CA and Associates Pty Ltd v Fini Group Pty Ltd
[2019] WASC 346
•26 SEPTEMBER 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CA & ASSOCIATES PTY LTD -v- FINI GROUP PTY LTD [2019] WASC 346
CORAM: MASTER SANDERSON
HEARD: 20 AUGUST 2019
DELIVERED : 26 SEPTEMBER 2019
FILE NO/S: COR 130 of 2019
BETWEEN: CA & ASSOCIATES PTY LTD
Plaintiff
AND
FINI GROUP PTY LTD
Defendant
Catchwords:
Corporation law - Application to set aside statutory demand - Turns on own facts
Legislation:
Nil
Result:
Application to set aside statutory demand dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr J Abberton |
| Defendant | : | Mr L A Warnick |
Solicitors:
| Plaintiff | : | Lavan |
| Defendant | : | Clifford Chance |
Case(s) referred to in decision(s):
Nil
MASTER SANDERSON:
This is the plaintiff's application to set aside a statutory demand. The application is supported by an affidavit of Goh Choon Aun affirmed 14 June 2019. A copy of the demand appears as attachment GCA‑5 to Mr Aun's affidavit. There appears in the schedule to the demand, under the heading 'Description of the Debt' the following:
The debt is the Consultancy Fees payable by the company to the creditor under schedule 2 of the Consultancy Services Agreement entered into between the Company, the Creditor and Mr Choon Aun Goh dated 21 December 2015 (as varied on 12 February 2018) for the services rendered by the Creditor to the Company as set out in:
There is then reference to five invoices issued at monthly intervals between 1 November 2018 and 15 March 2019. The amount claimed in the statutory demand is $330,000.
The relevant facts are not in dispute. They were summarised in pars 6 through to 17 of the plaintiff's outline of submissions.[1] My summary of the relevant facts is drawn largely from those paragraphs. On or about 25 November 2015 Adriano Giacomo Fini (Mr Fini), a director of the defendant, was appointed as a director of the plaintiff. On or about 21 December 2015 the plaintiff and the defendant entered into an agreement described as a Consultancy Services Agreement. This Agreement was varied by deed dated 12 February 2018. These two Agreements taken together are referred to in the submissions as the 'Agreement'. That is the term that I will adopt. The purpose of the Agreement was for the defendant to provide consultancy services with respect to the tender for, acquisition and development of lots 2 and 3 at Elizabeth Quay in Perth.
[1] Plaintiff's outline of written submissions filed 2 August 2019.
It is common ground the Agreement contemplated three 'phases'. The first and second phase was completed on or about 2 March 2017 when the plaintiff completed the purchase of the Elizabeth Quay properties for $93.5 million. The third phase of the Agreement was described as the 'Part C – Project Delivery' phase. It is convenient at this point to refer to the Consultancy Services Agreement. It appears as attachment GCA‑3 to Mr Aun's affidavit.[2] Clause 2 of the Agreement has the heading 'Agreement to Provide Consultancy Services, Payment of Consultancy Fees'. Clause 2.1 reads as follows:
FGPL will provide the Consultancy Services to the Project Entity provided in clause 3 and otherwise subject to and upon the terms of this Agreement.
[2] Affidavit affirmed 14 June 2019.
Clause 3 of the Agreement requires the defendant to provide consultancy services to the plaintiff on a non‑exclusive basis. The remainder of cl 3 sets out certain services which must be provided by the defendant and details the way in which they are to be provided. Clause 3.2(c) limits the right of the plaintiff to engage any other party to provide the same or substantially the same kind of consultancy services as is to be provided by the defendant.
Schedule 2 of the Agreement deals with 'Consultancy Fees'.[3] A table is found in the schedule. It reads as follows:
[3] Affidavit affirmed 14 June 2019 at page 61.
| MATTER / NATURE OF FEE PAYABLE TO FGPL | CONSULTANCY FEE AMOUNT | TIME FOR PAYMENT (Subject to issue of a Tax Invoice by FGPL) |
| Tender Success Fee | If appointed the Preferred Tenderer in respect of both of the Lots: $1,000,000.00. If appointed the Preferred Tenderer in respect of one only of the Lots: $500,000.00. | On or before 5 Business Days after receipt of Notification that CAGOH, CA & A, the Project Entity or an Associate is the Referred Tenderer for one or both of the Lots |
| Contract Success Fee | If the Tender is successful in respect of both of the Lots: $2,500,000.00. If the Tender is successful in respect of one only of the Lots: $1,250,000.00. | On or before 5 Business Days after the Project Documentation becomes unconditional except for any conditions which may be waived by, or are otherwise under the control of, CAGOH, CA & A, the Project Entity or an Associate |
| Project delivery fees | If the Tender is successful in respect of both of the Lots: $75,000 per calendar month. If the Tender is successful in respect of one only of the Lots: $37,500.00 per calendar month. | Payable monthly in arrears on the first day of the following month with respect to the Project development and construction phase which is the period commencing on the day immediately following the date of execution of the Project Documentation and ending on final completion of Construction |
| Termination Fee: Payable where this Agreement is terminated and CAGOH, CA & A, the Project Entity or an Associate enters into an Acquisition Agreement within 24 months after termination. | $1,750,000.00 per lot | On or before 5 Business Days after execution of the Acquisition Agreement. |
Before dealing with the meaning and effect of that Agreement – and that is at the heart of this application – I should complete the factual narrative. It would appear that the parties fell out sometime around February 2018. Either way, the plaintiff did not make any request for the defendant to provide consultancy services after February 2018. Notwithstanding there being no request by the plaintiff to provide consultancy services, the defendant continued to issue invoices to the plaintiff. On or about 7 January 2019 the defendant served a statutory demand on the plaintiff for an amount of $594,000 for the non‑payment of those invoices.
