EMIRGE PTY LTD -v- DE COPPI [2025] WADC 23

Catchwords:
Contract – Whether oral gentlemen’s agreement or side deal varied written contract – Turns on own facts
Penalty – Whether clause providing for interest is a penalty – Turns on own facts

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JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION : PERTH
CITATION : EMIRGE PTY LTD -v- DE COPPI [2025] WADC 23
CORAM : CHRISTIAN DCJ
HEARD : 12-13 DECEMBER 2024
DELIVERED : 10 APRIL 2025
FILE NO/S : CIV 3822 of 2023
BETWEEN : EMIRGE PTY LTD
Plaintiff
AND
TONY DE COPPI
Defendant
Catchwords:
Contract – Whether oral gentlemen’s agreement or side deal varied written contract – Turns on own facts
Penalty – Whether clause providing for interest is a penalty – Turns on own facts
Legislation:
Nil
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Result:
Judgment for the plaintiff
Representation:
Counsel:
Plaintiff
:
Mr A P Hershowitz
Defendant
:
In person
Solicitors:
Plaintiff
:
Paiker & Overmeire
Defendant
:
Not applicable
Case(s) referred to in decision(s):
Coyne v GSC Contracting Pty Ltd [2022] WADC 115
Ringrow Pty Ltd v BP Australian Pty Ltd [2005] HCA 71; (2005) 224 CLR 656
Spiers Earthworks Pty Ltd v Landtec Projects Corporations Pty Ltd [No 2] [2012] WASCA 53
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CHRISTIAN DCJ
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CHRISTIAN DCJ:
Introduction
1
This action concerns an amount of money which remains unpaid pursuant to a contract. On 20 June 2022 Emirge Pty Ltd (Emirge) and Mr De Coppi entered into a Residential Building Works Contract (the Written Contract) for the construction of a new house at 52 Saltriver Street, Ellenbrook. Mr De Coppi agreed to pay Emirge the sum of $450,000 to build the house. Pursuant to the Written Contract, tax invoices for five progress claims were submitted by Emirge to Mr De Coppi totalling $204,750. Emirge was paid $75,750 in respect of the progress claims by Mr De Coppi’s lender, Pepper Money (Pepper), on 12 April 2023. The $129,000 difference between those two amounts is the subject of this action.
Issues for resolution
2
It is not disputed by Mr De Coppi that Emirge submitted five progress claims. Nor is there any dispute that the sum of $129,000 remains unpaid.
3
There are two issues for determination. The first is whether pursuant to some gentlemen’s agreement or side deal Mr De Coppi was not required to pay the sum of $129,000.
4
The second only arises if I find in favour of Emirge in relation to the first issue. It is whether the interest charged pursuant to the contract constitutes a penalty.
Was there a gentlemen’s agreement or side deal?
Relevant contractual terms of the Written Contract
5
There is no dispute that the Written Contract required Mr De Coppi to pay $450,000.
6
Clause 25 of the Written Contract sets out the terms of payment of the $450,000, which was to be by way of progressive payments upon the submission by Emirge to Mr De Coppi of claims in accordance with completion of works as detailed in a schedule which formed part of the Written Contract.
7
Item 7 of Appendix 1 of the Written Contract refers to the method of progress claims. Item 7 consists of a separate document, which was
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signed by both Mr
Dye, a director of Emirge, and Mr De Coppi on 20 June 2022 (the Progress Claim Schedule). By way of a table, the Progress Claim Schedule has 10 items which are stages of construction. In respect of each item a percentage of the total contract amount is specified and there are two columns each containing a separate dollar amount. The columns are headed ‘Amount (Bank Finance)’ and ‘Clients deposit held / released to builder’. The total of the bank finance amount is $325,000 and the total of the client’s deposit amount is $125,000, which together add up to the Written Contract amount of $450,000.
Nature of the gentlemen’s agreement or side deal
8
At the time the Written Contract was entered into Mr De Coppi was employed by Emirge as a project manager. He had previously worked for Emirge in 2016 and was re-employed in 2022. The evidence before me varied as to precisely when he was re-employed. Mr Dye said it was April 2022 and Mr De Coppi said it was in February 2022. It is unnecessary for me to determine exactly when Mr De Coppi was re-employed. However, I am satisfied it was before the Written Contract was entered into on 20 June 2022.
9
In his affidavit sworn 20 October 2023, which by order of the court stands as Mr De Coppi’s defence1 (the Defence), Mr De Coppi pleaded that prior to the construction of the house, Mr Dye verbally offered him a discounted side deal to build the house at ‘cost plus’.
10
Further, he pleaded that the offer by Mr Dye was formalised in writing in approximately early February 2023 by way of an email to his Emirge email address in which Mr Dye offered for Emirge to build the house on a cost plus 3% basis. Mr De Coppi pleaded he accepted the offer by return email. No such emails were produced in evidence at the trial. Mr De Coppi’s position at trial in relation to the existence of such emails was somewhat inconsistent with the Defence. He suggested there were some emails dealing with parts of the agreement but predominantly it was their word.
