A J & S Constructions Pty Ltd v Aussie Trading House (International) Pty Ltd
[1999] TASSC 77
•29 July 1999
[1999] TASSC 77
CITATION: A J & S Constructions Pty Ltd v Aussie Trading House
(International) Pty Ltd [1999] TASSC 77
PARTIES: A J & S CONSTRUCTIONS PTY LTD
v
AUSSIE TRADING HOUSE (INTERNATIONAL) PTY LTD
BAALA, Zahid
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 82/1999
DELIVERED ON: 29 July 1999
DELIVERED AT: Launceston
HEARING DATES: 19 July 1999
JUDGMENT OF: Crawford J
CATCHWORDS:
REPRESENTATION:
Counsel:
Applicant: A Hamilton
Respondents: A S Kemp
Solicitors:
Applicant: Archer Bushby
Respondents: Lander & Rogers
Judgment ID Number: [1999] TASSC 77
Number of paragraphs: 12
Serial No 77/1999
File No 82/1999
A J & S CONSTRUCTIONS PTY LTD v AUSSIE TRADING HOUSE (INTERNATIONAL) PTY LTD and ZAHID BAALA
REASONS FOR JUDGMENT CRAWFORD J
29 July 1999
The plaintiff applied under the Rules of Court, O15, for summary judgment against the defendants in the sum of $63,441 together with interest at 10 per centum per annum from 4 May 1999 until judgment, on the ground that the defendants have no defence to the plaintiff's claim. I will determine the application in accordance with well known principles. Summary judgment should only be ordered where there can be no reasonable doubt that the plaintiff is entitled to judgment and that it is inexpedient to allow the defendants to defend for mere purposes of delay. Jones v Stone [1894] AC 122 at 124. The plaintiff must show that it has a clear case against the defendants which the latter cannot possibly answer. Roberts v Plant [1895] 1 QB 597 at 603. See also Stephens v Huett unreported 36/1983. A judge should not make an order for summary judgment unless fully persuaded that there is no real question to be tried, that is, there are no facts shown such as would lead to the inference that at the trial of the action the defendants might be able to establish a defence to the plaintiff's claim. Australia & New Zealand Banking Group Ltd v Barry [1992] 2 Qd R 12 at 14. A complete defence need not be shown by the defendants at the stage when summary judgment is sought. Cloverdell Lumber Co Pty Ltd v Abbott (1924) 34 CLR 122 at 133.
Alan James Ellis, a director of the plaintiff with the day to day management of the company, swore in an affidavit that the defendants are and were at the commencement of the action justly and truly indebted to the plaintiff for the sum of $63,441 and that particulars of that sum appear in the statement of claim. He said that to his knowledge the facts in the statement of claim are true and correct and he believes that there is no defence to the action.
The defendants delivered a defence to the statement of claim. Some of the facts pleaded in the statement of claim were admitted by them and some were not. In addition, counterclaims and set-offs were pleaded. The admissions in the defence are significant for the effect of them is that a substantial part of the plaintiff's claim is admitted. That was confirmed by Tugral Salim Shah a director of the first defendant, who in an affidavit stated that he believed that there was a defence to the action in accordance with the defence.
By the statement of claim the plaintiff claimed against the first defendant (inter alia) that on 25 September 1998 the plaintiff and the first defendant entered into an agreement in writing whereby the plaintiff was to undertake for the first defendant certain restaurant and kitchen renovations for a total price of $90,000 together with the costs of any variations to the contract which were agreed between the plaintiff and the first defendant. It was further pleaded that "between the 25 September 1998 and 20 December 1998 the Plaintiff undertook at the request of the Firstnamed Defendant certain variations the net cost of which was $48,441.00". By the defence those facts are admitted.
By the statement of claim the plaintiff therefore claims the total of $90,000 and $48,441, that is to say $138,441 less $75,000 paid by the first defendant, a balance therefore claimed to be due in the amount of $63,441.
As I said earlier, by the defence the defendants made counterclaims and claimed set-offs. They pleaded that it was an express term of the agreement that the plaintiff was to "bring the works to Practical Completion" by 10 November 1998, that the plaintiff failed to do so and that as a consequence the first defendant suffered damage particularised as "lost profits from trading in the premises as a restaurant from 13 November 1998 until 18 January 1999". In an affidavit filed on behalf of the defendants and sworn by an accountant, Trevor Hughes, the loss was assessed at $10,059. The defendants also pleaded in the defence that in breach of the agreement the plaintiff failed to carry out the works in a good and workmanlike manner, as a result of which the first defendant suffered damage. The damage was stated to be the cost of rectification of the faulty workmanship, the amount of that cost "to be supplied". In a report annexed to an affidavit filed on behalf of the defendants and sworn by a building consultant, Anthony S Widdowson, the cost of rectification was stated to be $12,050. The first defendant therefore seeks to counterclaim and to set-off against the plaintiff's claim $22,109, being the total of $10,059 and $12,050.
