[2020] FCAFC 235
Henville v Walker (2001) 206 CLR 459
[2001] HCA 52
Lin v Zheng [2023] NSWCA 174
Mann v Paterson Construction Pty Ltd (2019) 267 CLR 560
[2019] HCA 32
O'Brien v Dawson (1941) 41 SR 295
O'Brien v Dawson (1942) 66 CLR 18
[1942] HCA 8
Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605
[1992] HCA 55
Water Board v Moustakas (1988) 180 CLR 491
[1988] HCA 12
Watson v Foxman (1995) 49 NSWLR 315
Yorke v Lucas (1985) 158 CLR 661
Judgment (32 paragraphs)
[1]
Investments Corporated Pty Ltd v Ferrara [2017] NSWCA 9
Trimis v Mina [1999] NSWCA 140
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55
Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12
Watson v Foxman (1995) 49 NSWLR 315
Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65
Texts Cited: JW Carter, Contract Law in Australia (JW Carter Publishing, 8th ed, 2023)
Category: Principal judgment
Parties: Ultra Construction Pty Ltd (First Plaintiff / First Cross-Defendant)
Josephine Abousleiman (Second Plaintiff / Second Cross-Defendant)
Assaad Abousleiman (Third Plaintiff / Third Cross-Defendant)
Lift Shop Pty Ltd (Defendant / Cross-Claimant)
Representation: Counsel:
J R Young with M Klooster (Plaintiffs / Cross-Defendants)
D B Studdy SC with C D McMeniman (Defendant / Cross-Claimant)
[2]
Solicitors:
G&S Law Group (Plaintiffs / Cross-Defendants)
Gilbert & Tobin (Defendant / Cross-Claimant)
File Number(s): 2023/465825
Publication restriction: NIL
Decision under appeal Court or tribunal: Local Court of New South Wales
Jurisdiction: Civil
Date of Decision: 23 November 2023
Before: R Brender LCM
File Number(s): 2023/465825
[3]
JUDGMENT
This is an appeal from a judgment of R Brender LCM ("the Magistrate") and orders dated 23 November 2023. There is also an appeal against a separate judgment dealing with costs and interest on 21 December 2023. The appeal is brought as of right under s 39 of the Local Court Act 2007 (NSW). Section 39(1) is as follows:
A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.
The proceedings concern a contract for the construction of a lift in residential premises in Ganbenang, NSW. The second and third appellants, Josephine and Assaad Abousleiman on behalf of the first appellant Ultra Constructions Pty Ltd ("Ultra") engaged the respondent, Lift Shop Pty Ltd ("Lift Shop"), a business which designs and installs bespoke lifts for homes, to supply and install a lift in those premises. On 7 November 2019, the lift was delivered to the premises but was never installed.
Lift Shop have filed a notice of contention.
[4]
The proceedings in the Local Court
By an Amended Statement of Claim ("ASC") filed on 14 May 2021, Ultra claimed damages "for breach of contract in the sum of $25,000" against Lift Shop. The claim was also founded on a breach of a duty of care pursuant to s 37 of the Design and Building Practitioners Act 2020 (NSW) ("the DBPA") and negligence. Ultra abandoned any award of damages over $20,000 pursuant to s 23 of the Civil Procedure Act 2005 (NSW) ("CPA").
A convenient summary of the principal paragraphs in the ASC is as follows:
Para 5: "Prior to entering into the Contract … the Plaintiff expressly or by implication made it known to the Defendant the particular purpose, being a lift designed to be installed at the Home with brick, also known as Masonry walls (the Disclosed Purpose)".
Para 6: "In about March 2019 the Defendant was retained by the Plaintiff, to complete a design, manufacture and installation of a lift at a residential property … (the Home) and this included works within the Home (the Works) and the Plaintiff paid a deposit for the Work to commence (the Contract).
…
(i) It was an express term that the Work would be completed within 18 to 20 weeks.
…
Para 9: "In about November 2019 the Defendant repudiated the Contract by failing or refusing to install the Lift at the Plaintiff's home".
Para 10: "In about September 2020 the Plaintiff issued a notice to complete and accepted the Defendant's repudiation and terminated [the] contract".
By a further amended statement of cross-claim ("FASOCC"), Lift Shop cross-claimed against Ultra, Josephine Abousleiman and Assaad Abousleiman in the amount of $56,089 (inclusive of GST) for breach of contract and/or misleading or deceptive conduct. The cross-claim against Mrs Abousleiman pleaded that she was the sole director of Ultra (since 17 November 2003, other than from 25 October 2020 to 17 November 2020 when Mr Abousleiman was also a director); was also the sole secretary of Ultra since 30 July 2003; and was personally involved in the day to day management and activities of Ultra. The cross-claim against Mr Abousleiman pleaded that he was a director of Ultra from 25 October 2020 to 17 November 2020; was held out by Ultra and Mrs Abousleiman as having authority to represent Ultra in its dealings with Lift Shop; and was personally involved in the day to day management and activities of Ultra.
[5]
Proportionality
Before venturing further, I should add my agreement to the Magistrate's observations about this case. The length of the hearings in the Local Court and this Court; the voluminous submissions, both written and oral; the complexity of the pleadings, particularly the FASOCC; the multiple grounds of appeal are grossly disproportionate to the amounts in issue in these proceedings. This case represents a failure to implement s 60 of the CPA. No regard has been paid to the overriding purpose as set out in s 56 of the CPA.
For the sake of brevity, I have not recorded in this judgment all of the submissions of the parties which I have endeavoured to summarise.
[6]
The Magistrate's judgment
The Magistrate's judgment consists of 60 pages (excluding annexures). The facts recounted in his Honour's judgment provide a chronological background to the dispute between the parties and the findings that his Honour made.
Under the heading "The contract - offer and acceptance", his Honour detailed the following facts: J[5]-[23].
… on 28 August 2018 Mr Abousleiman, on behalf of [Ultra], sought a quote for a lift with 300 kg capacity to operate across four levels with an existing shaft already built out of bricks and was prepared to pay around $48,000.
On 19 March 2019 Mr Murphy [an employee of Lift Shop] was provided with the dimensions of the shaft and a handwritten drawing.
On 20 and 21 March 2019 Mr Murphy issued revised quotes which both include the dimensions of the shaft that were provided to him the previous day.
The terms of the second quote were the same as previously sent to Ultra, with the total price being $50,990 + GST.
Each of the quotes sent to Ultra provided that the "Client [Ultra] Responsibilities - Works by Others [ie not by Lift Shop]" included in cl 4:
"d) The shaft must be able to sustain loads as specified on drawings. (See page 2 of the lift drawing, top right hand corner for loads, the loads are approximately 3000N dynamic in the horizontal plane outwards and are transferred to the floor below the running gear side of the shaft - approximately 10,000N downwards). A structural engineer must ensure that the building and shaft can safely support all loads imposed by the lift equipment.
e) The shaft LOAD BEARING WALL is to be solid (not hollow) in either poured or pre-cast concrete, core filled block work, solid brickwork or steel framing designed by a structural engineer."
The "Lift Specifications" (forming part of the contract by cl 5(a) of the "Standard Conditions of Offer") stipulated, that the lift shaft was the responsibility of Ultra ("Shaft by builder" = "Yes").
Ultra responded on 21 March 2019 at 6:25 pm:
"Thanks for the revised quote.
I have just put a note on the quote [see in red] regarding the shaft walls being brick. Please keep on file. Tomorrow I will organise payment of the deposit."
That email attached a copy of the covering letter from Lift Shop to Ultra dated 21 March 2021 and some (but not all pages) of the quote attached to that letter which was sent by Lift Shop to Ultra by email at 7:44 am on 21 March 2019. None of the pages were signed.
The "note on the quote" is on the covering letter from Lift Shop to Ultra dated 21 March 2021. It states:
"As per phone discussion, we have brick walls not concrete solid walls. The entire shaft wall for the 4 levels consists of brick. Please ensure the lift can be supported solely by the brick walls."
On 22 March 2019, Ultra made the First Payment of $5,608.90 by an NAB credit card.
On 1 April 2019, Lift Shop sent an email to Ultra which included, in paragraph 9 and 14, that Ultra was required to sign-off on the final design and that "four months is required from when the final design is confirmed to ensure your lift can be delivered to site on time".
During April and May 2019, Ultra and Lift Shop exchanged correspondence about design details for the lift which Ultra was required to make decisions about before the design could be finalised (including lift finishes, door colours and dimensions).
Lift Shop followed up Ultra for approval of the revised drawings on 27 May 2019. Mrs Abousleiman responded on 28 May 2019 by acknowledging that Ultra had received the revised drawings but she did not sign and return them at that time.
On 29 May 2019, Ultra made the Second Payment of $22,435.60 by an NAB credit card.
On 1 July 2019, Mr Murphy called Mr Abousleiman and left a message seeking sign off on the final design drawings by Ultra.
On 9 July 2019, Mr Murphy informed Mr Abousleiman during a call that Lift Shop had yet to receive sign off on the quotation and final design drawings, that the lift had therefore not been approved for manufacture and that the revised estimated date for delivery at that time was mid-October 2019.
On 11 July 2019, Mr Abousleiman called Mr Murphy and said that Ultra was content for the lift to proceed to production.
On 22 July 2019, Lift Shop sent an email to Ultra stating: "Just a courtesy email to let you know that we don't have the signed quote docs attached on file? Are you able to send these to me ASAP so we can process the lift for production?".
Within 24 hours of this clarification being raised the signed quote is provided.
(Citations omitted, emphasis in original)
[7]
The appeal
The appellants' amended summons identifies 20 grounds of appeal. Mr Young, the appellants' counsel, informed the Court that grounds 3(b), 8, 8(a) and 20 were not pressed. Mr Studdy SC for Lift Shop did not make any complaint about the remaining grounds raising matters of fact. A ground of appeal that involves a question of mixed law and fact requires leave: s 40(1) of the Local Court Act 2007 (NSW).
The appellants seek the following orders:
1. Appeal allowed.
2. Orders made by his Honour Magistrate Brender on 24 November 2023 and 22 December 2023 … be set aside.
3. Judgment be entered in favour of the plaintiffs.
4. In substitution of order [sic] made by his Honour Magistrate Brender on 24 November 2023 and 22 December 2023, the Court makes the following orders:
a) Judgment for the plaintiff on the statement of claim to be determined upon remittal of the matter to the learned Magistrate in accordance with the reasons and orders of this court;
b) The defendant pay the costs of the plaintiff in this Court and in the court below.
c) The cross claim dismissed and in substitution or in lieu thereto, verdict for the plaintiffs on the cross claim.
In oral submissions, Mr Young informed the Court that notwithstanding the number of appeal grounds, the appeal was simple "in the sense that there are two sets of issues in relation to two proceedings" [1] . Mr Young was referring to the grounds of appeal relating to breach of contract and the grounds of appeal relating to issues of misleading and deceptive conduct referred to as "chargebacks".
[8]
Notice of contention
Lift Shop, by its notice of contention, seeks to affirm the Magistrate's decision on four grounds which can be summarised as follows:
1. The Magistrate should have found, based on the engineer's certificate his Honour addressed at J[78], that the lift shaft was inadequate or defective because it was made from hollow bricks; the lift shaft was never ready for installation; and Ultra never intended to make the lift shaft ready for installation.
2. The findings in (1) above affirm the Magistrate's conclusions that Ultra repudiated the contract and Lift Shop did not repudiate the contract, and that Ultra engaged in (or Mr and Mrs Abousleiman were involved in Ultra's) misleading or deceptive conduct.
3. The Magistrate should have found that Mr Abousleiman was not an employee of Ultra, supporting his Honour's conclusion that Mr Abousleiman induced a breach of the contract by Ultra and making him liable for the same loss and damage caused by Ultra's repudiation and breach of contract.
4. The Magistrate should have found that Ultra and Mr and Mrs Abousleiman engaged in misleading or deceptive conduct, supporting the finding made in relation to the bank representations with conclusions that Ultra and Mr and Mrs Abousleiman represented they would pay the first, second and third instalments in circumstances where they never intended to do so and that they made representations by silence in circumstances where they failed to disclose to Lift Shop that they had sought to reverse the credit card transfers which they had made in purported payment of instalments.
[9]
Grounds 1, 2 and 7
1. His Honour erred in law at [33], [34] and [35] by failing to make a finding as to the contract commencement date in circumstances where time was an important issue.
2. Further or in the alternative, [h]is Honour erred in law at [35] and [39] by implicitly finding that time for performance of the contract ran from the date it was initialled on every page being 23 July 2019.
7. His Honour erred in law at [96] and [97] in relation to [h]is Honour['s] finding that there had been "no repudiation by Lift Shop" in stating an erroneous legal test being "[e]ven if the contract dated from March, delay was not so egregious as to demonstrate repudiation".
These grounds of appeal may be conveniently considered together.
[10]
A summary of Ultra's submissions
In written submissions, Ultra stated that the Magistrate approached the issue of contractual interpretation "[s]omewhat unusually", by not dealing with the contract as a whole, but rather dealing with some specific issues and paraphrasing some provisions of the contract. The first question of interpretation which arose on the written contract was the commencement date of contractual obligations. This date is relevant to the analysis concerning repudiation and Ultra conceded that ground 7 only applies in the event that this Court finds his Honour erred in relation to the commencement date of the contract.
Ultra criticised his Honour's finding at J[34] that there was no binding agreement until Ultra complied with the quote, signed the quote and initialled all the pages, as occurred on 23 July 2019, and submitted that his Honour should have found that the contractual obligations commenced when the first instalment was paid on 22 March 2019. Ultra referred to the contract acceptance page which had four parts of which subparagraphs (a) and (d) were relevant.
Ultra submitted that the Magistrate did not consider the significance of subparagraph (d), which stated "[c]ontract acceptance date is [the] date of deposit payment", at all but concentrated exclusively on the obligation in subparagraph (a) that "[t]he lift described in this quotation is accepted in full…Every page must be initialled". Ultra contended that the effect of subparagraph (d) was that either the contract was formed on the date of the deposit payment on 22 March 2019, or more importantly, the contract commencement was the contract acceptance date of 22 March 2019.
The significance of a finding about the commencement date of the contract, Ultra pointed out was that at J[35], his Honour stated that the question of delay upon which Ultra relied for the repudiation argument dated from 23 July 2019 and not March 2019.
