Singh v Verdi Group Pty Ltd

Appearances

1. None of the respondents have ever appeared at the Tribunal in the matter and have not provided any documents in accordance with the Tribunal directions. Mr Singh gave evidence that he has not had any contact with the respondents since June 2016.
2. A copy of a notice of hearing sent to Verdi Group Pty Ltd appeared on the file. It is addressed to the registered address of the Corporation. The notice had not been returned. The Tribunal was satisfied that the Corporation had been given notice of the hearing and no reason has been given by the Corporation for non-attendance.
3. An ASIC search reveals that Valdecon Group Builders and Developers Pty Ltd have been deregistered. Mr Sam Hraiki had been a director of that Corporation. Due to deregistration of the Corporation, the Tribunal makes no orders in relation to Valdecon Group Builders and Developers Pty Ltd.
4. Copies of notices of hearing sent to Mr Samer Hraiki and Mr Charles Curro also appeared on the file. The Tribunal is satisfied that they have been given notice of the hearing and no reason has been given by them for non-attendance.
5. The applicants have complied with directions to provide documents to the Tribunal and in that regard have provided a folder of documents on which they rely dated 16 November 2016. Mr Nawal Singh was present, prepared and ready to proceed with the matter. The Tribunal was satisfied that the justice of the case required the matter to proceed in the absence of the respondents.
6. All the documents received by the Tribunal from the applicants and Mr Singh's oral evidence have been considered by the Tribunal in coming to this decision.
7. The applicant had initially been seeking an order for $42,030.00. By the time the matter came for hearing the applicant was seeking $247,296.60 for incomplete work and costs of obtaining searches and the costs of an expert report.
8. Mr Singh gave evidence that he sought referral for a builder for renovation of the residential premises through Hi-Pages. Mr Samer Hraiki on behalf of Verdi Group Pty Ltd responded and contacted him. Mr Hraiki took him to building sites in Milperra where he had two renovations and extensions underway. Mr Singh alleges that Mr Hraiki produced a contractor license no. L-7023. That license was in the name of Charles Curro which had also been the name listed on the initial referral from Hi-Pages. Mr Charles Curro is the Director of the Verdi Group Pty Ltd.
9. Mr Singh gave evidence that after seeing the two building projects and evidence of a building license he was provided with a quote. He accepted the quote and proceeded to enter into a contract. With the applicant's documents is provided a Fair Trading Contract dated 18 April 2016. The contract is for an amount $210,000.00 for the renovation of a house. The contract is between the applicants and Verdi Group Pty Ltd. Mr Singh gave evidence that Mr Hraiki had actually signed the contract, but that he had spoken to Mr Curro over the phone and had given him his licence details and told him he agreed to proceed with the contract. The license number on the contract belongs to Charles Curro.
10. At the instruction of Mr Hraiki, the applicants paid an amount of $42,000.00 after signing the contract as a deposit. Mr Singh stated that he was told that this was for buying all the raw materials so the job could be completed on time. He stated he was told by Mr Hraiki that the Corporation invested in many projects and were short of money and needed to be paid
11. The applicants provided evidence of bank transfer with their documents showing they had paid $42,000.00. Mr Singh stated that when the work started after 26 April 2016, both Mr Hraiki and Mr Curro attended with workers. They advised Mr Singh that they would create a temporary kitchen on the upper level so they could begin demolition and renovation of the lower level kitchen. They then proceeded to demolish the lower level kitchen and removed the bathroom tiles and fittings. Mr Singh stated that after the demolition works Mr Hraiki and Mr Curro started attending the site less and the applicant began making enquiries in relation to the licensing and other issues. They were subsequently advised by Fair Trading that Verdi Group Pty Ltd did not have a builder's license to carry out building work and that the licence of Charles (also known as Carmelo) Curro did not authorise him to carry out work for more than $20,000.00. Mr Singh had also been provided with a Home Warranty Insurance Certificate with the contract and he made enquiries with the insurer which had no record of the insurance.
12. Mr Singh gave evidence that he made repeated requests for the respondent's to return to complete the works. Mr Singh provided a letter dated 21 October 2016 sent to all the respondents terminating the contract for breach.
13. The applicants also provided an expert report from Mr Paul Cavallo of Independent Property Inspections.

