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[2003] NSWIRComm 141
Industrial Relations Commission (NSW)
1990-07-02
Schmidt J, Hill J, Mr P
Original judgment source is linked above.
Industrial Relations Commission of New South Wales in Court Session
CITATION : Paolo Bataglia and Anor v Samuel Edward Stratti and Ors [2003] NSWIRComm 141 PAOLO BATAGLIA First Applicant
MARIA LUZ BATAGLIA Second Applicant
SAMUEL EDWARD STRATTI First Respondent
PARTIES : TROY KENNETH STRATTI Second Respondent
DETAIL ROCK TOOLS PTY LTD (ACN 076 292 987) Third Respondent
STRATTI OCEAN & EARTH WORKS PTY LTD (ACN 067 274 220) Fourth Respondent FILE NUMBER: IRC 5709 of 2001 CORAM: Schmidt J CATCHWORDS : Unfair contract - construction industry - earthmoving equipment - allegations of fraud - onus on applicants - conflicting evidence given by applicants - expert evidence - onus not made out - contract not established to be unfair - application dismissed LEGISLATION CITED : Industrial Relations Act 1996 CASES CITED : Lefty's Excavator & Drott Hire Pty Ltd v Samuel Edward Stratti & Ors [2003] NSWIRComm 106 Tony Cok Kiat Yew v Pembroke Securities Limited (Unreported, Hill J, 2 July 1990) HEARING DATES: 06/03/2002; 06/04/2002; 06/05/2002; 06/06/2002; 06/07/2002; 03/06/2003; 03/10/2003; 03/11/2003 DATE OF JUDGMENT: 05/08/2003
APPLICANTS: Mr DH Murr SC with Mr JC Thompson of counsel SOLICITORS: R.A. Dunbier & Associates
LEGAL REPRESENTATIVES: RESPONDENTS: Mr P Menzies QC with Mr MJ Lawler of counsel (as he then was) and then Ms N Obrart of counsel SOLICITORS: Norman Waterhouse
JUDGMENT: - 51 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Schmidt J
PAOLO BATAGLIA AND ANOTHER v SAMUEL EDWARD STRATTI AND OTHERS Application under section 106 of the Industrial Relations Act 1996
1 This claim was brought under s106 of the Industrial Relations Act 1996 ('the Act') in August 2001. It concerned agreements alleged to have been entered by the applicants, a husband and wife then in partnership with each other in a building construction business, for the sale of various equipment and the performance of certain work in the earthmoving industry. Their partnership came to an end in March 2000 when Mrs Bataglia, a qualified accountant, took up a position with the Australian Tax Office. Both the terms of the sale agreement and whether in fact an agreement for work had been entered at all, was in dispute in the proceedings. The respondents also denied that the Court had jurisdiction to deal with the claim.
2 The first and second respondents were a father and son. They were directors of the two corporate respondents. The third respondent, Detail Rock Tools Pty Ltd ('DRT'), was the entity which sold certain equipment to the applicants. It was the fourth respondent, Stratti Ocean & Earth Works Pty Ltd ('SOE'), which it was alleged had agreed to supply work. (I will refer collectively to the respondents, unless it is necessary to distinguish between them.)
3 The respondents' case raised a number of serious allegations, that the first applicant, Mr Bataglia, had forged certain documents upon which reliance was placed and that other documents and evidence had been fabricated. It was also their case that evidence given by the applicants, had been fabricated. Similar allegations were advanced by the applicants against the respondents.
4 A number of very difficult questions arose on the cases which the parties advanced. In order to deal with these matters, it is necessary to have close regard to what was initially claimed by the applicants and what was finally in dispute; the case as put by the applicants in their affidavits in chief; what was put, in addition, in the affidavits filed in reply to the respondents' affidavits; what was advanced in the respondents' affidavits, and what then emerged in cross examination.
5 Evidence was given by the two applicants and numerous documents were tendered. Evidence was also called from Mr William Takataka, director of Crown Holdings (NSW) Pty Ltd. In the respondents' case, Mr Sam Stratti and Mr Troy Stratti gave evidence, as did Mr Howard Starkey, service manager for Bosch Rexworth Pty Ltd and Mr Ross Vanderslys, auctioner and valuer. Expert evidence was called from Stephen James Strach, document examiner, Forensic Documents Services Pty Ltd.
6 The parties also agreed that evidence given in other proceedings, Lefty's Excavator & Drott Hire Pty Ltd v Samuel Edward Stratti & Ors [2003] NSWIRComm 106 ('Lefty's case'), was to be received as evidence in these proceedings.
7 The original summons filed on 27 August 2001, supported by an affidavit sworn by Mr and Mrs Batagalia, on 26 August, sought the following relief: 'In respect of the agreement which the applicants entered into with the Third Respondent and the Fourth Respondent on or about 24 July 1998 ("the Agreement"). 1. An order declaring the Agreement unfair, as at the time at which it was entered into.
In the alternative to 1, an order declaring that the Agreement became unfair subsequent to the time at which it was entered into.
An order declaring wholly or partly void, or varying, the Agreement, either from its commencement or from a time after its commencement.
An order that the respondents pay, and be jointly and severally liable to pay, the sums particularised at D (below).
Pursuant to section 107, such order as the Commission considers appropriate for the purposes of prohibiting (either absolutely or otherwise than in accordance with each such conditions as the Commission deems appropriate) the respondents, or any one or more of them, from entering into any kind of arrangement involving the sale by them, or any one or more of them, of earthmoving equipment and an offer by them, or any one or more of them, to the purchaser or purchasers of such equipment of work in the earthmoving industry or from doing any act (whether by way of advertising or otherwise) which may reasonably be construed as being intended to induce other persons to enter into any such arrangement.
Such further or other orders as the Commission deems appropriate.'
8 The money orders sought were: D. Particulars of the manner in which any amount claimed is calculated. The applicants claim the amounts which they should have received, pursuant to the Agreement, over a period of 12 months, less the expenses reasonably expected to be incurred over that period, and less the net amount of the benefits received pursuant to the Agreement, calculated as follows. Machine hire 20 (hours) x 6 (days) x 48 (weeks) x $190.00 (per hour) = $1,094,400.00
Insurance (allowance) 5,000.00 Maintenance Operator @ $25.00 per hour 144,000.00 Superannuation levy 10,000.00 Workers' compensation levy 4,320.00 Interest on loan @ 7.15% p.a. 10,574.64 Overheads 5,000.00
Balance 905,302.00
Supervisory services of First Applicant 8 (hours) x 5 (days) x 48 (weeks) 67,200.00 x $35.00 (per hour)
Equipment not supplied Rock Saw 115,000.00 Ripper 5,500.00 Batter Bucket 8,500.00
Bonuses Based on the rate of 10% of the anticipated hire 109,440.00 Fees, per the agreement
Fuel 226.00 Moneys as paid on delivery
Motor Vehicle In lieu of provision of $WD (sic) utility an allowance of $50.00 (per week) x 52 (weeks) 2,600.00
TOTAL $1,213,768.00
9 The case was advanced on the basis that the applicants had agreed to purchase and had paid for, a rock saw, an excavator and standard bucket, a batter bucket and ripper, for the sum of $285,000. Only the excavator and standard bucket had ever been supplied. In addition, rock saw work, for 24 hours per day, seven days a week for a period of 12 months had been promised, but not provided. In closing submissions the claim in relation to the failure to supply the rock saw was abandoned, having regard to evidence given by Mr Takataka. The money orders sought were consequently amended, to: D. Particulars of the manner in which any amount claimed is calculated. The applicant's claim the amounts which they should have received, pursuant to the Agreement, over a period of 12 months, less the expenses reasonably expected to be incurred over that period, and less the applicants' gross receipts for the financial, year 1998-1999. 1. Machine hire 20 (hours) x 6 (days) x 48 (weeks) x $190.00 (per hour = $1,094,400.00 [Exh 2, MB1/1]
less Estimated gross cost of expected sales for 1998-1999 (adopting Lefty's figure of 61.5%) - 673,056.00 [actual costs for 1998-1999 = $187,134.00, see Exh 2, MB1/93]
less Allowance for operator @ $25.00 per hour - 144,000.00
Receipts for year [Exh 2, MB1/89] - 35,371.00 902,427.00
Balance 241,973.00
TOTAL $504,046.71
plus Interest from 10.03.03 at the rate of $87.97 per day
10 Mr Bataglia was a builder. His first affidavit recounted that in 1996 or 1997, he first heard of the existence of a rock saw from an excavator operator at a building site where he was engaged as a building supervisor. On June 12 1998, Mr Bataglia was supervising a building site for Mr Takataka's company, Crown Excavations Pty Ltd ('Crown Excavations'). Mr Bataglia suggested to Mr Takataka that the site would have been suitable for use of a rock saw. Mr Takataka disagreed, saying that: 'The machine would have been idling. I did not allow enough money in the budget to have a saw on the site as there would not be enough work for it here'.
11 Mr Takataka mentioned that rock saws were supplied by Stratti and on 13 June, a Saturday, gave him the respondents' telephone number. Mr Bataglia had known a Mr Stratti when he first came to Australia from Italy in 1963. Mr Bataglia then spoke to Mr Troy Stratti and confirmed that this had been his great grandfather. He asked to see a rock saw being operated and Mr Stratti agreed to get back to him. He did so a number of times between then and 1 July, pressing Ms Bataglia for a decision as to whether he would 'purchase a machine and enter a contract with the Respondents'.
