Revised

IN THE COUNTY COURT OF VICTORIA Not Restricted

AT MELBOURNE CIVIL DIVISION COMMERCIAL LIST BUILDING CASES DIVISION

Case No. CI-12-01073

MATIC PLASTERING PTY LTD (ACN 143 135 657) Plaintiff v

LJUBO MILOJEVIC Defendant

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^{JUDGE :} HIS HONOUR JUDGE GINNANE

^{WHERE HELD :} Melbourne

^{DATE OF HEARING :} 18 and 27 April 2012

^{DATE OF JUDGMENT :} 14 May 2012

^{CASE MAY BE CITED AS :} Matic Plastering Pty Ltd v Milojevic

^{MEDIUM NEUTRAL CITATION :} [2012] VCC 556

REASONS FOR JUDGMENT

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CATCHWORDS – Building and construction industry - security of payment – summary judgement – whether construction contract Building and Construction Industry Security of Payment Act 2002

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COUNTY COURT OF VICTORIA

250 William Street, Melbourne

HIS HONOUR:

1 The plaintiff seeks summary judgment under the Building and Construction Industry Security of Payment Act 2002 (“the Act”) in the sum of $145,750.

2 The principal defence relied on by the defendant is that he was not bound by a construction contract, within the meaning of the Act, with the plaintiff, but that rather his company, VBL Ceilings Pty Ltd, was. On the basis of that defence, the defendant argued that the plaintiff could not serve a payment claim on him under s.14(1) of the Act.

3 Construction contract is defined in s 4 to mean;

“ a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party.”

4 The question is whether, on the facts disclosed by the affidavits relied on by the parties, the plaintiff has established that that defence has no real prospects of success within the meaning of s.63 the Civil Procedure Act 2010.

5 The defendant raised other issues about the quantum of the claim and stated that he wished to file a counterclaim. However his counsel correctly accepted that these matters would not justify a refusal of summary judgment because the defendant had not detailed them in a payment schedule served in accordance with the Act.

6 The plaintiff relied on a number of affidavits sworn in support of the summons by Mr Dusko Matic, who is its managing director. In his first affidavit, he stated that the plaintiff and the defendant entered into an agreement that the defendant would engage the plaintiff to supply goods and services of a construction nature in exchange for payment. The agreement was verbal and was made in a meeting between Mr Matic and the defendant at Mr Matic’s home. It was agreed that the plaintiff would provide goods and services to the defendant in exchange for payment and that invoices/payment claims could be raised by the plaintiff at any time after the works were completed. The plaintiff provided goods and services to the defendant in relation to at least six construction jobs pursuant to the agreement.

7 The plaintiff, on 16 February 2012, served six payments claims under the Act on the defendant. As stated no payment schedules have been received in response.

8 The defendant, Mr Ljubo Milojevic, swore affidavits in opposition to the summons. In his first affidavit, he swore that since his arrival in Australia in 1999, he has worked in the construction industry as a plasterer and carpenter. Since 2005, he has run his own business under the company name, VBL Ceilings Pty Ltd. He is the director and secretary of that company and he and his wife own the shares. The company employs five people and carries a WorkSafe insurance policy and a General & Liability insurance policy.

9 Mr Milojevic swears that at no stage has he entered into an agreement with the plaintiff, or any other entity in his own name, and that he has not carried out any building and construction work in his own name. He would not be covered by insurance if he did so. He stated that the payment claims were served up to 19 months after the building work was undertaken and he never agreed to such an arrangement.

10 Mr Milojevic stated that he was introduced to Mr Matic in about April 2010 and that they agreed that their companies would do work together in partnership, sharing the work and profits. Mr Matic was a very good administrator with a trade speciality in finishing, whereas he had access to carpenters and ceiling installers. This combination allowed them to take on a broader range of work. In their initial conversations, Mr Matic and Mr Milojevic agreed that they would share work together, share their staff and share the profits of the various jobs that their companies were engaged to do. This arrangement continued for a period of approximately 18 months.