On or about 15 January 2019 the plaintiff delivered to the defendant a letter which attached a cheque for the amount in the statutory demand. In part that letter read as follows:
We hereby give notice to the Fini Group Pty Ltd:
·that CAA has not requested Fini Group Pty Ltd to provide any Consultancy Services (being those set out in Part C of Schedule 1 to the Agreement) since February 2018;
·not to provide any such Consultancy Services unless and until specifically requested to do so in writing from CAA; and
·no such Consultancy Fees shall be payable by CAA to Fini Group Pty Ltd for Consultancy Services as the assistance is not required by the Project Entity.[4]
[4] Attachment GCA‑7 to the affidavit of Goh Choon Aun affirmed 14 June 2019.
The defendant responded to that letter on 22 January 2019.[5] It rejected the plaintiff's interpretation of the contract. It said the contract was to the effect that the plaintiff was obliged to pay for the consultancy services whether or not they were used. After this exchange of correspondence the plaintiff did not request any consultancy services from the defendant but the defendant continued to render invoices. The plaintiff did not pay the invoices and that has led to the statutory demand.
[5] Attachment AGF‑1 to the affidavit of Adriano Giacomo Fini sworn 8 July 2019.
The nature of the dispute then between the parties is relatively simple. The plaintiff says it can, if it wishes, seek consultancy services from the defendant. If no services are sought and none are provided then no monthly payment is due. For its part, the defendant says the plaintiff is obliged to pay for the consultancy services whether or not they are actually used. Both parties accepted it was only necessary for the plaintiff to establish its interpretation of the contract was arguable. If it did that the demand should be set aside.
During the course of the submissions, and while considering the terms of the contract, I raised with counsel the possibility the contract was ambiguous. Both counsel agreed that if I came to the conclusion that the Agreement was arguably ambiguous then the demand would be set aside. In the context of this application it is important to note I was not asked to determine whether or not the contract was actually ambiguous. The question was whether it was arguably ambiguous.
It is not necessary for me to rehearse the authorities dealing with what constitutes a 'genuine dispute' under the statutory demand regime. In this case the question was whether the plaintiff's contentions were worthy of further investigation. The issue was quite straightforward.
It must be acknowledged the Agreement is sparse in its terms. Clause 3 sets out some of the matters which might be the subject of services provided by the defendant but reading the Agreement offers no real definition of just what the services will be. It is clear, however, the defendant must make those services available. For its part, the plaintiff cannot look elsewhere for services. It either uses the defendant or does not engage consultants. There was some evidence led about that issue in further affidavits filed – one on behalf of the plaintiff, one on behalf of the defendant. In my view that evidence is irrelevant. The document speaks for itself.
The difficulty with the plaintiff's submission is that it really anticipates a fee for service arrangement: if services are asked for they will be paid for. But there is no sliding scale which would recognise the extent of the defendant's involvement. For instance, the plaintiff may have made one phone call to the defendant during the course of a month asking a very simple question which required no more than a one sentence answer. But if that was done the plaintiff would be liable to pay the defendant the full fee. On the other hand the plaintiff may have requested the defendant's assistance on a major issue which occupied the time of a number of employees for the entire month. Even if the actual cost to the defendant was more than the consultancy fee, the defendant would be limited to the amount of the fee. Again, that reflects the fact this Agreement cannot be categorised as a fee for service Agreement.
In my view the position is clear. It is not arguable the Agreement is ambiguous. The plaintiff was obliged to pay the defendant a flat fee for consultancy services whether or not those services were provided and irrespective of the extent of the services provided. That is the clear operation and intent of the agreement – particularly in light of what is contained in sch 2 of the Agreement. That does not set out any regime for the payment of services actually provided. It sets out a regime for payment of the defendant for services it stands ready to provide.
There is no serious question to be tried in this matter. The plaintiff is indebted to the defendant and the application to set aside the statutory demand should be dismissed. The plaintiff should pay the defendant's costs of the application including the reserved costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson26 SEPTEMBER 2019
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