11
Mr De Coppi gave evidence that, prior to his re-employment, he had discussed with Mr Dye an arrangement he had with his previous employer whereby that employer was willing to build his house on a cost basis and Mr De Coppi would build the house and take care of all the construction. In evidence Mr De Coppi said Mr Dye agreed Emirge
1 Order made by Principal Registrar McGivern on 29 July 2024.
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would do the same thing.
However, in cross-examination Mr De Coppi accepted no agreement relating to construction of his house was reached with Mr Dye prior to him being re-employed.
12
Mr De Coppi’s oral evidence as to the nature of the gentlemen’s agreement or side deal varied. Mr De Coppi initially said a gentlemen’s agreement was reached that Emirge would build the house at cost price and he would contribute money to the build and do all the labour work on it himself. He also gave evidence that his work would offset the costs. He also said that the gentlemen’s agreement was to the effect that he would not have to pay the $125,000 referred to in the column headed ‘Clients deposit held / released to builder’ in the Progress Claims Schedule.
13
At a later point in his evidence, Mr De Coppi said the 3% margin was to be paid on the build cost. At that point, I understood him to be saying the gentlemen’s agreement was that he would pay cost plus 3% for the construction of the house. When questioned by me about how the cost plus 3% agreement was meant to work, in circumstances where Mr De Coppi claimed he, family members and friends had done the majority of the labour for the construction of the house and would be continuing to do so, he suggested that at the end of the build 3% of the cost would be added to the cost of the build. During cross-examination Mr De Coppi said the gentlemen’s agreement was for $325,000, which was the cost of the build, plus 3%. He later said the gentlemen’s agreement was to build the house at cost.
14
Mr Dye denied that Emirge had entered into any gentlemen’s agreement or side deal with Mr De Coppi.
Legal principles
15
The onus is on Mr De Coppi to establish the existence of any gentlemen’s agreement or side deal, oral or written, and its terms. There was no evidence before me of such a written agreement. In order to resist Emirge’s claim, Mr De Coppi must satisfy me on the balance of probabilities that an oral gentlemen’s agreement or side deal existed and satisfy me of its terms.
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16
The well-established relevant legal principles are conveniently set out by Gething DCJ (as he then was) in Coyne v GSC Contracting Propriety Limited.2 In summary, they are as follows:
(a) The question is whether during conversations relied on by Mr De Coppi the parties reached a bilateral agreement and had the necessary intention to immediately create a legally binding contractual relationship.
(b) That must be determined objectively having regard to all the relevant circumstances, which may include prior negotiations and subsequent conduct.
(c) Where an agreement is said to have been made entirely orally, the conversation or conversations must be proved to the reasonable satisfaction of the court, which means the court must feel an actual persuasion of its occurrence or existence.
(d) If the court has determined that the requisite intention is present, it is necessary to go on to consider whether the terms of the bargain, or at least the essential and critical terms, have been agreed upon or whether the intended contract is so incomplete or uncertain as to be void.
(e) Unless the concluded agreement is reduced to a deed, the party asserting the existence of the contract must prove that it provided consideration for the promises made by the other party.
Factual findings
17
For the reasons set out below, I am not satisfied the evidence establishes that a gentlemen’s agreement or side deal existed:
(a) The terms of the gentlemen’s agreement or side deal set out in the Defence differed from Mr De Coppi’s oral evidence about its terms. Further, in his oral evidence the nature of that agreement or deal varied. In his oral evidence there were three variations of the agreement or deal. The discrepancies are significant. When cross-examined about the discrepancies Mr De Coppi suggested the terms of the gentlemen’s agreement or side deal as pleaded in the Defence and the terms he gave evidence about were predominantly the same thing.
2 Coyne v GSC Contracting Pty Ltd [2022] WADC 115 [172] – [179].
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I am unable to accept that contention. The existence of the discrepancies alone makes it impossible to accept Mr De Coppi’s evidence that a gentlemen’s agreement or side deal existed. Further, even if I had been satisfied of the existence of a gentlemen’s agreement or side deal, I would have been unable to be satisfied as to its precise terms.
(b) Each of the five progress claims made by Emirge was for the total amount for that stage of construction and not for only the bank finance amount, which is inconsistent with Mr De Coppi’s evidence that he was not required to pay the amounts specified in the ‘Clients deposit held / released to builder’ column of the Progress Claim Schedule. When questioned about this during the course of his closing submissions, Mr De Coppi accepted that Emirge issued the progress claims to him and he was responsible for liaising with Pepper to have them paid. I am satisfied from all the material before me that Mr De Coppi did not challenge any of the five progress claims made by Emirge on the basis they should have been only for the bank finance amount. I am also satisfied that Mr De Coppi submitted each of the five progress claims to Pepper for payment. His failure to challenge the amount of each progress claim is inconsistent with a gentlemen’s agreement or side deal with terms that he was not required to pay Emirge the sum in respect of each progress claim specified in the column headed ‘Clients deposit held / released to builder’.
