The plaintiff, Visa Global Logistics Pty Ltd (Visa) operates a freight business, transporting goods by land, air and sea, both nationally and internationally, and a supplementary logistics service. For that purpose, Visa operates warehouse premises where it receives goods, stores them, and subsequently transports the goods to various destinations on behalf of clients.
By its statement of claim filed on 23 November 2015, Visa originally commenced proceedings against two defendants, the first being Frank Manuel Ojeda and the second being Nick Rimac.
Visa compromised its case with Mr Ojeda and its proceedings against him have been discontinued.
These reasons for judgment deal with Visa's continuing case against the second defendant, Mr Rimac.
In short, Visa seeks an order against Mr Rimac that he pay it compensation in the amount of $458,153.64, either as damages for breach of Mr Rimac's employment contract or as equitable compensation for breach of Mr Rimac's fiduciary duty to Visa. Visa put its case on alternative bases, but it is not necessary to consider those bases in detail, as they will not make any difference to the outcome of the proceedings.
On 29 March 2017, the proceedings were set down by a Registrar for hearing before me on 9 May 2017 (changed from 8 May 2017). Mr Rimac did not appear and was not represented at the hearing before the Registrar.
When the matter came on for hearing on 9 May 2017, it was called outside the court and Mr Rimac did not appear.
The hearing proceeded under Uniform Civil Procedure Rules 2005 (NSW) r 29.7. Under that rule, the court may proceed with a trial generally or so far as concerns any claim for relief in the proceedings if any party is absent.
A party is relevantly absent only if they had knowledge, or notice, of the hearing date: NSW Trustee & Guardian as Executor of the Will of Michael Robert Walsh (deceased) v Gregory [2012] NSWSC 681. It was necessary for Visa to show that all reasonable attempts had been made to notify Mr Rimac of the date of the hearing.
Visa relied upon an affidavit by one of its solicitors, Mr Martin John Watts, sworn 5 May 2017, to demonstrate that it had made reasonable attempts to notify Mr Rimac of the hearing date. Mr Rimac was initially represented by solicitors in the proceedings, who acted for him in an informal settlement conference, sought particulars of the statement of claim, filed a defence in the proceedings, attended directions hearings, and corresponded with the parties. The solicitors filed a notice of ceasing to act on 22 August 2016.
Thereafter, Visa's solicitors attempted to communicate with Mr Rimac through his email address, and by sending correspondence to his residential address.
Mr Rimac did not reply to most of the correspondence sent to him, although he did so by email addressed to Mr Watts on 21 October 2016 and 8 November 2016. Those replies establish that Mr Rimac at least received communications from Visa's solicitors at his email address. In the two emails, Mr Rimac sought extensions of the time for him to serve his evidence in response to Visa's claim, on the ground that he was without legal representation and was suffering from financial hardship.
Thereafter, Mr Rimac did not respond to any further correspondence on behalf of Visa, and did not appear at directions hearings.
Following the proceedings being set down for hearing on 29 March 2017, Visa sent a letter to Mr Rimac at his email address. The letter advised Mr Rimac that the proceedings had been listed for hearing for one day on 9 May 2017, commencing at 10 AM. It also advised Mr Rimac of the procedures that had to be followed before the commencement of the hearing.
Subsequently, my Associate sent an email to Visa's solicitors and Mr Rimac in relation to compliance with the Usual Order for Hearing, and the provision of the court book. Mr Rimac did not respond
I determined that it was appropriate for the court to proceed with the hearing of Visa's claim under UCPR r 29.7 in the absence of Mr Rimac.
Immediately prior to the commencement of the hearing, Visa provided to my chambers an outline of submissions by its counsel, in compliance with the Usual Order for Hearing. However, as Visa anticipated that Mr Rimac would not appear to defend himself at the hearing, the outline of submissions was prepared in substantially more detail than is usually necessary. The outline of submissions explains in detail how Visa seeks to make out its case based upon the evidence that it proposed to tender.
After the commencement of the hearing, Visa's counsel read all of the affidavits that have been served in this matter. He then tendered the exhibits referred to in the affidavits, as well as a statutory declaration by Mr Bradley Eastman on whom Visa had served a subpoena.
After counsel assisted the court with short submissions, in which he explained how the exhibits showed that various invoices addressed to Visa had been approved for payment by Mr Rimac, had been paid by Visa, and then had been remitted by the payee to Mr Rimac, I reserved judgment on the basis that it would be necessary for the court to read all of the evidence before it could determine whether the evidence established Visa's case against Mr Rimac.