12 On 18 June, Mr Bataglia and Mr Takataka again discussed a rock saw at the building site. Mr Takataka was a friend of Mr Bataglia's nephew and at a social function at the nephew's home on 22 June, he told Mr Bataglia that 'Stratti are selling the saw with the excavator as a package with a contract to be employed in the tunnel for 12 months, 24 hours a day work for $200.00 an hour.' Mr Takataka said that he would get involved himself, but he did not have the money.
13 On 2 July, Mr Bataglia met with Mr Troy Stratti and Mr Sam Stratti. He was taken to a site he understood to be the respondents' quarry and shown a rock saw working. On their return to the respondents' office, Mr Troy Strati told Mr Bataglia, that the excavator and saw would be working on the Eastern Distributor, where there would be 12 to 18 months work around the clock for six excavators, two with saws. Mr Bataglia, who had little experience operating an excavator, was offered work as a supervisor at the quarry.
14 On 8 July, Mr Bataglia and Mr Troy Stratti spoke again and Mr Stratti promised to send a fax for Mr Bataglia to show his bank manager. Mr Bataglia was shown a rock saw operating at another quarry and at the Eastern Distributor and on 9 July he spoke to Mr Robert Stratti, requesting paperwork. Mr Bataglia's further phone calls were not answered until 13 July. On 14 July, he spoke to Mr Stratti and to the Commonwealth Bank about a loan. On 15 July, the Bank sought details of the deal and Mr Bataglia sent it a copy of an agreement which he had received by fax from the respondents.
15 This agreement was between the two respondent companies and Mr Paul Bataglia for the purchase of a rock saw for $115,0000. There was an issue in the proceedings as to whether this document had been produced by the respondents, or fabricated by the applicants.
16 On 16 July, Mr Bataglia spoke again with Mr Stratti, who wanted proof of finance. Mr Bataglia said: 'Don't worry because as long as you guarantee 12 months of work for the machine in the tunnel for 24 hours a day, you can bet your backside that the money will be in your bank account before the end of the month'
17 Mr Stratti replied: 'I look forward to see that happen'.
18 On 16 July, Mr Troy Strati faxed a quote for $155,000 for 'our Halla HE280LC fitted with a hydraulic quick hitch, hammer piping, standard bucket, batter bucker and ripper'.
19 On 17 July Mr Bataglia faxed a letter to the Strattis, in the following terms: 'Troy and Sam, thankyou for your offer to employ the HE 280 & Rock Saw. You have my guarantee that the money will be in the bank account no later than the 27th July 1998 but most likely Friday 24the (sic) July 1998 which; - $115,000.00 for Rock Saw - $155,000.00 for the HE 280 LC + Standard B. Batter B. and Riper (sic) - $15,000.00 for buffer as discussed
Troy would you please send the bank a cheque of $8,748.93 as deposit. The rest will be left in your account for payment of your operator wages until I make some money.'
20 There was an issue in the proceedings as to whether this document had ever been sent to the respondents, or whether it had been later created by Mr Bataglia, in order to provide a foundation for the claims later made in these proceedings. It was the respondents' case that they had only agreed to sell the applicants an excavator and rock saw. It was the applicants' case that this correspondence reflected an agreement then reached between the parties.
21 Mr Bataglia met again with Mr Troy Stratti on 17 July, showed him the Bank approval and they arranged to speak again the next day. There were various problems and they in fact spoke on the following Monday, 20 July when the need for a written contract was raised by Mr Bataglia. Their conversation was: I said: "Do we need to have a written contract?" Troy Stratti: "I'm a man of my word." I said: "Well if that's the case, there is no need for a contract and the deal stands as per my letter to you of 17 July 1998." Troy Stratti: "Yes Paul. You just make sure that the money is as good as your word." I was a bit embarrassed about this. I then said to the Second Respondent: "Sorry, Troy. I understand. Thank you."
22 Mr and Mrs Bataglia went to the Bank on 23 July and Mr Bataglia spoke to Mr Troy Stratti beforehand, to get details of where the money was to be paid by the Bank. 'The loan was for the purchase of the following: 1 280LC Halla Excavator including Hammer Pipes, plus Batter Bucket, Ripper and the 2.2m diameter rock saw with 52 tungsten tipped teeth and teeth holders.'
23 On 20 July, Mr Sam Stratti provided a letter by facsimile in the following terms to Mr Bataglia, on DRT letterhead: ' Re: HE280 & Saw work in progress
'Paul, our work offer requires, if taken up the hire of your machine, for consistent 24 hour periods.
We have a (sic) extreme work load at this moment and can only achieve this by working around the clock.
24 There was also an issue in the proceedings as to whether this was another document fabricated by Mr Bataglia. Mr Sam Stratti denied ever having written such a letter.
25 On 24 July, the Bank paid $285,000 into the respondents' account. This accorded with an invoice on DRT letterhead, dated 21 July, which referred to an excavator and rock saw but not a batter bucket or ripper. Mr Bataglia denied ever having been provided with a copy of this invoice by the respondents. This was also in issue in the proceedings. He later obtained a copy from the Bank.
26 The Bank wrote to the Bataglias on 24 June confirming the payment made and advising that a copy of the loan contract would be forwarded shortly. This was done and a copy was annexed to Mrs Bataglia's affidavit.
27 Mr Bataglia then abandoned building supervision work which he had been engaged to perform elsewhere. Mr Bataglia obtained the names of three machine operators from Mr Takataka and then engaged 'Carl'.
28 On 29 July, Mr Bataglia sought to speak to Mr Troy Stratti about the delivery date of the equipment. On 30 July, he went to the respondents' premises and was shown his rock saw and told that the blade had not yet been delivered. Mr Sam Stratti assured him that it would be ready 'on time'. He asked for delivery of his machine, but was told that it was not quite ready. The Strattis had a heated argument about this. Again, these events were in dispute.
29 On 31 July, the excavator was delivered to his home, but without fuel, which had been promised and which Mr Bataglia then had to pay for. Mr Bataglia employed 'Floyd' as an operator and together they worked at the applicants' home 'for the purpose of getting to know the machine'. Mr Bataglia felt impatient and frustrated.
30 On 3 August, he spoke to Mr Troy Stratti about a mechanical problem on the excavator and a fitter was promised to be sent. On 7 August, Mr Bataglia was concerned about a lack of work and rang to ask about delivery of the batter bucket. It was promised to be provided next day by Mr Sam Stratti. Mr Bataglia pursued this on 8 August and on 10 August he also asked about the saw and ripper. Mr Troy Stratti told him that the tunnels were flooded and that he did not need it then. Both Mr Sam and Mr Troy Stratti denied these events.
31 On 12 August, Mr Bataglia wrote to the respondents, complaining that rock saw work promised had not been supplied, nor had he been given work as a supervisor, as promised. He said that he did not expect to be employed, but asked for work for the machine. He concluded: ' Sam and Troy if you think that you are not prepared to employ the excavator and rock saw as per your guaranteed verbal and written statement, at this stage I'm prepared to back off the deal that you have given me " providing " that you reimburse me and the Bank the full amount that I have borrowed as you are showing no interest to maintain your word.'
32 There was also an issue in the proceedings as to whether this document too, was a fabrication. On the respondents' case, the rock saw was delivered on 3 August.
33 On 17 August, Mr Troy Stratti promised to 'make it up' to Mr Bataglia. On 20 August, Mr Bataglia was told the machine was needed at Annandale the following Monday and that an operator would be supplied. Bucket work was performed between 25 August and 1 September. On 27 August, Mr Bataglia inspected the saw at the respondents' yard. On 31 August, he telephoned the respondents again and was fobbed off. The respondents also deny these events. On their case the excavator and rock saw performed work at the Annandale site and an arrangement was later made between parties as to payment for that work.
34 Mr Bataglia recounted that: 'From the time that I commenced my dealings with the Respondents I maintained a diary and I have prepared my instructions to my solicitors with reference to the diary. By 31 August, 1998, I was completely disillusioned with the Respondents. I stopped making entries in my diary from that point in time. Exhibited to me at the time of swearing this my affidavit and marked "Exhibit PB2" is a true copy of my 1998 diary, from which I have instructed my solicitors to prepare this affidavit. The entries in this exhibit were prepared for me by my daughter with my help.'
35 There was an issue in the proceedings as to whether the entries made in this diary were contemporaneous, or the subject of later addition, again in order to bolster the applicants' case in these proceedings. The diary contained entries after 31 August. There were also undoubtedly many discrepancies between Mr Bataglia's affidavit evidence and what was recorded in his diary.
36 On 6 October, Mr Bataglia wrote to the respondents about repairs which the excavator required, which he had noticed at an inspection of the machine at Annandale. While Mr Bataglia's evidence was that this letter dealt with 'non performance of the contract' it is difficult to read it as dealing with that topic. On 10 October the rock saw was delivered to Mr Stratti's home, after some repairs. While he took delivery, he disputed that this was the machine he had purchased.
37 On 11 October, Mr Bataglia wrote to the respondents, claiming that a new rock saw had not been delivered to him and concluding: 'However I don't seek any arguments providing that your guarantee does not lapse before it does some good work as you promised.'
