Carlino Enterprises Pty Ltd v Donnybrook Holdings Pty Ltd
[2000] WASC 247
•13 DECEMBER 2000
CARLINO ENTERPRISES PTY LTD -v- DONNYBROOK HOLDINGS PTY LTD [2000] WASC 247
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 247 | |
| Case No: | COR:256/2000 | 20 NOVEMBER 2000 | |
| Coram: | MASTER SANDERSON | 13/12/00 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Demand set aside | ||
| PDF Version |
| Parties: | CARLINO ENTERPRISES PTY LTD (ACN 008 854 386) DONNYBROOK HOLDINGS PTY LTD (ACN 009 326 112) |
Catchwords: | Corporations Law Application to set aside statutory demand Construction dispute Approach in such a case |
Legislation: | Corporations Law, s 109(1), s 459E(1), s 459G, s 459H(1)(b), s 459H(2), s 459J(1)(b) |
Case References: | Four Seasons Construction Pty Ltd v Eastern Metropolitan Regional Council [2000] WASC 277 Hope v Hope [1852] 43 ER 534 Howship Holdings Pty Ltd v Leslie (1996) 14 ACLC 1549 John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716 PDR Pty Ltd v Cottesloe Constructions Pty Ltd [2000] WASCA 62 Asian Century Holdings Inc v Fleuris Pty Ltd [2000] WASCA 59 AZED Developments Pty Ltd v Frederick & Co Ltd (1994) 12 ACLC 949 B & M Quality Constructions Pty Ltd v Baysite Steel Supplies Pty Ltd (1995) 13 ACLC 81 Capital Bay Investments Pty Ltd v Richard Szklarz Architects Pty Ltd, unreported; SCt of WA; Library No 980503; 8 September 1998 Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 Classic Ceramica Importers Pty Ltd v Ceramica Antiga SA (1994) 12 ACLC 334 Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (1998) 16 ACLC 12 Eyota Pty Ltd v Havana Pty Ltd (1994) 12 ACLC 699 Fieldmont Holdings Pty Ltd v Scrutiny (WA) Pty Ltd [2000] WASC 237 First Line Distribution Pty Ltd v Whiley (1995) 13 ACLC 1216 Gianfranco Constructions Pty Ltd v Ground & Fountain Supports Pty Ltd [2000] WASC 245 Goldspar Australia v KWA Design Group (1999) 17 ACLC 456 Jarpab Pty Ltd v Mark Winter t/as Bolden Haulage (1994) 12 ACLC 688 Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No 2) (1994) 12 ACLC 490 John Shearer Ltd & Arrowcrest Group Pty Ltd v GEHL Company (1995) 134 ALR 1 Kalamunda Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd (1994) 51 FCR 446 Mibor Investments Pty Ltd v Commonwealth Bank of Australia Ltd [1994] 2 VR 290 Pacific Capital Ltd v BBC Hardware Ltd (1995) 122 FLR 36 Portfield Enterprises Pty Ltd v Galvin Engineering Pty Ltd [1999] WASC 72 Portrait Express (Sales) Pty Ltd v Kodak (Australasian) Pty Ltd (1996) 132 FLR 300 Re Morris Catering (Australia) Pty Ltd (1993) 11 CLC 919 Re Waikim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511 Scandon Pty Ltd v Dome Supplies Pty Ltd (1995) 13 ACLC 1256 Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1993) 47 FCR 451 Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 147 ALR 444 Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294 Universal Greening Pty Ltd v Sabine (1999) 17 ACLC 880 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
DONNYBROOK HOLDINGS PTY LTD (ACN 009 326 112)
Defendant
Catchwords:
Corporations Law - Application to set aside statutory demand - Construction dispute - Approach in such a case
Legislation:
Corporations Law, s 109(1), s 459E(1), s 459G, s 459H(1)(b), s 459H(2), s 459J(1)(b)
Result:
Demand set aside
(Page 2)
Representation:
Counsel:
Plaintiff : Mr B W Ashdown
Defendant : Mr N Curwood
Solicitors:
Plaintiff : Ilbery Barblett
Defendant : Arns & Associates
Case(s) referred to in judgment(s):
Four Seasons Construction Pty Ltd v Eastern Metropolitan Regional Council [2000] WASC 277
Hope v Hope [1852] 43 ER 534
Howship Holdings Pty Ltd v Leslie (1996) 14 ACLC 1549
