Boral Resources (Qld) Pty Ltd v Griffith
[2005] FMCA 298
•15 March 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BORAL RESOURCES (QLD) PTY LTD v GRIFFITH | [2005] FMCA 298 |
| BANKRUPTCY – Contested Creditor’s Petition. |
| Applicant: | BORAL RESOURCES (QLD) PTY LTD |
| Respondent: | DAVID JAMES GRIFFITH |
| File Number: | BRG 506 of 2003 |
| Judgment of: | Baumann FM |
| Hearing date: | 13 November 2003 |
| Delivered at: | Brisbane |
| Delivered on: | 15 March 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mr P. McQuade |
| Solicitors for the Applicant: | James Conomos Lawyers |
| Counsel for the Respondent: | Mr D. Marks |
| Solicitors for the Respondent: | Cass Legal Group lawyers |
ORDERS
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 506 of 2003
| BORAL RESOURCES (QLD) PTY LTD |
Applicant
And
| DAVID JAMES GRIFFITH |
Respondent
REASONS FOR JUDGMENT
On 11 September 2003, the Petitioning Creditor BORAL RESOURCES (QLD) PTY LTD (“Creditor”) presented a petition seeking the sequestration of DAVID JAMES GRIFFITHS (“the Debtor”). The petition asserts the failure by the Debtor to comply with a Bankruptcy Notice served on 20 August 2003.
The Bankruptcy Notice is founded on a judgement of DCJ Forno on
21 July 2003 for $60, 947.75.
The Debtor’s Notice of Opposition filed 6 October 2003 claimed that:
“1) The Bankruptcy Notice dated 12 August 2003 found (sic) in the Creditor’s Petition is a nullity.
2) There is no debt owed in fact or law to the creditor”.
Ultimately, by final submissions, the Debtor no longer persisted with a submission that the Creditor was “not entitled under the Act to interest as claimed”. The assertion was without merit as the interest aggregated with the debt owed, was interest awarded under s.47 of the Supreme Court Act 1995 (Qld) and as such was a component of the judgment claimed by the Creditor.
The only remaining issues for my determination was whether the Debtor had a set-off, counter-claim or cross-demand in an amount greater than the amount claimed by the Creditor, such that it would not, in the circumstances, be appropriate to make a sequestration order.
Issue
The Creditor supplies concrete products and at all material at times the Debtor was a concreter who had contracted with the Debtor to supply concrete products.
As I am satisfied on the matters set out in s.52 of the Bankruptcy Act 1966, the Debtor, who bears the onus of establishing there is some other sufficient cause why the sequestration order ought not be made, asserts he was supplied with the wrong concrete and that this failure by the Creditor has caused defects in the finished pour and slab. The costs of remedial work and replacement the Debtor estimates exceeds the judgment debt founding these proceedings.
The Creditor denies any error was made by it in the supply of the product.
EVIDENCE RELIED UPON BY DEBTOR
The Debtor gave evidence and was cross examined as were the two “expert” witnesses which he relied upon, namely concreter ROY CASSIDY and engineer KENNETH BROWN.
The Debtor says that:
a)The concrete supplied by the Creditor “was not to the description ordered and not fit for the purpose required”. He says when he placed the order he specified he required “steel concrete”, which is a mix of concrete containing short fibres of steel which has “high strength” and is suitable for “load bearing”.
b)The Creditor eventually supplied a concrete mix “containing polypropylene fibre as a reinforcer” which is not “designed for or suitable for load bearing structures”.
c)He has had considerable experience in the “construction of load bearing structural slabs” and is “aware of the necessity for strength in any such slab and would not use anything other than steel for reinforcing whether it be a steel fibre mix or a reinforced welded wire mesh construction”.
d)“as a result of the incorrect concrete being supplied to me the concrete has cracked extensively – some cracks being up to 4mm in width and openly visible to the eye to a depth of 30mm with some extending the full dimension of the slab”.
Under cross examination he was insistent that:
a)He has no liquidity problems and can satisfy the debt, from the proceeds of the units constructed, once sold
b)The letter of Acknowledgement of Debt (dated 1 April 2003); the part payment of $40, 000 and the offers made on or about 10 September 2003 should not be construed as him accepting the product. The letters really do speak for themselves in my view.
c)
Even though his counter-claim was stuck out by DCJ Forno on
21 July 2003, he still intends to make a claim. He says he was let down by his former solicitors and hasn’t “had the opportunity” to put the claim in. Clearly he has had many months before I heard this matter in November 2003 to do so, and has done nothing.
d)His confusion about the date of the pour (a contradiction between an Affidavit used in the District Court proceedings asserting it was between the 14–17 January 2003; and the conceded day of the pour as 19 February 2003) did not change his recollection that the experience foreman on site was Mick Dood. Mr Griffiths did concede that the foreman engaged as required, would not have been aware of the specifications but he is sure “I told him I ordered steel fibrecrete”. Mr Dood did not provide any evidence to support the Debtor’s claim.
e)Importantly he says he personally ordered the product by phone and he ordered “steel fibrecrete”.