Ultra submitted the construction that the contract at least commenced in March 2019 arises from the plain reading of the contract and the reading which makes commercial sense citing Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 ("Ecosse Property Holdings") at [16]-[17]. Ultra referred to the considerable work done pursuant to the contract before 23 July 2019, including an inspection on 7 April 2019, production of plans, changes to the design, signing off on the plans and payment of the second instalment on behalf of Ultra on 29 May 2019.
[11]
A summary of Lift Shop's submissions
In written submissions, Lift Shop referred to his Honour's judgment at J[34]-[35] and submitted that Ultra had failed to grapple with his Honour's conclusion that even if the contract did commence in March, its terms were that "the lift would not go into production until the final specifications were finalised and agreed and that did not occur until 23 July".
Lift Shop submitted that based on that finding, ground 7 must fail. Lift Shop contended Ultra's suggestion that what his Honour said in J[35] was not an alternative finding ignored what was actually said and that his Honour's conclusion is unimpeachable.
Lift Shop referred to his Honour's finding at J[97] that "[e]ven if the contract dated from March [2019], delay was not so egregious as to demonstrate repudiation" which was submitted to be correct.
As to Ultra's reliance on subparagraph (d) on the contract acceptance page, Lift Shop submitted that subparagraph (d) must be read in light of and subject to subparagraph (a), that is, the contract acceptance date assumes that "every page must be initialled".
In oral submissions, Mr Studdy referred to parts of the contract and to various emails which were said to support Lift Shop's contention that no error had been demonstrated.
[12]
Consideration
It is clear from the judgment, particularly at J[24]-[25] and J[27] that his Honour understood an objective approach was required in determining when the agreement was concluded. His Honour cited Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605; [2015] NSWCA 313 at [64]-[65]; Darzi Group Pty Ltd v Nolde Pty Ltd (2019) 100 NSWLR 394; [2019] NSWCA 210 at [4], [141] and [144]-[145].
His Honour was also aware an objective approach extended to the construction of the provisions of the contract. His Honour cited Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 ("Electricity Generation Corporation") where the plurality (French CJ, Hayne Crennan and Kiefel JJ) said at [35]:
The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties … intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience".
(Footnotes omitted)
Mr Young was not critical of the Magistrate's recitation of the relevant legal principles but complained that his Honour did not apply them correctly. He brought to the Court's attention what was said by the plurality (Kiefel, Bell and Gordon JJ) in Ecosse Property Holdings at [16], which affirmed what was said by the plurality at [35] in Electricity Generation Corporation:
It is well established that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract. In a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it.
(Footnotes omitted)
[13]
Ground 3
3. His Honour erred in law at [75] to [78], in relation to the findings that the contractual obligations of the Defendant has not been triggered by failing to take into account critically important evidence or considerations including:
1. evidence given by the structural engineer Mr Boudib who provided an engineering statement, and explained the purpose of it and which explanation was not given to the Defendant's experts;
2. the evidence of Samer Bardouh who gave evidence that he installed the structural engineer's solution in accordance with the design of Mr Boudib.
3. Mr Ford, whose evidence His Honour accepted at [78] in relation to the Structural Engineers Statement, was not an engineer and admitted to having no experience in brick lift shafts;
1. The Defendant's witness Mr Hogan who was the only relevant Defendant's witness who inspected the shaft [sic], not raise safety issues, provided a report dated 7 November 2019 confirming the lift was Ready for Installation to commence [and which report was not provided to the Plaintiffs).
3A. Further or in the alternative of 3, his Honour erred in law at [75] to [78] in finding that there was no contractual obligation to install by:
(a) Ignoring evidence by the maker of the document being the engineer Mr Boudib who provided an engineering Statement and explained the purpose of it which was not given to the Defendant's experts;
(b) Ignoring that after the First Plaintiff had informed the Defendant that the lift shaft was made of brick the Defendant by its agent Mr Murphy had attended the premises, completed and inspection [sic] and informed the first Plaintiff that it could proceed with the contract to manufacture and install a bespoke lift.
3B. Further or alternative to 3A above, His Honour erred by failing to deal with the First Plaintiff's claim that the Defendant had engaged in misleading and deceptive conduct by making representations inter alia as pleaded [sic] paragraph 37 of the Amended Defence.
[14]
A summary of Ultra's submissions
Ultra submitted, in concluding that the responsibility to ensure the lift shaft was suitable was that of Ultra, the Magistrate relied on Mr Peisley's version of a conversation between him and Mr Abousleiman on 27 November 2019 in which Mr Peisley clarified Ultra's obligation to Mr Abousleiman. Ultra noted that at J[65] and J[67], the Magistrate rejected an alternative version of the conversation with Mr Abousleiman. Ultra submitted that his Honour failed to make any findings as to why Mr Peisley's version of the conversation was preferred, but it appeared to be implicit that his Honour (without making any finding) acted upon the assumption that Mr Peisley's version was correct. On this version, Ultra was required to send an engineering statement to confirm that the walls of the lift shaft could sustain the loads and guiding Lift Shop on the type of anchorage to be attached.
Ultra referred to J[72] where his Honour stated that no such engineering statement was provided with the possible exception of a one page plan referred to by Mr Boudib which was discussed by his Honour at J[64]. Ultra submitted that his Honour failed to make any finding as to whether this statement was provided. His Honour's finding was that the plan did not trigger the contractual obligations of Lift Shop to install.
Ultra's submissions on Ground 3 centred on the Magistrate's preference for the evidence of Lift Shop's two expert witnesses, Mr Ford and Mr Cully, to Ultra's expert witness, Mr Nicola. Ultra submitted that his Honour's analysis totally ignored the evidence of Mr Boudib who was the author of the one page plan discussed by his Honour at J[64], and Exhibit 38 (Exhibit B in this Court) which comprised the material relied on by Mr Boudib to make his design statement. Ultra referred to his Honour's finding that the plan did not trigger the contractual obligation of Lift Shop to install. Ultra summarised Mr Boudib's evidence and his rejection of the criticisms put to him in cross-examination.
Ultra contended it was not open to the Magistrate to make the findings at J[75]-[78] without considering the evidence of Mr Boudib. Ultra made reference to the concession by Mr Cully and Mr Ford that "they were not given the explanation of supporting material in Exhibit 38 as to material on which their opinion was sought". Ultra made further reference to Mr Ford's concession that he was not an engineer and had no experience installing lifts in a brick lift shaft.
[15]
A summary of Lift Shop's submissions
As to Ground 3A(b) Lift Shop submitted that Ultra failed to provide a shaft made of solid brick as required by clause 4(e) of the contract (and therefore was in breach of that clause) which prevented Lift Shop from installing the lift.
Lift Shop contended it was not for Lift Shop to identify, earlier than it did, that Ultra had failed to do so. The Magistrate identified that the evidence demonstrated the lift shaft was constructed of hollow bricks rather than solid bricks at J[48] and J[75]. It follows, Lift Shop submitted, that the lift shaft failed to comply with clause 4(e). Lift Shop pointed out that those contractual requirements, and the evidence referred to by his Honour as to the failure to construct the shaft with solid bricks, are not challenged by Ultra on appeal and were not referred to in Ultra's written submissions.
Lift Shop submitted that in order to establish any repudiation by Lift Shop, Ultra by Grounds 3, 3A, 3B, and 4 must overcome his Honour's findings that, when the lift shaft's non-compliance with clause 4(e) was identified by Lift Shop, Ultra failed to rectify it by implementing an adequate solution and providing satisfactory assurance from a structural engineer to ensure that the lift shaft could safely support all loads imposed by the lift equipment.
Lift Shop further submitted that the Magistrate's finding at J[50] quoted at [28]-[29] above, must also be overcome by Ultra. Lift Shop stated that this finding is not mentioned in the amended summons. Lift Shop referred to Ultra's criticism of his Honour's judgment that he failed to make a finding as to whether an engineering statement was provided. Lift Shop referred to his Honour's findings at J[72]-[78] and contended that Ultra seeks to dislodge his Honour's finding by reference to the evidence of Mr Boudib, Mr Bardouh and Mr Nicola.
Lift Shop referred in detail to the evidence of Mr Boudib and submitted his evidence was unsatisfactory. As to Mr Bardouh, Lift Shop contended his evidence was irrelevant as to whether the sketch provided a structural engineer's assurance that the shaft could withstand the loads and forces of the lift.
When referring to Mr Hogan, Lift Shop submitted he did not have authority to bind Lift Shop to any potential solution. Furthermore, his solution was not approved.
[16]
Consideration
Ultra's submission that the Magistrate failed to make any findings as to why he preferred Mr Peisley's version of the conversation with Mr Abousleiman on 27 November 2019 is incorrect. His Honour cited at J[67]-[68] Watson v Foxman (1995) 49 NSWLR 315 and Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 as authorities for the approach to be taken to the assertion of conversations, years after the event, said to give rise to oral agreements. At J[69] his Honour provided reasons for not accepting Mr Abousleiman's version of the conversation, which included the contemporaneous records kept by Lift Shop, the employees of Lift Shop having a less direct financial interest in the case, and Mr Abousleiman's credit being affected by his conduct.
Lift Shop concedes that the Magistrate in his findings at J[75]-[78] did not refer to the evidence of Mr Boudib. Ultra's argument is that his evidence was critical and to overlook it amounts to an error of law. Ultra cited Torbey Investments in which Basten JA (with whom McColl and Simpson JJA agreed) said at [65]-[68]:
The third proposition, which is critical for the present case, is that there may be no bright line distinction between a claim made by the applicant and evidence in support of the claim. In other words, to ignore or overlook apparently credible and relevant information, which might support an essential step in the reasoning process if the claim were to be upheld, may itself constitute a constructive failure to exercise the function conferred on the Tribunal. This point was made by Selway J in SHKB v Minister for Immigration and Multicultural and Indigenous Affairs in a passage extracted and adopted by Robertson J in SZRKT.
Without departing from that reasoning, it is appropriate to strike a note of caution. A tribunal, like a court, is not obliged to refer to all the material before it which may be thought by a party, or even by the reviewing court, to constitute relevant evidence. Evidence is often repetitive and will be of variable reliability. Hundreds of pages of evidence may need to be reduced to a clear and succinct statement of written reasons. Comprehensiveness is a relative concept and must be balanced against other relevant values.
This principle is in substance a development of the requirement that a tribunal take into account all relevant considerations. The term "considerations" is itself, perhaps, unfortunate, because it is imprecise. However, in legal parlance it refers to those matters which the statute expressly or by implication obliges the tribunal to consider. Thus the statement in Dranichnikov can be understood as a point of statutory construction: namely that the Migration Act (being the relevant statute in that case) in conferring jurisdiction on the tribunal implicitly required that it address the matters identified by the applicant as the basis of his or her application. A similar concept underlay the language adopted by Gummow J in Khan v Minister for Immigration and Ethnic Affairs, that the decision-maker was required to "give proper, genuine and realistic consideration to the merits of the case". However, as the High Court accepted in Minister for Immigration and Citizenship v SZJSS, this language is "apt to encourage a slide into impermissible merit review".
In short, although one can describe the overlooking of critical evidence as an error of law, it is important to understand the purpose and context of such a description. In this case, it is patent that the Tribunal did not ignore the material identified in the particulars: indeed, the particulars identified the material by reference to the reasons of the Tribunal and the appeal judgment. The complaint is merely that, for reasons she gave, the Tribunal member preferred other evidence. This ground did not establish an error of law on the part of the Tribunal, nor on the part of the District Court which correctly rejected it.
[17]
Ground 4
His Honour erred in law at [78] by failing to provide adequate reasons for finding that Lift Shop was entitled to refuse to install because of safety.
[18]
A summary of Ultra's submissions
Ultra submitted the Magistrate's statement at J[78] "[w]hen safety is involved, Lift Shop were [sic] entitled to take a conservative approach. The consequences of an error could be too great" was a "motherhood statement" provided without reasons. Ultra submitted the issue before his Honour was not a general safety issue, but a much narrower one about the adequacy of an engineering statement. Ultra complained his Honour was not entitled (at least without giving adequate reasons) to inflate the issue about the adequacy of a certificate to a general issue of "safety" when no such matter was properly raised.
[19]
A summary of Lift Shop's submissions
Lift Shop submitted that the safety issue arose from Ultra's failure to comply with clauses 4(d) and (e) of the contract.
[20]
Consideration
It is abundantly clear from the contract that safety was an important issue. The heading at page 31 of the contract "the Safest Lifts - Because Safety is Paramount" [14] emphasised that safety was not to be overlooked. Clauses 4(c), (d) and (e) were all directed at ensuring that the lift was passenger safe. As his Honour found, Lift Shop was entitled to take a conservative approach when safety was involved as the consequences of "an error could be too great".
There is no merit in this ground of appeal.
The remaining grounds of appeal relate to Lift Shop's FASOCC. Ground 9 relates to the fourth instalment under the contract. Grounds 10 to 19 (Ground 20 is not pressed) relate to what has been described as "chargebacks".
[21]
Ground 9
His Honour erred in law at [120] and [127] in finding that the defendant was entitled to recover the amount of the fourth "installation payment" and in so finding his Honour:
(a) ignored the evidence of the defendant (Mr Hogan and Mr Peisley) to the effect that the costs of completing the installation of the lift would exceed the amount of the Fourth payment.
(b) erroneously found that the first plaintiff "made no submission directed to whether there was a basis to decline to order the amount of the 4th payment, on the basis it would be overcompensation because it did not incur the expense of the installation and hence would be put in a better position than had the contract been performed".
(c) took an erroneous view that even if there was an absence of submission, which is denied, this was tantamount to an admission that the defendant was entitled to recover the amount of the fourth instalment.
(d) made error of law as to the principles or application of the principles of recovery of damages in contract.
[22]
A summary of Ultra's submissions
Ultra referred to the evidence of Mr Peisley, and Mr Katz, a Lift Shop director and to its submissions in reply at paragraph 7.1 and 7.3 to the claim of the fourth payment and to its closing submissions which summarised the evidence that had Lift Shop installed the lift, it would have incurred more expense than it would have received on the final progress claim. Ultra contended that the finding by his Honour was contrary to the evidence and to legal principle.
In oral submissions, Mr Young referred to Trimis v Mina [1999] NSWCA 140 ("Trimis") at [50] and submitted that Lift Shop was entitled to the profit of the unperformed work. He argued that if the lift had been installed, the profit would have been "zero".
Mr Young further submitted that what was said by Gageler J (as his Honour then was) in Mann v Paterson Construction Pty Ltd (2019) 267 CLR 560; [2019] HCA 32 ("Mann") at [62] has no application to the present case.
