Buildplex Construction Pty Ltd v Tran
[2022] WADC 11
•17 FEBRUARY 2022
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: BUILDPLEX CONSTRUCTION PTY LTD -v- TRAN [2022] WADC 11
CORAM: DEPUTY REGISTRAR HEWITT
HEARD: 27 JANUARY 2022
DELIVERED : 17 FEBRUARY 2022
FILE NO/S: CIV 3279 of 2021
BETWEEN: BUILDPLEX CONSTRUCTION PTY LTD
Plaintiff
AND
TRUNG LE TRAN
Defendant
Catchwords:
Practice and procedure - Application for security for costs - Claim and counterclaim - Turns on its own facts
Legislation:
Building Services (Registration) Act 2011 (WA)
Corporations Act 2001 (Cth), s 1335
Result:
Security refused
Representation:
Counsel:
| Plaintiff | : | Mr M J Keating |
| Defendant | : | Mr A P Rumsley |
Solicitors:
| Plaintiff | : | Williams & Hughes |
| Defendant | : | Western Legal |
Case(s) referred to in decision(s):
Nil
DEPUTY REGISTRAR HEWITT:
Introduction
This action was commenced by an indorsed writ of summons filed 1 September 2021. A memorandum of appearance was likewise filed on 1 September 2021 and a statement of claim was filed on 20 September 2021. Thereafter the defendant applied for security for costs and the plaintiff responded by filing an application for summary judgment. The latter claim was abandoned and that decision was made known by an outline of submissions filed 6 January 2022. It therefore remains to deal with the application for security for costs. For some reason the applicant defendant has chosen to bring the application for security relying on O 25 of the Rules of the Supreme Court 1971 (WA). As the plaintiff is a company, the more usual application is reliant on s 1335 of the Corporations Act 2001 (Cth) and reference is made to that provision in the defendant's submissions filed 6 January 2022.
I take the view that it is open to the defendant to rely on whichever of the provisions he chooses, so long as it gives the opposing party an ample opportunity to respond. In this case, the plaintiff was given approximately three weeks' notice of the defendant's intended reliance on s 1335 of the Corporations Act, and in the circumstances, I shall regard the application as reliant upon that section rather than O 25 of the Rules of the Supreme Court.
An application under s 1335 of the Corporations Act requires me to consider a threshold question, namely whether it is demonstrated by credible testimony that the plaintiff would be unable to meet an order for costs in the event that the defendant successfully defends the action. If that question is answered in the affirmative, the court then has an enlivened discretion to order such security as may be appropriate in the circumstances. However the court is not bound to order security but simply has the discretion to do so.
The most compelling evidence advanced by the defendant is that the registration of the plaintiff under the register of building contractors and practitioners under the Building Services (Registration) Act 2011 (WA) has lapsed, and did so in August 2021. That allied with the fact that Mr Aleksander Bukilic is the sole director and secretary of the plaintiff and is in poor health, adds credence to the fact that the plaintiff company is no longer engaged in the business of construction as it was formerly, and in particular, when it entered a contract with the defendant.
An affidavit filed by Mr Bukilic which was lodged on 2 November 2021 does not identify any assets to which the plaintiff company might have resort in the event that it was required to pay costs. The primary inquiry therefore devolves upon the quality of the plaintiff's claim and the defence to it which is offered by the defendant.
The plaintiff's claim
The plaintiff's claim stems from a building contract which was entered between the plaintiff and the defendant for the construction of an apartment complex for a total of $1,355,000. That amount was to be paid by various instalments during the progress of the building and the plaintiff's claim is that it rendered two progress payment claims which have not yet been paid, and that is the basis upon which the action was pursued.
The defendant's defence
The defendant's defence is that the relevant invoices were never issued to him and that, for his part, after what he considered unreasonable delays, he terminated the contract, engaged another builder to finish the job, and these events give rise to a counterclaim.
Insofar as the plaintiff's claim relies upon the delivery of the relevant invoices, there is an issue between the parties as to whether or not those invoices were ever served on the defendant. That is important because if they were delivered and unpaid, then the plaintiff would be entitled to suspend work on the building and the defendant's purported termination of the contract would have been ineffective. If on the other hand the invoices were not delivered and there was no progress being made on the building, the defendant would have been entitled to issue a notice of termination as he did.
There is a further complication however, because in the event of early termination the builder is still entitled to be paid for any work which he had completed which had not been paid for at the date of termination. In other words, even if the plaintiff had not delivered invoices as claimed to the defendant, it would, on the defendant's termination, still be entitled to be paid for the work which had been completed and for which no payment had been made.
It then becomes necessary to consider the position following the defendant's termination, assuming that termination to have been effective. Accepting the amount of the invoices upon which the plaintiff relies in its action as an appropriate measure for the value of work done, the plaintiff has a claim for $257,450.
The defendant's defence comprises the cost of engaging another builder to finish the work and some defects claims. The amount charged by the alternative builder was $232,000 and the defects claims add some $38,552. Offset against that is the amount that would have been payable by the defendant to the plaintiff had the plaintiff completed the work. That figure is $135,500. To that should be added a claim for delay costs which has been calculated by the plaintiff at $130,646.92, though as has been pointed out by the plaintiff, that figure contains a miscalculation to the tune of $54,979.37.
Taking those amounts together it would appear that the defendant is approximately $46,000 to the good, however, the defendant has thrown into the balance, losses in the nature of rental losses caused by the plaintiff's delay. On that score it is notable that the defendant engaged an alternative builder to complete the job and the terms of that engagement were that the tasks would be completed in 55 days. Without pretending precision, the job should have been finished towards the end of 2019.
The various leases which were eventually entered into by the defendant were in late 2021 after this action commenced. I am unable to see how it can be said that any such losses can be attributed to any delay by the plaintiff. It was almost two years after termination and completion of the works that the defendant decided to lease the premises. There must have been some other reason why the building lay vacant in the meantime, and whatever it was, it was not the default of the plaintiff. Accordingly, in my view, any attempt to pass on what are described as rental losses must be rejected and the bottom line therefore is that taking the materials as I find them, it is likely that the plaintiff will succeed in his claim, at least to the amount of some $50,000. If that is the case, it is difficult to see any justification for ordering the plaintiff to give security to the defendant, and in my view, such an order is inappropriate in the circumstances and I therefore dismiss the defendant's application.
There remains the question of costs and the defendant's failure on the present application would perhaps be balanced by the plaintiff's failure on the summary judgment application. However, that is a matter upon which the parties should be heard after this decision is delivered.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
FN
Associate
16 FEBRUARY 2022
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