C and L Ceilings Pty Ltd v Built Pty Ltd
[2017] WASC 214
•3 AUGUST 2017
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: C & L CEILINGS PTY LTD -v- BUILT PTY LTD [2017] WASC 214
CORAM: MASTER SANDERSON
HEARD: 20 JULY 2017
DELIVERED : 3 AUGUST 2017
FILE NO/S: COR 65 of 2017
BETWEEN: C & L CEILINGS PTY LTD
Plaintiff
AND
BUILT PTY LTD
Defendant
Catchwords:
Corporations law - Application to set aside a statutory demand - Turns on own facts
Legislation:
Nil
Result:
Demand set aside
Category: B
Representation:
Counsel:
Plaintiff: Mr G R Ritter QC
Defendant: Mr M C Hotchkin
Solicitors:
Plaintiff: HopgoodGanim Lawyers
Defendant: Hotchkin Hanly Lawyers
Case(s) referred to in judgment(s):
Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund (1996) 70 FCR 452
MASTER SANDERSON: This was the plaintiff's application to set aside a statutory demand. A copy of the demand appears as attachment GPL‑1 to the affidavit of Gary Philip Leach sworn 4 April 2017 and filed in support of the application. The amount of the demand is $565,064.90. Appearing in the schedule to the demand under the heading 'Description of the Debt' there is the following:
The amount of an overpayment made by the creditor to the company for work done by the company at the Heirloom Apartments in Fremantle under a subcontract between the creditor and the company.
The relevant facts can be simply stated. On or about 25 August 2016 the plaintiff as subcontractor and the defendant as main contractor entered into a subcontract for works on the defendant's project known as Heirloom Fremantle located at 36 Queen Victoria Street, Fremantle. The subcontract was a fixed lump sum in an amount of $10,100,000 (excluding GST). As is so often the case there were variations throughout the duration of the subcontract. It is common ground between the parties that eventually the defendant paid the plaintiff an amount of $12,197,564.90. It is important to note this was the actual amount paid by the defendant to the plaintiff. Nowhere in the evidence is it precisely stated what the plaintiff says was the actual contract sum inclusive of variations.
It is common ground between the parties that on 9 November 2016 a meeting took place between representatives of the plaintiff and representatives of the defendant. Mr Leach attended with a Mr Peter McGrath on behalf of the plaintiff; the defendant was represented by Mr Rodney O'Neill. What actually took place at that meeting is the subject of some debate between the parties. I will deal with this evidence further below. What is common ground is that the parties entered into a document headed 'Subcontractor Release' (GPL‑2 to the affidavit of Gary Philip Leach, sworn 4 April 2017). Clause 2 is for present purposes the relevant part of that agreement. It is in the following terms:
2.Release & Indemnity
2.1The Subcontractor agrees that its only entitlement to payment in respect of the Work under the Subcontract is as follows:
Original Subcontract Sum 10,100,000.00
Total of all adjustments & approved variations _____________
Final Subcontract Sum $10,575,000.0
Less previous net payments 9,386,464.75
Final balance owing (inclusive of retention) _____________
Plus retention terms (BG held) 256,396.57
Final balance owing (exclusive of retention) ____1,188,535______
2.2The Subcontractor, subject to receipt of the sum of _$1,444,933_ being the final balance owing (exclusive of retention) in the terms of the Subcontract:
2.2.1unconditionally releases and discharges Built and Built's Representative from all claims, demands, debts, accounts, costs, liens, actions and proceedings whether known or unknown which the Subcontractor has or might have against Built or Built's Representative howsoever arising under the Subcontract or out of its performance except for a claim for return of retention monies and remaining security (if any) after the issue of a final certificate or final payment statement as the Subcontract may require; and
2.2.2indemnifies Built and Built's Representative and their officers, servants and agents, from and against all claims, demands, debts, accounts, expenses, costs, liens, actions and proceedings, whether known or unknown, by any person, corporation or firm howsoever arising under the Subcontract or out of its performance.
2.3The Subcontractor acknowledges and agrees that this release does not relieve it from any of its obligations under the Subcontract including its obligations to rectify Defects during the Defects Liability Period.
There is one obvious error on the fact of this document. In par 2.2 there is reference to the sum of $1,444,933 which is said to be the final balance owing 'exclusive of retention'. In fact that amount is inclusive of retention. The figure is reached by adding the amount of $255,396.57 being the retention sum and the amount of $1,188.535 being what is described as 'Final balance owing'.
In opposition to the application the defendant relied upon an affidavit of Rodney John O'Neill sworn 24 May 2017 and affidavit of Jason Leonard Mortimer sworn 9 June 2017. Mr O'Neill refers to the meeting with the plaintiff's representatives on 9 November 2016. He refers to it as a 'close out' meeting. Certain matters were discussed and then Mr O'Neill says:
22.I cannot recall exactly the words spoken but towards the end of the meeting I said words to the effect that Built would pay C & L Ceilings a final net contract sum of $10,575,000 (excluding GST). Gary and Peter said words to the effect that they would accept that amount. My recollection of how this amount was calculated was that it was about halfway between Built's assessment and the amount of the Final Claim.
23.I then prepared a deed to record this.
24.After preparing the deed I printed it out and took it back to the meeting room where Gary and the others were.
