Techcor Developments Pty Ltd v Mustafa & Anor [2002] VCAT 467

2. The Applicant bought a claim for payment of money in the sum of $7,573.00 under the Fair Trading Act 1999 for work labour and materials provided by the Applicant to the Respondents.

3. At the commencement of the hearing I gave leave to the Applicant and to the second Respondent to be legally represented. There was no appearance for or by the first Respondent. Mr Neil McPhee, Solicitor represented the Applicant and Mr Michael Helman, Solicitor represented the second Respondent.

4. Both the Applicant and the second Respondent gave evidence. The Applicant called Mr Martin Posser as a witness. Each witness was cross examined.

5. Mr Morgan Elliot Thomas a Builder/Developer and Director of the Applicant company gave evidence that the company carried out general fit out works for a fast food outlet at 65 Main Hurtsbridge Road, Diamond Creek for the Respondents.

6. It was Mr Thomas' evidence that he was approached by Mr Martin Posser to quote for and then to carry out the works.

7. Mr Thomas said the value of the work undertaken was approximately $49,500.00 which included GST with a $5,000 to $6,000.00 variation. His evidence was that he had received payment for all but about $7,500.00. (His claim being for $7,573.00). He agreed he had issued invoices to "Pasta World" a company owned by the Respondents Mr Byrne and Mr Mustafa. He had done so because a lot was done on an ad hoc and "laid back" basis not anticipating that six months later the contractual side of things would be picked again. He had been given a cheque for $48,000.00 by way of payment by the first Respondent Mr Mustafa.

8. It was contended by Mr Thomas that although he had addressed his invoices to Pasta World the contractual side of the arrangements with Mr Byrne and Mr Mustafa were very messy and on an ad hoc basis. This he said was because of the personal friendship between Mr Byrne and Mr Posser.

9. It was Mr Thomas' evidence based on negotiations with Martin Posser that he believed he was engaged by Martin Posser on behalf of Darren Byrne and John Mustafa.

11. Mr Thomas gave evidence of promises made to him by Mr Byrne that he would be paid. He believed Mr Byrne had cash flow problems. He undertook to meet the extreme time frames for Mr Byrne and to do the work to help get the shop up and running.

12. Mr Thomas met Mr Byrne and Mr Mustafa on-site and was of the view they were doing the development themselves. He entered into the agreement on trust and on the promises given he would be paid and because of this he said there were no complicated contracts prepared. He said he took the job on "face value".

13. It was his evidence that it was never said to him that any incorporated entity was involved.

14. Mr John Mustafa was named as the owner of the building on the building permit.

15. Mr Thomas gave evidence of completing the work and of the inspection by Mr Peter Luzinat, a Building Surveyor and by a Health Inspector. An occupancy certificate was issued.

16. Mr Thomas said the business was a going concern for four to five months but is no longer operating.

17. In cross-examination Mr Thomas agreed the business running at the premises was called Pasta World, that the owner of the building in the building permit was John Mustafa and that Mr Byrnes' name did not appear on any documentation. However, Mr Thomas' evidence was that he had corresponded with Mr Byrne.

18. It was put to Mr Thomas that at the time of his quotation Pasta World was an incorporated company. Mr Thomas was firm in his evidence that he was engaged by Mr Posser on behalf of Mr Byrne and Mr Mustafa and not any incorporated company.

19. It was put to Mr Thomas that he had been paid $48,000.00 on a cheque drawn on the "current name of Pasta World Pty Ltd". Mr Thomas could not confirm or deny this. No documentary evidence was submitted in support of this contention.

20. It was put to Mr Thomas that works were incomplete and defective and that he had been notified of these matters on 20 February 2002. Mr Thomas denied seeing the letter of 20 February 2002 until the hearing day and relied on the issue of an occupancy certificate to rebut the accusation of defective works. He agreed some minor items required attention.

22. Mr Martin Poser, Construction Manager gave evidence of his involvement as Project Manager for the development of the Respondents. He confirmed he procured the services of the Applicant company on behalf of the Respondents. His evidence was he was asked by Mr Byrne to help as a favour as Mr Byrne needed to get the shop opened urgently. Mr Byrne had signed a lease with the shopping centre and was under time constraints. Mr Posser had known Mr Byrne for a long time. He reiterated that his involvement was as a favour - there being no contractual relationship between himself and the Respondents.

23. Mr Posser was asked if he ever heard either Mr Byrne or Mr Mustafa indicate to the Applicant that he would be paid. Mr Posser answered yes. His evidence was that Mr Byrne assured him he would pay the "man". Mr Posser was sure of his evidence because there had been an issue with the previous builder and pay.