I have now had the opportunity of reading the evidence in conjunction with a thorough consideration of the written submissions delivered on behalf of Visa, and I am satisfied that Visa is entitled to the relief that it seeks against Mr Rimac, except in relation to those aspects of the claim that I have rejected below.
I will not set out Visa's submissions in detail, but will proceed upon the basis that they are fully set out in Visa's written outline.
While it is necessary for the court to be satisfied that the evidence establishes Visa's entitlement to relief, the court is entitled to have regard to the fact that Mr Rimac has elected not to give evidence, and has not appeared to contest the evidence led by Visa, or to make any submissions against the case put forward by Visa.
This is a particularly important consideration in the present case, as Visa relies on a case that requires the court to draw inferences from evidence that casts grave doubt on whether Visa actually received the goods and services that it paid for on the authority of Mr Rimac, but Visa generally does not have direct evidence that it was defrauded. Generally, the effect of Visa's evidence is to shift an evidential burden or onus of adducing evidence on to Mr Rimac, and Mr Rimac has not responded by providing any proof that would cause the court to decline to draw the inferences sought by Visa: see Hawksford v Hawksford [2005] NSWSC 463 at [54]; (2005) 191 FLR 173; and Crowe‑Maxwell v Frost (2016) 91 NSWLR 414; [2016] NSWCA 46 at [91]. The court is entitled to draw the inference from Mr Rimac's failure to adduce evidence and his failure to appear in these proceedings, that there is no evidence that Mr Rimac could have given in these proceedings that would have assisted him: see Jones v Dunkel (1959) 101 CLR 298 at 308, 312 and 320-321; Dilosa v Latec Finance Pty Ltd (No 2) [1966] 1 NSWR 259 at 277; and Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at [63]-[64]. It has been held that in these circumstances "the court is entitled to be bold": Chong v CC Containers Pty Ltd (2015) 49 VR 402; [2015] VSCA 137 at [2012]. Mr Rimac's failure to give evidence or appear also amounts to an implied admission on his part: see Kuhl at [64].
The foundation of Visa's claim against Mr Rimac is that he was employed by Visa from about July 2009 until 8 December 2014 in the position of Visa's General Manager, Third Party Logistics, at Visa's Sydney warehouse.
In that position Mr Rimac was responsible for the engagement of third party suppliers and contractors, and the approval of third party supplier and contractor invoices.
Mr Rimac was originally engaged pursuant to a contract of employment dated 24 July 2019, but that contract was replaced by a later revised contract of employment signed by Mr Rimac on 6 February 2014.
I am satisfied that Mr Rimac owed to Visa the contractual, equitable and statutory duties pleaded in pars 4 to 6 of the statement of claim. Those duties are the conventional duties owed by an employee to an employer in these circumstances.
Visa has organised its claim by reference to the contractors who sent the invoices to Visa that were authorised to be paid by Mr Rimac, and which Visa says did not relate to goods or services that Visa was obliged to pay for. Those contractors are Mr Ojeda trading as Codiana Services, Bamit Pty Ltd, Coolman Logistics Pty Ltd and Wahid Pty Ltd.
The largest part of Visa's claim is an amount of $364,065.04 in respect of invoices that were paid to Codiana Services for goods and services that were not received by Visa.
The factual basis of this part of Visa's claim against Mr Rimac is set out in pars 7 to 18 of the statement of claim.
Visa's primary witness was Mr Simon Hardwidge, who is one of the two executive directors of Visa. It is not necessary to go into the detail, but in the latter part of 2014 Visa moved from its initial warehouse premises to two new warehouse premises. Mr Rimac was given responsibility to supervise the transport of pallets containing Visa's clients' products, and also empty pallets, from the original warehouse to the new premises. Mr Hardwidge discovered that the costs paid by Visa for the transportation of the pallets appeared to be substantially greater than at market rates. Confirmation of this situation led Visa to terminate the employment of Mr Rimac. Subsequently, further enquiries by Mr Hardwidge led him to believe that Visa had overpaid for goods and services in the manner set out in pars 7 to 9 of the statement of claim.
Generally speaking, Visa had paid for products and services purportedly provided by an entity called Codiana Services. Codiana Services was apparently a business operated by the first defendant, Mr Ojeda. It was discovered that Mr Rimac and Mr Ojeda had worked together at the same place of employment before Mr Rimac became employed by Visa. Mr Rimac and Mr Ojeda were connected, because they were both part owners of a racehorse named "Bright Future". By one means or another, Mr Rimac approved the invoices that were received from Codiana Services for payment, before they were paid by Visa's accounting staff in the ordinary course of business. Mostly, but not always, Mr Rimac approved the invoices by signing them, which was Visa's standard operating practice.
