Pouzyr v Makhanyok[2014] QDC 112

DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   On 21 April 2011 Daubney J, in the Supreme Court of Queensland, declared that a Contract of Sale made 31 January 2011 (Exhibit 1, Item “IP10”) between the plaintiff, as vendor, and the defendants, as purchasers, was “validly terminated”. The termination was pursuant to s 370A of the Property Agents and Motor Dealers Act 2000 (“PAMDA”). The provision dealt with termination during a “cooling-off” period. In addition, Daubney J stayed a consequential judgment (that the plaintiff pay the defendants the sum of $146,250.00 - being $150,000.00 less the statutory cooling-off “termination penalty”) for 28 days. This was to permit the plaintiff to commence proceedings against the defendants “seeking relief at law or in equity with respect to, inter alia, the entitlement of the (plaintiff) to retain or be paid the sum of $150,000.00 by the (defendants)” - which was the “deposit” paid under that Contract. On the commencement of this case, by further order, the stay was extended pending determination of the plaintiff’s claim in this proceeding; and costs were reserved to this proceeding. Written submissions were ordered but, although served, were neither timely nor otherwise fully compliant with the orders made.

Background

2. [2]
   The property the subject of the Contract of Sale (“Property”) was situated at 62 East Quay Drive, Biggera Waters in the State of Queensland and was, until relatively recently, owned by the plaintiff (as registered owner holding an estate in fee simple).

3. [3]
   At the time of the making of the Contract of Sale the plaintiff and the defendants had known each other for a period of approximately four years. When, earlier, in 2009, the defendants purchased a duplex unit at 2/23 Broadwater Street, Runaway Bay in the State of Queensland from the plaintiff, the plaintiff’s business was that he built, lived in and sold houses. He acknowledged in evidence that he appreciated the term “main residence exemption” and its applicability to living in the constructed house for a year. At that time, one solicitor acted for all parties to the transaction, with the relevant contract, on its face, being subject to FIRB approval. The approval was required because the defendants were Russian nationals and, therefore, “foreign nationals” under the Foreign Acquisitions and Takeovers Act 1975 (Cmth). The duplex unit was for the defendants’ daughter to reside in.

4. [4]
   On 3 September 2009, the plaintiff was granted an owner/builder permit under the Queensland Building Services Authority Act 1991 in relation to the Property. On 26 November 2009 the plaintiff obtained building approval for plans for a house to be constructed by him at the Property, which commenced fairly soon thereafter.

5. [5]
   In December 2009 and January 2010 the male defendant had discussions with the plaintiff, the male defendant eventually expressing an interest in purchasing the Property from the plaintiff (aware of the plaintiff’s owner/builder permit). Since the defendants were aware that the property had begun to be constructed by the plaintiff as an owner/builder, the defendants wished for alterations and additions to the partly constructed home and related amenities (“Residence”) to be made by the plaintiff. On, or about, 18 January 2010 both the plaintiff and the male defendant signed a one page document: Exhibit 1, Item “IP2”. It was held by Daubney J that the document recorded the parties’ “then understanding as to the arrangements between them”: at folio 1-2. Both sides of the record accept that an English translation refers to: the plaintiff; confirmation that the plaintiff received $150,000.00 from the male defendant “as a deposit to purchase house” on the Property; that sum was being paid as part of a total price of $1,500,000.00; and the deposit was to be owned “in total” by the plaintiff if the male defendant “as a buyer does not agree to purchase the property”.

6. [6]
   It may be accepted that the document was “unenforceable” as an agreement, given that the male defendant was not given a warning statement under s 365 of the PAMDA. And there was no pre-contractual certificate effective for waiving the cooling-off period under the then s 369 (later s 369A) of PAMDA.

7. [7]
   It is also clear from such “arrangements” that the plaintiff intended to carry out alterations and additions to the Residence at the request of the male defendant utilising the $150,000.00, and that certain additional requirements would be undertaken by the plaintiff at the male defendant’s expense (to be paid prior to the undertaking).

8. [8]
   The original proposed changes were set out in a document designated Item “IP1” (which is part of Exhibit 1). Again, there is both the original Russian list and an agreed English translation.

9. [9]
   As part of such additional requirements, the male defendant sent to the plaintiff a further $24,000.00 so that the plaintiff could pay for certain kitchen cabinets and “for all appliances in the kitchen… for fridge, for microwave, for hotplate, for dishwasher… for bench tops, for Southport stone”: accepted in the evidence given by the plaintiff at trial. Further, the male defendant had asked the plaintiff to build a special fence on the front of the block and to do some specified landscaping, for which the plaintiff was given $10,000.00 in cash: again, accepted in the evidence given by the plaintiff at trial. And certain chattels were bought by the defendants and affixed to the Property. All these matters are addressed in detail later.

10. [10]
    While there was much agreement about the work, disputes do exist. From the defendants’ perspective, these are contained in Schedule 1 to a proposed Contract of Sale (to be discussed later) under the designation Item “IP8” (which is part of Exhibit 1).