John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716
PDR Pty Ltd v Cottesloe Constructions Pty Ltd [2000] WASCA 62
Case(s) also cited:
Asian Century Holdings Inc v Fleuris Pty Ltd [2000] WASCA 59
AZED Developments Pty Ltd v Frederick & Co Ltd (1994) 12 ACLC 949
B & M Quality Constructions Pty Ltd v Baysite Steel Supplies Pty Ltd (1995) 13 ACLC 81
Capital Bay Investments Pty Ltd v Richard Szklarz Architects Pty Ltd, unreported; SCt of WA; Library No 980503; 8 September 1998
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148
Classic Ceramica Importers Pty Ltd v Ceramica Antiga SA (1994) 12 ACLC 334
Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (1998) 16 ACLC 12
Eyota Pty Ltd v Havana Pty Ltd (1994) 12 ACLC 699
Fieldmont Holdings Pty Ltd v Scrutiny (WA) Pty Ltd [2000] WASC 237
First Line Distribution Pty Ltd v Whiley (1995) 13 ACLC 1216
Gianfranco Constructions Pty Ltd v Ground & Fountain Supports Pty Ltd [2000] WASC 245
(Page 3)
Goldspar Australia v KWA Design Group (1999) 17 ACLC 456
Jarpab Pty Ltd v Mark Winter t/as Bolden Haulage (1994) 12 ACLC 688
Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No 2) (1994) 12 ACLC 490
John Shearer Ltd & Arrowcrest Group Pty Ltd v GEHL Company (1995) 134 ALR 1
Kalamunda Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd (1994) 51 FCR 446
Mibor Investments Pty Ltd v Commonwealth Bank of Australia Ltd [1994] 2 VR 290
Pacific Capital Ltd v BBC Hardware Ltd (1995) 122 FLR 36
Portfield Enterprises Pty Ltd v Galvin Engineering Pty Ltd [1999] WASC 72
Portrait Express (Sales) Pty Ltd v Kodak (Australasian) Pty Ltd (1996) 132 FLR 300
Re Morris Catering (Australia) Pty Ltd (1993) 11 CLC 919
Re Waikim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511
Scandon Pty Ltd v Dome Supplies Pty Ltd (1995) 13 ACLC 1256
Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1993) 47 FCR 451
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 147 ALR 444
Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294
Universal Greening Pty Ltd v Sabine (1999) 17 ACLC 880
(Page 4)
1 MASTER SANDERSON: This is the plaintiff's application to set aside a statutory demand. The application is brought on a number of grounds. First, it is said that the demand was not properly served and therefore there has been no compliance with s 459E(1). Properly construed it may be that the plaintiff is seeking a declaration that the statutory demand has not been properly served so that it could not form the basis of a later application for winding-up. For reasons which I will explain, precise characterisation of the plaintiff's application is unnecessary. Secondly, it is said that the affidavit accompanying the statutory demand is not in proper form and that the demand ought therefore be set aside under the provisions of s 459J(1)(b). Finally, it is said that the plaintiff has offsetting claims which means that the substantiated amount as calculated pursuant to s 459H(2) is equal to or greater than the statutory minimum with the effect that the demand should be set aside under s 459H(1)(b). I will deal in turn with each of the plaintiff's submissions.
2 It is conceded by the defendant that the statutory demand was not served on the plaintiff's registered office. It was served at an address which was formerly the registered office of the plaintiff. However, the statutory demand was forwarded onto the plaintiff and came to the plaintiff's attention soon after the purported service. There was no question that the demand came to the actual notice of the plaintiff. What is more, the plaintiff had sufficient time to make this application under s 459G.
