Carlino Enterprises Pty Ltd v Trimview Roof Restorations Pty Ltd
[2001] WASC 122
CARLINO ENTERPRISES PTY LTD -v- TRIMVIEW ROOF RESTORATIONS PTY LTD [2001] WASC 122
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 122 | |
| Case No: | COR:315/2000 | 1 FEBRUARY 2001 | |
| Coram: | MASTER BREDMEYER | 18/05/01 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed | ||
| PDF Version |
| Parties: | CARLINO ENTERPRISES PTY LTD TRIMVIEW ROOF RESTORATIONS PTY LTD |
Catchwords: | Corporations Application to set aside a statutory demand Disputed debt Offsetting claim |
Legislation: | Corporations Law, s 459C(2)(a), s 459E(1), s 459E(3), s 459G, s 459H(1), s 459J |
Case References: | First Line Distribution Pty Ltd v Whiley (1995) 13 ACLC 1,216 Re Wakim; ex parte McNally (1999) 198 CLR 511 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 Asian Century Holdings Inc v Fleuris Pty Ltd [2000] WASCA 59 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 (Murray J); 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 Commissioner of Inland Revenue New Zealand v Ward (1969) 69 ATC 6050 Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (1998) 16 ACLC 12 Euroasian Holdings Pty Ltd v Ron Diamond Plumbing Pty Ltd, unreported; FCA (Heerey J); No 139 of 1996 Eyota Pty Ltd v Havana Pty Ltd (1994) 12 ACLC 699 Fieldmont Holdings Pty Ltd v Scrutiny (WA) Pty Ltd [2000] WASC 237 Gianfranco Constructions Pty Ltd v Ground & Fountain Supports Pty Ltd [2000] WASC 245 Goldspar Australia v KWA Design Group (1999) 17 ACLC 456 Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No 2) (1994) 12 ACLC 490 John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716 John Shearer Ltd & Anor 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 PDR Pty Ltd v Cottesloe Constructions Pty Ltd [2000] WASCA 62 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 ACLC 919 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 Universal Greening Pty Ltd v Sabine (1999) 17 ACLC 880 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
BETWEEN : CARLINO ENTERPRISES PTY LTD
- Plaintiff
AND
TRIMVIEW ROOF RESTORATIONS PTY LTD
Defendant
Catchwords:
Corporations - Application to set aside a statutory demand - Disputed debt - Offsetting claim
Legislation:
Corporations Law, s 459C(2)(a), s 459E(1), s 459E(3), s 459G, s 459H(1), s 459J
(Page 2)
Result:
Application allowed
Representation:
Counsel:
Plaintiff : Mr B W Ashdown
Defendant : Mr M P Ellis
Solicitors:
Plaintiff : Ilberys
Defendant : Hopkins & Associates
Case(s) referred to in judgment(s):
First Line Distribution Pty Ltd v Whiley (1995) 13 ACLC 1,216
Re Wakim; ex parte McNally (1999) 198 CLR 511
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
Case(s) also cited:
Asian Century Holdings Inc v Fleuris Pty Ltd [2000] WASCA 59
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 (Murray J); 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
Commissioner of Inland Revenue New Zealand v Ward (1969) 69 ATC 6050
Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (1998) 16 ACLC 12
Euroasian Holdings Pty Ltd v Ron Diamond Plumbing Pty Ltd, unreported; FCA (Heerey J); No 139 of 1996
Eyota Pty Ltd v Havana Pty Ltd (1994) 12 ACLC 699
(Page 3)
Fieldmont Holdings Pty Ltd v Scrutiny (WA) Pty Ltd [2000] WASC 237
Gianfranco Constructions Pty Ltd v Ground & Fountain Supports Pty Ltd [2000] WASC 245
Goldspar Australia v KWA Design Group (1999) 17 ACLC 456
Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No 2) (1994) 12 ACLC 490
John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716
John Shearer Ltd & Anor 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
PDR Pty Ltd v Cottesloe Constructions Pty Ltd [2000] WASCA 62
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 ACLC 919
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
Universal Greening Pty Ltd v Sabine (1999) 17 ACLC 880
(Page 4)
1 MASTER BREDMEYER: This is an application by the plaintiff under s 459G of the Corporations Law to set aside a statutory demand issued by the defendant. The plaintiff is a builder and the defendant is a roofing plumber who was engaged by the plaintiff to do the roofing plumbing on a project at Lot 500 Tydeman Road, North Fremantle, ("the Northbank Development"). The demand was issued by the defendant upon the plaintiff for $27,500 and is dated 3 November 2000. The description of the debt in the demand is:
"The debt is an amount that is due and owing by the company to the creditor being a progress payment for work done at the company's request by the creditor, for which the creditor issued invoice No 52338/2 on 25 August 2000, which invoice has not been paid $27,500."