38 Again, there was an issue as to the authenticity of this document.
39 On 15 October, Mr Sam Stratti wrote to Mr Bataglia, who was so infuriated that he ripped the letter to shreds. It was not attached to Mr Bataglia's affidavit, but was later tendered. It provided: 'Paul, I was disturbed to hear you lent the saw to Willy to run on him machine. Not all the Halla excavators are set up the same way; for example Willie's Halla has both pumps running the hammer circuit where yours only has one, as well some machines may have contamination in the hydraulic oil. This contamination can destroy a hydraulic motor or severely score mating surfaces and when the saw is re-fitted to your machine your machine will be injected with this oil. In any event if your machine has hydraulic problems it will be difficult for us to cover the warranty as Halla Heavy Industries Korea are very hard on contamination. I hope this letter clarifies our position.'
40 On 27 October, Mr Bataglia responded: 'Sam, in accordance to our conversations and your fax to me dated 15th October 1998, where you mentioned that you were disturbed to know that I gave William the saw to use on his excavator for the Cameray (sic) job, you're contradicting your above mentioned fax by picking up the saw from my residence with the purpose of flashing it and also restoring it to be in good condition and free of defects.
I have no intentions of entering into a dispute of any kind regarding the deal that I entered with you in purchasing the HALLA HE 280LC and the rock saw with standard bucket, of which I have I (sic) hand but not quite happy about.
I have not borrowed $285,000.00 plus of equipment to play around with like the last 3 months or since the 24 July 1998, where I was guaranteed that the machine would be working in the Sydney Tunnel around the clock.
I understand that we are only human and not miracle makers.
41 Again, there was an issue as to the authenticity of this document.
42 Mr Bataglia spoke by telephone to the respondents seeking payment for work done. The respondents asked him to submit formal invoices. On 2 November, he wrote: 'Despite the several phone calls and conversations regarding you to pay me, you've finally asked me to give you and (sic) invoice. You always said not to worry but I find it very hard to believe you. You are fully aware of where you put the machine to work therefore you should know how much you owe me. If I had to invoice you, I should have invoiced you in accordance with our original agreement, which would be from 24th July 1998 to date being 2nd November 1998, coming to 102 days x 24 hrs = $2,448.00 @ $190 p.h. = $465,120.00 of which I hold you responsible for, as you leave me no other choice by not co-operating one little bit.'
43 Again, there was an issue as to the authenticity of this document.
44 On 20 December, Mr Bataglia spoke to Mr Robert Stratti, who asked him for details of work undertaken. Mr Bataglia responded by fax that day. He complained that he had received no payment for any work and that the rock saw for which he had paid had never been delivered. The sum of $560,880 was claimed. Invoices from 26 August to 21 September for rock saw and other work thereafter were supplied. Again, this was in issue in the proceedings.
45 In January, Mr Bataglia approached the respondents' clients to ascertain whether they had been paid for work performed by the applicants. This led to correspondence between the parties' legal representatives, concerning allegations of defamation. Mr Bataglia also approached the Korean manufacturer of the excavator about his concerns.
46 In March, Mr Bataglia attended the respondents' premises with Floyd to demand delivery of a new saw, a ripper and batter bucket. The police were called and Mr Bataglia was directed to leave the site.
47 On 8 March, Mr Sam Stratti wrote to Mr Bataglia on DRT letterhead: 'We understand that you have been using a rock grinding attachment on your rock saw. This attachment should not be used on your saw as prolong usage in hard rock will cause the drive to fail and will void the warranty of your rock saw.
Note: Unauthorised alteration of your rock saw is a breach of our agreement. Any maintenance is to be conducted by our company and deviation from this will void warranty, this includes welding holders to your saw blade. For further information regarding this warning please contact Sam Stratti on …'
48 On 17 March, Mr Bataglia responded, again complaining that he had never been given the rock saw. Mr Bataglia approached the Bank for assistance, having fallen behind with his loan repayments. On 4 May, the Bank sought information as to the equipment which Mr Bataglia held, including serial and registration numbers. There appears to have been no response to this request. Rather, in his reply to the Bank of 11 May he complained that all that had been delivered was the excavator.
49 On 7 February 2000, Mr Bataglia wrote to the respondents, after they had arranged a job for him in Northbridge, seeking a resolution to the dispute. The letter was faxed and sent by registered post, but the respondents denied having received it.
50 On 8 September, Mr Bataglia called Mr Sam Stratti's mother and faxed her a copy of the DRT letter of July 1998. On 2 February 2001, Mr Bataglia met with Mr Troy Stratti, demanding money for work done at a Woy Woy site. $17,592.00 was due. Various offers were made and finally "I accepted the sum of $10,000.00 in satisfaction of the debt which was due from one of the jobs and did so in order to receive some money. This sum of $10,000.00 was paid in cash from the Second Respondent's top draw of his filing cabinet. Before paying me the money, Troy Stratti insisted that I sign a "Deed of Release".' Again, these events were disputed.
51 Mrs Bataglia's first affidavit recounted that in mid-1998, she was told by her husband of 'a deal he had learned of for the purchase of an Halla excavator machine with other equipment and promised work for the Eastern Distributor tunnel.' She was concerned that the deal sounded too good to be true. She, her husband and son, nevertheless, undertook a feasibility study and she prepared three scenarios for income from a best to worst case position. The workings were recorded in her husband's diary and projected various income.
52 The loan taken by the Bataglias for the equipment purchased from the respondents was covered by a mortgage over their home. Eventually a need to refinance arose. This occurred in June 1999.
53 The rock saw delivered by the respondents was not new and later required considerable repairs. Repairs from 20 July 1999 to 19 April 2001, were detailed, at a total cost of $15,682.57 unpaid and $13,541 paid.
54 Of $94,892 invoiced to the respondents, in December 1998 and February 2002, only $10,000 had been paid.
55 Documents annexed to Mrs Bataglia's affidavit showed that the bank hire purchase agreement was in respect of: New - Halla 280LC Hydraulic Excavator Engine No. 45536751 Serial No. 2138K SS Rock Saw Serial No. 0013SES Hydraulic Motor No. RS8270NW8 Model No. 07/1998
56 Mr Takataka's evidence was that he had had a professional relationship with the respondents through his company, Crown Excavations since about 1996. That company went into voluntary liquidation in around June 1998. The respondents owed that company around $60,000. It had purchased an excavator, ripper and mud bucket from the respondents for $165,000 and a rock grinder for $87,000. $26,000 had been paid when the company went into liquidation, but the ripper and mud bucket had not been received.
57 In February 1998, a statutory demand for $122,475.67 was issued by Crown Excavations, addressed to SOE. The proceedings in the Supreme Court did not succeed. It was agreed between the parties that $26,000 would be paid but SOE had failed to do so, when Crown Excavations went into liquidation. Mr Troy Stratti agreed to pay out the CBFC loan for the grinder.
58 In early 1998, Mr Takataka agreed to work with Mr Troy Stratti on the construction of a rock saw. It was needed by Crown Excavations for a site at Kirribilli. The saw was built and delivered to the site, but no consideration was paid for it, it having been agreed that the saw would be provided in consideration of the debt owed to Crown Excavations. The saw broke down and was returned to the respondent's workshop. Mr Takataka then paid a $10,000 deposit for another saw, which was delivered to the site. Mr Takataka then cancelled the cheque, because he believed then that the money was not owed to the respondents by Crown Excavations. The saw was repossessed.
59 After the liquidation of Crown Excavations, Mr Troy Stratti agreed to pay Mr Takataka $15,000 in three instalments, but only $5,000 was paid.
60 On one occasion thereafter Mr Takataka borrowed the applicants' rock saw for about an hour and a half. Mr Troy Stratti asked about this, but did not object to him having done so.
61 In late 1998 or early 1999, the excavator was repossessed for non-payment of loans. In November 1998, Mr Takataka was present at the respondents' premises and witnessed an argument between Mr Bataglia and Mr Troy Stratti. Mr Bataglia pointed to a saw and said: 'That's not my saw'. Mr Stratti later asked Mr Takataka to deliver the saw to Mr Bataglia and Mr Takataka agreed, but took possession of the saw and 'later transferred title of the machine' to a different company, Crown Holdings (NSW) Pty Ltd, of which he remained a director.
62 In 1999, he lent this saw to the applicants. He later learned that Mr Bataglia had had modifications carried out to the machine. He wrote to Mr Bataglia complaining about this. The modifications did not work and he was not aware as to what had happened to the machine, but believed it was still in the possession of the applicants.
63 The respondents' evidence was to markedly different effect to that given by the applicants.
64 On Mr Troy Stratti's evidence, much of the detail of what was contained in Mr Bataglia's affidavit was a fabrication. He denied that the applicants had ever been offered round the clock work for the rock saw and excavator. The respondents had never had a job which ran for twenty four hours a day using a rock saw for weeks on end. Were such work to exist, it would be commercially absurd to offer the work to the applicants, thereby foregoing the profits which could be secured by the respondents performing the work themselves.
65 Mr Stratti's evidence was that the rock saw had been invented by his father and the first version went into production in 1995. The first external sale was to a quarry in 1996. By 1997 there was increased demand for the use of the rock saw and a strategic decision to expand the business by selling the machine to operators in the building and construction industry. The Strattis were anxious to protect the value in the innovation and to recover the cost of the development. They were also concerned about competition. The rock saw was the subject of a patent.
66 Mr Bataglia initially approached him to buy an excavator and later a rock saw. The agreed price was $285,000, as reflected in the invoice provided. As I have noted, there was an issue in the proceedings as to whether the applicants were provided with a copy of this invoice. It was common ground that it was provided to the Bank.
67 It was the respondents' practice to enter into written sale and works agreements with purchasers of the rock saw. Mr Bataglia refused to sign any agreement and the respondents were persuaded to sell the equipment to him without any such agreement, they having been advised by their patent attorneys, that the patent provided sufficient protection for their intellectual property in the rock saw.