Mr Hardwidge then made careful investigations to determine whether Visa had actually received the goods and services the subject of the invoices in question. He did so by causing a careful analysis to be carried out, following interviews with Visa's other staff, a review of its email records, and comparisons with the objective evidence of Visa's needs for the products and services after the end of Mr Rimac's employment.
The position determined by Mr Hardwidge's investigations was in substance as follows. Between February 2012 and October 2014, Mr Ojeda caused the following invoices to be issued to Visa:
1. 66 invoices totalling $202,224.94 in respect of goods with the description of "supply item hand stretch film" or similar reference. The best assessment Visa could make is that it would have needed product of this description to a value of $66,232.32.
2. 36 invoices to a total of $92,225.50 in respect of services with the description "transport services" or similar reference. Visa did not receive any of these services.
3. 55 invoices to a total of $120,358.92 in respect of goods with the description "reconditioned standard pallets at $10 each" or similar reference. Visa did not require any of these goods.
4. Five invoices totalling $15,488 in respect of services with the description "container services for Truly Berri Project" or similar reference. Visa did not receive any services matching this description.
It is significant that Mr Hardwidge gave evidence that Visa's records do not include any purchase orders issued by Mr Rimac that requested the goods or services the subject of any of these invoices. The evidence established that in the ordinary course of business Mr Rimac was required to issue formal purchase orders to the proposed suppliers, in addition to taking various other steps explained in the evidence, of which there was no evidence that those steps had been taken.
Visa relied upon an affidavit of Mr Ed Conway, its chief financial officer, which established the company's process for the approval of invoices.
Visa also relied upon the affidavit of Mr Michael Harris, who is at present Visa's warehouse operations manager, to explain how Visa's warehouses operated, and also the number of pallets and the amount of hand stretched film that Visa required from time to time for use in its operations. Mr Harris' evidence supported inferences that the amount of hand stretched film and the pallets that Visa had paid for was far in excess of its ordinary requirements.
The evidence explained how Visa had made an allowance of $66,232.32 in relation to hand stretched film, on the basis that Visa should give Mr Rimac the benefit if the doubt in respect of the cost of the amount of hand stretched film that Visa would have had a need to use in the ordinary course of its business over the period covered by Codiana Service's invoices.
After Mr Hardwidge had completed his investigations concerning the invoices apparently received from Codiana Services, his investigation expanded into invoices from suppliers infrequently used by Visa and which had been approved by Mr Rimac.
Visa claims an amount of $19,761.50 in respect of the issue to it by Bamit Pty Ltd (Bamit) of four invoices totalling that amount. The basis of this claim is pleaded in pars 13 to 18 of the statement of claim. Visa has established that the sole director and shareholder of Bamit, prior to its deregistration, was Mr Brett MacAlpine who was, at the date the invoices were rendered, being September to October 2011, an employee of Visa. The Bamit invoices originated with, and were created by, Mr Andrew Warden, another former employee of Visa.
Subpoenas issued to Bamit and Mr MacAlpine in these proceedings revealed that the payments made by Visa to Bamit were made into a St George bank account in the personal name of Mr MacAlpine.
The evidence includes an email from Mr Warden to Mr Rimac dated 22 September 2011, with attachments described as "OFF SITE. XLS". As I understand it, the four invoices appear to be for the weeks ending 12, 18 and 25 September and 9 October 2011. They purport to relate to "off-site containers", and contain various indecipherable codes. Three of the invoices were signed for payment by Mr Rimac, although Mr Hardwidge cannot identify who signed the fourth.
Mr Hardwidge's investigation established that Mr Warden, who was the warehouse manager of Visa, was the author and last person to modify each of the invoices, which had been saved in soft copy versions on Visa's own computer system.
Entries on the invoices appear to show that they related to the un-packing and cleaning of containers at specified rates.
The essence of Visa's case is that Mr Rimac should not have authorised payments by Visa to a company that was controlled by an existing employee of Visa, to do work which ordinarily ought to have been done by the employee as part of his ordinary duties.
It was part of Mr Rimac's duty to obtain the services of an environmental expert to provide assistance for the purpose of the disposal by Visa of certain damaged property on behalf of Visa's principal client, Hill's Pet Nutrition Pty Limited. It was Mr Rimac's duty to acquire the services himself after seeking competitive quotations.
Visa pleads a claim in respect of this matter in pars 19 to 28 of the statement of claim.