[23]
A summary of Lift Shop's submissions
Lift Shop submitted that the fourth instalment represented the bargain that it had lost by Ultra's breaches of the contract and cited Mann.
Lift Shop contended that an enquiry into the profit derived by Lift Shop was not supported by law and cited Trimis per Mason P at [47].
In oral submissions, Mr Studdy emphasised that what is derived from Trimis at [50] is that you do not depart from putting the innocent party in the position it would have been if the contract had been performed.
Mr Studdy submitted that the questions put to Mr Katz regarding the profit Lift Shop expected to make were irrelevant to the quantification of Lift Shop's damages in contract. Mr Studdy pointed to Mr Katz's confirmation that Lift Shop expected to make $10,000 profit on the job. In addition, Lift Shop stood to make further profit from the service annuity income. It was submitted that this evidence nullifies Ultra's submission that there was no profit in the job.
[24]
Consideration
This ground of appeal concerns the fourth payment which was payable under the contract on the installation of the lift.
After reciting the submissions of the parties at J[117]-[123], his Honour quoted what was said in Mann at [62]. His Honour had at J[121] quoted Mason P at [47] in Trimis. His Honour said at J[127]:
In those circumstances, the operation of the contract was that Lift Shop was entitled to keep the first three instalments and in circumstances where it was ready willing and able to perform, to receive the fourth payment as damages. It is the "innocent party" and ought be put in the position it would have been in had the contract been performed, in this case by way of an order for the payment of all the money that ought have been paid to it. ultra made no submission directed to whether there was a basis to decline to order the amount of the 4th payment, on the basis it would be overcompensation because it did not incur the expense of installation and hence would be put in a better position than had the contract been performed.
In stating that Ultra made no submission on the basis that it would be "overcompensation", it appears his Honour overlooked all of the submissions that had been made by Ultra's counsel.
The cost of the lift installation had been explored in the cross-examination of Mr Peisley. He explained that if the site was ready, the installation would take two people full-time roughly about a week and a half at eight hours a day and motel accommodation in Lithgow would be around $120 to $150 a night. The time charge for employees to carry out the work would be about $139 an hour plus GST. [15]
It may be accepted that those costs would have exceeded the fourth instalment which was $5,608.90.
However, Mr Katz gave evidence that the profit that Lift Shop expected to make from the whole job was about $10,000 [16] and to "service annuity income". [17]
The Magistrate found at J[119] that Lift Shop was entitled to receive "the instalment (staged) payments accrued prior to the termination of the [c]ontract" citing Mann at [28]. His Honour said that "[t]hose accrued rights to the instalments are recoverable as debts" citing Mann at [62].
In referring to Mann at [28], it appears his Honour was referring to a passage in the judgment of Kiefel CJ, Bell and Keane JJ (who were in the minority) where their Honours stated:
It was suggested in the course of argument that some work was done by the respondent before the contract was terminated but for which a right to payment had not yet accrued under the contract, and that there was a total failure of consideration in respect of such work which could support a restitutionary claim for quantum meruit. Some support for this may be found in Horton v Jones [No 2], where Jordan CJ said:
"If one party to an express contract renders to the other some but not all the services which have to be performed in order that he may be entitled to receive the remuneration stipulated for by the contract, and the other by his wrongful repudiation of the contract prevents him from earning the stipulated remuneration, the former may treat the contract as at an end and then sue for a quantum meruit for the services actually rendered: Segur v Franklin."
(Footnotes omitted)
[25]
Grounds 10 to 19
Third party payer issue
10. His Honour erred in law at [141] in that having found that the third plaintiff was "a third-party payer". His Honour failed to consider that any charge backs by the third plaintiff who had no liability to make the third-party payments did not cause loss or damage to the defendant because on his Honour's findings the first plaintiff was contractually liable to make the payments and the charge backs simply restored the first plaintiff's contractual liability.
11. His Honour erred in law at [141] in finding that the third plaintiff was a third-party payer and stood outside the employee/employer relationship, and in making that decision his Honour failed to correctly apply the principle in O'Brien v Dawson (1941) 41 SR 295; (1942) 66 CLR 18.
Misleading or deceptive conduct: Chargebacks
12. His Honour erred in law at [185] to [192] in finding that the representations were that the lift had not been delivered and further that the conduct in relation to the chargebacks included representations made in July 2019 which was contrary to the evidence from the defendant's own bank at CB 801 to 808 which set out the true and only basis for the chargeback request that St Bank [sic] was required to consider and acted in accordance [with] the Visa Rules.
13. His Honour erred in law at [144], [191] and [192] by failing to have regard to or failing to make findings in relation to the pleaded case of the plaintiffs that there was no causation or alternatively any casual link was broken by reason of the defendant failing to comply with their chargeback obligations in respect of the chargeback claim made by the plaintiffs.
14. His Honour erred in law at [182] to [184] by denying the plaintiff (cross-defendants below) procedural fairness by treating paragraph 26(b) of the further amended statement of claim as including representations.
15. His Honour erred in law by failing to have regard to critically important evidence being letters pleaded in the cross-claim at 27(b)(ii) that were tendered by the defendant (cross-claimant below at CB 801 to 808).
16. Further in the alternative, his Honour erred in law by failing to consider critically important material being the terms of the urgent chargeback obligations of Lift Shop to respond to correspondence from St George Bank dated 18 December 2019 at CB 801 and instead making the following findings:
(a) at [144] "Lift Shop was unable to stop the banks from reversing the charges"
(b) at [144] the banks relied on misleading or false statements that Lift Shop had failed to deliver the lift, was not entitled to payment and (the credit card holders) were entitled to a refund of the credit card charges under the contract
(c) at [144] the banks relied on statements identified in (b) otherwise they would not have reversed the charge
(d) at [191] Lift Shop was not in breach of any relevant obligation, and it followed procedures and there was no material available suggesting the contrary
(e) at [195] Lift Shop did not find out about the claims for reversal before they were actioned and before Lift Shop had an opportunity to dispute them
16A. His Honour erred in law in that his Honour made irrational and illogical findings in that his Honour found at [191] that the St George Bank was not in breach of any obligation, and it followed procedures, while also finding that at [144] that:
(a) Lift Shop was unable to stop the banks from actioning the chargebacks; and
(b) Further Lift Shop did not find about the chargeback claims before they were actioned; and
(c) That Lift Shop did not have an opportunity to dispute the chargeback claims before they were actioned.
17. Further or in the alternative, his Honour failed to have regard to the relevant failure by the defendant (cross claimant below) to respond to the chargeback request and that no conduct by the plaintiff (cross-defendants below) misled the defendant in relation to that failure or contributed to that failure.
18. Further or in the alternative, his Honour failed to have regard to the entitlement of a card holders, such as the plaintiffs, to dispute a transaction and that the raising of such a dispute could not amount to misleading or deceptive conduct in trade or commerce.
19. Further or in the alternative, at the time that any payments were made by credit card for the first and second instalments, on the finding of his Honour below, the defendant was not entitled to payment as no contract was then in existence.
[26]
A summary of the cross-defendants' submissions (Ultra, Mr and Mrs Abousleiman, conveniently referred to as the cross-defendants)
The cross-defendants' submissions collectively embrace grounds 10 to 19. Accordingly, it is convenient to deal with these grounds together which focus on J[144]-[195] and particularly relate to the payments made by credit card reversed by a bank process noted as "chargeback". The cross-defendants observed that a chargeback arises under the Visa and other credit card merchant facilities. The cross-defendants referred to the pleadings in the FASOCC and the particulars at paragraph 27(b)(ii) which state that the representations in paragraph 27(b) were made to Lift Shop from St George Bank dated 18 December 2019, 15 July 2020, 28 July 2020 and 4 August 2020 ("the St George chargeback documents").
The cross-defendants submitted that these five letters are critically important documents in relation to the chargeback issues.
The credit card transactions were as follows:
1. On 22 March 2019 $5,508.90 was paid on a National Australia Bank ("NAB") credit card held in the name of Assad Abousleiman ("AACC 1").
2. On 22 May 2019 $22,720.27 was paid on a NAB credit card held in the name of Assad Abousleiman ("AACC 2").
3. On 4 November 2019 $22,435.60 was paid on an Australia and New Zealand Bank ("ANZ") credit held by Ultra ("Ultra CC 3").
The cross-defendants referred to the St George chargeback documents establishing the following critical information:
1. the date of on which the Ultra CC Payment 3 Chargeback request was initiated with St George Bank was on or after 19 November 2019;
2. all of the documents provided the basis on which the chargebacks were made; Lift Shop's card holder payers, including Ultra, claimed that services had not been provided by 19 November 2019 in relation to an agreement to install a lift.
3. (perhaps most critically) the reason for the chargebacks in each case was that Lift Shop did not respond in the time permitted by the Visa rules which govern chargebacks. St George made this clear that while it was on Lift Shop's side it could do nothing to change the Visa rules. [18]
The cross-defendants submitted that nowhere in his Honour's judgment from J[144]-[195] does his Honour mention these critical documents. The cross-defendants argued that had the St George chargeback documents been considered, his Honour could not have made the statement at J[195] that Lift Shop did not find out about the claims for reversal (chargebacks) before they were actioned and had an opportunity to dispute them.
[27]
A summary of Lift Shop's submissions
Lift Shop submitted that the cross-defendants, on appeal, seek to run a new defence to the effect that there was a break in the chain of causation because the payment disputes were resolved by NAB and ANZ based on the Visa and other credit Rules and Lift Shop should have intervened and prevented the banks from being misled by convincing the banks that what the cross-defendants told them was false.
Lift Shop argued that the new defence culminates in the cross-defendants' submission that the chargebacks only occurred because:
1. Lift Shop did not provide a response within the time provided by the Visa Rules;
2. at J[144] "his Honour stated incorrectly that Lift Shop was unable to stop the banks reversing the transactions"; and
3. because Lift Shop did not provide a response in accordance with the time in the Visa Rules, the case must fail on the issue of causation alone.
Lift Shop contended that this is a new defence which was not squarely run below. It was contended that not only are the Visa Rules not in evidence, but that the only part of the banks' conduct which featured in the case below was the suggestion by the cross-defendants that their liability on the cross-claim should be apportioned with the banks.
Lift Shop submitted that the cross-defendants should not be allowed, on appeal, to broaden their defence to the FASOCC in the way propounded in grounds 10 to 19.
Lift shop cited DXC Eclipse Pty Ltd v Wildsmith [2023] NSWCA 98 ("DXC Eclipse") at [60] to [62].
Lift Shop submitted that the new defence is contrary to the law and the facts. With respect to the law, Lift Shop cited Lin v Zheng [2023] NSWCA 174 at [51] ("Lin"). Lift Shop argued that the representation made by the cross-defendants to their banks was for the sole purpose of causing the banks to reverse the payments which the banks did. Lift Shop contended the only conclusion that can be drawn is that the representations played a part in the reversal of payments.
A further submission was made that there was no basis in law for the cross-defendants' suggestion that it was incumbent on Lift Shop to intervene and nullify the effect of the cross-defendants' misrepresentations.
Lift Shop argued the fact that the banks could have understood the cross-defendants' representations were false or misleading by the time of the reversals was no answer to the question of whether the representations were false or misleading and caused the reversals. Lift Shop cited Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 at [50]-[55].
[28]
Do grounds 10 to 19 raise new defences?
In Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12, the plurality (Mason CJ, Wilson, Brennan and Dawson JJ) said at 497:
More than once it has been held by this court that a point cannot be raised for the first time upon appeal when it could possibly have been met by calling evidence below. Where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied.
In deciding whether or not a point was raised at trial no narrow or technical view should be taken. Ordinarily the pleadings will be of assistance for it is one of their functions to define the issues so that each party knows the case which he is to meet.
(Footnotes omitted)
The pleadings that are of relevance to the chargebacks are found in paragraphs 27(b), 28, 29, and 31 to 33 of the FASOCC. For present purposes, it is sufficient to recite paragraphs 27(b) and 28:
27 Further or in the alternative, Ultra Construction, or further or alternatively, Josephine Abousleiman and Assaad Abousleiman represented:
…
(b) to their bank or credit card authority that:
(i) The lift had not been delivered by Lift Shop;
(ii) Lift Shop was not entitled to any payments in respect of the lift; and
(iii) They were entitled to a refund of all amounts paid to Lift Shop,
(the Payment Representations).
Particulars
…
(ii) The representations in paragraph 27(b) above:
i. the representation were made orally or in writing; and
ii. letters to Lift Shop from St George Bank dated 18 December 2019,
15 July 2020, 28 July 2020 and 4 August 2020 at pages 92 to 99 of Exhibit "LSK-1" to the Affidavit of Leslie Saul Katz affirmed 6 August 2021.
28 Further or alternatively, at the time the parties were in discussions in an attempt to facilitate the installation of the lift, Ultra Construction, Josephine Abousleiman and Assaad Abousleiman failed to disclose to Lift Shop that they had disputed the credit card transfers pleaded in paragraph 11(b) above and sought a reversal of all of the monies that had been credited to the bank account of Lift Shop and thereafter sought a further (duplicative) refund from Lift Shop (the Payment Dispute).
The first cross-defendant (Ultra) in its defence to the FASOCC did not raise the causation argument. Ultra's defence was a denial of paragraph 27(b)(i), (ii), and (iii) to the extent that it related to Ultra. Ultra also pleaded that there was a reasonable basis for the payment representations at the time which related to future matters.
[29]
Consideration
Although the Magistrate did not refer to the St George chargebacks documents in J[141]-[195], it is clear that he was aware of the causation argument advanced on behalf of the second and third cross-defendants. At J[144] quoted at [61] above, his Honour commenced by saying:
I reject the defence that because Lift Shop had the opportunity to make representations to the bank, causation could not be proved.
It appears that his Honour was responding to the pleaded defence and submissions made on behalf of the second and third cross-defendants referred to at [220]-[221] above.
I do not agree with the cross-defendants' contention that his Honour's statement at J[144] that "Lift Shop was unable to stop the banks from reversing the charges" is incorrect. This contention overlooks the evidence of Mr Katz of the steps taken after the letter dated 18 December 2019 from St George Bank came to his attention on 3 January 2020. His evidence included "I caused Lift Shop accounting staff, including the (late) Mrs Lisa Black, Lift Shop Financial Controller … to call St George Bank and dispute" the chargeback. [23] The Lift Shop log (Exhibit 10) records an email sent by Mrs Black to the "bank" on 7 January 2020. There is an earlier entry on 3 January 2020 whereby Mrs Black states she had "an extension to respond on Monday". [24]
Lift Shop was sent a further letter by St George Bank dated 10 February 2020 which stated that a response was required by 24 February 2020. The Lift Shop log records an email sent to Mr Abousleiman on 20 February 2020 that the lift would be installed if Ultra "sorted out" the monies owed. [25] A further log entry by Mrs Black on 16 March 2020 records "still no news from STG merchant. It is with the other bank. Call in a week." [26] An available inference from this entry is that Mrs Black communicated with St George Bank. After unsuccessfully endeavouring to resolve the dispute with the cross-defendants, Lift Shop responded to St George Bank on 8 April 2020.