Claims

11. [11]
    As set forth in the Further Amended Statement of Claim filed 12 September 2013, the plaintiff claims, with respect to the overall sum of $496,804.95, obviously alternatively, that it was: for moneys payable pursuant to contract; for damages; or, for restitution.

12. [12]
    The sum of $496.804.95, when broken down, comprises claims for:

1. (a)
   alterations and additions to the Residence in accordance with the defendants’ request (being $276,884.95) which “did not enhance the value of the Property”; and

2. (b)
   the cost to “restore” the Residence “to the same condition it would have been constructed” but for the “arrangement” (being $170,520.00).

13. [13]
    With respect to the latter, on 11 November 2013, after evidence had been given that the plaintiff had ceased to own the Property and that none of the work which was alleged to be required to be undertaken to “restore” the Property had been carried out by the plaintiff, or at his direction, I dismissed that part of the claim seeking $170,520.00 (referable to paragraph 28 of the pleading). The transfer of the Property by the plaintiff was made on 23 September 2013.

Issues

14. [14]
    Although most of these issues, as next detailed, are contained in the defendant’s Submissions served on the plaintiff on 7 April 2014, particularly in circumstances where the plaintiff gave his Notice that he was Acting in Person on and from 27 September 2013, I have concluded that they do comprise, in the main, the issues that need to be determined.

15. [15]
    They are:

1. (a)
   what work of alterations and additions (“alterations”) to the plaintiff’s original plan and design were directed by the defendants to be carried out (and which were in fact carried out by the plaintiff)?

2. (b)
   what additional sub-contractors’ costs and supervisory costs were involved in such work (for which the plaintiff has not already been paid)?

3. (c)
   was there a legally binding agreement at the time the alterations work were performed and, if so, did any such agreement contain an obligation to pay for the reasonable cost of the alterations – and was any such agreement to be affected by a contract for the sale of the Property?

4. (d)
   what was the reasonable cost of such alterations?

5. (e)
   was there any enhancement, thereby, of the value of the Property?

6. (f)
   whether under any such agreement, or not, did the defendants take the benefit of such alterations and additions? 

7. (g)
   to the extent that there has been work done which has been accepted by, or which has conferred a benefit on, the defendants, and which, what is a fair and reasonable compensation for such work done?

8. (h)
   in any event, were all parties’ rights and obligations concerning such work subsumed in the Contract of Sale made 31 January 2011 (which has been held to be validly terminated)?

16. [16]
    The defendants, in their written Submissions, expressly do not press their counterclaim.

Prelude to “final” Contract

17. [17]
    The acts of both the plaintiff and the male defendant prior to the Contract of Sale made 31 January 2011 were, briefly, dealt with by Daubney J. As determined by him, interpreted parts of the sequence were as follows:

1. (a)
   on 18 January 2011 the solicitor for the defendants wrote to the solicitor who was then acting for the plaintiff enclosing, relevantly, a proposed Contract of Sale;

2. (b)
   as Daubney J remarked, for “reasons best known to himself”, the plaintiff dispensed with the services of his legal adviser and thereafter represented himself in his dealings with the defendants’ solicitors;

3. (c)
   by document dated 17 January 2011 – but received by the defendants’ solicitors on 24 January 2011 - the plaintiff purported to give notice pursuant to “our agreement dated 17 January 2010”;

4. (d)
   when delivering that “notice”, the plaintiff also delivered an amended copy of the first mentioned contract (deleting all special conditions originally sought by the defendants), leading Daubney J to conclude that the amendments “constituted a counter proposal by the (plaintiff) to the proposal which had been made by delivery of the form of contract as was delivered under the (defendants’) solicitors’ letter of 18 January 2011”;

5. (e)
   under cover of a letter dated 31 January 2011, the defendants’ solicitors delivered to the plaintiff the form of contract which the plaintiff had tendered under his notice dated 17 January 2011 – and delivered on 24 January 2011 – with the changes and amendments proffered by the plaintiff being initialled as having been accepted by the defendants;

6. (f)
   Daubney J, in considering the last mentioned document, concluded that the defendants “accepted the counter proposal which had been put by the (plaintiff) with his proffered form of the form of contract”;

7. (g)
   the relevant covering letter of 31 January 2011 asserted that the sum of $150,000.00 was to be applied as the deposit “payable under this contract”, being the basis upon which the enclosed contract had been signed and initialled on behalf of the defendants and was forwarded “by way of acceptance of your counter-offer”;

8. (h)
   as Daubney J further concluded, as events subsequently transpired, the defendants gave notice within the cooling-off period provided for under the contract and authorised under the PAMDA.

18. [18]
    In characterising the document of “18” January 2010, Daubney J concluded that the $150,000.00 which had been paid was “pursuant to the arrangement or understanding reached and evidenced by (that) document”, noting that the deposit was to be treated by the parties as payable “under any formal contract entered into between the parties for the sale” of the Property.