The services were provided by Veolia Environmental Services (Australia) Pty Ltd (Veolia). Visa does not complain about the services being provided by Veolia. However, Veolia invoiced a total of $28,824.81 for the work done. The issue is that Mr Rimac did not cause Visa to enter into a contract for the provision of the services directly with Veolia. Instead, Mr Rimac arranged for the services to be provided to Codiana Services on behalf of Visa.
Codiana Services invoiced Visa an amount of $33,095.59, which was $4270.78 more than the amount that Veolia invoiced to Codiana Services.
Visa's case is that the mark up of $4270.78 has been incurred by Visa as a direct result of Mr Rimac's failure to perform his duties and responsibilities in good faith and with reasonable care and skill, as Mr Rimac would have saved Visa $4270.78 if he had performed his duty properly and arranged for Veolia to contract directly with Visa.
Visa then makes a claim in respect of invoices approved by Mr Rimac for transport services provided by Coolman Logistics Pty Ltd (Coolman) and Wahid and Sons Pty Ltd (Wahid).
These claims are pleaded at pars 31 to 37 and 41 to 45 respectively of the statement of claim. Mr Rimac engaged Coolman and Wahid to provide transport services to assist with Visa's move to new warehouse premises in 2014.
As I have noted above, the event that led to the termination of Mr Rimac's employment contract was the discovery that the costs incurred by Visa in relation to the transport of pallets from its old to its two new warehouses were much greater than would have been incurred if Visa had only been required to pay for the correct number of truck movements and at market rates. The invoices concerned were those issued by Coolman and Wahid.
Coolman issued five invoices to Visa for a total of $55,132, which was paid by Visa.
The invoices claimed that Coolman had moved 179 loads of pallets from the old to one of the new warehouses. The delivery dockets retained by Visa indicate that only 105 loads were delivered by Coolman.
The amount of freight per load claimed in the invoices was $308 (inclusive of a 12% fuel levy and GST). Mr Hardwidge claimed in his affidavit that this amount was far in excess of the prevailing commercial rate at the time. He gave evidence that the commercial rate was $150 per load, plus GST, or $165 per load. He substantiated this assertion by reference to the rates charged by Wahid to Visa for genuine transport services.
Mr Hardwidge said that no evidence could be found of Mr Rimac seeking quotes from any carriers, and there were no communications showing that Mr Rimac had reached an agreement with Coolman.
Visa supported its claim by showing that the average truck load of pallets was 22 pallets per load so that 179 loads would involve the carrying of 3938 pallets. Visa required a total of 4323 pallets to be transported to the new warehouse. Mr Hardwidge referred to the fact that Visa and a company called Eclipse Couriers had transported 600 pallets, and Wahid had transported pallets in 235 truckloads. The point of these observations is that Visa's need for the transfer of pallets was insufficient for there to have been enough pallets to require 179 truckloads as claimed by Coolman.
Mr Hardwidge also discovered other features of the Coolman invoices that, while not conclusive in themselves, gave rise to suspicion as to the genuineness of the invoices. The invoices were issued by a Mr Dunne from a Gmail email address. It would be unusual for a genuine business of the apparent nature conducted by Coolman to use a Gmail email address. Coolman's website had the domain name "coolmanlogistics.com.au". Mr Dunne had sent another email to Mr Rimac using the email address "ben@coolcarriers.com". The meta data associated with the invoices from Coolman paid by Visa showed that they were prepared by Mr Ojeda. Mr Rimac, Mr Dunne and Mr Ojeda had earlier been employed together by a business called "Westgate Logistics" between 2007 and 2008.
Assuming that Visa only received the benefit of 105 truckloads from Coolman, then Visa overpaid 74 times $380, being $22,792. Further, there was an overpayment in relation to the 105 truckloads that Visa accepted had occurred equal to 105 times the difference between $308 and $165, or $143. The amount is $15,015.
The total amount of the overpayment authorised by Mr Rimac in relation to the provision of transport services by Coolman to Visa was therefore $37,807.
In relation to the transport services provided by Wahid to Visa, Visa makes various types of claims, being:
1. $8448 for 256 truckloads charged at $165 per load that should have been charged at $132 per load.
2. $21,392.80 charged for goods and services not provided.
3. $1730.52 for transport services charged at the load rate instead of the pallet rate.
4. $402 for transport services charged at the pallet rate rather than the load rate.
5. $276 for pallet de-hire where services were not performed.
There was evidence that a person called Mr Jon Copson communicated with Mr Rimac on behalf of Wahid, as Wahid's operations manager, at a time when Mr Copson was also an employee of Visa. However, it appears from the evidence that Wahid was a legitimate supplier, and Visa's real complaint concerns the absence of records of delivery by Wahid and invoices calculated on an incorrect basis.