In a letter dated 15 July 2020 from St George Bank emailed to Mrs Black, the bank inter alia stated: [27]
St George received your response to these disputed transactions on 9 January 2020 and 8 April 2020. Unfortunately in each case these responses were well past the deadline by which St George required a response from you. For this reason St George was not able to raise the matter with the Issuer Bank in accordance with the prescribed process under the Visa Rules.
However, we reviewed the material you provided and with a view to supporting your position we requested that the Issuer Bank in good faith reconsider the chargeback. This process was undertaken outside the scope of the Visa Rules so no time-frame is mandated. At this time the Issuer Bank has not agreed to withdraw the chargeback.
[30]
Notice of contention
Grounds 1 and 2 were prefaced as requiring consideration "in the event of" [29] the Magistrate's conclusions at J[103] being overturned. As they have not been overturned, it is unnecessary to consider these contentions.
Ground 3 contends his Honour should not have found that Mr Abousleiman was an employee so as to support his Honour's conclusion at J[141]-[145] of Mr Abousleiman's personal responsibility. As I have dealt with the issue of personal responsibility at [237]-[242] above, it is unnecessary to consider ground 3.
Ground 4 contends the Magistrate should have dealt with the misleading conduct by silence claim.
The cross-defendants submitted that even if it was found Ultra should have disclosed the chargeback requests to Lift Shop before the Bank did, it made no difference to the result because Lift Shop was given ample time to dispute the chargebacks. I have dealt with this submission at [223]-[234] above.
The cross-defendants further submitted that his Honour's findings at J[144] were findings in accordance with Lift Shop's pleaded case and Lift Shop now seeks to depart from its pleaded case.
I do not understand that submission. Lift Shop's misleading conduct by silence claim was identified by the Magistrate in J[193] as being pleaded in paragraph 28 of the FASOCC and in submissions Lift Shop also referred to paragraph 27(a).
The steps taken by Mr and Mrs Abousleiman to cancel the charges on Mr Abousleiman's credit card commenced on 11 July 2019. As I have stated at [236] above, these payments secured the purchase price, the order for the design drawings and the manufacture of the lift. The cross-defendants did not advise Lift Shop that they disputed the credit card payments.
Mrs Abousleiman in her evidence admitted that she did not tell Lift Shop of the dispute and conceded she told NAB "Lift Shop have failed to provide the goods as promised" because she wanted the Bank to refund the credit card transactions.
Notwithstanding the finalisation of the contract on 23 July 2019, Mr and Mrs Abousleiman continued to seek the reversal of the credit charges with NAB in August and September 2019. Despite being emailed by Lift Shop that the estimated start day of the lift installation was on 11 November 2019, Mr Abousleiman emailed NAB on 28 October 2019 with a deliberately misleading communication "I haven't received the good/services yet" to obtain a reversal of the credit card charges. It is unnecessary to refer chronologically to the further steps taken by the cross-defendants, of which Lift Shop was not notified.
[31]
Conclusion
Given that none of the grounds of appeal have been successful, the summons must be dismissed. The sole mention of the Magistrate's cost decision in Ultra's submissions was that his Honour made consequential orders on 24 November 2023. With the dismissal of the summons, it follows that the appeal against those cost orders fails.
No submissions were made by the parties that there should be any order than the costs of the appeal should follow the event. I would make that order.
I make the following orders:
1. Order that the amended summons filed on 8 February 2024 be dismissed.
2. Order that the appellants/cross-defendants pay the defendant's/cross-claimant's costs of the appeal.
Lift Shop's Notice of Contention Submissions, para 4.
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: 13 September 2024
In his judgment, the Magistrate referred to relevant parts of the FASOCC against Mr and Mrs Abousleiman as put in Lift Shop's submissions, at J[131]:
… Fourthly, Lift Shop alleges that Mr Abousleiman induced Ultra's breaches of contract and interfered with the contractual relations between Lift Shop and Ultra, and he is therefore liable for the loss caused by the breaches …
Sixthly, Lift Shop alleges that Ultra, Mrs Abousleiman and Mr Abousleiman engaged in misleading or deceptive conduct (or Mr and Mrs Abousleiman were involved in the misleading or deceptive conduct of Ultra):
(1) representing that the site was ready, particularly that the lift shaft was capable of bearing the loads in the Lift Specifications (those representations being made throughout 2019 and again in early 2020 when it was represented they had done remedial work on the lift shaft), thereby inducing Lift Shop to design and manufacture the lift and then have it delivered to site;
(2) representing that Ultra would arrange for payment, and pay, to Lift Shop the First Instalment, Second Instalment and Third Instalment by arranging for the transfer (using personal credit cards of Mr and Mrs Abousleiman) of:
(a) $5,608.90 on 22 March 2019, thereby inducing Lift Shop to prepare design drawings for the lift;
(b) $22,727.27 on 29 May 2019, thereby inducing Lift Shop to commence manufacturing the lift in Italy for delivery to Ultra in Australia; and
(c) $22,435.60 on 4 November 2019, thereby inducing Lift Shop to deliver the lift to Ultra and perform work in respect of installation of the lift;
(3) without Lift Shop's knowledge, Ultra, Mrs Abousleiman and Mr Abousleiman had taken steps from 11 July 2023 to cancel the charges on their credit card (with their credit card provider the NAB) which had been made for the First Instalment and the Second Instalment under the contract, and then from 2 December 2019 made a claim for cancellation of the third charge on their credit card (with their credit card provider the ANZ) for the Third Instalment;
(4) in doing so, Ultra, Mrs Abousleiman and Mr Abousleiman misrepresented to the NAB and ANZ that the lift had not been delivered by Lift Shop, Lift Shop was not entitled to payments in respect of the lift and they were entitled to a refund of all amounts charged to their credit card, and that induced the NAB and ANZ to reverse the charges in July 2020 (as set out below);
(5) when Lift Shop found out in early 2020 about the claims made with the NAB and ANZ, it informed Ultra, Mrs Abousleiman and Mr Abousleiman that it would install the lift if the payments were made (ie the claims for cancellation were withdrawn), particularly on 20 February 2020. Ultra, Mrs Abousleiman and Mr Abousleiman did not do so - they instead continued to pursue the claims with the NAB and ANZ;
(6) the First Instalment ($5,608.90) and Second Instalment ($22,727.27) were thereafter reversed by the NAB on 28 July 2020 and the Third Instalment ($22,435.60) was reversed by ANZ on 4 August 2020 such that all amounts which Ultra had purported to pay to Lift Shop under the contract had been reversed and Ultra had not paid any funds to Lift Shop …
As the Magistrate said at J[146], there were additional pleadings that alleged various misleading conduct by Ultra, Mr Abousleiman and Mrs Abousleiman. Lift Shop also sought to impose liability on Mr and Mrs Abousleiman for being persons involved in the misleading conduct of Ultra.
The final hearing before the Magistrate went for six days, excluding time occupied by motions and mentions. Multiple folders of documents were tendered and written submissions totalling hundreds of pages were filed. His Honour observed at J[1]:
"[m]ultiple expert witnesses were retained and gave evidence. It became very hard fought. Senior counsel was retained. … During submissions fresh issues arose about pleadings, admissibility of evidence and the length of submissions. Costs no doubt became disproportionate."
On 23 November 2023, the Magistrate published his judgment dismissing Ultra's claim. His Honour entered a judgment on the cross-claim against Ultra for $56,089 and a judgment on the cross-claim against Mr and Mrs Abousleiman for $50,480.10.
It is convenient to note that not all of Lift Shop's claims in the FASOCC were upheld by the Magistrate. Shortly stated, the assertions of misleading or deceptive conduct (the Site Representations) pleaded in paragraphs 25, 26, 29 30, and 32 were dismissed. His Honour also dismissed the assertions of misleading or deceptive conduct (Payment Representations made to Lift Shop) pleaded in paragraphs 27(a), 29, and 31 to 33. His Honour did not deal with the assertions of misleading or deceptive conduct by silence pleaded in paragraphs 28, 29, and 31 to 33. As will be seen, of particular significance in the FASOCC appeal are the findings by his Honour that upheld the assertions of misleading or deceptive conduct (Payment Representations made to the banks) pleaded in paragraphs 27(b), 28, and 31 to 33.
The Magistrate then considered when a concluded agreement had been reached. His Honour referred to the competing arguments at J[26]:
By the latest, in July 2019 there was an agreement constituted by the above communications. The Plaintiff submitted that the communication of 21 March which included the written note about the brick construction was a counter offer, accepted by the Defendant. The Defendant took the view that the communication was merely a note, and did not form part of the agreement.
The Magistrate did not accept Ultra's argument that the communication was a counter offer. In rejecting Ultra's submission, his Honour said the communication was "in substance a disclosure that the walls were made of brick, and a request that the lift as designed be able to be supported by brick walls": J[29].
The Magistrate found at J[33] that the contractual process was complete when Ultra complied with the terms of the offer by signing all the relevant pages on 23 July. His Honour referred at J[34] to Lift Shop's reliance upon the obligation for the customer to "Sign and accept (page 5) contract and initial all pages" and said that was the method by which the offeror indicated it would agree to be bound by the contract which Lift Shop had never waived. His Honour said Lift Shop was entitled to take the position that there was no binding agreement until that term of the offer was met, which it did by insisting on receiving signed documents on 27 May, and on 1, 9, and 22 July.
The Magistrate said that he did not think (his conclusion) made much difference to the analysis. His Honour said that "[e]ven if a contract was entered in March, its terms included that the lift would not go into production until the final specifications were finalised and agreed, and that did not occur until 23 July": J[35]. His Honour concluded that questions of delay, upon which Ultra relied for their repudiation argument, would date from 23 July, even if the contract was binding in March.
The Magistrate then turned to events after the contract was entered into. His Honour recounted that after completing the contracting process on 23 July 2019, the lift proceeded into production. His Honour said that "[u]nbeknown to Lift Shop, 12 days before, on 11 July 2019, Mr and Mrs Abousleiman had taken steps to cancel the charges on the credit card which had been used for the First Payment and the Second Payment under the contract": J[37]. His Honour observed that the Dispute Resolution Form claimed that the lift ought to have been installed in July, when in fact Ultra had not yet completed the signing of the contract. His Honour said that Mrs Abousleiman admitted that she did not tell Lift Shop that Ultra had disputed the credit card charges that had been made and that she had made statements to NAB that "Lift Shop have failed to provide the goods as promised". His Honour recounted that Mr and Mrs Abousleiman continued to pursue the reversal of the credit card charges in August and early September 2019, without Lift Shop's knowledge.
The Magistrate recounted that Lift Shop sent an email to Mr Abousleiman on 26 September 2019 stating that the lift should clear customs and that installation was estimated to commence on 11 November 2019. On 30 October 2019, the lift arrived in the warehouse.
His Honour said that at this point in time, Mr Abousleiman sent an email to Lift Shop complaining about the delay. On 1 November 2019, Ultra paid the third instalment to Lift Shop by credit card in the sum of $22,435.60.
After stating that the lift was delivered to the site on 7 November 2019, some 33 weeks after the deposit was paid on 22 March 2019, the Magistrate referred to Ultra's argument that the contract construction period was anticipated to be 20 weeks and to Lift Shop's argument that that was an estimate and not a contractual guarantee and "the start day for any such calculation purposes in any event would be July, not March": J[44].
On 7 November 2019, Mr Hogan, an employed site manager of Lift Shop attended the site to inspect the lift shaft. The Magistrate stated that Mr Hogan formulated a solution that he had used before. Mr Hogan told Mr Abousleiman he would confirm with his office as to the implementation of the solution; he would come back and have another look at the site if the solution was approved.
On 8 November 2019 Lift Shop issued an invoice for the fourth payment of $5,608.90, which was due when the lift installation was finished: J[47].
On 11 November 2019, Mr Abousleiman emailed Mr Murphy stating that he was fully aware that the shaft wall consisted of hollow bricks and Lift Shop was obliged to ensure that it could be fully supported by brick walls. The email attached a signed quote with red handwriting that was sent to Mr Murphy on 22 March 2019. In response Mr Ian Johnson stated that he was not saying that the brick wall could not support the load with the issue being confined as to how to attach it to the wall (ie solid fixing points were required).
On 12 November 2019, Ultra sent Lift Shop a drawing titled "lift guiding rail fixing to masonry wall.pdf". His Honour referred to Mr Peisley's description of the single handwritten plan on plain paper with some figures on it as "irregular". At the time of the hearing, Mr Peisley was a director and secretary of Lift Shop.
The Magistrate said "[g]iven the serious nature of safety issues surrounding the installation of a lift, Lift Shop was entitled to approach that document by seeking to understand from its author what it was intended to establish or convey, and to be satisfied it constituted the formal, reliable certification by an engineer of an installation method that was suitable, and if so, that its elements had been implemented": J[50].
His Honour went on to say at J[50]: "As will be seen, it never reached that state of satisfaction".
On 18 November 2019, Ultra sent an email to Lift Shop demanding that "if installation does not commence tomorrow, please pick up the goods and refund my money". The Magistrate referred to a conversation that Mr Peisley had (noting it was contested) with Mr Abousleiman in which he said that Lift Shop was not going to pick up the lift, the site was neither safe nor ready, the lift had been designed and made for you and it hadn't been paid for. Mr Peisley told Mr Abousleiman that Lift Shop would not give him a refund as they had not done anything wrong. Mr Peisley said to Mr Abousleiman "you need to sort out your construction problems please so we can get this done. We have only one thing in common, which is that we both want this lift finished and in the past as soon as possible": J[52].
The Magistrate referred at J[54] to Mr Peisley's conversation with Mr Boudib, Ultra's engineer, on 19 November 2019, during which he spoke "at length re work they are required to do to strength the shaft". The Magistrate quoted at J[53] that Mr Boudib stated during that phone call:
I don't care, I don't want to know about it. This is your problem as you accepted the shaft as is when my friend placed the order. I am not doing anything else.