11 Mr Milojevic stated that in that period between April 2010 and September

2011, the plaintiff and VBL Ceilings Pty Ltd carried out approximately $3.1 million worth of building work together. Some of the projects were the subject of the plaintiff’s payment claims. VBL Ceilings Pty Ltd was the head contractor on those projects, as the defendant was the initial contact person. The plaintiff invoiced most of the remaining jobs.

12 The plaintiff’s staff did some work on the projects, but it was minor and the amounts claimed for it were excessive. As stated, counsel for the defendant correctly conceded that such a claim could have been included in a payment schedule.

13 During the period of their work together, Mr Matic would pay VBL Ceilings Pty Ltd small amounts, when, as Mr Milojevic was told, money was available. From time to time Mr Milojevic’s accountant advised him to provide tax invoices to ensure that VBL Ceilings Pty Ltd complied with GST obligations and he spoke to Mr Matic about invoicing the plaintiff. Mr Matic gave him directions about what the invoices should state.

14 Mr Milojevic stated that the partnership arrangements were informal. Neither the plaintiff or VBL Ceilings Pty Ltd provided each other with quotes. They discussed opening a joint bank account, but Mr Matic always said that he was too busy. Mr Matic handled the administrative matters, including controlling the money, which allowed Mr Milojevic to concentrate on plastering and carpentry work. He stated that he supervised a job at the Ocean Grove Bowling Club, for which the plaintiff had the contract and he organised some of the materials for that job and paid for them with his company’s credit card. He also paid for food for the plaintiff’s workers on that job.

15 Mr Milojevic stated that his relationship with Mr Matic broke down in about August 2011. The previous month he asked to see the books for the previous financial year. He then attended a meeting with Mr Matic and Mr Matic’s

bookkeeper in Noble Park North in which Mr Matic referred to him as a partner and said that all profits should be split 50/50. The bookkeeper said that he would need some time, presumably to prepare some accountancy records or document, and asked Mr Matic for an excel spreadsheet. Mr Matic said that he would provide it. Mr Milojevic said that after this meeting, he spoke again with the bookkeeper, who finally said that he would not give him any paperwork.

16 Mr Milojevic stated that he met Mr Matic at a café in August 2011. Mr Matic said that VBL Ceilings Pty Ltd had been paid $125,000 and, that after it had kept the money from its other jobs, the parties were even for the 2010 and 2011 years. Mr Milojevic said that that was not enough and asked Mr Matic to produce papers, presumably relating to payments received. Mr Matic refused. Mr Milojevic formed the view that they could no longer work together. In a further brief conversation, which occurred at the front door of Mr Matic’s home in September 2011, Mr Matic told him that he would not be paying him anything and that he would see him in court.

17 Mr Milojevic stated that neither he, or his company, had received any tax invoices from the plaintiff until 15 February 2012, when he received the invoices which relate to the present claims. They were sent up to 19 months after the work concerned was completed. Mr Milojevic stated that during the working relationship with the plaintiff, VBL Ceilings Pty Ltd carried out work on sites where the plaintiff was head contractor and it was not paid for such work. He foreshadowed filing a counterclaim.

18 In a responding affidavit, Mr Matic exhibited cheque butts for payments that he made on behalf of the plaintiff to the defendant personally. He stated that he was informed by his banking provider that these cheques were cashed by the defendant. He alleges that these cheques were drawn as a result of the defendant telling him to bill him personally. He stated that on one occasion in June 2011, Mr Milojevic asked him to make out a cheque in his personal name. He also alleged that Mr Milojevic told him that he had taken out the contracts personally for the jobs that are the subject of these proceedings.

19 Mr Matic denied that there was a partnership with Mr Milojevic. He tried, on a few occasions, to commence a partnership, but Mr Milojevic was not prepared to make any capital contribution to it. No partnership accounts were opened and no other steps were taken consistent with a partnership. No winding up of any partnership has occurred.