Mr Hardwidge gave evidence that Wahid initially provided transportation services to Visa for which the relevant invoice showed that the rate was $120 per load, plus GST, or $132 per load in total. Mr Hardwidge acknowledged that this rate was below market, which he said was $165 per load. The invoice in which Wahid charged Visa at the rate of $120 plus GST per load for "Visa move" described the amount as "set price", and was dated 17 August 2014. The seven invoices in which Wahid charged at the rate of $165 per load were dated between 29 June and 29 November 2014. Those invoices simply referred to a "load rate" of $150 (GST was added separately).
As I understand the evidence and Visa's submissions, there is no evidence that Wahid agreed to provide transport services at the below market rate of $120 plus GST per load, other than the one invoice that contains a reference to "set price". I do not regard this evidence alone as sufficient to establish that Mr Rimac, or anyone else on behalf of Visa, entered into an agreement with Wahid that bound that company to transport pallets to Visa's new warehouse at the below-market rate of $120 plus GST for all truckloads.
It seems to me that, as Visa was in fact charged the market rate, according to Mr Hardwidge's evidence, I should not find on this limited evidence that Visa's claim for damages of $8448 from Mr Rimac has been established.
As to Visa's claim for $21,392.80, Mr Hardwidge gave evidence that in respect of those invoices there was no proof of delivery documentation supplied by Wahid to Visa.
As Mr Rimac has not provided an explanation as to why Visa was obliged to pay for the transport of the pallets the subject of these invoices, notwithstanding that Visa did not have any records of delivery in respect of the invoices at its new warehouse, I am satisfied that Visa has made out its claim for the $21,392.80.
I do not propose to allow the claims for $1730.52, $402 and $276 made by Visa. I am not satisfied on the evidence that these claims have been made out. The underlying factual circumstances are not clear, and on my reading of the relevant paragraphs of Mr Hardwidge's affidavit, being pars 133, 128 and 132 respectively according to Visa's submissions, the court is really being asked to act upon Mr Hardwidge's own assertions as to the errors in the invoicing. It must be remembered that Visa's entitlement to compensation does not simply depend upon whether an error was made by Wahid in the calculation of the freight it was entitled to for the genuine supply of services. The ultimate question is whether the circumstances prove on the balance of probabilities that Mr Rimac breached his duties to Visa in authorising payments. I am prepared to find that such a breach has been established when there is no evidence of delivery, in the absence of a satisfactory explanation from Mr Rimac. It is a different matter where it appears that there is a contestable claim by Wahid to be entitled to payment on a particular basis set out in an invoice, in respect of services actually provided to Visa.
The result is that I find that Visa has established that it is entitled to judgment against Mr Rimac for the amount claimed of $458,153.64, less the total amount of $10,856.52. The amount of compensation payable is therefore $447,297.12.
Visa has also sought interest at the court rate plus costs. Visa is entitled to interest from the dates payments were made that are the subject of Visa's entitlement to compensation, plus costs on the ordinary basis.
I will invite Visa to submit short minutes of order to my associate to give effect to these reasons for judgment, together with a schedule showing how the interest has been calculated.
I note that in support of its claim Visa tendered evidence and provided submissions in support of its claim generally, to show that it appeared that some amounts that it had paid on the invoices that it challenged appeared ultimately to have been paid to Mr Rimac, as well as other evidence such as the deposits of cash into Mr Rimac's bank accounts that give rise to suspicion that Mr Rimac was part of a conspiracy with others to cause Visa to make payments for goods and services that it did not receive, for Mr Rimac's own pecuniary benefit. Visa did not claim that the amounts that may have been received by Mr Rimac ought to be included in the compensation to which it was entitled, as that would involve double-counting because Visa was already seeking compensation in relation to the overpayments. This aspect of Visa's case was put forward primarily to support the drawing of inferences in order to accept Visa's claim that it had made payments on invoices that it was not obliged to make, and the overpayments were caused by breaches of duty by Mr Rimac.
As I have decided that Visa is entitled to the compensation that I have found above, this amount should be the subject of a judgment in Visa's favour on the basis of the evidence that I have considered, and as the evidence of possible receipts of money by Mr Rimac could not affect the outcome in respect of the small amounts of Visa's claim that I have rejected, I do not propose to make findings in relation to the evidence put forward by Visa that may suggest that Mr Rimac deceitfully received payment out of the monies paid by Visa. It is not necessary for me to make those findings, and given the absence of Mr Rimac it is appropriate that I do not do so.
[2]
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Decision last updated: 14 June 2017