19. [19]
    Given that those conclusions reached by Daubney J were for the purposes of reaching his decisions in making the declaration and consequential orders, it is not open to the parties in this consequential proceeding to challenge those conclusions so far as they went. This includes the implicit conclusion that the proffered counter proposal of the plaintiff objectively accepted a cooling-off period, since there was no allegation of any representation as to waiver of the defendants’ statutory right to it. Then would have been the occasion for its consideration.

Restitution

20. [20]
    There was nothing advanced by way of evidence, and certainly nothing advanced by way of written Submissions, which even raised, much less argued for the establishing of the causes of action based upon either “monies payable pursuant to contract” or “damages”. The primary difficulty in any event would be the set of conclusions that I have just canvassed by Daubney J in circumstances where there was no additional contractual framework which was advanced by the plaintiff in the evidence that he gave. That is, there was no evidence that, outside the “arrangements”, or even collateral to it (though it would have to be in the sense of a contract in its own right), any binding agreement concerning the alterations existed. This is clearly so where even the original “arrangements” were themselves dependent on a conveyance of the Property. Thus, although the Further Amended Statement of Claim refers to “the Agreement” of 18 January 2010 as “partly written and partly oral”, it is clear that the partly written part was never anything more than - as Daubney J concluded - an arrangement, or understanding. With respect to the “partly oral” aspect, the terms as pleaded (for instance, in paragraph 10) were just not the subject of evidence, at least in so far as a court might determine that they were more than mere requests (or non-contractual “directions”) made pursuant to the arrangement or understanding. Any further “requested” alterations and additions pleaded (for instance, in paragraph 10A) were of exactly the same kind (or, at least, not proved on the balance of probabilities to be different). Additionally, there was absolutely no evidence of any agency - and certainly none whereby the plaintiff was the defendants’ agent.

21. [21]
    It is, therefore, unnecessary for present purposes – although it will be considered later – to analyse any further the interactions that the plaintiff and defendants had between 18 January 2010 and 31 January 2011.

22. [22]
    Thus, on that approach, the only cause of action that may appear to have any substance is that based in restitution. Accordingly, it will be necessary to consider the relevant principles of that doctrine as applicable to this case.

Applicable restitutionary principles 

23. [23]
    Given its currency, the recent High Court decision of Australian Financial Services and Leasing P/L v Hills Industries Ltd [2014] HCA 14 is particularly instructive.

24. [24]
    In the joint decision of Hayne, Crennan, Kiefel, Bell and Keane JJ the following propositions were expounded:

• in David Securities P/L v CBA (1992) 175 CLR 353 the submission that unjust enrichment was a definitive legal principle was rejected, a position that has since been maintained consistently “by this Court”: at [73];

• Equuscorp P/L v Haxton (2012) 246 CLR 498 confirmed that unjust enrichment does not found or reflect any “all-embracing theory of restitutionary rights and remedies”, identifying instead unconscionability as relevant and as derived from general equitable notions which find expression in the action for money had and received: at [74];

• as acknowledged in Australia and New Zealand Banking Group Ltd v WBC (1988) 164 CLR 662, “contemporary legal principles of restitution or unjust enrichment can be equated with seminal equitable notions of good conscience” at [74]; and

• the issues of conscience which fall to be resolved assume a conscience “properly formed and instructed” by established equitable principles and doctrine, noting (by reference to cited authority) that “(t)he conscience spoken of here is a construct of values and standards against which the conduct of ‘suitors’ – not only defendants – is to be judged”: at [76].”

25. [25]
    Although the statements just referred to - and the following - were dealt with in the context of an enquiry as to whether the retention of moneys was unconscionable, the principles are ones of general applicability. As the joint judgment went on to hold, under Australian law, a mathematical assessment of enduring economic benefit does not determine the availability of restitutionary remedies since the equitable doctrine which protects expectations, with which the notion of “detriment” is associated, is not concerned with the loss caused by a wrong or a breach of promise: at [84].

26. [26]
    In Australian Financial Services and Leasing, at the Court of Appeal level (Hills Industries Ltd v Australian Financial Services and Leasing P/L [2012] NSWCA 380), Allsop P (with whom Bathurst CJ agreed) proffered some general statements about the relevant principles of restitution. It should be noted that when the case was considered in the High Court, besides the principles that I have already canvassed, the concentration there was on the issue of “change of position”. The statements that I intend now to canvass were not the subject of express approval – or disapproval – by that joint judgment in the High Court.

27. [27]
    Allsop P noted that the contractual regime or milieu in which the payment – since that was in issue in the case – was made would be important, in particular if the making of an order for restitution “will disturb an existing and bargained–for allocation of risk or liability”: at [74] referring, amongst other cases, to Lumbers v W Cook Builders P/L (In Liq) (2008) 232 CLR 635. Before moving to a consideration of Lumbers, it should be noted that Allsop P in referring to it, and paraphrasing the words of Lord Goff of Chieveley in Pan Ocean Shipping Co Ltd v Creditcorp Ltd [1994] 1 WLR 161, stated that the “parties had distributed their risks by applicable contracts and the application of restitutionary principles (there of benefit and acceptance) in any altering of that redistribution raised serious difficulties”: at [75].