2 Under s 459H(1) of the Corporations Law a demand can be set aside if the court is satisfied that there is a genuine dispute between the company and the respondent about the existence or amount of the debt to which the demand relates, or that the company has an offsetting claim. In Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294 the Full Court has said that to reach a finding that there is a genuine dispute the plaintiff must satisfy the court that:
"(a) the dispute is bona fides and truly exists in fact; and
(b) the grounds attending the existence of the dispute are real and not spurious, hypothetical, illusory or misconceived."
3 The plaintiff filed two affidavits in support of the application, each by Sergio Demali, one sworn 22 November 2000 and the other sworn 24 January 2001. The defendant filed an affidavit in opposition, sworn by David Leonard Turner on 18 December 2000. Since hearing argument, and whilst I was reserved, the defendant asked if it could submit a further affidavit. The plaintiff consented to this course on the basis that it, too, could submit a further affidavit. Accordingly, the defendant also relies on the affidavit of Matthew Paul Ellis, sworn 17 April 2001, which goes to the solvency of the plaintiff. No further affidavit was filed by the plaintiff.
4 The plaintiff has objected to the form of the statutory demand issued. By s 459E(1) of the Corporations Law the statutory demand must relate to a "debt" that is "due and payable". An unliquidated claim is not a "debt" for the purposes of s 459E(1): First Line Distribution Pty Ltd v Whiley (1995) 13 ACLC 1,216. I accept that principle of law but do not consider
(Page 5)
- that this demand falls foul of it. This was a fixed price contract for $44,684, plus $1,500. These are the plaintiff's figures. The defendant says it has completed the work. It submitted a progress claim on 2 August 2000 for $19,800 and this was paid. The sum, the subject of the demand, is progress claim No 2 dated 25 August 2000 for $27,500 which is, subject to some adjustments, the balance of the contract sum. I consider the sum, the subject of the demand, is a contractual debt and not a claim for damages.
5 The plaintiff's next objection is to the form of the affidavit in support of the demand. It is the affidavit of David Leonard Turner sworn 3 November 2000. I have not hitherto mentioned this affidavit. By s 459E(3) the demand must - unless it relates to a judgment debt - be accompanied by an affidavit which verifies that the debt is due and payable by the company and complies with the rules. The supporting affidavit verifies that the sum of $27,500 is due and payable by the company. The plaintiff says that it does not comply with the rules. "Rules" is defined in s 9 of the Law to mean:
"(a) Rules of the Federal Court; or
(b) Rules of the Supreme Court of this or another jurisdiction;
as the case requires;"
6 The expression "as the case requires" in s 9, when applied to the relevant rules mentioned in s 459E(3), enables the creditor to swear its accompanying affidavit in the form provided by the rules of any court which would have jurisdiction to order the winding up of the company or in which an application to set aside the demand could be brought: Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 147 ALR 444 at 452.
7 The plaintiff argued that the only court with jurisdiction to order the winding up of the plaintiff in this State is the Supreme Court of Western Australia, as a result of Re Wakim; ex parte McNally (1999) 198 CLR 511. Rule 31 of the Corporations Rules O 81G of this Court provides for the affidavit accompanying the statutory demand:
"For the purposes of section 459E(3) of the Law, an affidavit accompanying a statutory demand relating to a debt, or debts, owed by a company must -
(Page 6)
- (a) be in accordance with Form 7 and state the matters mentioned in that Form;
(b) be made by the creditor or by a person with the authority of the creditor or creditors; and
(c) not state a proceeding number, or refer to a court proceeding, in any heading or title to the affidavit."
8 The operative part of Form 7 states:
"I, [name] of [address and occupation], *say on oath/*affirm [or *make oath and say/*solemnly and sincerely declare and affirm] -
1 I am [state deponent's relationship to the creditor(s), e.g., 'the creditor', '(name), one of the creditors', 'a director of the creditor', 'a director of (name), one of the creditors'] named in the statutory demand, which this affidavit accompanies, relating to the *debt/debts owed by [name of debtor company].