3 The question of what amounts to service under the Corporations Law was considered in some detail by Young J in Howship Holdings Pty Ltd v Leslie (1996) 14 ACLC 1549. I think the position can be summarised in this way. If a demand comes to the attention of a party, whether by service on the registered office or otherwise, there has been service of the document. This applies the common law rule which has been followed for centuries: See Hope v Hope [1852] 43 ER 534. Section 109X(1) of the Corporations Law is not a code but a deeming provision which sets out certain circumstances when service will be taken to have occurred as a matter of law. For instance, if under s 109X(1)(a) statutory demand is left at the company's registered office but never actually comes to anyone's attention, with the effect that the directors of the company do not in reality know of the existence of the demand, service will nonetheless be deemed to have been properly affected. But that is not this case. Here the demand came to the company's attention. There has been service of the demand and there is no basis upon which a declaration that there is no demand on foot could be made.
(Page 5)
4 It is apparent that the affidavit accompanying the statutory demand is defective. Order 81G r 31 and Form 7 set out the requirements of an accompanying affidavit. Section 459E(3)(b) requires that the accompanying affidavit complies with the Rules. Order 81G r 5(1) allows a document which is "substantially in accordance with the form required" to stand even when a rule is in mandatory terms. The question is whether in a particular case the form of the affidavit is such as to allow a debtor to understand the nature of the case to be met: See Four Seasons Construction Pty Ltd v Eastern Metropolitan Regional Council [2000] WASC 277.
5 The accompanying affidavit in this case is deficient in a number of respects. It does not follow and it does not purport to follow Form 7. On its face, it is in the form of a document which would be filed in this Court. It does not have an action number, although there is space for an action number to be inserted. It does not directly offend r 31(c) because there is no proceeding number and it does not refer to any particular court proceeding. But it is in a form which r 31(c) clearly intended to avoid.
6 The demand itself is an annexure to the affidavit. It does not stand alone as should be the case. The affidavit does set out in some detail the nature of the defendant's claims and although Form 7 is not followed strictly, the amount of detail is such that the plaintiff could have been in no doubt how the debt was said to arise. There is no statement by the deponent to the affidavit that he believes there is no genuine dispute as to the debt. Rather, the deponent verifies that he believes "that the debt remains due and owing to the creditor by the company".
7 There is no good reason why the accompanying affidavit in this case could not have followed Form 7. In particular, it is important in the context of the statutory demand procedure that the deponent of the affidavit turn his or her mind to the question of whether or not there is a "genuine dispute" as that phrase is used in the Corporations Law with respect to the debt the subject of the demand. However, it is apparent from the detail contained in the accompanying affidavit that the deponent has given careful consideration to the alleged debt and how it has arisen. The detail contained in the affidavit when taken with the annexures to the affidavit make that plain. The plaintiff upon receipt of the demand and the accompanying affidavit could have been in no doubt as to how it was said the amount of the debt had, on the defendant's case, arisen. On the particular facts of this case I am satisfied that the accompanying affidavit substantially complied with the requirements of r 31 and Form 7 and
(Page 6)
- accordingly there has been compliance with s 459E(3). I would not then be prepared to set the demand aside under the provisions of s 459J(1)(b).
8 During the course of his submissions counsel for the defendant acknowledged that based upon the affidavit evidence filed by the plaintiff, the plaintiff had three offsetting claims so as to give rise to an "offsetting total" as that phrase is defined in s 459H(2). The amount of the statutory demand was $47,686.50. After allowing for what counsel said was the offsetting total, it was submitted that the substantiated amount was $28,781.50. It was the plaintiff's position that in fact the offsetting total exceeded the amount of the demand so that there was no substantiated amount. To resolve this issue it is necessary to consider in some detail the evidence led by the parties.