28. [28]
    Turning, then, to Lumbers: the joint judgment of Gummow, Hayne, Crennan and Kiefel JJ, stated that, relevantly, if the relevant builders did work or paid money, those builders could look to another party for payment for the work that they did and the money that they paid at the request of the other party in the performance of the building works which the other party had agreed to perform under a contract with a third party. However – and importantly – they further stated that “if an enforceable contract were made then no action would lie for a quantum meruit while the contract remained on foot”: at 671 [111]. Although that extract was taken from an analysis as to “who” “did the work”, the principle as to what effect an affecting contract has resonates with earlier statements in that joint judgment. There, it was held that an essential step in considering a claim in quantum meruit (or money paid) is to ask whether and how that claim fits with any particular contract the parties have made: at 663 [79]. That conclusion was based upon a warning (contained in cited authority) that “serious difficulties arise if the law seeks to expand the law of restitution to redistribute risks for which provision has been made under an applicable contract”: at 663 [79].

29. [29]
    Such an analysis should not confuse the situation of enforceable contracts with those which provide the necessary basis for the availability of a restitutionary cause of action. But as remarked in Equuscorp, a person who renders performance under an agreement that cannot be enforced against a recipient by reason of the failure to satisfy an extrinsic requirement of enforceability does not have a restitutionary claim against the recipient if the allowance of that claim “would defeat the policy of the law that makes the agreement unenforceable”: at 541 [104], per Gummow and Bell JJ.

30. [30]
    A primary case relied upon is Sabemo P/L v North Sydney Municipal Council [1977] 2 NSWLR 880. That decision of Sheppard J was analysed by McPherson J in Ward v Eltherington [1982] Qd R 561. In the latter case the obligation to pay was imposed by law notwithstanding that the parties did not intend, expressly or impliedly, that such an obligation should arise. As Ward illustrates, the factual circumstances of this case that I am deciding fall neither within Sabemo nor Ward. In the latter the condition precedent to performance by payment was prevented by the impossibility of performance; and it was held that that condition was discharged, leaving the plaintiff’s right to a fee unconditional and unimpaired. In the former, as encapsulated in the head note, where two parties proceed upon a project on the joint assumption that a contract will be entered between them, and the first party does work beneficial for the project – and does it in the interests of both parties - which work the first party would not be expected, in other circumstances, to do gratuitously, the first party will be entitled “by operation of law” to compensation or restitution from the second party “if the latter unilaterally abandons the project for reasons pertaining only to himself, and not arising out of a disagreement as to the terms of the proposed contract between the parties”. Many of the cases relied upon by both sets of litigants have little factual similarity to this one. Many involved circumstances which might, after analysis, be found to resemble this case right up to, and until, the making the Contract of the Sale on 31 January 2011. But, very importantly, they do not include the making of such a contract.

31. [31]
    In particular, in Brewer Street Investments Ltd v Barclays Woollen Co Ltd [1954] 1QB 428, both parties assumed without question that a lease would be granted, even to the extent of the defendant accepting responsibility for the cost of any work (in writing). When negotiations for the lease broke down, there was no defence available to the prospective lessees, although many possible defences – given different postulated circumstances – were canvassed. Somewhat importantly, Somervell LJ, with whom Romer LJ agreed on this aspect, held that “each case must be judged on its own circumstances”: at 434.

32. [32]
    In Regalian Properties plc v London Docklands Development Corp [1995] 1 AllER 1005, Rattee J held that, even though the expenditure incurred was made for the purpose of enabling the other party to obtain and perform the “expected” contract, because the parties had, in effect, expressly agreed by the use of the words “subject to contract” that there should be no legal obligation by either party to the other unless and until the formal contract had been entered into, either party was free to walk away from negotiations, although neither expected that this would happen: at 1018. It was also found that, by the time the negotiations between the parties fell through, the fall in the residential property market had been such that the other party was not, and no one else would have been, interested in buying the land concerned, to carry out the sort of development for which the designs had been produced and, therefore, no ascertainable benefit accrued: at 1018.

33. [33]
    Finally, in Nepean District Tennis Association Inc v Penrith City Council (1988) 66 LGRA 440, Hodgson J, in the New South Wales Equity Division, held that, where a tennis club proceeded to have its courts resurfaced, as well as contributing to the construction of a levee by the local Council (the purpose of which was to protect surfaces of the courts), it could recover against that local council where the legislation had been changed in the meantime and the Council as a result went to establish its own committee to manage the complex. Although it was held that the club could not maintain an estoppel pursuant to the principles developed in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, on the application of cases such as Pavey & Matthews P/L v Paul (1987) 162 CLR 221, the circumstances of the expenditure were such that it would be unconscionable for the local Council to obtain the increased value of the land without compensation to the tennis club. Yet again, the facts were completely different from this case. Here, the plaintiff, if the Contract of Sale made 31 January 2011 had been performed, would have had no cause of action based on restitutionary principles because he, together with the defendants, had agreed that that particular binding agreement – later validly terminated – had the effect that the parties had distributed their risks and liaibilities.