(Citations omitted)
The Magistrate noted that this evidence was contested.
The Magistrate detailed an email sent by Mr Peisley to Ultra on 21 November 2019 which included (J[56]):
We understand your point with fixation, chemset type and application. However our rails do not fix direct to the shaft walls.
…
We are not confident with your fixation plan … From our industry experience, we know, this is not at all adequate and do not want any role in their implementation.
Our standard fixings are 12mm x 100mm by bynabolts or trubolts, into concrete or core filled blocks.
We elect to plumb, markout and drill our standard 12mm fixing holes into the shaft. From that point, we suggest you chemset and install your own fixings, as per your engineering specifications. Cancelling Liftshop from any responsibility for their strength, application or durability.
Once your fixings are set and you are confident with their strength and durability to carry the loads specified in our engineering drawing specifications.
We will then return to site and complete the lift installation.
Please reply to this email, your agreement to this scenario, and we will push forward and arrange appropriately.
The Magistrate recounted that on 21 November 2019, Mr Abousleiman took further steps to recover the deposits by emailing NAB and on the next day, Mr Murphy called Mr Abousleiman. Mr Murphy recorded in Lift Shop's call log "he thinks he has a solution to fit off the shaft. Would like to meet Baz [Peisley] to discuss. I suggested Barry touch base with him on Monday to arrange a time to discuss".
The Magistrate said this was followed by a further demand, on 22 November 2019, by Ultra to Lift Shop: "Please organise to refund today all the money that I have paid to lift shop because as of Monday the 25th of November 2019, I will be charging 10% interest on the money I've paid to lift shop until it is refunded and I will charge weekly storage fees of $500 until the goods are collected by lift shop". His Honour observed at J[59]:
Unless Lift Shop had repudiated by that time, Ultra had no right to demand a refund, charge interest or storage fees under the contract.
The Magistrate recounted further discussions between Lift Shop and Ultra regarding plans to make the lift shaft suitable for installation of the lift which included Mr Peisley's meeting with Mr Abousleiman on 27 November 2019 at Lift Shop's offices. Mr Peisley provided Mr Abousleiman, again, with hard copies of the engineering load force drawings and the instructions for the steel supports that would be required for the lift to be installed safely. Mr Peisley's conversation included making it very clear to Mr Abousleiman not to change the physical dimensions of the shaft. His Honour stated the conversation continued as follows: (J[63])
Mr Peisley: "Whatever you do, do not change the dimensions of the shaft. If you put brackets on the back, make sure that there is still enough space for the lift to fit. You need to check the entire shaft to make sure the depth still works. You may have to do plate steel rather than box steel because of your space limits. Point this out to your engineer because he will have to approve and certify any fixings."
Mr Abousleiman: "Ok, I understand. I will get it done and it will be ready next Monday."
Mr Peisley: "There are very real dangers and risks of injury and death with the site as it is."
Mr Abousleiman: "I don't agree."
Mr Peisley: "Look, I just want to get this job done. And it has to be done safely. Please take it to your engineer and sort this out. I am not going to continue to argue with you."
The Magistrate referred to a contest in the evidence as to what was said at the meeting: Mr Abousleiman's evidence was that an agreement was reached whereby Mr Abousleiman would carry out the steel bracket and support solution (being the work outlined in the email Mr Peisley sent on 21 November 2019) and Lift Shop would install the lift by the end of the year.
The Magistrate did not accept that the conversation occurred in the terms asserted by Mr Abousleiman. His Honour said, "it is implausible that an employee of Lift Shop would vary the standard form contract by such a conversation "on the run"". His Honour preferred the evidence of the Lift Shop employees, who his Honour said, generally kept contemporaneous records of what had occurred and had a less direct financial interest in the case. The Magistrate added (at J[69]):
Mr Abousleiman's credit is also affected by his conduct in secretly seeking the return of the credit card progress payments during the currency of the contract, and not disclosing that to Lift Shop. If there had been a variation one would expect it to have [been] recorded and asserted in writing in a timely fashion.
The Magistrate recounted a conversation which Mr Peisley had with Mr Abousleiman on 28 November in which Mr Peisley asked if the steel modifications had been installed. Mr Abousleiman told him that he would be installing the steel modifications that day. Mr Peisley asked him to send photos before he went to the site and an engineer's statement confirming that the walls of the lift shaft were able to sustain the load described on the lift engineering drawings and guiding Lift Shop on the type of anchorage to attach to the steel. His Honour found that no such engineering statement had been provided to Lift Shop by Ultra or its engineer, with the possible exception of the one page plan which may have been reissued on letterhead.
It appears that his Honour was referring to a one page plan titled "Structural Design Statement" prepared by Mr Boudib. His Honour referred to the differing views of Mr Ford and Mr Cully (who were called by Lift Shop) and Mr Nicola (called by Ultra), who had given expert evidence in the trial.
His Honour noted that Mr Ford said that the plan was not in standard form, that it was unclear what it was intended to depict and contained little detail and no calculations. His Honour noted Mr Nicola's disagreement. His Honour said that Mr Cully supported Mr Ford's view, opining that the certificate did not contain the level of detail and clarity required. Mr Cully was of the opinion that a third party could not rely on it to understand and execute the design intent.
The Magistrate preferred the evidence of Mr Ford and Mr Cully to that of Mr Nicola. His Honour referred to the view of Lift Shop's experienced staff "that they were not satisfied with the situation and required further certification after the provision of the one page handwritten plan" (at J[78]), and stated that the evidence of Mr Ford and Mr Cully accords with the views of the staff on the ground. His Honour concluded that the certificate lacked detail and clarity and said it was "not clear that the work done in purported compliance with it reflected its requirements": J[78]. His Honour added that "[w]hen safety is involved, Lift Shop were [sic] entitled to take a conservative approach. The consequences of an error would be too great": J[78].
The Magistrate rejected the suggestion that the plan was a sufficient engineering basis for the triggering of the contractual obligation to install.
The Magistrate returned to the factual chronology. His Honour related that Mr Peisley had arranged to attend the site on 2 December 2019 and Mr Abousleiman waited for him on that day and called him at least two or three times but got no answer. His Honour stated that it appears Mr Peisley was unable to attend due to a personal problem.
The Magistrate detailed communications between the parties in January 2020. On 9 January Lift Shop sent an email seeking confirmation that the site was ready. On 13 January Lift Shop sought to assure Mr Abousleiman that all it was doing was seeking confirmation that the shaft was ready. Mr Abousleiman replied that he would be deducting all costs paid for steel fixings and epoxy, for his labour and claiming compensation for all the delays including storage and gyprock work. On 17 January Lift Shop again sought information as to the state of the preparatory work needed. Mr Abousleiman in reply demanded that Lift Shop "pay for all work I did for you and compensate me for all delays": J[81].
Further facts that were related by his Honour included Mr Hogan's attendance at the site on 12 February 2020. He had previously been there when the lift was delivered. His Honour referred to Mr Hogan's evidence that he was there to see whether the problems he identified in November had been rectified. Whilst some work had been done, he was not satisfied the shaft was ready. His Honour noted that Mr Hogan's version of events was confirmed in his contemporaneous report.
The Magistrate referred to Ultra's submission concerning Mr Hogan's evidence which included that there had been a solution agreed to by Mr Abousleiman and Mr Peisley on 27 November 2019. That solution only required steel brackets on levels two and three of the shaft, where there was single brick. It was Ultra's case that what Mr Hogan observed on 12 February 2020 was the 27 November solution.
The Magistrate did not accept there was any agreement reached on 27 November 2019. His Honour found that the meeting on that day "formed part of Lift Shop's efforts to seek to co-operate with Ultra to complete the contract": J[85].
The Magistrate said that Lift Shop was notified of the chargeback of the 1st and 2nd payments on 28 July 2020 and of the third payment on 4 August 2020. His Honour then recounted that Ultra's solicitor wrote on 28 September 2020 terminating the agreement and demanding a refund. Lift Shop's lawyers responded on 9 July 2021 stating that Ultra's termination was itself a repudiation, which it accepted, and terminated the agreement.
The Magistrate rejected Ultra's submission that Lift Shop had repudiated the contract by failing to install the lift by about November 2019. His Honour said at J[96]:
Given that it was Ultra's obligation to make the lift shaft suitable for installation of the lift, I see no repudiatory conduct of Lift Shop in the chronology recounted above. It did not evince an intention "no longer to be bound by the contract … or [show that it] intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way". It was working with Ultra to achieve the result desired by both parties. Even if there were some delays, miscommunications, or mistakes made along the way, Lift Shop was not evincing an intention not to be bound by the terms of the contract. It was seeking to ensure that the lift shaft was made safe and suitable for installation of the lift it had manufactured and delivered to site. It did it consistently with the knowledge that the shaft was made of brick but also in circumstances where the ultimate obligation to ensure suitability of the shaft was that of Ultra. It engaged in numerous communications with the principals of Ultra and its engineer to seek to organise [a] safe and suitable method of fixing and installation. The conversations and meetings in November formed part of the attempts by Lift Shop to complete the contract, albeit not successfully. There was no repudiation by Lift Shop.
(Emphasis in original)
The Magistrate said that commencing on 23 July when the contract was fully signed and the lift put in production, the delay to late November did not exceed the twenty-week guideline. His Honour added that even if the contract dated from March, delay was not so egregious as to demonstrate repudiation. His Honour rejected Ultra's submission that Lift Shop was not bona fide in its efforts because there was no profit in the project.
The Magistrate said that if there was a party evincing an intention not to be bound by the contract it was Ultra. His Honour said at J[100]:
It was Ultra who made demands it was not entitled to make in its letters of 18 and 22 November 2019, including demanding its money back which was telegraphing an intention only to be bound by an incorrect interpretation of the contract and thus a repudiation, and secretly pursuing a strategy of seeking from its credit card banker, the return of the funds it was required to and had paid under the contract, which was also suggestive of an intention not to be bound by the agreement which required instalments to be made, and obviously, not seeking their return during the currency of the contract. It also never provided a clear, written engineer's statement of suitability of the shaft. And it continued with its legally baseless demands in January.
The Magistrate found that Lift Shop was entitled when terminating to rely upon the repudiatory conduct of obtaining the return of the instalments. His Honour said that could not be consistent with an intention to comply with the payment obligations under the contract to be actively seeking their return. The payments had actually been returned by the time Lift Shop terminated. His Honour found that constituted a further ground to accept the repudiation and terminate. His Honour said that formed part of the justified basis of the termination dated 9 July 2021.
Further findings by his Honour included that no breach of any tortious duty owed by Lift Shop had been made out. As to s 37 of the DBPA, Ultra was not the owner of land and s 37 imposes duties for the benefit of owners.
The Magistrate turned to the FASOCC against Mr and Mrs Abousleiman. It had been submitted by the cross-defendants that the steps Mr Abousleiman had taken to prepare the site for the lift installation were undertaken in his capacity as an employee for Ultra. Furthermore, the steps taken by him in relation to the chargebacks were undertaken by him pursuant to the direction and authorisation of Mrs Abousleiman, in her capacity as the director of Ultra.
The Magistrate found that Mr Abousleiman was an employee of Ultra. However, in rejecting Ultra's submission, his Honour said Mr Abousleiman was the driving force behind Ultra's actions and at all times was at least an equal actor with his wife, who was the sole director. His Honour observed that it did not accord with reality to suggest he was directed by her to do anything. His Honour found in relation to the first two instalments, Mr Abousleiman had an additional special role, "in that he was the credit card holder who had paid the instalments and needed to be involved in the taking of any steps to retrieve them": J[137].
As to the breaches of contract by Ultra constituted by conduct other than the seeking of the credit card reimbursements, the Magistrate found that Mr Abousleiman was acting as an agent within the scope of his authority and was not liable for inducing a breach of contract.
The Magistrate referred to the effect of the law in Realtek Holdings Pty Ltd v Wetamast Pty Ltd [2019] NSWSC 1869 ("Realtek") as summarised by the cross-defendants. The Magistrate agreed that the effect of the law in Realtek was dispositive of Lift Shop's inducement claim against Mr Abousleiman (with one exception). His Honour said the evidence was that Mr Abousleiman was authorised by Ultra and/or Mrs Abousleiman to represent Ultra in its dealings with Lift Shop. He was an employee of Ultra. Mr Abousleiman's acts were Ultra's acts.
The Magistrate regarded the actions taken to retrieve the first two payments made on Mr Abousleiman's card to be in a different category. His Honour said at J[141]:
Mr Abousleiman in his capacity as the payer is a third party who "stands outside" the contractual relationship and was not simply the agent or alter ego of the company. He was a 3rd party payer who was involving himself in the contractual relationship between Ultra and Lift Shop by seeking to get his money back and in doing so, albeit in concert with Ultra, put Ultra in breach.
The Magistrate said the conduct commenced while the contract was on foot. His Honour found Mr Abousleiman liable in damages for the first instalment ($5,608.90) and the second instalment ($22,727.27).
In rejecting the cross-defendants' submission that causation could not be proved, his Honour said at J[144]:
I reject the defence that because Lift Shop had the opportunity to make representations to the bank, causation can't be proved. I accept the Cross Claimant's submission in reply at [79]-[80] to the effect that misleading or false statements were made to its banks that Lift Shop had failed to deliver the lift, was not entitled to payment and were entitled to a refund of the credit card charges under the Contract. It is clear that the banks relied on those statements, made as they were by their customers (the credit card holders), otherwise they would not have reversed the charge. The banks were induced to act on the representations made to them by reversing the charges to their credit cards. The fact that Lift Shop was unable to stop the banks from reversing the charges confirms that the banks relied on the misleading and false representations.
The Magistrate rejected the arguments that Mr Abousleiman lacked the relevant intent and/or that Ultra would have breached the contract regardless of its conduct. As to the first argument, his Honour found that Mr Abousleiman intended to act to retrieve the funds which he knew or ought to have known were not refundable during the currency of the contract. As to the second, his Honour found that Ultra could not have retrieved those funds without the involvement of the payer.
The Magistrate went on to deal with what was described in the cross-defendants' submissions as the "Site Representation Case"; the "Payment Representations Case"; the "Representation by Silence Case"; and the "Accessorial Liability Case".
The Magistrate found that Lift Shop had not established that the cross-defendants did not intend to honour the statements when they were made. His Honour pointed out the parties were largely co-operating and proceeding towards installation for many months up to delivery in November 2019.