24. Mr Posser gave evidence that he had heard of the company Pasta World Pty Ltd and knew the work was being done for Pasta World but he did not know of Mr Byrne's and Mr Mustafa's business affairs and believed he was acting on behalf of Darren Byrne and John Mustafa not any company. He described the circumstances in which his services to Mr Byrne were obtained as a favour. His evidence was unequivocal.

25. Mr Posser gave evidence that on Mr Byrne's instructions he dealt mainly with Mr Mustafa in relation to works and variation works. This was because Mr Byrne was busy elsewhere.

26. I found Mr Posser a frank and reliable witness.

27. Mr Byrne gave his occupation as a financial advisor running his own practice. He corrected this evidence saying he in fact worked for his father. He gave his credentials as Dip. Finance Planning 1, 2 and 8. He was asked several questions about the Corporations Law. His knowledge appeared scant. This was of significance because when asked if he made it clear to Mr Posser that it was the company Pasta World Pty Ltd who were seeking his assistance he replied, relying upon his occupation to support his evidence, that being a financial adviser, "I would - I advise people every day finances, their insurances, their leases, their homes and their mortgages". His response in my view was somewhat equivocal and unconvincing.

28. Mr Byrne gave evidence that he was not in trouble with financing. On this point, I prefer the evidence of Mr Posser as being more reliable.

29. Mr Byrne said a payment of $48,000.00 to the Applicant was drawn on a company cheque. He distanced himself from the variation works saying this was signed off by John Mustafa.

30. No explanation was given as to why John Mustafa did not attend the hearing and I take this matter into account in reaching my determination.

31. Mr Byrne gave evidence of being in partnership with Mr Mustafa on the one hand and of being directors in the company on the other. He corrected this evidence to say Mr Mustafa was his "partner" in a "company".

32. When Mr Byrne spoke of the role of Mr Posser in the project. His evidence was that Mr Posser organised architects and plans. He said that he himself was "not there 100% and of course it was all done with a partner".

33. Mr Byrne gave evidence that Mr Posser would have known from day one he was dealing with a "Pty". He did not elaborate on this.

34. Mr Byrne was cross examined in relation to the evidence of Mr Thomas and Mr Posser that he had promised to pay Mr Thomas. He disagreed with the evidence saying he promised nothing.

35. Mr Byrne later changed his evidence about promising to pay but said he didn't sign for any variation.

36. He was asked where he was when he promised to pay. Mr Byrne replied he first promised at a meeting and later he promised on the phone. Mr Bryne was not sure if the work was finished when he promised to pay the Applicant.

37. Mr Byrne gave evidence that when he spoke to Mr Thomas on the phone promising to pay that he couched the promise as being "for and on behalf of Pasta World Pty Ltd".

38. It was put to Mr Byrne that it was inherently unlikely that he would use these words and not correct. He disagreed.

39. I find the Applicant relied upon the promise of Mr Byrne that he would be paid.

40. Having considered all the evidence in this matter, I find the Respondents were under tight financial and time constraints to complete their project and get their business up and running. I am satisfied they entered into an arrangement albeit a very loose arrangement aided by Mr Martin Posser for fit out work to be done by the Applicant. There was no written contract.

41. Whilst, I find Pasta World Pty Ltd was incorporated at the time the job was quoted nevertheless. I prefer the evidence of Mr Thomas that he was engaged to do the work on behalf of Mr Byrne and Mr Mustafa. On the balance of probabilities, I am not satisfied on the evidence before me that it was ever indicated to the Applicant that he was engaged by Pasta World Pty Ltd. I find on the facts before me the evidence was to the contrary.

42. The arrangements between the parties have been described as "messy". Mr Mustafa was named as the owner of the building. There was a sense of urgency to complete the work. I accept the evidence of Mr Posser that he was doing a favour and that Mr Thomas was also working hard to assist Mr Posser to assist Mr Byrne to get the project completed. I accept the arrangements were based on an element of trust.

43. I accept the unequivocal evidence of Mr Posser that though he may have known the name Pasta World he did not know the business affairs of Mr Byrne and Mr Mustafa. He dealt with Mr Byrne personally and with Mr Mustafa personally on Mr Byrne's instructions in relation to the variation.

44. I have considered the evidence of defective works and reject it. I find the work was completed in a satisfactory manner save for some minor matters. I note the evidence in relation to health and building inspections was not challenged and that an occupancy certificate was issued.

45. The Respondents to pay to the Applicant the sum of $7,573.00 forthwith.

46. I direct the Principal Registrar to issue a certified copy of this Order to the Applicant.