34. [34]
    It is not now open to the plaintiff – and he has not in his written Submissions suggested so – that he can revisit the findings and conclusions of Daubney J as far as they go. Accordingly, in the absence of any cogent evidence to the contrary, the conclusion that I reach in this case is that that the contractual distribution of rights and obligations – and therefore including benefits and risks – should be determined under contractual principles only. Thus, there can be no recovery in restitution in such circumstances. And given that the “contractual” outcome has already been determined for the purposes here by Daubney J and given the evidence led at this trial, even if the plaintiff had raised the question of waiver of rights or some kind of abandonment of the project, as restitutionary issues, it is difficult to see how they could have impinged on the outcome here.

Credibility

35. [35]
    If it were to be held that my conclusion on restitution did not determine the outcome of this case, it would be necessary to consider the other issues that have been noted above.

36. [36]
    For such a purpose, it would be necessary to determine the issue of credibility.

Mr Pouzyr (plaintiff)

37. [37]
    Although the defendants’ written Submissions contend that the plaintiff gave an untruthful account of the progression of contractual negotiations during the latter part of 2010 – in particular where he had said in an affidavit that the document designated Item “IP4” (in Exhibit 1) was the “first contract” – given the analysis by Daubney J where he began by analysing actions that occurred in and from January 2011, the designation of a “first” or later contract loses its impact as a determiner of credit. But, importantly, it is from an analysis of the events of September and October 2010 that an indication can be obtained of a lack of candour on the plaintiff’s part. This arises from a dispute about who was the proponent of a proposed collateral agreement. This was where there had been a proposed purchase price of $1,000,000.00, with a deposit of $1,000.00, along with a proposed collateral agreement that $500,000.00 more be paid “in cash” to make up the $1,500,000.00.

38. [38]
    When the defendants’ daughter, Ms Anastasia Makhanyok gave evidence of a telephone conversation she stated that she overheard between her father and the plaintiff in which this “cash” payment of $500,000.00 was mentioned, she was not challenged. This is particularly important because the evidence of both the male defendant and his daughter was that the proposed collateral agreement was not acceptable on the defendants’ part. As was submitted by the defendants, one particular person who stood to benefit from the collateral agreement, if reached, was the plaintiff, by reason of its effect on Capital Gains Tax payable by him. After all, the plaintiff was a party to a further payment “in cash” of $185,000.00 concerning “the Broadwater transaction” where the “stated” consideration was $400,000.00. Although the plaintiff denied that he was the proponent, he did not tax the male defendant with that suggestion.

39. [39]
    The next concern arises from the role, if any, the corporation IS Home 4U Pty Ltd played. From the oral evidence of the plaintiff and the ASIC search (Exhibit 12), the business of this entity was managed by the plaintiff, it built “cheaper” houses and derived its funds from the shareholder who held 90% of the relevant shares, Mr Korshun. There were three claims in the Further Amended Statement of Claim involving this entity. In cross-examination, the plaintiff conceded that this corporate entity “did nothing” in the calendar year 2010. The point was made clear in an answer to a further question, when the plaintiff stated that there was: “No activity at all”. That answer appeared to be backed up by the plaintiff when he responded to, in particular, a claim for “more expensive landscaping” in Schedule 1, Item C attributed to the corporate entity really meant that he “did the work” – to which he answered “Yeah”. Yet, that was immediately followed by the apparent contrary assertion that a claim that the corporate entity did do the work involved in the “more expensive landscaping in 2010” was not false.

40. [40]
    The last aspect to be considered on this matter of credibility deals with claims made by the plaintiff about his own supervision. The extent of the time of the supervisory claim is negated, to a substantial extent at least, by the plaintiff’s concession that he was also supervising construction at both 3 Middle Quay and 39 Knightsbridge Parade, at Sovereign Island in the State of Queensland. In particular, when cross-examined about how many hours there were for which he was seeking to be remunerated, he stated that he could not answer how many, as he “didn’t count” (them). Furthermore, when it was suggested to him that his claimed figures meant that he would have to have spent 506 hours for general supervision and 895 hours for specific supervision (being approximately 36 full weeks in 2010), after acknowledging the truth of the mathematics, he simply answered in the negative to the further suggestion that it was “completely over the top as an estimate of (his) time”.

41. [41]
    In consequence, I have significant doubts about the plaintiff’s credibility, particularly when he has contested statements made by the male defendant and his daughter.