9 The plaintiff is a building contractor. The defendant is an electrical contractor who, from time to time, has performed subcontract work for the plaintiff. The debts which form the basis of this claim relate to four subcontracts undertaken by the defendant for the plaintiff as outlined in the affidavit of Sergio Demali sworn 28 September 2000. The first relates to work undertaken at Lot 89 Fraser Road, Applecross ("the Bollig residence"). The contract price for the work undertaken on this residence was $14,980. During the course of construction there were agreed variations which increased the price by $1137. The plaintiff says that during the course of carrying out the work the defendant incorrectly cut out the ceilings in the ground floor for the installation of light fittings. The plaintiff says that it has incurred additional costs of $500 as a consequence of the defendant's mistakes. In his affidavit of 10 November 2000, sworn in opposition to the application, Mauro Triventi ("Triventi") accepts for the purpose of this application there is a dispute with respect to the $500. Triventi also says that there was a further variation for $485. In his affidavit of 17 November Sergio Demali ("Demali"), a director of the plaintiff, denies any knowledge of this variation. In the circumstances the evidence shows that in relation to the Bollig residence the plaintiff is indebted to the defendant in the sum of $15,617.
10 The second part of the claim relates to work undertaken at Lot 64 Victoria Avenue, Claremont ("the Hardie residence"). The fixed price contract in this case was for $23,590. This was varied twice with the effect that the eventual total contract sum for the Hardie residence was $27,390. Both parties agree with this figure. The defendant says that variations were issued by the plaintiff which added an amount of $30,531 to the contract price: See par 15 of Triventi's affidavit. I have some difficulty working out from the invoices provided how this amount is
(Page 7)
- calculated. But that issue can be put to one side. What the defendant says is that there were three variations which were signed by Demali - these are exhibits "D" and "E" to be found on p 24 to p 26 of Triventi's affidavit. (There are two documents marked "D" which means that there are, in effect, three exhibits referred to). It is then said that variation 7, which was originally for $23,048, was revised down to $16,916: See par 12 of Triventi's affidavit. The reduction is explained by comparing variation 7 (on p 16 of Triventi's affidavit) with the authority (the second exhibit "D"). Eight in-ground uplighters have been removed and certain other work has been omitted. Furthermore, variation 6 (the first exhibit "D") is for an amount of $737. The amount claimed is $670 because a builder's margin of $67 was included in the authority but has been removed from the invoice. The defendant submits that the plaintiff cannot then dispute an amount of $20,313 for variations.
11 In reaching that figure the defendant appears to have ignored a claim for deductions in the sum of $1280 outlined in par 27 of Demali's affidavit of 28 September 2000. That amount is reflected in the defendant's invoices: See p 17 of Triventi's affidavit. That amount must be taken into account in the overall picture but does not affect the question of whether or not the variations are in dispute.
12 It is difficult to ascertain from the affidavits of Demali on what basis he disputes the plaintiff's liability for these variations. By par 14 of his affidavit of 17 November he appears to concede liability for the variation in an amount of $16,916. In relation to the variation for $2660 it would appear that there is some dispute about the plaintiff's liability on the basis that the variation was signed under duress. No detail is provided which would justify any claim for duress.
13 In the circumstances and based upon the evidence of the parties, I am satisfied that there is no dispute that the contract sum was $27,390. I am satisfied there is no dispute in relation to variations totalling $20,313. From those two amounts should be deducted an amount of $1280 for items deleted from the contract works. That gives a total liability in relation to the Hardie residence $46,423.
14 The third dispute relates to work undertaken by the defendant on the Mandurah Quay Function Centre ("Mandurah Quay"). The agreed contract sum for Mandurah Quay was $166,000. Variations of $5340 were agreed. The plaintiff claims that pursuant to the contractual agreement between the plaintiff and the defendant the plaintiff was entitled to retain $4283.50 (being 2-1/2 per cent of the contract sum) for a
(Page 8)
- period of 12 months, being the defects liability period within the terms of the contract. In addition, the plaintiff says that under the subcontract agreement and the annexed construction programme the defendant was to complete the subcontract works by 17 October 1999. The plaintiff says that the works were not completed until 22 December 1999 - a delay of 66 days. Pursuant to the subcontract the plaintiff says the defendant is liable for liquidated damage for delay at the rate of $500 per day. The plaintiff says then that there is a dispute as to $33,000. There is a further claim for rectification work in an amount of $1620 which is conceded for the purpose of this application by the defendant.