68 Mr Stratti's recollections of his discussions with Mr Bataglia were that he was initially telephoned about 6 weeks before the invoice was issued on 21 July and that they had first met about 2 July. Mr Bataglia told him he needed an excavator for his building business and enquired about market rates for hiring out the machine, when he was not using it.
69 In a later conversation a rock saw was discussed. Mr Stratti later conceded that work at the Eastern Distributor was probably discussed and the sale agreement, which the respondents required purchasers to enter, was raised. His evidence was that Mr Bataglia was concerned about entering any agreement which imposed restrictions on him.
70 On 16 July, Mr Stratti faxed the quote for an excavator and attachments. Mr Bataglia was not interested in a rock saw, at that stage, but when he expressed an interest a few days later, Mr Stratti faxed him a blank version of the standard agreement and on 20 July offered him work, in a fax in the following terms: ' Re: HE280 & Saw work in progress for weekend work shut down As you know we are involved in weekend possession work. During two weekends in August we require extra equipment to carry out this possession work. Paul, our work offer requires, if taken up the hire of your machine, for consistent 24 hours (sic) periods. We have a (sic) extreme work load at this moment and can only achieve this by working around the clock. I hope this does not pose as a problem. Please let me know if you are interested.'
71 Mr Stratti denied ever having an agreement in the form attached to Mr Bataglia's affidavit prepared. He did not do so himself, nor did he have the respondents' solicitors do so. Copies of other draft agreements sent to and discussed with Mr Bataglia were attached to his affidavit.
72 The price of $285,000 had been agreed after an earlier request from Mr Bataglia for the price for an excavator, hammer and rock saw. $170,000 was quoted for the excavator, $115,000 for the rock saw and $45,000 to $50,000 for the hammer. Mr Bataglia had finally decided upon the excavator and rock saw, as reflected in the invoice later provided. There was never any agreement reached for supply of a batter bucket or ripper. Again, this was in issue in the proceedings. This decision led Mr Stratti to discuss weekend possession work using the rock saw with Mr Bataglia, but it was work which Mr Bataglia declined, because 'I have my own work to do'. Mr Stratti assured him the work would not be in normal work hours and Mr Bataglia said that he would think about it. Mr Stratti sent the letter of 20 July in confirmation. The authenticity of this letter was also in issue.
73 Mr Stratti's evidence was that the letter of 20 July annexed to Mr Bataglia's affidavit was a forgery.
74 Mr Bataglia declined to sign any agreement and the respondents decided to proceed with the sale of the rock saw after taking advice. On 21 July, Mr Bataglia informed him that he had bank approval for a loan for $285,000, for an excavator and rock saw and asked him to send an invoice to the Bank. He did so and sent another copy on 23 July, the day that the applicants attended the Bank to sign a hire purchase agreement.
75 On 21 July, Mr Bataglia also spoke to Mr Stratti about a cash flow problem he was experiencing. Mr Stratti agreed to find work for the machine and to pay the first instalment on the applicants' loan.
76 The excavator was delivered to the applicants on 31 July and the rock saw a few days later. In late September the saw was returned for warranty work. Mr Takataka had also sought to purchase a rock saw from the respondents. It was repossessed after his cheque was dishonoured.
77 Mr Stratti's evidence was that he had never before seen the letters attached to Mr Bataglia's affidavit of 12 August, 11 October, 27 October, 2 November, 20 December, 17 March, nor the invoices. While he accepted that documents could go astray in the respondents' filing system, his evidence was that it was inconceivable that all of these documents had been received, but not placed on the applicants' file.
78 As to the invoices, the only invoice ever submitted by the applicants was for one job at Woy Woy. The respondents' system was to provide subcontractors with a docket book, which they then had signed each day by the site foreman. Invoices were then prepared by the subcontractor, to which the dockets were attached. (This was consistent with the evidence of the applicant's practice in the Lefty's case.) Such a book was provided to Mr Bataglia in respect of a job at Annandale, but no invoices provided. The excavator was dry hired at a rate of $40 per hour, with the driver and fuel provided by the respondents. The job lasted for 18 or 19 days. A sum of just under $8,000 was later agreed as payment for that job. The respondents had made the first loan repayment for the applicants and they agreed to 'treat it as square'. Again, these matters were disputed by the applicants.
79 Mr Bataglia made enquiries about further work from time to time, but none was available. In late December 1999, Mr Bataglia made complaints to Mr Robert Stratti and faxed to him a copy of a letter of 20 July signed by Mr Troy Stratti, in different terms to that which, on his evidence, he had sent to Mr Bataglia, promising round the clock work. After he saw this document, Mr Troy Stratti spoke to Mr Bataglia and accused him of forging the letter. The conversation became heated.
80 In January, Mr Stratti heard that Mr Bataglia had 'defamed me and made a threat to my brother Darren on a site at Lidcombe that he would shoot me.' Correspondence ensued between the parties' legal representatives about the alleged defamation. Mr Stratti refused to take calls from Mr Bataglia in 1999.
81 In January 2000 they spoke. Mr Bataglia was looking for work and suggested that they should 'forget the past and look at the future'. In February Mr Stratti offered Mr Bataglia subcontract work on a job for Gosford City council. The Council later complained about the work being performed, with the result that Mr Bataglia was directed off the job. When he and his father arrived on site, Mr Stratti found that a power cable had been dragged down, that the trench had been dug in the wrong location and that Mr Bataglia had left. The work was redone. Mr Bataglia rendered an invoice for $17,592, which he hand delivered in June 2000. Mr Stratti refused to pay. More than $20,000 work had been performed by the respondents to finish the job. It had been priced at $30,000.
82 Mr Stratti met again with Mr Bataglia in February 2001. He agreed to accept $10,000, which was paid by cheque and a release was executed.
83 As to other jobs, no invoices were provided by the applicants and in some cases the respondents never had the jobs referred to and had never engaged the applicants to perform work on such jobs.
84 Mr Troy Stratti gave further affidavit evidence of 7 June 2002, in response to Mr Takataka's evidence. His evidence was that it had been agreed to sell him an offset rock saw, being a new version of the saw, Mark 2. The saw sold to Mr Bataglia was the original version, Mark 1. The price agreed with Mr Takataka was $115,000. A deposit of $10,000 was paid and the saw delivered to Kirribilli. The cheque was dishonoured and arrangements made for a replacement to be provided by Mr Takataka. It was not forthcoming and the saw was repossessed. It remained in the respondents' possession. Mr Takataka and his companies had been sold no other rock saw. Mr Takataka's evidence was a fabrication.
85 Mr Stratti also denied not having paid Crown Excavations monies due to it. He agreed that an excavator had been sold to Crown Excavations, but not a mud bucket or ripper. A grinder was also sold, the subject of a hire purchase agreement. The grinder was later repossessed by CBFC, when Crown Excavations defaulted on the payments and the hire purchase agreement was assigned to SOE, after negotiations between it and CBFC.
86 Mr Stratti's evidence was that Crown Excavations owed SOE $26,895.81. Crown Excavations' statutory demand made no reference to a ripper, a mud bucket or a grinder.
87 Mr Sam Stratti's evidence concerned the development of the rock saw, the demand which grew for its use in the industry, the decision made to manufacture and sell the saws, the steps taken to protect the intellectual property in the development of the saw and the respondents' dealings with the applicants.
88 Mr Stratti's evidence was that he had little involvement in the negotiations with Mr Bataglia, which were conducted by his son. He denied having promised the applicants work for 24 hours per day on the Eastern Distributor, for 12 months or 2 years or any other period. He also denied knowledge of any agreement to sell a batter bucket or ripper.
89 His evidence was that the DRT letter of 20 July attached to Mr Bataglia's affidavit was a forgery. He had not seen a copy of the letter when apparently faxed to his mother in September 2000. Like Mr Troy Stratti, he denied having seen the letters and invoices earlier identified, which were attached to Mr Bataglia's affidavit.
90 He, too, denied much of the detail of Mr Bataglia's affidavit, particularly that he had also been offered a job as a supervisor. The respondents had no vacancy for such a position. Mr Stratti confirmed the delivery of the rock saw in August 1998. While he had not arranged the delivery, the delivery driver complained to him that Mr Bataglia had 'harassed' him about an oil leak on the excavator when he delivered the new saw. Mr Stratti then arranged for warranty work to be performed by the supplier of the hammer piping and wrote to Mr Bataglia about the matter that day in the following terms: 'Paul our delivery driver is not a hydraulics mechanic and we ask that in future when you require assistance that you contact us. Chris is simply a driver and will help to his best capacity. We resent your comments today, he simply was there to deliver your New Rock Saw.'
91 It was the applicants' case that this letter was never sent.
92 Mr Sam Stratti attended to warranty work on the saw within a month to six weeks. The saw was then redelivered to Mr Bataglia. Mr Bataglia then claimed that the saw was not his. When they spoke, Mr Bataglia claimed that the saw belonged to Mr Takataka. Mr Stratti informed him that Mr Takataka had not purchased a saw. Mr Stratti later learned that Mr Takataka was working with the applicants' saw. He wrote to Mr Bataglia on 15 October, warning that the use to which the saw was being put might void the warranty.
93 In 1999 and 2000, Mr Sam Stratti had many telephone conversations with Mr Bataglia and asked him to put his complaints in writing. Nothing emerged.