Andrey Makhanyok (male defendant)

42. [42]
    While I was not necessarily convinced that the male defendant was entirely forthcoming in the evidence he gave, particularly with respect to his insistence that he was concerned about strict adherence to Australian laws concerning proper disclosure of consideration, important aspects of his evidence were supported by the evidence that I have briefly referred to of his daughter, Ms Makhanyok. It must be acknowledged that the male defendant, concerning the Broadwater transaction, did, later, after obtaining legal advice, pay the additional State transfer duty on the “full” consideration - but he appeared to have no problem at the earlier time. Since, in the analysis I will soon do, I have concluded that she was a credible witness who gave her evidence honestly and without guile, to the extent to which she provided support to the male defendant, I am content to accept his evidence bearing upon those sets of circumstances.

Anastasia Makhanyok (daughter of defendants)

43. [43]
    As I remarked earlier, both from her demeanour in the witness box, and those documents which were contemporaneous to which she had reference, support, to my mind, a finding that this particular witness gave credible evidence. In particular, as asserted by her in her own evidence, Ms Makhanyok managed all her family’s finances in Australia, keeping all invoices that her father brought to her and conducting her own account with the ANZ. With respect to a document which later became Exhibit 14, she gave persuasive evidence, supported by documentation, about what she had included in her “blue book” that listed particular items that were bought by the defendants for the Property (for which she had attached invoices and a costing).

44. [44]
    What I did draw from a cross-examination of this witness by the plaintiff, noting that I had indicated to the plaintiff (before this witness gave any evidence) that he was entitled to cross-examine all witnesses and if he should so wish, he should take notes of their evidence to prepare himself about what questions he might ask them, is that he never really challenged the evidence that the witness gave, simply making a claim that he had never been given the invoices upon which she relied, despite disclosure indicating to the contrary.

Conclusions (on credibility)

45. [45]
    What obviously flows from the survey I have done of the evidence is that I am loathe to accept, particularly where there is a conflict about what occurred, the evidence given by the plaintiff. In some ways, of course, the plaintiff’s problems with his own case – should it be necessary to consider his evidence on these issues that will now be canvassed – is that the evidence that he elected to present both from himself and his supporting witnesses lacked both content (for the most part) and accuracy (at least as revealed from the cross-examination of him).

46. [46]
    Contrastingly, where evidence was given by the male defendant which was in conflict with that of the plaintiff and such evidence of the male defendant was backed up by his daughter, I accept, for the reasons that I have outlined, that such evidence has been accurate and reliable.

Extent of “alterations and additions”

47. [47]
    In the Further Amended Statement of Claim, there are four Schedules. According to the pleading, Schedule 1 alleges the “Initial Alterations” (which are stated to be derived from the memorandum, in Russian, written on or about 18 January 2010): see Exhibit 1, Item “IP1”. Schedule 2 is alleged to be additionally requested “alterations and additions”. Schedule 3 is alleged to be additionally requested alterations or additions “to areas where alterations or additions had been effected” already.

48. [48]
    As pointed out in the written Submissions of the defendants, the English translation (agreed to be accurate) of the Russian words used “broadly comprise” Schedules 1 and 2. Thus, this division between Schedules 1 and 2 was unable to be explained by the plaintiff when cross-examined.

49. [49]
    As for Schedule 3: some items were identical, or allegedly complementary in an unspecified way, to those in Schedule 2 (where the additional or rectifying aspects of earlier work were not proved); almost all involved no actual evidence of any payment by the plaintiff; some items were not proved to be other than necessary rectification of work originally envisaged by the plaintiff’s first building application; and, to the extent that there was proof of work done and any payment incurred, no basis exists for assessing a fair and reasonable basis for it.

50. [50]
    At trial, the Scott Schedule (comprising of 10 pages) provided a basis for examination and cross-examination of these Schedules: see Exhibit 6.

Examination of “claimed costs”

51. [51]
    I accept what the defendants have contended for in their written Submissions concerning costs, including supervisory costs, for which the plaintiff was not otherwise paid. It is to the effect that:

• since, for the most part, the base specifications for the original design of the Property were not made clear, for most of the items listed in Exhibit 6 it is just not possible to determine what would have otherwise been spent, in order to calculate the differential cost between what the plaintiff would have done in building his own residence and what he, in fact, did to the Property for the defendants; and

• with the exception of Exhibit 4 (a Tax Invoice of Gold Coast Tile Market Pty Ltd with respect to the supply of tiles, in the total sum of $20,129.88), the plaintiff failed to lead any evidence of the payment of any invoice or the existence of any cheque (or bank statement) or any other means of payment, such that there is no evidence that any of the costs set forth in Exhibit 6 were incurred by the plaintiff, although such disclosure as there was of tax invoices (as set out in Exhibit 5) was assumed to be accurate by the quantity surveyor’s report (discussed later) for the purpose of determining the “value” (at least in terms of money spent) of any additional work by way of “alterations”.

The trial ruling that documents brought to Court after lunch on day one by the plaintiff could not be used by him followed upon both their non-disclosure until then (despite having legal representation during the disclosure period) and the fact that the trial had been then expressly set down for 5 days at a hearing held on 23 April 2013 (when the plaintiff was represented by Senior Counsel). He was still so represented on a further directions hearing and review of the proceeding on 23 August 2013. The trial was subsequently adjourned on 17 October 2013 due to the plaintiff’s illness - but no further disclosure has been made, or order sought seeking leave to do so.