Findings

1. The applicants have bought the claim pursuant s 48K of the Home Building Act 1989 (HBA) for breach of the building contract. The Tribunal is satisfied that the contract relates to residential works and that the matter is a building claim in accordance with section 48K of the Act. The Tribunal is satisfied that it has jurisdiction to decide the matter.
2. The Tribunal is satisfied that the respondent contracted with Verdi Group Pty Ltd. Mr Curro is the sole director of the Corporation. Mr Singh spoke to Mr Curro prior to entering into the contract and Mr Curro also attended to do the works. Although, Mr Hraiki signed the contract, the Tribunal is satisfied that it was with the authority of Mr Curro, the director, and that at all times Mr Curro was aware that the contract had been entered into.
3. The Tribunal finds that despite repeated requests for Verdi Group Pty Ltd to return to complete the works, they did not return and were in breach of the contract. Further Verdi Group Pty Ltd is neither properly licensed nor insured in accordance with the Home Building Act and as a result they were in breach of the contract.
4. The Tribunal finds that the applicants validly terminated the contract by letter sent to the respondents on 21 October 2017. The Tribunal is satisfied that having validly terminated the homeowners are entitled to the incomplete works.
5. The Tribunal finds on the report of Mr Paul Cavallo of Independent Property Inspections that the costs to complete the works for which the parties contracted is $398,912.00. The report complied with the expert code of conduct and the Tribunal is satisfied that is the costs for completing the works.
6. The Tribunal also finds that Mr Curro is responsible for misleading and deceptive conduct as a director of the Corporation with which the applicant contracted. The Tribunal finds on the evidence of Mr Singh that he contacted the Home Warranty insurer and that no such insurance exists.
7. s74 on (3) of the Fair Trading Act 1987 (NSW) (FTA) relevantly states the following: 74 Actions for damages and compensation orders …. (3) The Tribunal may decide the matter of whether a person has suffered loss or damage because of the conduct of another person that constitutes a local contravention or a contravention of Chapter 2 or 3 of the ACL if that matter arises in connection with another matter the subject of proceedings in the Tribunal. In deciding the matter of loss or damage, the Tribunal may award such sum, and make such ancillary orders, as it thinks fit. ….
8. Section 18 contained in Chapter 2 of schedule 2 of the Competition and Consumer Act (2010) (Cth) (ACL) relevantly states: 18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
9. In the case of Houghton v Arms [2006] HCA 59, the High Court held that employees of a company were individually liable for their misleading and deceptive conduct under section 9 of the Victorian Fair Trading Act 1999. In that case the Victorian legislation read in almost the same terms as s 18 of the ACL. The matter involved an Appeal of orders made against employees who were found by the Federal Court to have been acting within the scope of actual authority and liable for misleading or deceptive conduct. Judgement was made against the employees and it was found that individuals whose conduct was "in trade or commerce" could be liable to pay damages for that conduct, regardless of whether they as an employee of the company at the time.
10. The principles contained in Houghton v Arms were adopted in the subsequent case of CH Real Estate Pty Ltd v Jainran Pty Ltd ; Boyana Pty Ltd v Jainran Pty Ltd [2010] NSWCA 37. That case involved the sale of a commercial property. Boyana Pty Ltd was the vendor and Mr Sgro was the director of the Corporation. It was found, in the initial proceedings that Mr Sgro had made certain representations by failing to disclose to the purchaser road widening proposals and as such was personally liable for the damages which flowed from those misrepresentations. Basten JA noted that the Fair Trading Act as it was then extended to a person engaging in misleading and deceptive conduct. Similarly, the ACL extends to such conduct. In the appeal Counsel for Mr Sgro had submitted; that to impose liability on Mr Sgro for conduct undertaken as the human agent of the corporate entity had the effect of withdrawing the protections available to an individual who sought to run a business through a corporate vehicle.