The Magistrate rejected Ultra's submissions concerning the oral representation alleged against Mr Abousleiman on 2 April 2019 when he was alleged to have said that "the rear wall is very strong" and "I will get my engineer to check the lift drawings you gave me". His Honour pointed out that the first statement was never relied on by Lift Shop who always insisted on "engineering sign off": J[164]. His Honour also found that the submission the cross-defendants did not have the ability to make good the representations was not made out.
In dealing with the Payment Representation Case, his Honour found that Lift Shop had not established that the cross-defendants had any relevant intention from any time before 11 July 2019 not to make the first two payments. As to the third payment, his Honour could not see any misleading conduct "with respect to promising to and in fact making the third payment": J[178]. His Honour said the first part of this claim fails. His Honour went on to consider the second part of the claim which involved representations made to the banks, which misled them into refunding the payments.
In rejecting the cross-claimant's submission that the case was not sufficiently pleaded his Honour said the pleading was in para 26(b) and was fully ventilated at the hearing. His Honour found the NAB representations were misleading. His Honour said at J[185]:
The NAB representations were misleading. They misconstrued the contract, provided selective information to the NAB and claimed in substance that there had been breach of contract and no performance by Lift Shop. It ultimately succeeded in inducing the NAB to refund payments to which Mr Abousleiman and Ultra had no right. That caused damage to Lift Shop quantified as the value of the two instalments.
The Magistrate did not accept that only Mrs Abousleiman made the NAB representations. His Honour referred to Mr Abousleiman's call to NAB in July 2019 and his agreement that he made a second call to that bank. His Honour inferred that the calls contained representations to the effect that Ultra was entitled to a refund of the first two instalments. His Honour found that Mr Abousleiman also made the NAB representations. His Honour said that given his close connection to the entire project, it was not conceivable the NAB written documentation was prepared without his active involvement.
When considering the third payment made on a company credit card with ANZ, the Magistrate found that Mr and Mrs Abousleiman acted together in making representations to the bank. As to Ultra's entitlement to a refund, his Honour said that "ANZ would not have actioned the request without a request from the company asserting a right in that respect": J[190]. His Honour rejected the suggestion that Lift Shop and or St George Bank were jointly responsible for the loss.
The Magistrate found that the cross-defendants were liable on this claim for damages measured by reference to the three instalments refunded by the banks. The Magistrate found it was unnecessary to determine Lift Shop's cross-claim founded on representation by silence. His Honour made the orders at [10] above.
In oral submissions, Mr Young argued that his Honour's construction of subparagraph (a) was overly technical and did not reflect the commercial purpose of the contract. Mr Young submitted that the requirement for each page being initialled was intended to be facilitative so that there was an acknowledgement by the recipient of having read the pages of the contract. Mr Young submitted that provision did not affect when the contract was formed.
Mr Young made an alternative submission, if the Magistrate was correct in concluding the contract was formed in July, the date on which things started to happen was when the deposit was paid, and Lift Shop did not say to Ultra that they could not do anything until the contract was signed. The submission was that his Honour was incorrect in his finding as to when the time for the installation of the lift was to be judged to run.
The objective approach also applies to acceptance of an offer. The following statement of relevant principles regarding acceptance in JW Carter, Contract Law in Australia (JW Carter Publishing, 8th ed, 2023) ("Carter") reflects an objective approach at [3-20]:
Acceptance must be unequivocal so that nothing further is left to be negotiated between the parties. The language used must convey clearly a decision by the offeree to be bound by the terms of the offer. Whether this has occurred depends on the view that a reasonable person in the position of the offeror would take. Therefore, it is sufficient if a reasonable person in the position of the offeror would regard the communication as an acceptance. The offeree need not have said expressly "I accept your offer". For example, the offeree may have informed the offeror that goods or materials have been ordered to commence performance of the contract.
(Footnotes omitted)
In Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 ("Brambles Holdings"), Heydon JA said at [81]:
In the light of the above cases, it is relevant to ask: in all the circumstances can an agreement be inferred? Has mutual assent been manifested? What would a reasonable person in the position of the Council and a reasonable person in the position of the defendant think as to whether there was a concluded bargain?
Both the passages quoted from Carter and Brambles Holdings were recently cited with approval in Piety Developments Pty Ltd v Cumberland City Council [2024] NSWCA 173 at [84]-[87] (Griffiths AJA, Payne and Adamson JJA agreeing).
The issue of acceptance is an important aspect of this appeal as it was Ultra's case that Lift Shop's offer to install the lift was accepted when Mr Abousleiman sent an email dated 21 March 2019 to Mr Murphy thanking him for the revised quote and putting a "note on the quote [see in red] regarding the shaft walls being brick." [2] and by paying the first instalment of $5,608.90 for which Lift Shop issued a receipt dated "20/03/2019". [3]
Ultra places emphasis on the significance of subparagraph (d) which appears under the heading "Contract Acceptance" in the quotation sent by Lift Shop to Ultra on 20 March 2019.
The quotation document was of some length and became the contract between the parties (conveniently referred to from now on as the "contract"). As Mr Murphy pointed out in his email to Mr Abousleiman the contract consisted of the following "Quotation Sub-Sections" [4] :
• Specifications and Selections
• Price and Options
• Payments and Program
• Contract Acceptance (to place order)
• Client Responsibilities / Work by others
• Standard Contract Conditions
"Contract Acceptance" appears at page 79 of the contract. Subparagraph (d) is preceded by three subparagraphs. Subparagraphs (a) to (d) are as follows:
a. The Lift described in this quotation is accepted in full including Specifications, Program, Payment Terms, Price, Client Responsibilities and Conditions. Every page must be initialled.
b. The quotation is for the specifications selected. The 1st Design Drawing will be created with this information. The price is based on these selections.
c. Selections can be chosen and amended later but are required for the final As Built Design Drawing. Undecided items are highlighted.
d. Contract acceptance date is date of deposit payment.
In the preceding page 78, there is a table under the heading "After order: Payments and Program" which provides for a 19-20 week lift installation program. The first stage is "Week 0 Lift Order". The first payment of a 10% (non-refundable) deposit is required "to secure the price for 90 days". The adjoining "explanation" states "Quotation Specifications are sent to engineering and 1st Design Drawing is prepared".
The program and payment schedule then provides from "Week 2 Design Approved by Client" through to "Week 19-20 Installation Completed".
The contract includes Clauses 1 to 15 under the heading "Client Responsibilities - Work by Others" and Clauses 1 to 9 under the heading "Standard Conditions of Offer".
The "Client Responsibilities" makes provision for site delivery, site storage, lift pit, lift shaft, cabling, landing door openings and buttons, the shaft's roof and other items. Clause 15 requires that the customer has read the client's responsibilities and understands them. Clauses 4(c), (d) and (e) which had some significance during the hearing before the Magistrate provide:
(c) The shaft must be able to sustain loads as specified on the As Built Drawing.
(d) A structural engineer must ensure that the building and shaft can safely support all loads imposed by the lift.
(e) The shaft load bearing wall is to be solid (not hollow) in either poured or pre-cast concrete, core filled block work, solid brickwork or steel framing designed by a structural engineer. [5]
Clauses 1 to 9 under the heading "Standard Conditions of Offer" include the program, payment terms, product manufacture, storage and warranty. Clause 2(a) provides:
The Program and Payments Schedule is a guideline to the expected time frame for the completion of the lift works. In the event that any part of the program is delayed or varied, the expected time frame for completion will be delayed.
Clause 5(b) provides:
The Customer will be required to sign the As Built Drawing confirming the specifications and finishes for the lift prior to placing the lift into manufacture.
At the bottom of each page of the contract the word "initial" appears.
It is hardly surprising that Lift Shop required each page to be initialled by Ultra as the contract was detailed and placed responsibilities upon the customer. By initialling each page, the customer was acknowledging that the terms of the contract had been read, understood, and accepted.
The importance that Lift Shop placed on the initialling of each page was emphasised by the email sent to Mr Abousleiman dated 1 April 2019 which includes "Copy of the Quotation - (Initial each page and Complete Contract Acceptance page)". [6] Further requests were made for every page of the contract to be initialled and "Contract Acceptance" to be signed in emails dated 15 May 2019 [7] and 23 May 2019. [8]
The subjective intentions of Lift Shop are not a determining factor but may assist if it demonstrates knowledge of surrounding circumstances: Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 per Leeming JA at [59].
In the present case, where the terms and conditions of the contract were complex imposing obligations on Lift Shop and Ultra, a reasonable businessperson placed in the position of the parties would have understood that each page of the contract was required to be initialled before there was a binding contract.
A reasonable businessperson in Ultra's position would have understood that the terms of Lift Shop's offer required Ultra as the offeree to have read, understood and accepted all the terms of the contract, which was to be acknowledged by initialling each page of the contract.
A reasonable businessperson in Lift Shop's position would not have regarded Mr Abousleiman's email dated 21 March 2019 and payment of the non-refundable deposit as acceptance of Lift Shop's offer. Reasonable businesspeople placed in the position of the parties would have understood that the payment of the non-refundable deposit was made to secure the quotation price for 90 days and for the preparation of the first Design Drawings. They would have also understood that subclause (d) assumes that every page of the contract has been initialled. In other words, subclause (d) is to be read as subject to subclause (a).
True it is that the Magistrate did not refer to subclause (d) but that does not mean that he did not apply an objective assessment in making a finding as to the commencement date of the contract. In my view, his Honour correctly concluded that the contract commenced on 23 July 2019.
Whilst it was unnecessary for the Magistrate to state at J[35] that "even if a contract was entered [into] in March", questions of delay upon which the plaintiff relied for their repudiation argument would date from 23 July, his Honour, in my view, was correct. Clauses 2(a) and 5(b) of the contract are quoted at [102]-[103] above. The Magistrate found that the final design and finishes were only approved by Ultra on 23 July 2019, which is also when the signed contract was provided by Ultra to Lift Shop.
For these reasons, I reject Ultra's contentions in Grounds 1, 2 and 7 that the Magistrate erred in law.
Ultra cited Torbey Investments Corporated Pty Ltd v Ferrara [2017] NSWCA 9 ("Torbey Investments"), at [61]-[68] where the Court of Appeal held that a court that overlooks critical evidence falls into an error of law.
As to Ground 3(c) Ultra submitted that the Magistrate failed to consider the evidence of Mr Bardouh whose evidence was to the effect that he installed the steel supports in accordance with the structural design statement of Mr Boudib and the lift was ready for installation on 28 November 2019.
Ground 3(e) focussed on Mr Hogan's alternative solution which his Honour noted at J[46]. Ultra contended that the evidence given by Mr Nicola was entirely consistent with the alternative solution. Ultra referred to his Honour dealing with Mr Nicola's evidence in three words at J[74]. Ultra submitted that his Honour failed to consider Mr Hogan's alternative solution and in rejecting Mr Nicola's evidence, failed to consider that it was entirely consistent with the alternative solution.
Ultra argued the Magistrate misunderstood Mr Hogan's evidence when his Honour found at J[78] that the views on the ground of Lift Shop were in accordance with the views of Mr Ford and Mr Cully. Ultra contended that unlike Mr Ford, Mr Hogan and Lift Shop had installed lifts in brick shafts. Unlike Mr Cully, Mr Hogan was prepared to install the lift using the alternative solution.
As to Ground 3A, Ultra submitted even if his Honour was correct to find that the contract was neither formed nor commenced until 23 July 2019, there was a contractual obligation to install the lift once it had been delivered. Ultra argued the lift was delivered on 7 November 2019 and on that day, Mr Hogan certified the lift was ready to install and sought approval for his installation solution and accommodation. The third instalment consisting of 40% of the total payment had been paid on 4 November 2019.
Ultra argued that it does not accord with a common sense or commercial understanding of the contract that a bespoke lift can be designed, manufactured, delivered and 90% of the payments made where the manufacturer and installer of the lift had not until after delivery made investigations as to their ability to install.
Ultra submitted Lift Shop's case that the Magistrate accepted was that notwithstanding the representatives of Lift Shop were aware of the particular construction of the shaft being out of brick (Mr Murphy inspected on 7 April 2019 prior to the second payment being made on 29 May 2019 and Mr Hogan inspected on 7 November 2019 and prepared a ready to install report), they still found safety issues which prevented installation.
Ultra contended that at no point had Lift Shop requested an engineering statement prior to, or on delivery.
In oral submissions, Mr Young said that the third ground was about whether Lift Shop had a contractual obligation to install the lift. Mr Young referred to his dislike for the use of the word "triggering" in J[78] by the Magistrate. Mr Young referred to clause 4(e) of the contract and submitted that Ultra had carried out that responsibility by retaining Mr Boudib, a structural engineer, who gave the most important evidence of all, as he was the person actually responsible for the structural design and approval of the lift shaft.
Mr Young said Mr Boudib was a participating expert and not put to the court as an independent expert. He had provided detailed calculations which were in Exhibit B. Mr Young argued the vice was that the Magistrate ignored Mr Boudib's evidence. In referring to ground 3(a), Mr Young submitted the Magistrate erred at J[75]-[78] in finding there was no contractual obligation to install by ignoring the evidence of Mr Boudib, the maker of the document.
Ground 3(c) was the lay evidence of Mr Bardouh, who installed the solution in accordance with Mr Boudib's design.
As to Mr Nicola, Lift Shop referred to his Honour's reasons at J[74]-[77] and contended that when those paragraphs are read in their entirety, it was clear that his Honour did not deal with Mr Nicola's evidence in "three words" as Ultra submits.
In oral submissions, Mr Studdy referred to Mr Boudib's acceptance in cross-examination that he was wrong in his affidavit and there was "no evidence that Lift Shop got the design statement" [9] . Mr Studdy further explained he was referring to the "design structural document". He said Lift Shop never received the certificate but only received the sketch in the middle of it.
Mr Studdy further contended that Mr Boudib did not give evidence of any calculations and Ultra's submissions about calculations was "a complete furphy". [10] Mr Studdy submitted Mr Boudib was not a critical witness for the reasons provided and that may be why he was not referred to by the Magistrate. A further submission was that having heard the evidence of Mr Ford, Mr Cully and Mr Hogan, it was his Honour's task to determine which evidence he preferred.
Mr Boudib's affidavit sworn on 6 September 2021 was admitted into evidence as Exhibit 7. In his cross-examination by Mr Studdy, he accepted that he did not send a copy of the engineer's structural statement (being Annexure "A" to his affidavit) to Lift Shop. He thought he gave that statement to Ultra. Further on, he agreed that the only document he sent to Mr Abousleiman was the sketch. In re-examination, he referred to the sketch and design statement as two separate documents and he did not recall how the design statement got to Ultra. It was his evidence that he thought the sketch adequately referred to what he was asked to do which was to provide "the fixing details".