94 Mr Howard Starkey gave evidence that service work had been performed for Mr Bataglia on a rock saw in October 1998.
95 The applicants also called expert evidence as to the origins of the disputed letters of 20 July. I will refer to this evidence later.
96 In Mr Bataglia's affidavit in reply, the version of events being advanced altered in a variety of important respects. His evidence in this affidavit was that he had originally been approached by Mr Troy Stratti, after a referral from Mr Takataka. He received a used rock saw from the respondents 'for a period as a loan'. He never received the new saw which he had paid for and the used saw was later taken back by the respondents.
97 Mr Bataglia also signed a 'sales tax exemption' as the equipment supplied was to be applied for government work at the Eastern Distributor. He denied having purchased the equipment for personal work. He reiterated the promises made in relation to '$200 an hour, 24 hours work'.
98 Mr Bataglia denied having refused to sign an agreement sought by the respondents, to the contrary he had insisted upon it. He insisted that the agreement referring to him, which was attached to his original affidavit, was the only agreement ever sent to him by the respondents. He later executed that agreement and left it with them. He denied having ever seen the draft agreements attached to Mr Stratti's affidavit.
99 Mr Bataglia also denied ever having seen the invoice sent by Mr Stratti to the Bank. He denied much of the detail of the second respondent's affidavit evidence and denied that he had forged any documents. He maintained that all of the documents attached to his affidavit were genuine and sent to the respondents at the relevant times.
100 Mr Bataglia admitted that a second hand rock saw was delivered to him on 10 October 1998, which was later taken back. He had no knowledge of the serial number of that saw. He denied making complaints about the used rock saw in September, however, because he did not have that unit at that stage.
101 Mr Bataglia also denied ever having been provided with one of the respondents' docket books and asserted that all invoices had been sent to the respondents, which each provided a clear reference to a job. He did agree that an invoice in relation to work at Sylvania incorrectly referred to a job at Sans Souci, but insisted that other work invoiced had been performed at the respondents' direction. Reliance was placed upon his diary entries. He also denied the agreement alleged in relation to the Annandale work.
102 Mr Bataglia also denied ever having discussed the letter of 20 July with Mr Troy Stratti, or having defamed him. He denied that there had been difficulties in relation to the Woy Woy job. He admitted that a power cable had been accidentally dragged down, but that otherwise the work was performed as required. He only accepted $10,000 in payment for the work because he was desperate for money.
103 As to Mr Sam Stratti, Mr Bataglia asserted that he had been very involved in the negotiations and was aware of the work offered. He denied having ever seen Mr Stratti's August 1998 letter, or having abused a delivery man. He agreed that a problem with the excavator fuel line then existed, but that he had telephoned Mr Troy Stratti about that problem.
104 As to the October delivery docket, it related to the used saw, which was taken back.
The evidence which emerged in cross examination of the applicant's witnesses
105 A number of matters emerged in cross examination, which again put the applicants' case into a different light. They included that the rock saw taken by Mr Takataka and loaned to Mr Bataglia, was the rock saw sold to the applicants by the respondents. It was marked with the same serial number as appeared on the respondents' original invoice and the Bank's hire purchase agreement.
106 Mr Bataglia explained that he had that rock saw modified by a firm, P & N Engineering. Mr Bataglia later dumped the modified rock saw in the bush at Menai, in 2001. During the course of the hearing, it was discovered by a private investigator engaged by the respondents. Photographs of the saw were in evidence and identified by Mr Bataglia. Mr Bataglia's legal advice had been to remove the rock saw and secure it. It had, however, disappeared in the meantime. Mr Bataglia's evidence was that the rock saw he dumped belonged to Mr Takataka. He had it modified even though it did not belong to him and modified it again, even after Mr Takataka complained that he had made the first modification. Mr Bataglia denied that he had attempted to hide that saw.
107 While Mr Bataglia initially denied ever having seen the hire purchase agreement which noted the rock saw serial number, he finally accepted that he had. A copy was annexed to Mrs Bataglia's affidavit. His evidence was that he didn't remember signing the hire purchase agreement and 'I have never taken much notice of it'. The same serial number was on a delivery docket when the saw was delivered to him in October, after the respondents had repaired it. Again, his evidence was that he had never taken any notice of that number. The same serial number appeared on the saw dumped at Menai, but he had not noticed this either.
108 Mr Bataglia also had P & N Engineering build another new rock saw, in about February 2001. He was still using that saw. He confirmed that he had told Mr Takataka, that he intended to build rock saws and sell them for $80,000 to $90,000. He denied that it was his intention to steal the Stratti design, 'until they forced me to that, until they lead me to that'.
109 Mr Bataglia also conceded that some of the work referred to in annexures to his wife's affidavit, reflected charges for modifications on the first rock saw and construction of a new rock saw, rather than for repairs of the first rock saw.
110 Mr Bataglia also confirmed that prior to October 1998, a rock saw had, in fact, been delivered to him by the respondents and that it had then been used. His explanation was that an operator had, however, told him that it was not a new saw. It was on this advice that his belief that the saw he had purchased had never been delivered to him by the respondents, rested.
111 While Mr Bataglia asserted that the respondents had never provided him with a copy of the draft agreement attached to Mr Troy Stratti's affidavit, but only the named agreement which he had attached to his own first affidavit, a copy of the draft agreement was then produced by the applicants, in answer to a notice to produce. It was attached to a fax cover sheet sent to Mr Bataglia by Mr Stratti with the draft agreement. It was revealed that a photocopy of that same cover sheet had been attached to the named, but unsigned agreement, attached to Mr Bataglia's affidavit, which Mr Bataglia said he had signed and left with the respondents. Mr Bataglia could not produce the original of the named agreement which he had received, nor could he account for its whereabouts. Mr Bataglia denied that he had photocopied the fax cover sheet which came with the draft version of the agreement and attached it to the named version.
112 Mr Bataglia's evidence was that he signed the named agreement on the same day as he signed the tax form. His diary noted that this had occurred on 15 July. That form was undated, but included a reference to 29 July. There was, however, no reference to these events in his affidavit evidence. Mr Bataglia agreed that at 15 July he was in the process of seeking a loan from the Bank, that he had assets, but no income to support the loan and needed evidence of an income stream to support the loan, for the Bank. He denied that he had fabricated the named agreement and the letters of 20 July, in order to provide such evidence for the Bank. He also denied having received from Mr Troy Stratti the longer letter of 20 July, which on Mr Stratti's evidence, had been sent to him that day.
113 Mr Bataglia denied that his diary contained entries made long after the events recorded. His oral evidence showed however, that his diary, a copy of which was annexed to his first affidavit, did not contain a contemporaneous record of events, in at least one relevant respect. Events which Mr Bataglia said had taken place at the respondents' premises in March 1999, when he demanded delivery of the rock saw which he was insisting the respondents had never delivered to him, which resulted in the police being called and he being directed to leave, were recorded in his 1998 diary as having occurred in November. Mr Bataglia advanced a number of explanations for this discrepancy, including that he must have misplaced his 1999 diary at the time of these events, and that in March 1999 he had deliberately recorded these events in his diary for the preceding November, for various other reasons. His evidence culminated with: 'Q. Let's deal with your last answer. Are you saying that there was some things so distressing to you that you didn't want to put them in the diary? A. Yes.
Q. And was the event of the police being called one of those distressing things that you couldn't write in your diary? A. Could have been, yes.
Q. Well you did write something about them in your November entry so that can't be the explanation, can it? A. For what Mr Stratti has done to me if I didn't cancel my mind he wouldn't be around today.
Q. I beg your pardon? A. I beg your pardon that's what I said, in front of the law.
Q. Say it again, if you hadn't cancelled your mind Mr Stratti wouldn't be around today? A. That's correct.
Q. In other words if you hadn't cancelled your mind you would have him done away with, is that right? A. That's a hundred per cent correct.
Q. Is that right? A. Yes, that's right.
Q. So you are so distressed about this that you didn't write in your entire things that distressed you, is that right? A. Sometimes, yes.
Q. And one of them was the incident about the police? A. Yes.
Q. How did it get into your diary in November 1998 if that's the case? A. I don't know.
Q. You have no explanation? A. No, the only explanation that I have is to put it within the bad part of my evidence.'
114 There were many other aspects of the diary, alleged by the respondents to have been the subject of addition or fabrication. As I have earlier noted, many of them did not accord with Mr Bataglia's oral and affidavit evidence. The explanations advanced by Mr Bataglia for the reasons for making various diary entries, the interlineations and the use of different pens and differently coloured pens, were difficult to accept. Even if they were to be accepted, they would leave the evidence in a quite doubtful state. When comparisons were made between the evidence given by Mr Bataglia in his various affidavits, orally in cross examination and what was recorded in his diary, the upshot was that there were a great number of inconsistencies. Which version of the events in question were correct, was in many cases impossible to ascertain, especially given Mr Bataglia's evidence as to how his affidavits had been prepared and whether or not he had relied upon his diary, or upon his memory, in preparing them. Notably in some instances, Mr Bataglia himself could not say which version was to be preferred, in the event of conflict. He also agreed that he had not himself checked the accuracy of his affidavits, before he swore them, because he had not appreciated that the Court wanted to understand exactly what had happened.
115 The result of this evidence was that other than in those cases where one of the versions of the events which Mr Bataglia advanced, coincided with evidence given by other witnesses, it was impossible to determine which version accurately reflected what had occurred. As a result it was impossible to accept his evidence, when it conflicted with that of other witnesses.