20 Mr Matic stated that some of the jobs that Mr Milojevic asserts were joint jobs in fact did not involve the plaintiff. He denied that, at the meeting with the bookkeeper, he introduced the defendant as his partner. Rather, he said that the meeting was to have a discussion with the bookkeeper about the prospects of becoming partners. The meeting occurred at Dandenong North, not at North Noble Park. He stated that the last conversation which occurred at his home lasted only a moment; Mr Milojevic said that he wanted to talk and Mr Matic responded by saying that he had done enough damage and asked him to leave.

21 Mr Matic stated that the reason for the delay in invoicing Mr Milojevic for moneys owing was that Mr Milojevic had made a number of promises to him about payment but did not keep them.

22 Pursuant to leave, Mr Milojevic swore an affidavit exhibiting invoices that VBL Ceilings Pty Ltd had sent the plaintiff for labour and materials supplied in respect of various projects. These invoices were said to have been handed to Mr Matic in person on dates between November 2010 and June 2011. Mr Milojevic stated that between those dates VBL Ceilings Pty Ltd received $128,100 from the plaintiff made up of cash and cheques.

23 Mr Milojevic exhibited a number of cheques that he deposited into his bank account, however, they were made payable to VBL Ceilings rather than VBL Ceilings Pty Ltd. Mr Milojevic is the registered owner of the business name VBL Ceilings.

24 Mr Milojevic denied that he asked Mr Matic to pay him personally. He stated that he paid a cheque drawn to him personally into his company account. He exhibited receipts for food and other expenses that his company incurred on behalf of workers, who carried out work on the Ocean Grove Bowling Club project.

25 The plaintiff filed two further affidavits by leave. In the first, Mr Matic stated that the invoices relied on by the defendant related to work pursuant to other contractual arrangements between the plaintiff and a third party and did not bear on the current proceeding. He made a similar comment in respect of the cheques exhibited by Mr Milojevic. He stated that those cheques concerned payments by the plaintiff for works undertaken for other work sites. In addition, those cheques were made out to a business name, VBL Ceilings, which is owned by Mr Milojevic personally and not by his company. He exhibited two cheques made out to Mr Milojevic personally.

26 The second affidavit filed in reply by the plaintiff was made by Mr Maroun Hanna, the bookkeeper, who has been referred to previously. He stated that he did meet Mr Milojevic and Mr Matic in July 2011, but at Dandenong North, and not at Noble Park, as alleged by Mr Milojevic. Mr Matic met him to interview him for work and at the meeting asked him questions about the services that he offered. Mr Milojevic was not introduced as Mr Matic’s partner. Mr Hanna denied many of the matters relied on by Mr Milojevic, including that Mr Matic had said that all profits would be split 50/50. He stated that as Mr Matic closed the meeting, Mr Milojevic said to him, words to the effects: “I got another company, maybe we can work together in the future.” Mr Hanna then handed Mr Milojevic his business card. The meeting had nothing to do with the managing of the accounts of the new partnership. He had not done any work in relation to such a partnership. He denied Mr Milojevic’s claim that he telephoned him after the meeting or, that he has spoken with Mr Milojevic over the telephone.

Submissions of the Parties

27 The plaintiff submitted that the defendant’s defence lacked credibility and had no reasonable prospects of success.

28 There was no proof that the plaintiff and the defendant’s company VBL Ceilings Pty Ltd had carried out the work the subject of the claims or that is referred to in Mr Milojevic’s affidavit. The list of jobs that Mr Milojevic had exhibited as work that the plaintiff and VBL Ceilings Pty Ltd had allegedly performed was inadmissible The use of the business name VBL Ceilings was prima facie evidence that it was being used on behalf of the owner, who was Mr Milojevic personally. The defendant had not disclosed the existence of, or his ownership of, the VBL Ceilings business name. The plaintiff had drawn cheques payable to the defendant personally. The argument that there was a partnership agreement was implausible. The cheques were made out to an individual.