An issue at the hearing of the application was whether the defendants should be given leave to defend the plaintiff's claim in so far as it includes $48,441 for the cost of variations. In his report Mr Widdowson expressed the opinion that the fair and reasonable value of the variations was $12,735. Mr Kemp for the defendants submitted that they should therefore have leave to defend as to the difference. However, he was faced with insurmountable difficulties in maintaining the submission in view of the evidence before me. Firstly, the defence admitted that the sum of $48,441 was the net cost of the variations. Secondly, in the affidavit of the first defendant's director, Mr Shah, he only maintained the defence as pleaded and made no suggestion that the plaintiff's claim for variations was excessive. He said that Mr Widdowson's company, Widdowson Building Consultants Pty Ltd, had been instructed to prepare a report in respect of par8 of the defence, which concerned the alleged failure of the plaintiff to carry out the work in a good and workmanlike manner, but made no mention of a defence concerning the variations. Thirdly, the defendants put before me evidence concerning the building agreement and of agreements between the parties that the variations be carried out for at least the amount claimed by the plaintiff. Clause 10 of the agreement between the parties effectively provided for variations to be carried out with the agreement of the parties at a cost also to be agreed by them and, if a variation was agreed upon, for the parties to sign a written record of the details. In evidence were copies of three documents purporting to be signed on behalf of the plaintiff and the first defendant. Essentially they set out the variations and their cost to a total of $48,796 (because of arithmetical errors a greater sum than is now claimed by the plaintiff) and stated that the variations had been agreed or authorised by them and that the costs were payable by the first defendant. Mr Kemp conceded that he had great difficulty arguing against such weighty evidence. I conclude that the defendants have failed to satisfy me that there is an issue which ought to be tried concerning the variations.
Subject to the question of interest, to which I will return, the plaintiff should therefore have judgment against the first defendant for $41,332, made up as follows:
Agreed cost of building works $ 90,000 Agreed cost of variations $ 48,881 Total $138,441 Less paid by the first defendant $75,000 Less damages claimed by the first defendant for delay $10,059 Less damages claimed by the first defendant for faulty workmanship $12,050 $ 97,109 Amount for which judgment will be entered $ 41,332 The first defendant should have leave to defend as to its set-offs totalling $22,109.
Concerning the second defendant, Mrs Hamilton submitted for the plaintiff that it should have judgment for the full amount of its claim and that the second defendant is not entitled to the benefit of the set-offs claimed by the first defendant. The second defendant was sued under a guarantee he gave to pay the plaintiff any money that was to be paid to the plaintiff under the agreement between the plaintiff and the first defendant. I was referred to Langford Concrete Pty Ltd v Finlay [1978] 1 NSWLR 14 as authority for the proposition that it by no means necessarily follows that, because a debtor could have set up a claim for defective work in diminution of a price, the guarantor can do so. However, what that case emphasises is that the question depends on the terms of the contract of guarantee. It would of course be unjust to require the second defendant to pay to the plaintiff a sum greater than the first defendant's liability to the plaintiff, for the plaintiff would be unjustly overpaid and in my view it is strongly arguable for the second defendant, although I do not decide the point, that his liability to the plaintiff under the guarantee does not exceed the liability of the first defendant. If the set-offs claimed by the first defendant are proved, the amount payable by the first defendant to the plaintiff under the contract will have been reduced and the liability of the second defendant as guarantor will likewise have been reduced. Accordingly I hold that, subject to the question of interest, the plaintiff should have judgment against the second defendant also for $41,332 and that the second defendant should have leave to defend as to $22,109.
Concerning interest, the plaintiff claimed against both defendants "interest by way of damages or interest at $10 per centum per annum from 4th May 1999". No particulars of the claim for interest by way of damages were provided and they will need to be assessed. The plaintiff does not seek and cannot have judgment for interest of that nature at this stage of the proceedings However, Mrs Hamilton asked that I order that the plaintiff have judgment against the defendants for interest as claimed in the alternative, that is at the rate of $10 per centum per annum from 4 May 1999. She said that the claim was made under the Supreme Court Civil Procedure Act 1932, s34(1)(b), which, in certain circumstances, allows for such interest to be claimed "from the time when demand of payment was made in writing, giving notice to the debtor that interest would be claimed from the date of such demand or any later date". She asserted from the bar table that such a notice was served on 4 May 1999, which was 10 days prior to the commencement of the action, claiming $63,441 and interest under s34 from 4 May.
In my opinion the plaintiff is not entitled to interest under s34(1)(b) and certainly not at this stage of the proceedings. I dealt with such claims for interest in Chaffey v Charles Martin Constructions Pty Ltd unreported 5/1989. I pointed out that O15 establishes no entitlement to interest when summary judgment is obtained and that there is a need for the facts upon which the claim for interest is based to be pleaded. In this case the plaintiff has pleaded no facts upon which the claim is based. It ought to have pleaded the making of the demand in writing, prior to action, but has not done so. It is also noted that the affidavit of Mr Ellis, which verifies the plaintiff's claim, verifies merely the claim for $63,441 and not the claim for interest. For these reasons the defendants will have leave to defend the plaintiff's claim to interest.
There will be an order that the plaintiff may sign final judgment in this action against both defendants for $41,332 and that the defendants be at liberty to defend this action as to the residue of the plaintiff's claim.
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