Mr Boudib's explanation of the error in his affidavit was consistent with Mr Peisley's evidence that he received from Mr Abousleiman the sketch plan reproduced at page 6 of Exhibit BJP-1 annexed to his affidavit affirmed on 3 August 2021. Mr Boudib did not give evidence concerning Exhibit B.
There was a large amount of material in evidence concerning Mr Boudib's sketch plan and certificate, which included the affidavits of Mr Ford (Exhibit 25) and Mr Cully (Exhibit 28); Mr Nicola's report (Exhibit 27); Mr Nicola's further report (Exhibit 30); the report of Mr Ford and Mr Cully in response to Mr Nicola's report (Exhibit 31); the joint expert's report with Mr Nicola's response (Exhibit 32); and the joint expert conclave report with Mr Nicola's response (Exhibit B). In addition, the Magistrate heard the evidence of Mr Ford, Mr Cully and Mr Nicola concurrently on 23 February 2023.
I have no doubt that the Magistrate was fully aware of Mr Boudib's evidence. He referred at J[28] to the conversation between Mr Peisley and Mr Boudib. In my view, as Mr Boudib's sketch plan, certificate and affidavit had been so thoroughly canvassed in the evidence of the three expert witnesses, there was no need for his Honour to refer to Mr Boudib's evidence in his judgment.
The same may be said about Mr Bardouh's evidence. Mr Bardouh is a steel fabricator, who gave evidence of fabricating steel tube brackets, which were bolted and fixed with heavy duty epoxy resin to the rear left shaft wall. His evidence was of limited significance and his Honour was not obliged to refer to it in his judgment.
As to Ultra's complaint that the Magistrate misunderstood and overlooked Mr Hogan's evidence, his Honour referred at J[45]-[46] to Mr Hogan's site visit. His Honour noted that Mr Hogan's solution was subject to approval by Lift Shop. This is consistent with Exhibit DH-I to Mr Hogan's affidavit which included a document entitled "Pre-install and subsequent site visits. Ready for installation to commence" [11] . In "site checks" there are the notations: "Extruded bricks and a fixing idea needs to be sorted. Maybe Chemset sleeves are the option" and further under "other issues", "Rail wall" "Extruded bricks will need some type of fixing decision".
In their evidence, Mr Ford and Mr Cully explained that the problem with the suggested solution was the hollow bricks. Mr Cully said "the weakest part of [that] connection is the brick" [12] which was brittle. The use of epoxy resin to strengthen the bolts fixing the lift to the shaft wall would not have overcome the problem as the bricks would remain brittle such that the epoxy resin and the bolts would be torn away from the bricks by the load and force of the lift.
Contrary to Ultra's submission, Mr Hogan did not certify that the lift was ready to install at his site visit in November. Mr Hogan denied he said to Mr Abousleiman "everything looks fine" during either the site visit in November or February. [13] He found problems with the lift shaft which were identified in the Pre-install document. I do not accept that his Honour overlooked or misunderstood Mr Hogan's evidence.
His Honour observed at J[75] a difficulty with Mr Nicola's evidence was that the opinions expressed in Mr Nicola's report were based on the misunderstanding that the shaft was "constructed of extruded bricks filled with concrete". Although Mr Nicola in oral evidence said he was still of the opinion that the walls were sufficient even though the bricks were hollow, his Honour found that opinion "was unsupported by identifiable reasoning".
At J[72]-[78], his Honour dealt with the experts' reports and provided reasons for preferring the evidence of Mr Ford and Mr Cully. His Honour's preference for their evidence was clearly open to him.
By ground 3A(b), Ultra advances an argument that his Honour erred in law at J[75]-[78] by ignoring the information provided to Mr Murphy that the lift shaft was made of brick. This submission overlooks Mr Murphy's evidence he told Mr Abousleiman at the meeting on 2 April 2019 that he should speak to his engineer to ensure the bricks at the rear of the shaft were of sufficient strength for the lift to be affixed. Furthermore, the content of this submission emphasises the importance of clauses 4(c), (d), and (e) of the contract and of each page being initialled by Ultra before there was a binding contract.
It was Ultra's responsibility to comply with each of those conditions. Clause 4(e) required the shaft loading bearing wall to be "solid (not hollow)", however, the lift shaft was constructed with hollow masonry and the load bearing wall was unable to safely support all loads imposed by the proposed lift.
Moreover, Ultra was responsible under clause 4(d) for a structural engineer ensuring "that the building and shaft" could "safely support" all loads imposed by the lift. The contract did not oblige Lift Shop to identify, prior to when the lift was delivered, that Ultra had failed to comply with clauses 4(d) and (e).
His Honour's conclusions at J[50] and J[77] are well founded on the evidence.
I am not persuaded by Ultra's arguments in support of grounds 3 and 3A that his Honour erred in law by finding at J[75]-[78] that Lift Shop's contractual obligations to install the lift had not been "triggered" by the provision of Mr Boudib's plan. In my view, his Honour's findings supported his conclusion at J[96] quoted at [50] above that there was "no repudiatory conduct" on the part of Lift Shop.
Ultra has failed to establish grounds 3 and 3A. Ground 3B was not pressed.
In my respectful opinion, I do not think that Mann at [28] is helpful. The same may be said about Mann at [62] which was a passage in the judgment of Gageler J (who was in the majority but expressed different reasons to the joint judgment of Nettle, Gordon and Edelman JJ). Gageler J identified at [57] three distinct categories of work which the builder claimed to recover by way of restitution representing the value of the work done for the benefit of the owners. Category 2 was as follows:
work done by the Builder in respect of the plans and specifications set out in the Contract for which the Builder had accrued a contractual right to payment under the Contract at the time of its termination; …
His Honour said at [62]
There can be no doubt about the outcome in relation to work done within category (2). The result of the Builder's acceptance of the Owners' repudiation is that the Builder still has in respect of that work the same accrued contractual right to payment under the Contract as the Builder had up until the time of termination of the Contract. The Builder can enforce that accrued contractual right in a common law action in debt.
(Footnotes omitted)
In the present case, Lift Shop's claim is not for work done by Lift Shop but for the payment of the fourth instalment which it would have been entitled to under the contract but for the wrongful repudiation by Ultra.
The guiding principle is to place Lift Shop in the same position it would have been in if the contract had not been repudiated and the lift had been installed. In Trimis, Mason P (with whom Priestley and Handley JJA agreed) said at [47]-[50]:
It is submitted by the owners that the whole measure of the builder's damages should have been assessed as on a repudiation. The task is to put the builder in the same position he would have been in had he completed the whole job. The consequence is said to be that the Court was obliged to take the total of the instalment payments actually received; then subtract the cost of the work to the point of termination; then add the balance of the purchase price; then subtract the cost of completing the work in accordance with the contract. The result would represent the profit the builder would have made had he completed the work. Instead of this approach, the builder's claim was effectively divided into parts. The work done was paid for at contractual rates, and damages for loss of profits were awarded with respect to that part of the work which the builder was prevented from doing by reason of the owners' repudiation.
In the owners' submission, this approach effectively treats each stage as an independent contract, with the progress payment relating to that milestone as the contract price. It is submitted that this is incorrect as a matter of legal analysis because the instalment payment may not necessarily reflect the value and cost of the work done for the stage of the project to which it relates. The consequence is, in the owners' submission, that even if the owners repudiated the contract, the builder has not proved his damage on the contractual aspects of his claim. The owners seek to have the relevant parts of the judgment set aside (these are identified as pars 1(e), (f), (g) and (h).
In my view, there was no error of principle in the way that the trial judge approached the issue of contractual damages. He was not bound to assess damages in the manner asserted by the appellants. The method chosen represented an available path to the goal of placing the builder in the position he would have been had it not been for the owners' accepted repudiation.
There was no evidence to suggest that the contract had been arranged in such way as to give the builder all of his profit at any particular stage. The agreed progress payments are capable of providing evidence of the common agreement of the parties as to the value to each party of each stage. I see no reason why work performed should not be paid for at agreed contractual rates with the lost profit on the unperformed work confined to that component. This does not involve segregating the contract. Nor does it depart from the requirement to approach the matter with the aim of putting the innocent party (in this case the builder) in the position he would have been had the contract been performed. The propriety of approaching contractual damages in this way is supported by McGregor on Damages 16th ed.
(Citations omitted, emphasis in original).
In the present case, as a matter of construction, the contract is not a severable contract. As was observed in Carter, at [28-25]:
The fact that the contract provides for progress payments towards a lump sum price does not make the contract severable if the contractor agreed to accomplish a single task. An important example is a building contract. In Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd Lord Diplock defined a modern building contract as 'an entire contract for the sale of good and work and labour for a lump sum price payable by instalments'. Australian authority is to the same effect. The conventional terminology for a severable building contract is a contract for 'separable portions'.
Similarly to Trimis, the contract did not make provision for the builder to be given all of his profit at any particular stage. The contract is to be construed in its entirety even though the cost of the installation of the lift may have been more than the fourth instalment. The profit anticipated by Lift Shop on completion of all the work was about $10,000 together with future service annuity income. Payment of the fourth instalment does not overcompensate Lift Shop. It best serves the guiding principle of placing Lift Shop in the position it would have been in if the contract had been performed.
I am not persuaded that his Honour erred in law. Ultra has failed to establish ground 9.
The cross-defendants referred to his Honour's statements at J[144], J[191] and J[195] set out in ground 16.
As to J[144], the cross-defendants contended that it would have been impossible for his Honour to state banks relied on statements made by the cross-defendants in July 2019 "where the evidence of the St George Chargeback documents makes it pellucidly clear that the relevant representations that were the basis of the complaint on which chargeback response were [sic] sought from Lift Shop related to 19 November 2019." [19] Furthermore, it was submitted that it would have been impossible for his Honour to state that the representations to their own bank related to the delivery of the lift "otherwise they would not reverse the charge". The cross-defendants pointed out the St George chargeback documents explained the process of chargeback and that in this case the chargebacks had to be actioned by St George Bank. This was solely because Lift Shop did not provide a response within the time provided by the Visa Rules.
A further submission was that the St George chargeback documents made it clear the basis of the chargeback claimed was that services were not provided by 19 November 2019 which was clearly a complaint in relation to the failure to install the lift.
The cross-defendants contended that his Honour was in error at J[191] for stating that Lift Shop was not in breach of any relevant obligation. The cross-defendants submitted that having proper regard to the St George chargeback documents, the reason for all three chargebacks was that Lift Shop did not respond within the time permitted under s 9.2 of the Visa Rules and the merchant terms provided by St George Bank. It was further contended that Lift Shop did not deal with this failure in evidence, nor did Lift Shop tender the letter of 10 February 2020. The cross-defendants submitted that the finding at J[191] could not have been made if his Honour took into account the critically important evidence.
In relation to the third credit card payment (Ultra CC 3) the cross-defendants pointed out that the only documentary evidence of the chargebacks was the St George chargeback documents. The cross-defendants submitted that Lift Shop did not adduce evidence of their responses referred to in the St George chargeback documents. Lift Shop was notified by St George Bank on 10 February 2020 that a response was required by 20 February 2020. Lift Shop responded on 8 April 2020. It provided no explanation for this inordinate delay. The cross-defendants submitted that St George Bank made it clear that the dispute related to an agreement to install a lift which was entirely consistent with Mr Abousleiman's evidence referred to at J[109].
The cross-defendants contended that contrary to his Honour's finding at J[190], a claim for a chargeback does not involve a repudiation of legal entitlement to a chargeback as the chargeback request states facts not a conclusion of law.
In relation to grounds 10 and 11, the cross-defendants referred to his Honour's findings at J[141]-[144]. The cross-defendants submitted that the chargebacks for AACC1 and AACC2 occurred on 28 July 2020. Prior to this, Lift Shop had been advised of these two chargebacks on 10 February 2020 with a requirement that they respond by 24 February 2020. They were further advised that they had other options. The cross-defendants submitted that there is no evidence of any action taken by Lift Shop between 10 February 2020 and 24 February 2020 nor after 18 July 2020, which was 10 days before the chargebacks actually occurred.
The cross-defendants referred to his Honour's incorrect statement that Lift Shop was unable to stop the banks reversing the charges. It was submitted that his Honour's findings at J[141]-[144] must fail on that issue alone.
The cross-defendants argued that the concept of "Third-Party Payer" does not withstand analysis. The Magistrate, it was submitted, did not provide any rationale for finding that Mr Abousleiman became liable as a Third-Party Payer in contract.
The cross-defendants contended that once the chargebacks occurred on Mr Abousleiman's credit card, the issue of whether Ultra was liable to make payments or was in breach of the contract was a matter for determination between the contracting parties. The cross-defendants submitted that Mr Abousleiman was not sued as a Third-Party Payer or a person liable under the contract other than it was alleged that he had induced a breach of contract. However, it was not found that he had induced a breach of contract but rather he was liable because Lift Shop had lost the value of his credit card payments. The cross-defendants submitted that this was "circular reasoning" devoid of any legal foundation.
When referring to ground 11, the cross-defendants contended that the Magistrate's findings at J[141] that Mr Abousleiman offended the principle in O'Brien v Dawson (1942) 66 CLR 18; [1942] HCA 8 which was at 27 that agents as employees of a company are not liable for alleged tortious conduct if they are acting within their functions and within their authority. The cross-defendants referred to his Honour's findings at J[137] that Mr Abousleiman was an employee of the company and was authorised by Mrs Abousleiman to act as the company's agent.
As to ground 19, the cross-defendants argued that given his Honour's analysis that the contract was not formed until July, at the time AACC1 and AACC2 were paid, Ultra was under no legal obligation to Lift Shop and the payments made were gratuitous. The cross-defendants submitted that it follows Mr Abousleiman could not be a Third-Party Payer of a contractual obligation. A further submission was, there was no loss as a result of anything done by Mr Abousleiman nor could there have been.
Lift Shop identified in submissions it's responses to the St George Bank letters. [20]
Lift Shop referred to the cross-defendants' submissions which sought to overturn the Magistrate's findings at J[189]-[192]. Lift Shop argued the cross-defendants' submission that the chargebacks initiated by Mr Abousleiman were an "exercise of his own contractual rights with NAB and the Visa Rules" which "left the contractual issues between Lift Shop and Ultra entirely unaffected" elided with the facts. Lift Shop contended that Mr Abousleiman used his personal credit card to make the first two instalments under the contract, which induced Lift Shop into performing the steps tethered to those instalments (designing and manufacturing the lift). He then successfully pursued payment reversals with his bank. Lift Shop submitted that in doing so, Mr Abousleiman intervened directly in the contractual relationship between Lift Shop and Ultra.