(c) Despite the figures set out in the Progress Claim Schedule, an email from Pepper to Emirge3 establishes that by 12 April 2023, Pepper was under the impression that Mr De Coppi had paid a total of $129,000 towards the first three stages and part of the fourth stage of construction. Therefore, Pepper was only willing to pay progress claims for part of stage 4 and the subsequent stages. That email from Pepper is largely consistent with the email Mr De Coppi sent to Mr Dye on 3 January 2023 in which he told Mr Dye the bank notified him that he needed to use his own money for the first three payments and after that they would pay the progress claims in full.4 At the start of his email of 3 January 2023 Mr De Coppi informed Mr Dye he had been on the phone with Pepper that morning trying to find out
3 Exhibit 12.
4 Exhibit 7.
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when they would pay the first two progress payments. Had Mr De Coppi not been under any obligation to make those payments to Emirge, which was what his case boiled down to at trial, there would not have been a need for him to make inquiries with Pepper.
(d) Further, in that same email to Mr Dye, Mr De Coppi stated that Pepper’s position ‘Throws a spanner in the works as my money doesn’t roll over with my dad until sometime next month’. That statement and the rest of the content of that email is consistent only with Mr De Coppi having a belief that he was required to pay the entire Written Contract amount. Had a gentlemen’s agreement or side deal existed which did not require him to pay the full Written Contract amount, it makes no sense that Mr De Coppi did not remind Mr Dye of it and its terms.
18
There is one further exchange of emails that is relevant. Exhibit 11 consists of an email Mr De Coppi sent to Mr Dye on 4 May 2023 as well as Mr Dye’s response. Mr De Coppi’s email contains a table. Upon careful examination of the table, after the hearing had concluded, it was apparent that at least one column was missing from it. A complete copy of Exhibit 11 was provided at my request.
19
I invited the parties to make further submissions in relation to Exhibit 11. Counsel for Emirge did not wish to do so. By email dated 28 February 2025 Mr De Coppi submitted a typed document, which he referred to in his email as a written submission. Arguably, the document goes beyond submission and contains material that ought to have been the subject of evidence. However, without having regard to Exhibit 11 and Mr De Coppi’s written submission, I am not satisfied a gentlemen’s agreement or side deal existed.
20
Nonetheless I have considered Exhibit 11 and Mr De Coppi’s written submission. For the following reasons, I am satisfied that Mr De Coppi’s email that is part of Exhibit 11, including the table, provides no support for Mr De Coppi’s position.
(a) The content of the email is inconsistent with a belief by Mr De Coppi that he was not required to pay the full contract amount. The email was sent after Mr De Coppi had seen an email (not in evidence) from Emirge’s lawyer. In the email Mr De Coppi acknowledged he was in a difficult position and was trying to sort out his situation with money. He referred to
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the fact that he would not be getting money, which he accepted in evidence was from his father, until closer to the end of the build and that his father wanted to pay as much as he could direct to trades. If Mr De Coppi was not required to pay the first three progress payments and part of the fourth one, he did not owe any money to Emirge. In those circumstances any financial difficulties Mr De Coppi was experiencing were irrelevant. Further, it would have been unnecessary for Mr De Coppi’s father to pay trades because Pepper would pay the remaining progress claims when they were made.
(b) Nowhere in the email did Mr De Coppi say he did not owe any money to Emirge because of the gentlemen’s agreement or side deal.
(c) The email contains a table. In the table Mr De Coppi set out the two progress payments that had been paid to Emirge by Pepper, the anticipated future payments to Emirge from Pepper, the already incurred building costs paid by Emirge ($190,000), as well as remaining estimated building costs for work yet to be done ($156,588). Mr De Coppi submitted that the figure of $156,588 in the table is the ‘tally estimate’ of future works that never took place and that the figure of $190,000 was an estimate only of future works not completed and past works. While I accept that the figure of future works might be an estimate only, as opposed to having been based on actual quotes to carry out the work, I do not accept the latter figure includes the former. In the table itself next to the figure of $190,000 are the words ‘paid out’. Those words are consistent with the figure of $190,000 being the amount Emirge had paid at the date of the email for goods and trades for the construction of the house. My view about that is fortified by the fact that in the table, those two figures are added to arrive at a total of $346,588 from which the total progress payments Pepper would pay pursuant to the Written Contract ($75,750 already paid and $245,250 to be paid) to arrive at a shortfall of $25,588. If the $190,000 included the future works, it would make no sense to add to it $156,588. The shortfall is an estimate of the amount that Emirge would be out of pocket if the construction of Mr De Coppi’s house had been completed.