116 Mr Bataglia gave evidence as to the circumstances in which Mr Sam Stratti came to create the DRT letter of 20 July, after Mr Bataglia had approached him, needing further evidence for the Bank. He showed Mr Sam Stratti, Mr Troy Stratti's OES letter of that date. Mr Sam Stratti then prepared an identical letter on DRT letterhead, which he then signed. It was revealed, however, that the respondents had sought the production of the originals of these letters. Mr Bataglia's solicitors had written to the respondents' solicitors, advising that the original of Mr Troy Stratti's letter was missing. Mr Bataglia's evidence in cross examination, however, was that he had left the original with Mr Sam Stratti on 20 July. Mr Bataglia denied that this evidence was an attempt to disguise the fact that no such original could be produced, because it had never been provided to him by the respondents
117 I interpose at this point, that this evidence has to be considered in the context of the expert evidence, which established that, as to the letters produced by Mr Bataglia, Mr Sam Stratti's letter on DRT letterhead had been created by reproducing Mr Troy Stratti's letter on OES letterhead. How Mr Troy Stratti's letter had been produced could not be established, because the original was not available for examination.
118 Mr Bataglia agreed that he first heard of the Strattis offering rock saw work for 24 hours per day, 7 days per week for 12 months from Mr Takataka, a friend at the time, who he regarded as truthful and honest and to be believed. His wife thought that this was too good to be true, but it led them to make a feasibility study. It was in cross examination, that Mr Bataglia said for the first time that he had contacted Mr Troy Stratti, who had confirmed to Mr Bataglia the availability of such work on those terms, before this study had been undertaken. When challenged, Mr Bataglia finally agreed that it was Mr Takataka's information that he had relied upon in preparing the feasibility study and which had caused him to approach the Bank for finance, by way of hire purchase. The conversation he asserted he had had with Mr Stratti was not referred to in his original affidavit. He also conceded that given his diary entries, perhaps he and Mr Stratti had not at that stage discussed rates. He later also agreed that he had begun organising finance, before he discussed rates with Mr Stratti.
119 Mr Bataglia's feasibility study was based on the machine operating 20 hours per day, to take account of the need for maintenance. He didn't take the possibility of breakdown into account, which he accepted had been foolish.
120 Mr Bataglia confirmed that his claim was that he had paid a total $285,000 for an excavator, a rock saw bucket, ripper, second bucket, for $270,000, with an extra $15,000 to cover the first repayment of the loan and wages and fuel. Mr Bataglia explained that this $15,000 reflected a deduction for sales tax, because the equipment was to be used for Government work. He confirmed that he had lied to the Bank about the transaction, because he had told the Bank that the cost of the equipment was $285,000, when it was in fact less. His evidence was that Mr Troy Stratti had threatened to tell the Bank what he had done, which was "childish talk", because the Bank had lent him the money, because he was a good payer. In any event, his view was that this lie hadn't hurt anyone, but himself.
121 Mr Bataglia's evidence about the applicant's invoice book, produced as the result of a call made by the respondents, was that all of the invoices were completed on the dates shown, even though an invoice for a job in 2001, appeared earlier in the book than an invoice for August 1998, with the intervening pages blank. Invoices for August and September of 1998 were at the rate of $190 per hour, reflecting that the applicants were making a charge for rock saw work. Mr Bataglia denied that he had created the invoices after March 2001, in order to support the case here brought, or that he had sought to disguise that they did not fit chronologically in the invoice book kept, or that they were patently false. Mr Bataglia explained that the early invoices were actually job records and another part was a receipt and that there were other methods for sending invoices in relation to other jobs, the details of which he was not certain of.
122 Mrs Bataglia confirmed in cross examination that when she swore her affidavit in September 2001, she believed that the rock saw supplied by the respondents was a lemon and that the records as to the repairs it required between July 1999 to April 2001, attached to her affidavits, demonstrated this. This evidence was inconsistent with Mr Bataglia's evidence as to those records, which showed that some of these costs reflected modifications made to the rock saw and others, the construction of a new saw. Mrs Bataglia said that claims for the depreciation of the saw, which the respondents had never supplied was a mistake. She denied that the saw had not been written off, because it had always remained in the applicants' possession.
123 Mr Takataka confirmed that when Crown Excavations went into liquidation, the records he had signed showed that the respondents were not creditors of Crown and that the company owned no plant and equipment. On 2 June 1998 an administrator was appointed and on 29 June a liquidator, as the result of a creditor's winding up. His role as a director ceased then and he was not reappointed. He therefore had no authority to act for Crown Excavations and so it was impossible for him to have taken possession of a rock saw for that company. He agreed that had he done so, his obligation would have been to make the asset available for Crown Excavations' creditors. He also agreed that it was therefore also impossible for him to have transferred title of the rock saw to Crown Holdings Pty Limited. He accepted that it followed that his affidavit evidence, as to how he had dealt with the rock saw, was nonsense. He accepted that he didn't own the rock saw.
124 Mr Takataka declined to answer further questions about how he came into possession of the rock saw, on the ground that they might tend to incriminate him. He denied at one point, that he had told Mr Bataglia that it wasn't Mr Bataglia's rock saw. He couldn't remember what he had told him, although he later agreed that when he went to Mr Bataglia's property on 19 October, where he saw the rock saw, he told him that the rock saw which Mr Bataglia then had, in fact belonged to him. That was the rock saw which Mr Takataka said he had later loaned Mr Bataglia. He confirmed that this rock saw was the saw which he had agreed to deliver to Mr Bataglia, when asked by Mr Troy Stratti. He also confirmed that the rock saw had never been returned to him by Mr Bataglia.
125 Mr Takataka also confirmed that the statutory demand made against the respondents in the Supreme Court was set aside on their application. Crown Excavations did not appear in the proceedings, but paid the costs of the proceedings. His evidence was that he had earlier reached an agreement with Mr Troy Stratti, that Mr Stratti would build him a new saw and give him some money. He denied that this was a lie and refused to answer further questions. He could not remember the Stratti's solicitors denying the existence of any such agreement to the solicitors then acting for Crown Excavations.
The evidence which emerged in cross examination of the respondents' witnesses
126 Mr Sam Stratti's evidence was that when he met Mr Bataglia he said he was a builder, who had learned of the rock saw from Mr Takataka and wanted to get in on the ground floor of a new piece of equipment. He denied discussing the availability of work for the package which Mr Bataglia was interested in acquiring, although he accepted that he might have generally discussed the work which the saw could do. Discussions of available work were conducted by his son.
127 Mr Stratti agreed that it was the respondents standard practise for agreements such as that which Mr Bataglia asserted he had signed to be entered. He insisted upon this in Mr Bataglia's case, but Mr Bataglia refused. He was not aware, however, of what documents his son had provided to Mr Bataglia.
128 Mr Sam Stratti persisted with his denial of writing the letter of 20 July, attached to Mr Bataglia's first affidavit. He also persisted with other aspects of his affidavit, which it is unnecessary to repeat.
129 Mr Troy Stratti denied fabricating the longer letter of 20 July attached to his affidavit or creating the shorter letter attached to Mr Bataglia's affidavit. He also denied creating or sending to Mr Bataglia the named contract attached to Mr Bataglia's affidavit. He, too, persisted with other aspects of his affidavit, which it is unnecessary to repeat. He explained how various versions of executed agreements came to be in the respondents' files relating to the applicants, given the negotiations; Mr Bataglia's refusal to execute any agreement and the advice sought by the respondents as to the protection provided by the patents. He also agreed that available rock saw work was discussed, that he told Mr Bataglia a lot of work was available and that there was work available at the airport link tunnel. He denied, however, that any agreement in relation to work was ever entered.
130 Mr Stratti also explained how he discussed with Mr Bataglia the error which he had made in his 16 July quote and how the discussion had led to the agreement to sell the excavator and rock saw, the invoice of 21 July, which he also provided to Mr Bataglia and sent again to the Bank on 23 July, when the applicants signed the hire purchase agreement. He denied that the invoice which he had sent to the Bank had been created to hide from the applicants his earlier error in quoting, so as to deprive them of the equipment they had agreed to purchase.
131 The case finally advanced for the applicants by Mr Murr SC appearing with Mr Thompson of counsel was that the sale of the equipment here in question was accompanied by repeated assurances as to the availability of a significant level of remunerative work. Neither equipment nor work was provided as promised. The Lefty's case was relied upon, as to the claim for the overvaluation of the rock saw.
132 It was emphasised that there were two separate contracts, for the sale of equipment and the supply of work. Numerous questions of fact arose to be determined, having regard to the conflicting evidence of the witnesses. In cases of conflict, Mr Bataglia's evidence would be preferred. He had no motive for fabricating documents, as the respondents alleged and no advantage in having done so. The evidence of the respondents, by way of contrast, was implausible in a number of important respects, particularly having in mind what was being sold and the negotiations between the parties as to price. It was argued that Mr Troy Stratti's version of events amounted to unbelievable nonsense, especially as to what was sold.
133 The position was that Mr Stratti had underquoted and had then fabricated an invoice to cover his error, to the applicants' cost. This was consistent with the scant regard then paid by the respondents, to honouring their promises to provide the equipment purchased and the work promised.
134 As to the letters of 20 July, it was submitted that it would be accepted that the respondents had produced the letters relied upon by the applicants and that the longer letter of 20 July had been later manufactured by Mr Troy Stratti. The content of that letter and its structure, supported that conclusion, as did the other evidence as to how the shorter letters were produced.
135 It was argued that it would be accepted that the rock saw was never delivered until October 1998. The particulars of loss finally pressed were explained, including the further reliance placed on the Lefty's case, in that respect.