29 The jobs that Mr Milojevic alleged were carried out by the plaintiff did not involve the plaintiff and/or Mr Matic in any way.

30 The defendant’s arguments about defective work and over charging all lacked detail. No payment schedule had been provided.

31 There had been a failure to provide any supporting evidence to suggest there was a partnership eg tax returns or books of account. In those circumstances, the ordinary inference, referred to in cases such as O’Donnell v Reichard¹, that any evidence that could have been produced would not have assisted the defendant, should be drawn against the defendant. The defendant’s conduct breached the overarching obligations imposed on the parties by the Civil Procedure Act.

¹ [1975] VR 916

32 The affidavit of Mr Hanna affected the defendant’s credibility adversely.

33 The approach to the grant of summary judgment applied by the Court of Appeal in Pearl Hill Pty Ltd v Concorp Construction Group (Vic) Pty Ltd ² should be followed.

34 The defendant emphasised that the plaintiff must satisfy the threshold issue that the plaintiff and defendant were parties to a construction contract. The defendant referred to the provisions of s.3(1) and s.4 of the Act. He relied on the Queensland Court of Appeal decision in Mansouri v Aquamist Pty Ltd.³

35 The defendant argued that the Court should not determine disputed questions of fact based on the consideration of affidavit evidence. There was a triable issue as to what the terms of any construction contract were. The defendant had deposited cheques received from the plaintiff into his company account and that supported his case. It was also important that there were no invoices for the jobs, which were the subject of the payment claims. No claims had been made until many months after the jobs, some of which dated back to September 2010.

36 The defendant relied on the proposition that, while the registration of a business names is prima facie evidence of the fact that the owner was carrying on business, the facts may show that the owner was not carrying on business under the business name and that a company or other person was.⁴

Conclusion

37 The Court has to keep clearly in mind that the issue to be determined on the summary judgment application is whether the plaintiff has proved that the defence relied on has no reasonable prospects of success.

_{38 The defence is that no construction contract existed between the plaintiff}

² _{[2011] VSCA 99}

³ _{[2010] QCA 209 at [19]}

⁴ _{See Re ABC Plastik Pty Ltd (1975) 1 ACLR 446 at [449] to [450] cited in Pethybridge v Stedikas}

Holdings Pty Ltd [2007] NSWCA 154 at [37]

company and the defendant, Mr Milojevic in respect of the work, which is the subject of the claims on which the proceeding is based. Both parties accepted that the Court needed to be satisfied, at the level required for a summary judgement application, that a construction contract existed between the parties.

39 I do not consider that the plaintiff’s case, or the totality of the affidavit evidence, establish that a defence, that there was no construction contract between the plaintiff and the defendant, has no real prospects of success. I have reached that conclusion for the following reasons:

(1) There is no written agreement between the parties and therefore the determination objectively of, who the parties to the contract were, requires an examination of all the relevant circumstances, including the dealings between the parties. Normally such circumstances would be revealed, at least in part, by oral evidence from the parties, including oral evidence resulting from cross-examination, which would give a context to their business dealings.

(2) It appears that the defendant has used his company’s cheque account to deposit some of payments received from the plaintiff.

(3) There has been considerable delay in the plaintiff seeking payment for the relevant work from the defendant. That delay may well be explicable by previous promises of repayment by the defendant, which promises were not kept. However, I do not consider that I should make a finding of that fact on the basis of the affidavit material.

40 The plaintiff has made a number of significant submissions about the credibility of the defendant’s defence and the defendant’s affidavit evidence, currently before the Court. Some of these submissions were based on the contents of Mr Hanna’s affidavit. However, the material at trial may be significantly different from that presently before the Court and therefore I

express no concluded view about the question of credibility.

41 For those reasons, the plaintiff’s application for summary judgment is dismissed.

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