15 The defendant does not dispute the terms of the subcontract agreement. However, the defendant says it signed the agreement on 23 February 2000 after the entire contract works had been completed: See par 16 of Triventi's affidavit. Triventi goes on to say that he only signed the agreement so that the defendant would be paid. However it does appear that a copy of the subcontract agreement was forwarded to the defendant prior to the commencement of the contract. Triventi says he did not read it and at least by implication says that he did not regard himself as bound by its terms. Furthermore, he disputes that any delays in the completion of the contract were the responsibility of the defendant. He goes into some detail to explain why the delays were the fault of the plaintiff or other subcontractors.
16 There is clearly a dispute between the parties as to the contractual position which cannot be resolved on affidavit. It is at least arguable that the written agreement formed the basis of the contractual relationship between the plaintiff and the defendant, even though the agreement was not signed until after the work was completed. In my view, it can be said then that there is a genuine dispute as to a total sum of $38,903.50. The contract sum plus the variations amounts to $171,340. From that amount must be deducted the amount about which there is a genuine dispute, leaving an undisputed balance of $132,436.50.
17 The fourth contract relates to Lot 351 Birkett Street, Bedford ("the Demali residence"). In his affidavit of 10 November Triventi concedes there is a dispute in relation to the Demali residence, however, it is not entirely clear as to what amount. As I understand the plaintiff's position, they say that the contract price including variations was $18,000. It is alleged that remedial work in the sum of $7000 will be necessary, consequent upon the defendant's failure to properly complete the contract, plus a further $8000 for the installation of a C-Bus system. It is said that the installation of this C-Bus system is a consequence of the defendant's
(Page 9)
- failure to properly complete the contract. In its submissions the defendant appears only to concede $7000. However, as no evidence has been led to answer the plaintiff's claim, it would seem to me that it must be assumed that the sum of $15,000 is in dispute.
18 Taking into account all of the evidence I am of the view that there is a genuine dispute as to the whole of the claim relating to the Demali residence. It may be that the plaintiff is indebted to the defendant in the sum of $3000. But the position is unclear. In any event, this aspect of the claim will not affect the outcome of the application.
19 The plaintiff says that in relation to these four contracts it has paid the defendant the sum of $209,723. The amount of the payment is not specifically dealt with in the defendant's affidavit material, but the figure is not disputed. Allowing for the amounts about which I have determined there is a genuine dispute. The defendant's claims amount to $194,476.50 ($15,617 for the Bollig esidence, $46,423 for the Hardie residence and $132,436.50 for Mandurah Quay). This falls well short of the amount already paid. In the circumstances then I am satisfied that there is an offsetting claim greater than the substantiated amount and the proper order is that the statutory demand be set aside.
20 Construction cases such as this one present particular difficulties in relation to statutory demands. In John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716, Young J was dealing with a claim by a subcontractor in relation to payments from a contractor. His Honour went through and considered what amounts were claimed and what amounts were in dispute. Having done that, his Honour said (at 719):
"It may be that I am doing a disservice to this Court in approaching the matter in this mathematical way. It may be that it is far more appropriate in the instant sort of case for the court to take just a broad brush approach. Thus the court might just say that because this is not a debt collecting court, where there is a construction case of this nature, the demand should be set aside under s 459J(1)(b) whenever it can be seen from the correspondence that there are honestly held views on either side which have brought a dispute between the parties. Thus, the matter can be dealt with in the ordinary way in which construction disputes are dealt with without the time and expense that is involved in running this sort of litigation ahead
(Page 10)
- of that dispute. If I were to do that in the instant case, I would come to the same result."
- See also PDR Pty Ltd v Cottesloe Constructions Pty Ltd [2000] WASCA 62 at [8]. I have reservations about undertaking the process of attempting to add and subtract amounts admitted and those in dispute. I am inclined to the view, as was Young J, that the "broad brush" approach would be best. Either way, the outcome is the same.
21 I will hear the parties as to the precise form of order and as to costs.
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22
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