136 It was the case advanced by Mr Menzies QC, first appearing with Mr Lawler of counsel, as he then was, and later with Ms Obrart of counsel, that it would be accepted that Mr Bataglia, driven by avarice, had sought to acquire a rock saw, unencumbered by the terms of any agreement protecting the interests of the respondents in their invention. It was extraordinary that all of the documents which Mr Bataglia said supported his case had simply disappeared. Mr Bataglia's evidence on all of the issues in contention was such that it could be given no credit at all and must be rejected. There was a detailed examination of that evidence, including by comparison with diary entries and the invoice book, which I do not here outline. It was submitted that the evidence was characterised by dishonest attempts to disguise that Mr Bataglia had been caught out telling lies. Nor would it be accepted that any responsibility for the applicants' difficulties rested with his solicitor.
137 The applicants' case also depended upon the evidence of Mr Takataka, which it was submitted could not be accepted for any purpose. Detailed submissions were made as to that evidence. The expert evidence and the documents produced by the applicants in response to notices to produce, showed that the applicants' evidence as to these matters could not be preferred to that of the respondents.
138 The evidence, as it developed, led to the abandonment, in final submissions, of the claim that the rock saw had never been provided. It was argued that careful consideration needed to be given as to the various evidence as to those matters, all of which would lead to these claims being dismissed. It could not be concluded, on the evidence, that the applicants had discharged the onus which fell upon them to make out their case. The applicants sought that the Court accept propositions which were glaringly improbable and contrary to the evidence established.
139 The rejection of Mr Bataglia's evidence, should lead to the dismissal of all of the claims advanced. His cross examination showed repeated refusals to accept facts which were irrefutable. As a result, serious questions of credit arose. Affidavits sworn had been shown to have been knowingly incorrect, or to have hidden or obfuscated the truth. The diary had been shown to contain fabrications and inconsistencies with the affidavits sworn. The end result was that none of the evidence was reliable, or could be accepted.
140 The evidence as to the letters of 20 July did not, on any version, amount to a contractual representation of any significance to the claims here advanced by the applicants. Detailed submissions were advanced as to the creation of the documents, which I will not detail. It was submitted that fabrication of the letters by Mr Bataglia was consistent with other proven conduct.
141 As to the disputed written agreement, it was relevant that the respondents practice was to enter such agreements and that it would have been their preference to have done so with the applicants. Given the evidence as to the agreement provided to the applicants by the respondents, denied by Mr Bataglia, but later confirmed, when a notice to produce was answered, the conflict in the evidence could not be resolved by accepting Mr Bataglia's version of events. Again, a detailed analysis was made as to the evidence about these matters, which I will not detail.
142 It was also submitted that the claims advanced in reliance on the Lefty's case paid no regard to the fact that his machinery was to be operated twenty hours a day, six days a week, forty eight weeks of the year. It followed that running costs would have to be approached on quite a different basis to that claimed in Lefty's. No account was taken of other expenses, such as operator costs, which also could not be ignored.
143 In reply, it was put by Mr Thompson that ample allowances had been made for the basis upon which the machine was to be operated. It was also safe, it was submitted, for the Court to proceed on the basis that Mr Bataglia and Mr Takataka's evidence was consistent and could be preferred.
144 Proceedings brought under s106 are adversarial in nature, with the applicant having the onus to make out the case brought, namely that the contract or arrangement in question is unfair, as that term is defined in s105 of the Act. In coming to that conclusion, the section obliges the Court to have regard to the parties' conduct.
145 As was submitted for the respondents, even if that onus is met and a finding that the contract is unfair is available, there is no doubt that the Court may decline to grant relief, in the exercise of its discretion under the section. Tony Cok Kiat Yew v Pembroke Securities Limited (Unreported, 2 July 1990) was such a case. There, Hill J, for example, declined relief, observing at p21: 'I have formed the opinion that in view of the applicant's conduct in the performance of his obligations and duties under the agreement, his evidence in this case and his apparent lack of co-operation in providing any tangible assistance to Pembroke in recovery of the bad debts that he should not be and is not entitled to any relief under s 88F.'
146 His Honour also referred to the applicant's inability to assist the respondent to unravel the real object and ramifications of a number of transactions, which resulted in bad debts for the respondent and his contradictory evidence about various matters related to these transactions. This caused his Honour to conclude that the applicant was 'an unreliable witness and should not be believed where his evidence is uncorroborated unless the evidence is prejudicial to himself.' (at p20)
147 Here, the case advanced by the applicant was founded about complaints in relation to the rock saw and other equipment purchased from the respondents; their failure to deliver that equipment and their failure to provide work, as promised.
148 The evidence for the applicants, as it developed, revealed a picture which led irresistibly to two conclusions. First, that the evidence which they called had to be approached with the greatest caution, and secondly, that the applicants had not satisfied the onus which fell upon them in these proceedings. Even where documentary support appeared to exist for evidence given, those documents too had to be approached with caution.
149 The central allegation advanced by the applicants was that the respondents had never delivered to them the rock saw they had purchased. This story was persisted with, despite the difficulties as they emerged in the evidence. The claim was eventually abandoned in final submissions. This development properly reflected what had emerged, which included that the evidence given by Mr Bataglia, both in his affidavits and orally, conflicted with his own diary records, other records led in the applicants' case and with the evidence given by Mrs Bataglia, as well as with evidence given by the respondents.
150 The saw was found by the respondents during the hearing, abandoned in the bush. Mr Bataglia confirmed that he had left it there. Mr Takataka, called by the applicants to give evidence as to his ownership of the saw, admitted having taken the applicants' rock saw for his own purposes and then loaning that same saw to Mr Bataglia. While some of the documents in evidence supported the view that Mr Takataka had misrepresented his ownership of the rock saw to Mr Bataglia, the way in which Mr Bataglia dealt with, and later disposed of, that saw was, however, entirely consistent with an understanding that he owned it. The way in which the saw was treated by the applicants for tax purposes, including in relation to the cost of the repairs of the saw, suggested the same understanding. Given his evidence, anything produced by Mr Takataka in writing in relation to the rock saw the subject of these proceedings, also had to be approached with grave reservations.
151 The tangible evidence which cannot be overlooked was that relating to the serial number of the rock saw sold by the respondents. Mr Bataglia accepted that the rock saw found in the bush was marked with a serial number which also appeared on the hire purchase agreement which the applicants signed, at their Bank, before any equipment was delivered to them. This document reflected the information contained in the respondent's invoice. While Mr Bataglia denied having seen the invoice, there was no doubt, despite Mr Bataglia's initial denials, that the applicants were given a copy of the hire purchase agreement by the Bank, shortly after they signed that document. That same serial number was also referred to in various other documents led in the applicant's case. In those circumstances, Mr Bataglia's explanation, that he had never checked the serial number, which appeared on the saw and the hire purchase agreement was difficult to credit, especially given that he had been asked to provide the serial number to the Bank, after he had approached it for assistance.
152 That the saw was being used in August 1998, at a time when it was alleged it had not even been delivered to the applicants by the respondents, also appeared from the Mr Bataglia's diary. The invoices which the applicants relied upon confirmed this. The explanation eventually proffered by Mr Bataglia, in cross examination, that he had been told by the operator then engaged to operate the saw, that the saw was not a new one and that accordingly, he did not believe that it was the saw which he had purchased, was also difficult to credit. This was not consistent with the evidence given in his earlier affidavits, where he utterly denied that a saw had ever been delivered. It also did not accord with Mrs Bataglia's evidence that the saw was a lemon and required a lot of work, nor with invoices for work allegedly performed with the saw, which the applicants later produced and for which they sought payment.
153 While this aspect of the claim, the failure to deliver the saw at all, was finally abandoned in submissions, the complaint that the saw had not been delivered until October 1998 was not. This, too, was not made out on the evidence. It can only be concluded that this aspect of the claim was known by the applicants to have had no foundation, from the outset. The unexpected development that the missing saw was found by the respondents during the course of the proceedings, where it had been abandoned in the bush by Mr Bataglia, at a location from which it was then apparently stolen, before it could be retrieved by the applicants, only reinforced this conclusion.
154 These circumstances squarely raised for consideration whether any relief could properly be granted to the applicants in these proceedings. For reasons to which I will return, it is unnecessary to decide this question.
155 There was another fundamental issue in the proceedings, as to promises allegedly made by the respondents, about available work. I do not propose to further detail the conflicting evidence as to the discussions between the parties at various stages. The respondents always denied making the alleged representations. Mr Bataglia's evidence, by way of contrast, was something of a roving feast. Initially, his evidence was that he had first received the information on which he relied from Mr Takataka. While his story altered, he finally accepted that Mr Takataka's advice as to what work the respondents had available and the rates they paid, formed the basis of his feasibility studies and caused him to approach both the Bank and Mr Troy Stratti. He alleged that the respondents then made similar representations about available work and that they were supported by the agreement which he had later executed. Whether or not such representations were made and that agreement had been provided to him by the respondents and which he had executed and left with them, was in issue.
156 Given the evidence as it developed, it must also be concluded that the applicants did not make out this aspect of their case. In the case of conflict between the evidence of Mr Bataglia and other witnesses, it was not possible to prefer his version of events, as I have explained. I note that Mr Bataglia sought to explain various of the difficulties with which he was confronted in cross examination, by reference to matters such as his abilities with the English language, problems of understanding in relation to the court process and the failure of his solicitor, to act in accordance with his instructions. These explanations could not be accepted as providing a basis upon which it could be concluded that the evidentiary onus which fell upon the applicants was met, given the difficulties in the evidence which I have outlined.