25.Gary then signed the deed. I did not see him read through it. I then made a copy of the deed and gave it to Gary. This is the document attached as 'RO2' to my affidavit in support of the Statutory Demand dated 21 March 2017.
Although he does not say as much Mr O'Neill must have gone to the close out meeting believing as at the date of the meeting the defendant had paid to the plaintiff an amount of $9,386,464.75. Presumably he obtained that figure from the records kept by the defendant. What the defendant now says is that in fact it had paid to the plaintiff an amount greater than the figure stated. Mr Mortimer is the head of finance for the defendant. Essentially he says an error was made by the defendant as the result of a computer glitch. Two further payments were made by the defendant to the plaintiff. One on 11 November 2016 and the other on 7 December 2016. That was presumably in satisfaction of the amount agreed in the Subcontractor Release. But the defendant now says it has overpaid the plaintiff by the amount stated in the statutory demand.
For its part the plaintiff says an agreement was reached between the parties at the meeting on 9 November 2016, it was reduced to writing and the plaintiff was entitled to what it received. Effectively it says there is a contract between the parties and no warrant for going behind that contract. It says at the very least it is arguable the contract is enforceable and the defendant has no right to recover any funds allegedly overpaid.
It is not easy to see the basis upon which the defendant could claim not to be bound by the terms of the Subcontractor Release. The terms of cl 2 are clear. On the fact of it there is no reason to go behind the contract and look at the negotiations that took place and the position of the respective parties. There is one clear mistake but that is obvious and would not in and of itself allow the whole bargain to be reconsidered. What the defendant appears to be arguing is that it was operating under a unilateral mistake - for one reason or another the amount of previous payments was overstated. But there is no suggestion that this mistake was induced by the plaintiff nor is there any suggestion that the plaintiff was aware that the defendant had the incorrect figure. In fact there is no evidence on that point. In the circumstances it must be doubtful whether equity will act to protect the defendant's position.
In his written submissions counsel for the defendant appears to rely on restitution. Paragraph 13 of the written submissions is in the following terms:
The undisputed evidence is that two payments were made by the [Defendant] to the [Plaintiff] after the parties had signed the Subcontractor Release, totalling $1,436,230.53 plus GST. The payments were made in consequence of the promise of releases. If the Subcontractors Release is void, it my be rescinded. The releases would not be enforceable, and the consideration for the payments thereby wholly fail: see Halsbury's Laws of Australia (last updated: 4 June 2015), 110 - Contract, VIII Remedies (4) Restitution in Contract, paragraph [110-11665] Total failure of consideration.
It is difficult to see why the Subcontractor Release is void. It was a bargain entered into after negotiation between the parties. In any event that is not an issue which I have to determine. All I have to conclude is that the plaintiff has an arguable case such as there is a genuine dispute as to the debt. In my view the position is clear and the plaintiff has made good on its application.
At the commencement of the hearing counsel for the defendant objected to certain paragraphs of two affidavits relied upon by the plaintiff. The objection raised was first to the final sentence of par 11 of Mr Leach's first affidavit. That sentence reads: 'The parties did not agree to a final Subcontract sum of $10,575,000 (excluding GST)'. Objection was also taken to pars 5 and 6 of an affidavit of Mr Leach sworn 28 June 2017. Those paragraphs read as follows:
5.I said to Rodney that the draft Deed Poll contained an error in that the Final Subcontract Sum of $10,575,000 referred to in the Deed Poll was incorrect. Rodney said words to the effect that:
'Don't worry about that figure [the final Subcontract Sum] all that matters is the final balance owing.'
6.It was on this basis that I signed the Deed Poll on behalf of the [Plaintiff], requiring the [Defendant] to pay the sum of $1,444,933 (exclusive of GST) and requiring the [Plaintiff] to release the [Defendant] from any claims.
The defendant objected to these paragraphs on two different but inter‑related grounds. First it was said that the final sentence of par 11 of Mr Leach's first affidavit was not sufficient to raise as an issue the question of whether or not the subcontract sum had been agreed. Relying upon the decision of Sundberg J in Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund (1996) 70 FCR 452, further evidence on this issue could not be raised in a subsequent affidavit. I took the view the question of whether or not an agreement had been reached about the contract sum was raised in the supporting affidavit and once it had been raised the evidence could be supplemented by the subsequent affidavit. I therefore declined to strike out the paragraphs about which counsel for the defendant complained. However, as it turned out the subsequent affidavit of Mr Leach did not make any attempt to quantify the contract sum. If, for instance, it had been the plaintiff's case that although it may have been overpaid by the defendant the contract sum was greater than what was stated in the Subcontractor Release and therefore there was a genuine dispute as to the amount owing, at the very least the plaintiff would have needed to provide an amount for the contract sum and probably some evidence as to how the figure was calculated. The plaintiff would have failed. As I have mentioned above the plaintiff did not make any attempt to say what the contract sum might be. It did not need to do so. Indeed it is doubtful whether the discussions which took place at the meeting are of any relevance at all in determining the contractual position between the parties. But that is a matter for another day. It is sufficient if I say in relation to the evidence complained of while I found it admissible it played no part in my decision.
The statutory demand will be set aside. The defendant ought pay the plaintiff's costs of the application including reserved costs.
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