52. [52]
    What was clear from the whole of the evidence led at trial was: that another corporation, New Altitude Pty Ltd, did receive the moneys that were paid by the defendants, for the purposes of the plaintiff alone, for alterations and additions; and that, on the balance of probabilities, it was that company that on paid money to such of those contractors as were the subject of evidence. The defendants appear to have agreed that New Altitude be such a conduit, since Ms Makhanyok’s evidence was consistent with such direct payments.

53. [53]
    For reasons already referred to, to the extent that the entity IS Home 4U Pty Ltd is concerned, I do not accept any evidence which is based upon that entity being a contractor to whom money ought to have been paid from moneys however given to the plaintiff, or for his purposes.

54. [54]
    By way of a further Reply and Answer filed 11 October 2013, it was accepted, at least implicitly, that the $10,000.00 paid by the defendants to the plaintiff (in cash to build the fence and for the landscaping) was utilised for that purpose. This was, additionally, conceded (in cross-examination) by the plaintiff himself. To the extent that a further claim was made in relation to landscaping, it is based upon it being done by IS Home 4U Pty Ltd – and therefore, for reasons already dealt with, should be rejected.

55. [55]
    A further aspect (of the alleged costs expended) concerns the other admitted payment, although channelled through New Altitude Pty Ltd on the plaintiff’s own admission, with respect to specific alterations originally outlined, taking the total advanced by the defendants to about $34,000.00. That Reply and Answer of 11 October 2013 expressly accepted that $23,189.00 was spent upon specified Miele appliances for the kitchen, on laundry cabinets (paid to “Pro-Design”) and on insulation for extra bathroom fittings (paid to “Milan”). In addition, that pleading accepts that the defendants paid for specific chattels identified in the Second Amended Defence and Counterclaim of the first and second defendants filed 3 October 2013:  see paragraph 28, as accepted by paragraph 15 of the Reply and Answer.

56. [56]
    Above and beyond that $34,000.00, that Reply and Answer also accepts that certain chattels (specifically identified in paragraph 15) were directly paid for by the defendants; and became fixtures.

Examination of the “reasonable costs” of Exhibit 6 items

57. [57]
    The defendants called independent expert evidence. This was provided in a report of Rider Levett Bucknall dated 9 October 2013 under the hand of Mr Michael Gilligan, Senior Associate. The report, which became Exhibit 16, is a quantity surveying report.

58. [58]
    At trial, although Mr Gilligan was called by the defendants and gave detailed evidence, the plaintiff cross-examined him with just one question only. It was simply whether the witness had asked the plaintiff to provide any document to the witness, to which the witness replied that the plaintiff had not been so asked.

59. [59]
    I accept that the analysis undertaken in the defendants’ written Submissions of Mr Gilligan’s report is an accurate summary of it. On that acceptance (but observing that this expert witness heavily qualified the following “opinions” by stating that he was unable because of the paucity of evidence - and particularly of documentation - to provide an opinion on either the likely construction cost of the building as originally designed or the likely additional cost of the “as-constructed” building), the following tentative conclusions could be reached:

• as for “pavers”, for which the plaintiff has made a claim of $21,130.88 for “more expensive pavers”, a reasonable allowance would be in the order of $2,000.00 to $3,000.00;

• as for “tiles”, although the plaintiff claimed $20,129.00, a reasonable allowance for any additional costs would be $2,000.00 to $3,000.00;

• as for “timber”, although the plaintiff claimed $39,292.00, reasonable additional costs (over and above porcelain tiles and carpet) would be in the order of $10,000.00;

• as for the “pool”, although the plaintiff claimed $21,050.00 for a “more expensive swimming pool”, due to concessions made by the plaintiff in cross-examination, this claim has no validity;

• as for the “pontoon”, although there was a claim for $20,995.00, payment was admitted for its construction and, since I find that there was always going to be a pontoon built on the Property, this claim is not an extra;

• as for “landscaping”, although the plaintiff claimed $17,811.00 for “more expensive landscaping”, this again was ascribed to work done by IS Homes 4U Pty Ltd (and perhaps, more importantly, from admissions made in the Reply and Answer of the plaintiff, there was not an actual cost of $17,811.00 and there was evidence that much was in fact paid by the defendants) – and the expert report suggests a reasonable allowance would be $5,000.00;

• as for the “powder room”, a claim of $34,127.00 was made, for which the report stated a reasonable additional cost would be $10,000.00;

• as for “electrical works”, although the plaintiff made a claim for $12,356.00 for “extra wiring and more expensive switches”, there was no base specification upon which to determine what was an extra and, as already noted, there was no evidence to sustain the claim in any event;

• as for general miscellaneous matters, the plaintiff had claimed $11,447.00 for “miscellaneous works/materials” and, although ordered by the Court to provide particulars, he did not do so; and

• as for all remaining matters, although there exists a further 13 items totalling $60,808.00, there is no documentary proof to support these claims.