2 [If the deponent is not the creditor, state the facts entitling the deponent to make the affidavit, e.g. 'I am authorized by the creditor(s) to make this affidavit on its/their behalf.]
3 [State the source of the deponent's knowledge of the matters stated in the affidavit in relation to the debt or each of the debts, e.g. 'I am the person who, on behalf of the creditor(s), had the dealings with the debtor company that gave rise to the debt', 'I have inspected the business records of the creditor in relation to the debtor company's account with the creditor'].
4 *The debt of $[amount]/*The total $[amount] of the debts mentioned in the statutory demand is due and payable by the debtor company.
5I believe that there is no genuine dispute about the existence or amount of the *debt/*any of the debts.
Sworn/ [etc]
... "
(Page 7)
9 The operative part of the affidavit in support of David Leonard Turner, sworn 3 November 2000, is as follows:
"1. I am a director of the Creditor and am authorised to swear this affidavit on its behalf.
2. I swear this affidavit based on my own knowledge and belief.
3. I believe it to be true that the amount of $27,500.00, being the amount of the debt specified in the accompanying demand, is due and payable by the debtor to the Creditor.
4. I swear this affidavit based on my dealings with the debtor and my examination of the creditor's books and records. From my examination of the creditor's books and records, I have knowledge of the facts giving rise to the debt referred to in paragraph 3, so far as they are known to the creditor.
5. I believe that there is no genuine dispute about the existence or amount of the debt referred to in paragraph 3.
SWORN [etc] ... "
10 I consider that the affidavit substantially complies with the form and the rule.
11 There was undoubtedly a contract between the two parties for the defendant to carry out the roofing plumbing on the Northbank Development for a fixed sum. The plaintiff says it was for $44,684 (the defendant's quote) plus $1500, an increase allowed by Mr Demali, a total of $46,184. With GST that comes to $50,802.40 The defendant says it was for $50,802.40 inclusive of GST. The defendant's undated quote of one page on the defendant's letterhead is as follows:
"QUOTE RE: NORTHBANK DEVELOPMENT.
FROM PLANS A01-2-3-4-5-6-7-8-10-11-13 REVISION 'B'
SPECIFICATION SECTION 'P' PAGES 69-70-71-72.
THIS QUOTE HAS BEEN DONE ON THE BASIS THAT THE
SPECIFICATION OVERRIDES THE PLANS.
(Page 8)
- SUPPLY AND FIX,
1. 0.47 TCT TRIMDECK ROOF SHEETING ZINCALUME
2. 0.47 CUSTOM ORB ZINCALUME ROOF SHEETS
3. 0.60 BLUE ORB CURVED AWNINGS ZINCALUME
4. COLORBOND MINI ORB CANOPY LINING
5. 50 MM ANTICON ON WIRE MESH
6. ZINCALUME ROLL ROP RIDGE
7. ZINCALUME BARGE CAPS ROLL EDGE
8. COLORBOND COLONIAL GUTTERS
9. COLORBOND 75mm DOWNPIPES
10. COLORBOND RAIN HEADS
11. BOX GUTTERS 0.60 ZINCALUME ON SADDLES AND STRAPS
12. BOX GUTTERS ON MARINE PLY OR TIMBER PACKERS (ALL MARINE PLY OR TIMBER PACKERS BY OTHERS)
13. ZINCALUME ACCESS HATCH
14. CLASS 3 SCREWS
15. ALL DELIVERY AND CRANE HIRE FOR ROOFING
16. FLASHING AND CAPPING 0.60 ZINCALUME
- BUILDER TO SUPPLY POWER ON SITE AND ANY SCAFFOLD REQUIRED.
PRICE IS SUBJECT TO BUILT IN CAVITY FLASHING BEING PROPERLY INSTALLED AS PER PLANS, BY OTHERS.
TOTAL PRICE ................................................$44,684.00
ADDITIONAL PRICE FOR DAMPALON OR SIMILAR TWINWALL ACRYLIC SCREEN .. $2700.00 FRAME BY OTHERS."