As to the cross-defendants' argument that agents (such as employees or directors) of a company are not liable for the alleged tortious conduct of their employer, Lift Shop submitted that the cross-defendants ignored the settled legal principle that an agent may be liable for the tortious acts of their company where they pursue a course of action for the company without good faith and with the knowledge that the acts are infringing conduct. Lift Shop cited Hashtag Burgers Pty Ltd v In-N-Out Burgers, Inc (2020) 385 ALR 514; [2020] FCAFC 235 ("Hashtag Burgers") at [136]-[138].
Lift Shop referred to the misleading or deceptive conduct claim and pointed out that under s 236 of the Australian Consumer Law, a plaintiff can recover damages from both the company and its agents. Furthermore, an agent will be liable for their own conduct as an individual person pursuant to s 18 or for being "involved" in a company's contravention. "Involvement" is broadly defined in s 2 of the Australian Consumer Law. Lift Shop cited Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65.
Lift Shop submitted that the elements required to establish Mr Abousleiman's liability for Ultra's torts and for misleading or deceptive conduct were readily satisfied. Both Mr and Mrs Abousleiman knew or ought to have known that the statements made by them to the bank, including on behalf of Ultra, were without basis and contrary to the contract, and were made to induce the banks to reverse the payments.
Lift Shop argued that Mr and Mrs Abousleiman were both closely involved in Ultra's conduct; they performed the acts which led to the payment reversals knowing that there was no basis for them to obtain the chargebacks.
Lift Shop pointed out that by its Notice of Contention, it seeks to overturn the Magistrate's finding that Mr Abousleiman was an employee or agent of Ultra acting within a legitimate scope of authority.
In oral submissions, Mr Studdy said: [21]
[t]he causation defence, … that is being put forward was not run below as it is now put before your Honour. What was run below was that the [cross-defendants'] liability should be apportioned with that of the banks because the banks should have realised they were being misled by not believing them. Now, most significantly this new defence, i.e. causation, and we were out of time, which your Honour heard a great deal about yesterday, is contrary to the law.
In oral submissions in reply, Mr Young said: [22]
[c]an I deal now with the chargeback issues, and firstly, the suggestion that the [cross-defendants] here are running a different case based on causation. The pleading and the claim of entitlement to damages under 27(d) was denied. In other words, that pleading of the cross claimant, Lift Shop, was denied, so it was up to Lift Shop to prove every element of the claim.
The second cross-defendant (Mrs Abousleiman) and the third cross-defendant (Mr Abousleiman) raised the causation argument in paragraph 28 of their defences to the FASOCC. Paragraph 28 in each defence was in similar terms:
In response to paragraph 28, the Second Cross-Defendant [the third cross-defendant]:
a. Says the Cross-Claimant was made aware of the Payment Dispute through their bank, St George Bank, and had opportunity to argue and or respond to the complaint, as is the usual process.
b. The Payment Dispute was resolved through the St George Bank after the Cross-Claimant had the opportunity to challenge the claims.
c. The Cross-Claimant failed to dispute the Payment Dispute, and the determination made by St George Bank is binding on the Cross-Claimant.
d. Otherwise, denies the allegation.
The causation argument was also raised in written submissions to the Magistrate (particularly at paragraphs 104, 110 to 116) on behalf of the second and third cross-defendants in relation to the FASOCC.
Although I am unable to find in those submissions any specific argument concerning the Visa Rules and evidence in the proceedings about those rules, it would be taking too narrow a view to reject the cross-defendants' arguments advanced in this Court. Accordingly, I do not accept Mr Studdy's submission that grounds 10 to 19 raise new defences which should not be allowed.
Notwithstanding Lift Shop's responses "were well past the deadline", St George Bank supported Lift Shop's position and requested the "issuer bank" to reconsider the chargeback outside the "Visa Rules" process. At the time the letter was written, St George Bank's request had been unsuccessful. No evidence was adduced which provides a reason for the St George Bank's lack of success in having the issuer bank agree to withdraw the chargeback. It may have been the representations made by the card holders or the failure to comply with the Visa Rules. It is apposite to note that Mr Abousleiman's email to NAB on 1 August 2019 (Exhibit 36, AB 1133) was out of time but appears to have been considered by that bank.
It was open to the Magistrate to conclude that Lift Shop was unable to stop the bank from reversing the charges.
The cross-defendants' criticism of the Magistrate's statement at J[195] that "[i]t would not have involved, inter alia, deciding whether any loss flowed from silence itself in circumstances where Lift Shop did not find about the claims for reversal before they were actioned and had an opportunity to dispute" does not support the contention that his Honour did not consider the St George chargeback documents. When the judgment is considered as a whole, that statement followed his Honour's recitation of Lift Shop's argument in J[193] that the cross-defendants had made representations by silence by failing to disclose they had sought to reverse the credit card transfers. His Honour used the word "actioned" rather than "reversed". The steps taken by the cross-defendants were "actioned" by NAB communicating with St George Bank. Lift Shop had no knowledge of the claims for reversal, or the actions taken by NAB before receiving the letter from St George Bank. In any event, the Magistrate found it unnecessary to consider this claim. This is one of the matters Lift Shop raises in its notice of contention.
The cross-defendants' submissions appear to confine the representations pleaded in the FASOCC to the statement in the St George Bank letter "services not received by 19/11/2019" by referring to the particulars in paragraph 27(b)(ii). However, this submission ignores the "representations were made orally or in writing" referred to in the particulars to paragraph 27(b) extracted at [218] above.
His Honour identified at J[37],[38] and [40] the steps taken by Mr and Mrs Abousleiman to cancel the charges on the credit card which had been used for the first and second payments. At J[185], his Honour found that the NAB representations were misleading which ultimately succeeded in inducing NAB to refund payments to which the cross-defendants had no right. His Honour found at J[187] that Mr Abousleiman had "also made the NAB representations". At J[189] his Honour extracted Mr Abousleiman's evidence about the ANZ credit card payment. At J[190], after referring to Mr Abousleiman's admission that he and Mrs Abousleiman acted together, his Honour found that "[t]he ANZ would not have actioned the request without a request from the company asserting a right in that respect." Much of the written material relating to the chargebacks is found in Exhibit 37.
Lift Shop was not obliged to establish that the steps taken by the cross-defendants were the sole cause of the chargebacks. As Payne JA (with whom Bell CJ and White JA agreed) explained in Lin at [49]-[53]:
The primary judge acted upon the well-known principles regarding reliance explained in Gould v Vaggelas (1984) 157 CLR 215; [1984] HCA 68 at 236:
1. Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case.
2. If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation.
3. The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation.
4. The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract.
What must be established is a causal connection between the alleged representations and the loss for which they seek compensation: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55 at 525-526; Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at 469-470 [17] (Gleeson CJ), 480 [61] (Gaudron J), 488-489 [94] (McHugh J with whom Gummow J agreed) and 508-509 [159]-[160] (Hayne J with whom Gummow J agreed). In a claim for misleading or deceptive conduct constituted by representations, acts done by the person to whom the representation was made in reliance upon the misrepresentation will "constitute a sufficient connexion to satisfy the concept of causation": Wardley at 525.
A material representation, in the sense of a representation that is "objectively likely" to act as an inducement to act in a particular way, will be a cause of the relevant loss or damage if it contributed to the loss or damage in some way, even if "other factors or conditions … played an even more significant role in producing the loss or damage": Henville at 493 [106] (McHugh J, with whom Gummow J agreed), 509 [163] (Hayne J, with whom Gummow J also agreed).
In an appropriate case, reliance may be inferred: Hanave Pty Ltd v LFOT Pty Ltd [1999] FCA 357; (1999) 43 IPR 545 at [11] per Wilcox J, and at [45] per Kiefel J.
The principles stated at 236 of Gould v Vaggelas do not provide an exhaustive rule but may be used as a guide. …
Having regard to the evidence and to these principles, it was open to the Magistrate to find at J[144] that:
1. misleading or false statements were made that Lift Shop had failed to deliver the lift, was not entitled to payment and were entitled to a refund of the credit card charges under the contract;
2. the banks relied on those statements, made as they were by their customers (the credit card holders), otherwise they would not have reversed the charge; and
3. the banks were induced to act on the representations made to them by reversing their charges to their credit.
The cross-defendants have not established grounds 12, 13, 14, 15, 16, 16A and 17.
The cross-defendants' submission that at the time payments AACC1 and AACC2 were made the contract had not been entered into and were gratuitous payments has no merit. The contract itself and Mr Katz's evidence makes clear that the first instalment was a non-refundable amount to secure the purchase price for a 90-day period and for the order of the design drawings. The second instalment was required in order to place the lift into manufacture. [28]
The cross-defendants submitted that his Honour's reference to a "[third] party payer" in J[141] does not withstand legal analysis and provided an example of that expression in s 171 of the Legal Profession Uniform Law (NSW). In my view, his Honour was using that expression to describe Mr Abousleiman's actions in seeking to retrieve payments AACC1 and AACC2 as "standing outside" the contractual relationship and "was not simply the agent or alter ego of the company." His Honour had referred at J[139] to the essential proposition in O'Brien v Dawson that "directors [that is, agents] are not liable for the tort of inducing breach of contract where, in exercising their functions as directors [that is, agents] and in acting within that authority, they have caused the company to breach its contract".
His Honour found at J[140] that essential proposition "dispositive of Lift Shop's inducement claim against Mr Abousleiman" with the one exception being his actions to retrieve the credit card payments: J[141].
The cross-defendants complain in ground 11 that his Honour failed to correctly apply the principle of O'Brien v Dawson. It is well established that there are circumstances when a director, employee or agent can become personally liable. As Starke J explained in O'Brien v Dawson at 32:
The acts of Doyle were the acts of the company and not his personal acts which involved him in any liability to the plaintiff. But I would add that it does not follow that a director of a company would escape personal liability under cover of the company's responsibility if he himself became an actor and invaded the plaintiff's rights, as by trespassing on his land, or seizing his goods and so forth.
In Hashtag Burgers, Nicholas, Yates and Burley JJ said at [136]-[138]:
In JR Consulting, after reviewing the authorities relevant to determining whether a director of a company will be jointly liable as a tortfeasor with that company, the Full Court concluded:
350 We suspect that there is ultimately not a great deal of difference between these lines of authority as the director must be shown to have directed or procured the tort and the conduct must, clearly enough, go beyond causing the company to take a commercial or business course of action or directing the company's decision-making where both steps are the good faith and reasonable expression of the discharge of the duties and obligations of the director, as a director. The additional component required is a "close personal involvement" in the infringing conduct of the company and inevitably the quality or degree of that closeness will require careful examination on a case by case basis. That examination might show engagement by the director of the kind or at the threshold described by Finkelstein J in Root Quality at [146] (as earlier discussed) which would undoubtedly establish personal liability in the director or a less stringent degree of closeness (perhaps described as "reckless indifference" to the company's unlawful civil wrong causing harm), yet sufficiently close to demonstrate conduct of the director going beyond simply guiding or directing a commercial course and engaging in (perhaps vigorously) decision-making within the company as a director.
351 Ultimately, the question, on the facts, is what was the conduct of the director said to go beyond the proper role of director so as to descend into the realm of "close personal involvement"?
Earlier in its reasons, in referring to Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 177 ALR 231; 49 IPR 225; [2000] FCA 980 (Finkelstein J), the Full Court in JR Consulting said:
342 …Finkelstein J, like Le Dain J, thought that purpose was an important consideration. His Honour seemed to focus on a reasonably high threshold of involvement on the part of the director. His Honour put both matters this way at [146]:
The director's conduct must be such that it can be said of him that he was so personally involved in the commission of the unlawful act that it is just that he should be rendered liable. If a director deliberately takes steps to procure the commission of an act which the director knows is unlawful and procures that act for the purpose of causing injury to a third party, then plainly it is just that liability should be imposed upon him.
[emphasis added]
343 However, at [146], his Honour also observed that "lesser conduct may suffice" and an example of lesser conduct is a director acting with reckless indifference to whether his company's act was unlawful and would cause harm. His Honour said that such conduct "may also suffice" although in the end it would depend, as all cases do, upon the facts of each particular case.
Plainly enough, to incur personal liability for a tort committed by a company, a director must be acting beyond their proper role as a director. In JR Consulting, the Full Court approved the statement of Besanko J in Keller where at [291] his Honour said that:
…A "close personal involvement" in the infringing acts by the director must be shown before he or she will be held liable. The director's knowledge will be relevant. In theory, that knowledge may range from knowledge that the relevant acts are infringing acts to knowledge of an applicant's registered designs to knowledge of acts carried out by others.
These principles are applicable to employees and agents.
In my view, it was open to the Magistrate to find that Mr Abousleiman was personally liable for the first two instalments made on his credit card which were reversed by NAB. He had made misleading or false statements to the Bank in order to retrieve those payments. He had taken deliberate steps "to retrieve the funds which he knew or ought to have known were not refundable during the currency of the contract": J[145]. He was acting in his own interest and not in the interests of Ultra whose contractual obligations required compliance with Clauses 4(c), (d) and (e) of the contract. His close personal involvement, as the Magistrate found, "put Ultra in breach": J[141].
The cross-defendants have not established grounds 10 and 11.
There is no merit in ground 18. His Honour was plainly aware that credit card holders could dispute transactions.
I do not recall any oral or written submissions being advanced by the cross-defendants in support of ground 14 before me. I have re-read the transcript and written submissions but have been unable to find submissions relevant to this ground.
The submissions made in the Local Court were extensive and demonstrated that the cross-defendants understood the case that had to be met. I am not persuaded that the cross-defendants were denied procedural fairness. Ground 14 has not been established.
Reasonable businesspeople in the position of Ultra and Mr and Mrs Abousleiman would have understood that Lift Shop should be advised of the claims for a refund of the credit card payments at the time the claims were made.
Reasonable businesspeople in the position of the cross-defendants would have understood that the payments induced Lift Shop to contract with Ultra, to prepare designs, to manufacture and deliver the lift and to try to resolve the outstanding issues to complete the contract.
A reasonable businessperson in the position of Lift Shop would have a reasonable expectation that the cross-defendants would notify them of any claims for a refund so that the outstanding issues could be dealt with before the work proceeded further. The cross-defendants' silence was a cause of Lift Shop's loss.
In my view, Lift Shop's contention is established.