11. His Honour adopted the reasoning in Houghton v Arms and concluded: 104 There remains a question whether the conduct of the corporation in presenting the contract with its misleading representations to the purchaser, was also the conduct of Mr Sgro. Whilst, as the mind of the company, he directed the preparation of the contract and executed it on behalf of the company, he was not aware that the contract contained the precise representations relied upon, nor was he aware of the falsity. The latter element of ignorance is not presently relevant, there being at this stage no question of accessorial liability. The question is whether, because s 42 requires no intent, or even negligence, on the part of the person engaging in the prohibited conduct, the fact that Mr Sgro may not have been aware of the existence of the statements in the contract would relieve him of liability. Just as the corporation will be liable because it presented a contract to the purchaser containing statements which were in fact misleading or deceptive, so Mr Sgro will be liable under s 42 if he engaged in conduct of the same kind. Apart from the conduct involved in signing the contract, his conduct was engaged in through the agency of the solicitors. They, acting on instructions received from him (albeit on behalf of the vendor) prepared the contract and, after obtaining its execution by him (on behalf of the vendor), again acting on his instructions as the human embodiment of the corporation, forwarded the contract to the purchaser. Mr Sgro submitted that the acts of the solicitors were carried out purely as agent for the vendor, and not on behalf of Mr Sgro himself, who was not their client. In terms of legal analysis, that was correct; in terms of the characterisation of the conduct, it was nevertheless conduct which can be attributed to the direction of Mr Sgro, as a matter of fact. That the mechanical task of presenting the contract was delegated to someone in the solicitor's office (probably a clerk) does not prevent the conduct being properly attributed to Mr Sgro, as the person directing the affairs of the vendor.
12. Given those statements the Tribunal finds that Mr Curro is personally liable as he engaged in conduct that was misleading or deceptive. The Tribunal is satisfied, based on the evidence of Mr Singh, that he has enquired with in relation to the Home Warranty Insurance Certificate and that no such insurance exists with the provider in relation to the property. The Tribunal also finds that the Corporation was not licensed to do building works. Mr Curro led the applicants to believe that they werr entering into a contract with a properly licensed and insured entity. The Tribunal is satisfied that the Corporation was ultimately both unlicensed and uninsured and that both the Corporation and Mr Curro are liable for the losses that flow from that breach to the applicants. ss 4 and 5 of the HBA prevent unlicensed contracting and s92 of the HBA requires that contract work must be insured. Verdi Group Pty Ltd was unable to do the contract works. The Tribunal finds that Mr Curro's misrepresentations, being the providing of his individual license as evidence that the works could be done and the providing of the Home warranty Insurance, induced the applicants into the contract. The Tribunal is also satisfied that the homeowners damages have arisen as a consequence of entering into the contract with an unlicensed and uninsured entity.
13. Mr Hraiki was not a director of the Corporation and the Tribunal does not find any cause of action made out against him.
14. The Tribunal finds that the following amounts sought by the applicant should be allowed: 1. $16,000.00 for liquidated damages under the contract for the period from 1 July 2016 to 1 February 2017 . 2. $188,912.00 for the difference to now have to complete the works (the difference between the contract amount and the expert's Scott Schedule amount to complete the job $398,912 - $210,000). Has the applicants not been misled into entering into the contract, they would not have suffered that loss. 3. The respondent was also seeking a refund of $42,000.00 for amounts already paid. Given the amount of work that was ultimately done by the respondent was minimal, the Tribunal allows that amount to be refunded.

Costs

1. Section 60 of the Civil and Administrative Tribunal Act (NSW) 2013 requires parties to pay their own costs unless the Tribunal is satisfied that special circumstances warrant an award of costs. There is an exception in rule 38 of the Civil and Administrative Tribunal Rules 2014, for applications for sums exceeding $30,000.00, which allows the Tribunal to award costs in proceedings even in the absence of special circumstances. The Tribunal is satisfied that the applicant has been largely successful in this claim and is satisfied to make an orders for costs as follows: 1. $123.00 in total for ASIC search fees 2. $261.60 NCAT filing fee
2. Accordingly the Tribunal makes an order for $247,296.60 in favour of the applicants.

Civil and Administrative Tribunal of New South Wales

11 December 2017 I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 23 January 2018