60. [60]
    A significant factor relevant to determining what the reasonable cost might be is the question of the plaintiff’s time spent supervising the construction, as compared to that which he would have spent in any event on constructing “his” residence on the Property. This has already been canvassed, in general terms, earlier. As to further aspects of it, when asked why he claimed the figure of $35.00 per hour, the plaintiff responded that this was the average payment per hour for subcontractors, although there was no evidence at all that the plaintiff was a tradesman of any kind. And no evidence was otherwise led as to the prevailing rates of such a supervisor. Additionally, there was no evidence that he kept any records of supervision and certainly there was no disclosure of any records of time spent on supervisory activities. Lastly, it is necessary to refer again to the fact that his answers about the time that he spent on supervising during 2010 suggest, if not significant exaggeration, then deliberately false claims.

Absence of evidence

61. [61]
    Although it was not part of any pleaded case advanced by the plaintiff, it would not have been possible in any event for any determination to be made as to any enhancement of the value of the land by reason of expert evidence, excluding factors relevant to extraneous effects on any increased value, because there was none. Furthermore, it has not been possible to calculate any enhancement pursuant to a calculation of the amount spent or value supplied by the plaintiff (minus that separately advanced by the defendants and used for the “alterations”).

62. [62]
    The fact that the Property, with improvements, was transferred on 23 September 2013 for $1,000,000.00 establishes nothing in the particular circumstances of this case. Importantly, the transferee personally provided no consideration. She was the daughter of Mr Belozerov, a business partner of the plaintiff. The plaintiff’s own evidence about this was to the effect that Mr Belozerov had formerly loaned the plaintiff money, asked for the money back and, so, the plaintiff “sold” him the house and land for $1,000,000.00. Although the plaintiff asserted that he tried to sell the Property before this transfer, blaming delay on the caveat which the defendants had lodged against the title, there was no further evidence about what the Property might have sold for at that or some other time. Additionally, this case is not concerned with any possible compensation for some unreasonable lodgement of a caveat.

Summary of conclusions on alternative recovery

63. [63]
    From the analysis undertaken of the plaintiff’s case, if the Court should be required to consider the detailed terms of the extent of the restitutionary claim made, it is just not possible from the whole of the evidence to determine what is the reasonable amount for alterations and additions, apart from those implicitly conceded by the defendants in the evidence of Mr Gilligan, totalling some $30,000.00 only.

64. [64]
    The problem with a final acceptance of any figure would be that it ignores the fact that at least a portion of the “benefit” of the money spent accrued to the plaintiff himself. As explored, a significant amount of money and chattels were advanced by the defendants, as well, for that purpose which, again, the plaintiff has received by way of some “benefit” to the Property. Since the defendants have now not pressed their counterclaim, to the extent that enhancement of the value of the land could possibly be determined by the amount spent on it, there would need to be - as noted above - a credit to the extent to which the defendants made such payments or assisted such improvements (if not any effect of it on an increased value), though, in the absence of valuation evidence, no such determination is now possible.

65. [65]
    If one also takes into account the fact that the plaintiff has received consideration at least to the extent of $1,000,000.00 on the sale of his property, it would just leave the plaintiff’s restitutionary case in a position where no accuracy of any kind would attend upon a figure which could be sought to be calculated as a justifiable amount arising from an “unconscionable” exercise by the defendants of their undoubted contractual rights. Even more difficult would be the exercise of determining the worth of the work “to” the defendants: see Peet Ltd v Richmond (2011) 33 VR 465 at 485 [105].

66. [66]
    Accordingly, even if it were to be the case that some undertaking of an assessment of the plaintiff’s “loss” was necessary, it is impossible on the evidence led at trial to make any justifiable determination.

Outcomes

67. [67]
    By reason of the conclusions reached in these Reasons, the plaintiff’s claim, having been rejected, should result in a judgment for the defendants against the plaintiff on the claim.

68. [68]
    Since the defendants have not pressed their counterclaim, it must be that there should be judgment for the plaintiff against the defendants on the counterclaim.

Costs

69. [69]
    Although the defendants’ written Submissions descended into arguing costs, given that the plaintiff has not addressed the issue, I will give both parties leave to file, and serve, written submissions on costs within a period of seven days from handing the decision down. It must, however, be done in the context where a number of things need to be borne in mind. First, many of the costs in question, on interlocutory applications, have been “costs in the cause”. Given that the primary “cause” was the claim (and the counterclaim was quite recent), I intend (subject to argument) to treat such costs as being referable to the claim. But there are also “reserved” costs in this proceeding. Secondly, the plaintiff’s costs of his judgment on the counterclaim are severely restricted by the fact that he has been a litigant in person on and from 27 September 2013. Thirdly, part of the plaintiff’s claim that depended upon restoring the Property to the state it was in before January 2010 was struck out, at a time after the plaintiff had begun to give his evidence at trial and before the adjourned part of the trial was continued. Fourthly, the costs of the Supreme Court proceeding were reserved for determination here.