157 The position was that the agreement asserted by the respondents to have been fabricated, formed an important evidentiary foundation for the applicants' claims, supported on their case by other correspondence, also said by the respondents to have been fabricated.
158 While the provision of a draft agreement by Mr Troy Stratti was persistently denied by Mr Bataglia, in cross examination it emerged that Mr Troy Stratti had faxed a blank version of the alleged agreement to the applicants. It was produced by the applicants, attached to a fax cover sheet written by Mr Stratti. The applicants plainly had access to a template from which the named agreement could have been created. The version which Mr Bataglia asserted he had signed and left with the respondents, which named Mr Bataglia, had been prepared by someone, but who, was not established on the evidence. On the evidence there were at least three possibilities, the applicants, the respondents, or the respondent's solicitors. It was the respondents' practice to have their solicitors prepare such agreements. The evidence showed that they had not done so in this case. On Mr Troy Stratti's evidence he gave them no instructions to do so, because the applicant was refusing to sign any agreement at all.
159 The named version which Mr Bataglia allegedly signed and left with the respondents, keeping no copy for himself, contained spelling errors, not present in the draft version provided by Mr Troy Stratti. The evidence of the respondents was that they had not produced this document, nor had it been signed by Mr Bataglia, nor left with them. When a call was made during cross examination of Mr Bataglia, the applicants produced unexecuted copies of both the draft and named version of the document. They were each attached to identical fax cover sheets, one a copy of the other. The fax cover sheet was the one sent by Mr Troy Stratti to Mr Bataglia, attaching the draft agreement. How a copy of that cover sheet came to be attached to a copy of the named version of the agreement was not explained. The original of that document was not produced.
160 The proper inferences from this evidence were that Mr Stratti had faxed the draft version of the agreement to Mr Bataglia, as was his evidence, under cover of the fax cover sheet. That fax cover sheet had been copied and attached to the other, named, version of the document. This had not been done by the respondents, but had occurred after the draft came into the hands of the applicants. The evidence did not permit the inference that the named version of the agreement, had been created by the respondents.
161 The explanation, proffered for the applicants in submissions, that the fax cover sheet had been attached in error to the named version of the document was entirely possible. This possibility could not, however, overcome the other difficulties which lay in the way of accepting that the applicants had established this aspect of their case, namely that the respondents had produced the named version of the agreement on which the applicants relied and that the parties had made such an agreement with each other.
162 I turn then to the controversy as to promises allegedly made in writing on 20 July, by the respondents, for the provision of work.
163 The evidence showed that the copy of the letter annexed to Mr Bataglia's first affidavit, signed by Mr Sam Stratti on DRT letterhead, had been produced as the result of copying another letter of the same date, a copy of which was later produced by the applicants, signed by Mr Troy Stratti on OES letterhead. The respondents sought the production of these letters and were advised by the applicants' solicitor, that the original was missing. Mr Bataglia's evidence, in cross examination, was that he had left the original with Mr Sam Stratti at the respondent's offices, when Mr Stratti had produced the DRT letter, in identical terms, in response to a request from him for further information for the Bank. How two identical letters in that form could be thought to provide such assistance, was not explained. Mr Bataglia confirmed, however, that he was aware that his solicitor had incorrectly informed the respondents that the original was missing. He could not explain why he had permitted this advice to be given, knowing that he had left the original with the respondents. In any event, both Mr Sam and Mr Troy Stratti denied having produced such correspondence. It was their case that the letters were both a fabrication. It was the applicant's case that they were not.
164 Another longer letter, of the same date, 20 July signed by Mr Troy Stratti, on OES letterhead, which contained many of the same words, together with additional words which substantially altered the effect of the letter, was said never to have been received by the applicant. It was the applicant's case that this letter was a later fabrication by Mr Troy Stratti. He denied this.
165 The expert evidence established that the shorter DRT letter had been produced by reproduction of parts of the shorter OES letter. How the longer OES letter was produced was not established. The original was not in evidence. That either of these shorter letters had been produced by copying the longer letter of 20 July was not established. The expert evidence was that it was most unlikely. What was undoubtedly the case was that the longer letter was produced by Mr Troy Stratti. When it was produced, is impossible to say. Mr Stratti certainly had the means to create that letter, if his evidence that he was not the creator of the shorter OES letter, was false. Likewise, Mr Bataglia had the means to create both shorter letters, if his evidence that he had not received Mr Troy Stratti's longer letter was false.
166 The upshot was that the two shorter letters, could have been produced either by the applicants, or by the respondents. The longer letter could have been produced by Mr Stratti on 20 July, or later. Given the state of the evidence, these issues must be resolved on the basis of onus. I am satisfied that it must be concluded that the onus falling upon the applicants to establish the case they advanced, on the balance of probabilities, was not met. No conclusions favourable to the applicants can be drawn about these matters.
167 There was also evidence as to work alleged to have been performed and not paid for. Reliance was placed upon the evidence in the Lefty's case. A comparison of the evidence in that case, with the evidence here led by the applicants as to this aspect of their claim, illustrates the difficulties in the way in which this aspect of the case was advanced. In Lefty's case, the evidence established that work had been performed. Documents maintained by the applicant in relation to hours and days worked by Mr Metaharis were tendered. There was evidence of the acknowledgement which was daily obtained by Mr Metaharis from contractors on site, that the work had been performed. Invoices for that work were then promptly sent by the applicant. While there were disputes between the parties as to the details of the sums claimed and a failure to pay on time, the respondents made payments in response to the invoices.
168 Here, the evidence was that Mr Bataglia did not himself perform the work for which invoices were later created. While there was evidence that a number of operators had been engaged, there was no evidence called from the operators who performed the work, to establish that the applicant's machines had been used, as claimed. Indeed, some of the invoices related to periods prior to October 1998, in respect of which it was the applicant's case that the rock saw had not been supplied. Nevertheless, payment for rock saw work was claimed, again underlining the dubious nature of that aspect of the claim.
169 No evidence of acknowledgement from contractors on site, that the work claimed had been performed, was led. The system of invoicing which the applicants utilised, was peculiar, to say the least. This included the timing of invoices (all but one provided on 20 December 1999, for work dating back to August 1998) and the manner in which the applicants maintained the invoice book itself. The applicants' evidence as to these matters raised various difficulties. While Mr Bataglia denied that the invoices had been later manufactured to support the applicants' case, given the way in which the invoice book was kept, including that it was not kept chronologically, this was plainly possible.
170 While the respondents acknowledged that they had not made payment to the applicants in accordance with 30 day terms, their case was that all but one of the invoices the applicants' relied upon had not been supplied and that payment for work performed in August 1998 had been the subject of an agreed 'contra arrangement', the respondent having paid the applicant's first loan repayment in lieu of payment for work done. The applicants acknowledged, in their case, the agreement as to the loan repayment. They accepted that such a loan repayment had been made by the respondents, but denied the agreement as to any set off. As to the job at Woy Woy, it is unnecessary, at this point, to outline Mr Bataglia's various evidence about how that payment came to be made and whether it was paid by cash or cheque. This was, however, another instance where it was difficult to accept his version of events.
171 Another difficulty in the applicants' case was that some of the sites for which claims were made were sites with which, on the respondent's case, they had no connection at all. In one case, the respondent's evidence was that Mr Takataka was the subcontractor on site and any work performed there was for him and not the respondents. The applicants accepted that he was the subcontractor, but asserted that they had a direct relationship with the respondents on that job. Mr Takataka gave no evidence about these matters.
172 The state of the evidence was such that no conclusions could be drawn in favour of the case which the applicants advanced as to these matters.
173 The Lefty's case was also relied upon for the claim advanced as to the alleged unfair overpricing of the rock saw. I do not propose to repeat the evidence and conclusions which I there reached in relation to that matter. I adhere to the conclusions which I came to, for the reasons given. Mr Bataglia's evidence that he intended himself to manufacture rock saws and to sell them for $80,000 to $90,000, confirmed those conclusions. It follows that this aspect of the case was also not made out.
174 As to the claims for other equipment paid for, but not supplied by the respondents, I am satisfied that Mr Bataglia's evidence, inconsistent with both the evidence of the respondents and the hire purchase agreement entered by the applicants with the Bank, cannot provide a sound foundation for any finding of relevant unfairness in the agreement. Nor can I find that the evidence established that Mr Bataglia was to be employed by the respondents as a supervisor. He never performed such work and even his own evidence, if accepted, suggested that this possibility was the subject of only brief discussion, early in the parties' dealings with each other. The respondents denied such an arrangement.
175 It follows that it must be concluded that the applicants have failed to demonstrate that the contract in question was unfair, as alleged. It is thus unnecessary for me to give consideration as to whether any discretion could properly be exercised in favour of the applicants, had I come to a different view. It has only been necessary, so far, for me to touch upon a portion of the evidence relevant to this secondary question. Suffice it to say that I have the gravest doubts as to the exercise of any discretion in favour of the applicants, but do not find it necessary to consider this further, given the conclusions which I have otherwise reached.
176 For all of these reasons, I order that the applicants' case be dismissed.
177 The usual order as to costs would be that the applicants bear the respondent's costs, as agreed or assessed. The parties have liberty to approach in relation to the making of any costs order. That liberty should be exercised within 28 days of today's date. ------------------------
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Paolo Bataglia and Anor
Samuel Edward Stratti and Ors