The Debtor called Mr Cassidy to provide an estimation of the costs of replacement – said to be $57, 991.00.
Kenneth Brown, a professional engineer, arranged for a representative of his firm to inspect the works and provide a report, for which he accepts responsibility. He had not inspected the works personally.
He says in his report and further evidence, under cross examination that:
a)The “aim of the inspection was to examine the cracking that has occurred throughout the basement slab and provide comment as to the cause of the cracking and suggest possible remedial works”.
b)The design drawings (which I infer they sighted), indicated a “100mm thick slab on grade reinforced with RF82 steel reinforcing fabric”. He says “we understand” that the specification was amended “to replace the RF82 reinforcing fabric with ‘fibresteel’”. He does not say who was the source of this “understanding” and he was not asked. The Debtor did not chose to provide evidence from the apartment designer Rymank Engineers, to explain how this alleged variation occurred and why it occurred.
c)Further investigations need to be carried out before it could be determined what caused the cracking. The cracking in this slab is obvious and as wide as 4mm. The slab finish is unacceptable, both aesthetically and structurally and remedial works will be required.
d)“fibremesh” is an inappropriate product for this application but you would not be able to necessarily identify what was used.
Evidence Relied Upon By The Creditor
Apart from the history of delay in taking action and the evidence of acknowledgement of liability by the Debtor put to him in cross examination, the Creditor relied upon an Affidavit of CRAIG WILSON, the batcher in charge of the concrete plant of the Creditor at Benowa.
Relevantly he swears (and was not required for cross examination) that:
a)the concrete supplied by the Creditor to the Debtor was supplied from his plant and “I took ninety-eight (98) percent of the orders”.
b)The orders for the concrete were placed by “Gary whom I believe to be the respondent’s foreman” and that “at no time, did either Gary or the respondent place any telephone order for fibresteel concrete”. He says Gary did order “fibrecrete” which is the industry term for “firbremesh stealth”. The delivery dockets annexed to his Affidavit confirm what was delivered was “fibremesh stealth”, which is less expensive than fibresteel concrete.
The recollections and corroborative documents relied upon by
Mr Wilson have a ring of truth and efficient practice about it. This contrasts with the vagueness, uncertainty and uncorroborated assertions of the Debtor.
Conclusion
On the evidence I find the Debtor’s version of events is implausible. There is no evidence it was either:
a)rejected the product at the time, despite evidence that an experienced concreter would probably know the difference; and
b)it was the subject of complaint when months later negotiations for payment were undertaken.
The Debtor was dilatory in pursuing his alleged counter-claim and when he did, it seems on the evidence, to have been struck out.
I agree that there is a public interest, in some circumstances in allowing a debtor to prosecute a claim for on amount which would offset the amount claimed by a Bankruptcy Notice 9 (see LING v ENROBOOK (1997) 74 FCR 19 at 25), however where the claim is doubtful and the Debtor has not acted diligently in prosecuting the claim, the Creditor is entitled to urge for sequestration.
This is the case in this matter.
An issues arises which was not the subject of submission. The Creditor’s Petition in this matter has expired – between the time I heard this matter in November 2003 and delivery of this Reasons. This was due to inadvertence by the Court – had I been aware (as perhaps I should have) that the Petition was to expire, then delivery of these Reasons would have been expedited.
In the circumstances, I am satisfied that the Court may have the power to extend the life of the Petition for the reasons given by Spender J in MATTHEWS v COLLETT (2000) FCA 224 (see also ELYARD CORPORATION PTY LTD v DDB NEEDHAM SYDNEY PTY LTD (1995) 133 ACR 206; Re: LANGRIDGE; Ex parte BENNETT CARROLL & GIBBONS (1998) FCA 879). Before pronouncing an order for sequestration, I propose to give the parties an opportunity to made submissions on this issue.
For completeness, I also find that the Debtor (who offered little evidence about solvency), has not satisfied me that he has the capacity to pay his accounts as and when they fall due sufficient to avoid sequestration.
I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Baumann FM
Associate:
Date:
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