. There is evidence that he spoke to Mr Dean about that funding. There is also evidence that Diamond Made took out insurance in the amount of $500,000 in relation to Mr Osborne and that this was apparently required by the plaintiffs as part of the debt financing. The evidence goes no further than that.
5. The evidence is capable of establishing that the sole directors of PPP and Diamond Made were closely involved with each other. PPP was going to "buy into" Diamond Made and when Diamond Made made an approach to Moneytech for finance, Mr Schlebusch went guarantor for Diamond Made. The correspondence from Moneytech was sent jointly to Mr Corkery and Mr Schlebusch on behalf of Diamond Made.
6. I am satisfied that I do not need to make any findings in relation to how invoice 238 came into creation and why it was provided to Moneytech in order to resolve the issue before me. Despite this, the irregularities in relation to its creation confirm the findings I have otherwise made as to whether the plaintiff can establish that there was any contract between Mr Osborne and Diamond made in the amount of $757,308.16 as alleged.
7. Finally, an issue arose during the hearing as to evidence sought to be adduced on behalf of the plaintiffs that Pizza Pasta Please is currently a restaurant operating at the Campbelltown premises. That fact was not disputed by Mr Robertson. Mr Wood on behalf of the plaintiffs made a number of submissions by reference to the documents before me to the effect that they disclose that Mr Osborne always had a close involvement in the leasing of the premises. That is to be accepted but is also consistent with the landlord wanting to secure a profitable tenant. To the extent that the plaintiffs sought to submit that Mr Osborne was somehow still involved in that restaurant business and that he benefited in some way from the events giving rise to these proceedings, there was no evidence before me to establish that fact.

Conclusion

1. Given that are not satisfied that there was any contract to be assigned to the second plaintiff in the first place I do not consider it necessary to address the submissions made as to the validity of any assignment of that debt.
2. I note the submission of Mr Robertson that it was the second plaintiff, Diamond Made Trading as the Invoicing Entity for Moneytech who sued Mr Osborne for the debt and not the first plaintiff Moneytech. I accept that submission and it will be reflected in the orders that I make.
3. I am satisfied that the plaintiffs have discharged their onus of establishing that judgment for the plaintiffs could not be supportive.
4. In the circumstances I am satisfied that judgment should be entered in favour of the sixth defendant.
5. I will hear the parties further as to the appropriate costs order.

ORDERS

1. I make the following order. 1. Judgment for the sixth defendant. 2. Costs reserved.

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: 20 March 2019