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(d) Below the table Mr De Coppi said, ‘I know this is not an ideal situation, but I need to resolve this for you and I and it seems the best way moving forward’. That sentence was followed by a dot point and the words ‘3% margin to be paid’. Regardless of whether the table is referring to estimates of the cost of future work, or quotes for future work, it shows the existence of a shortfall or potential shortfall of money owed to Emirge upon completion of construction of the house. It is clear from the content of the table that Mr De Coppi believed that after Pepper paid the rest of the progress claims, which would be issued after further work took place, there would be a shortfall owing to Emirge. The existence of a shortfall is inconsistent with any gentlemen’s agreement or side deal Mr De Coppi claimed existed with terms, of whatever nature, that did not require him to pay the $129,000 of the Written Contract amount.
(e) The email can best be characterised as an attempt by Mr De Coppi to renegotiate the Written Contract in a way that required him to pay less than the $450,000 contract amount.
(f) In his evidence, Mr De Coppi seemed to suggest that the reference to 3% in that email was a reference to a percentage above the cost of construction of the house, which formed part of the gentlemen’s agreement or side deal. However, that contention does not sit well with the rest of the contents of the email. Further, it is inconsistent with his written submissions on Exhibit 11. In those written submissions, Mr De Coppi suggested the 3% was an extra margin he and Mr Dye discussed to mitigate any potential interest Emirge accrued. An offer of an extra 3% margin is consistent with evidence given by Mr Dye. Mr Dye’s evidence about the email was to the effect that the 3% margin referred to by Mr De Coppi was an additional margin being offered to Emirge for its indulgence in relation to the outstanding progress claims. It is not readily discernible from the email itself that the reference in the email to a 3% margin is meant to be an extra margin. However, it is apparent from the email chain that there must have been other discussions, either orally or by email, about the situation between Emirge and Mr De Coppi. Therefore, it may well have been the case that an extra 3% margin had been discussed by them at some point before the email was sent by Mr De Coppi. However, it does not necessarily follow that is what he meant in the email.
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(g) I need not make any finding about what the reference to a ‘3% margin to be paid’ actually meant because what is significant is that the reference to any 3% margin is inconsistent with Mr De Coppi not owing any money to Emirge because of the gentlemen’s agreement or side deal.
(h) The table shows a shortfall owing to Emirge of $25,588. In his written submissions on Exhibit 11 Mr De Coppi suggested the potential shortfall consisted of the extra 3% margin. That position is inconsistent with the figures in the table. It is clear the shortfall is the difference between total construction costs and the total amount Emirge would be paid by Pepper if the house was completed. The shortfall amount bears no relationship to a margin of 3% on the total anticipated or estimated construction cost of $346,588 that is set out in the table.
21
Having regard to the conclusions I have reached about Mr De Coppi’s email that is part of Exhibit 11, I considered it was not necessary to hear the parties orally in relation to Exhibit 11, nor for Mr De Coppi to give evidence relating to his written submission about it.
22
In cross-examination, Mr De Coppi attempted to explain the emails that are inconsistent with the notion that he was not required to pay the full Written Contract amount by saying that Mr Dye had asked him to pay extra money instead of waiting for Pepper to pay progress claims. I do not accept that contention because it is inconsistent with the content of the emails themselves.
Does the interest rate constitute a penalty?
23
Clause 25(f) of the Written Contract provides that Emirge is entitled to interest on any unpaid progress claims at the rate specified in Appendix 1 Item 9. The rate specified in Item 9 is 20% if not stated. A rate is not stated in cl 25(f).
24
The Defence contends the interest rate is ‘exuberant’ [sic] and states an argument would be made for the rate to be at the average term deposit amount.
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25
Emirge made submissions in relation to penalties on the assumption the Defence was asserting the interest rate was a penalty. Mr De Coppi did not make any submissions in relation to this issue.
26
The onus is on Mr De Coppi to prove the clause is a penalty.5 An interest rate will be a penalty if it is extravagant and unconscionable in comparison with the greatest loss that could conceivably have followed the breach of contract.6
27
There was no evidence led in relation to this issue. On its face, I am not satisfied the interest rate was a penalty.
Conclusion
28
Emirge is entitled to judgment in the sum of $129,000 plus interest at the rate of 20%.
29
I will hear the parties in relation to the formulation of the final orders and costs.
5 Spiers Earthworks Pty Ltd v Landtec Projects Corporations Pty Ltd [No 2] [2012] WASCA 53 [23], [86].
6 Ringrow Pty Ltd v BP Australian Pty Ltd [2005] HCA 71; (2005) 224 CLR 656 [32].
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I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
BN
Associate to Her Honour Judge Christian
9 APRIL 2025