12 The defendant says that that quote was accepted with a $1,500 increase because the quote had been prepared some considerable time before acceptance. Whilst I accept that the written quote was orally accepted, there is a dispute however as to other terms of the contract. It came about in this way. In discussions leading up to the contract, Mr Turner says he told Mr Demali that he was not happy with the plaintiff's payment history (they had worked together before), nor with the proposed payment terms of 30 days after the end of the month in which the invoice was raised. Turner said Demali offered to change that to 30 days after submission of the invoice. The plaintiff submitted a written form of contract to the defendant headed "Subcontract between Carlino Developments and DTS Restorations". However, Mr Turner for the defendant declined to sign it. I quote from par 13 to par 16 of his affidavit:
(Page 9)
- "13. On or around 11th July 2000, I contacted Sergio Demali of the Plaintiff by telephone and advised him that the Defendant would not execute the sub-contract agreement.
14. In the conversation referred to in paragraph 13 above, Demali asked for reasons why the Defendant would not execute the sub-contract agreement. I referred him to the fact that the sub-contract agreement did not reflect the payment terms, and a number of other clauses remained of concern. On the whole the Defendant was not prepared to enter into such an agreement.
15. Notwithstanding the above, Demali authorised and instructed me, on behalf of the Defendant, to proceed to do the work on the basis of the quotation provided by the Defendant as verbally amended.
16. Subsequent to that conversation with Demali, I spoke by telephone to Vince Carlino, one of the Directors of the Plaintiff, who confirmed that the Defendant was to proceed with the works on the basis of the quotation."
13 Mr Demali, in his second affidavit states, in relation to pars 13, 14 and 15 of the Turner affidavit, that "No discussion of this nature or content took place".
14 I consider that the contract between the parties is partly in writing and partly oral and partly implied. The written part includes the plans and specifications already mentioned and the written quote from the defendant, orally increased and accepted. already mentioned. They may or may not have agreed on an extra sum for GST. The implied terms would include terms that the work should be carried out in accordance with the plans and specifications and in a proper workmanlike manner.
15 The plaintiff argued that the unsigned written contract was adopted by the defendant's conduct. In this connection, I was referred to "ST 7" to Mr Demali's first affidavit which is a letter from Mr Turner for the defendant, to the plaintiff dated 11 September 2000, as follows:
"Dear Vince,
DTS will carry out the supply and fix [sic] of the twinwall sun screen if you wish but not as a variation, this is not a variation as it was quoted as a separate item and due to clause 5.1(e) of
(Page 10)
- your contract document DTS are not willing to carry out variations."
- Clause 5.1(e) provides:
"Notwithstanding clause 5.1(d), the Subcontractor's entitlement to payment for any Variation under this Subcontract will not exceed the amount, if any, recovered by CARLINO DEVELOPMENTS under the Head Contract in respect of the work involved in the Variation, excluding the amount of CARLINO DEVELOPMENTS' mark-up or margin relating to the Variation."
17 The plaintiff has given detailed evidence that the defendant's work was defective in a number of respects and that the defendant was late in completing the work, thereby incurring liability for liquidated damages of $1,000 per day which, when calculated, exceed the sum claimed in the demand. Thus, in terms of s 459H, the plaintiff claims that the debt is genuinely disputed and/or that it has an offsetting claim for liquidated damages.
18 The defects in the workmanship are set out by the plaintiff in Mr Demali's second affidavit and are illustrated by 27 photos taken on 8 September 2000 and 16 photos taken by the plaintiff on 27 October 2000. Later, on or about 20 November 2000, the architect supervising the Northbank Development, Mr Greg Sharp, inspected the site and issued a list of roofing plumbing defects. It covers one and a half pages and is found at 80 and 81 of Mr Demali's second affidavit.
19 Mr Turner, for the defendant, in his affidavit of 18 December 2000 says that the vast majority of items complained of have now been completed, apart from minor rectification items. He has exhibited 22 photographs showing what he says is the completed work. He has also purported to answer the allegations of defective work in some detail. His affidavit is 16 pages of text and many pages of exhibits. I think, in
(Page 11)
- general terms, that the defendant is right in his assertions that by 26 November 2000 when his photographs were taken he had remedied many of the defects pointed out by Mr Demali in his affidavit and illustrated in his photos of 8 September and 27 October 2000. However, some disputed items remain and they are set out in the architect's report of 20 November 2000, already mentioned. The architect's report is set out under a number of headings: "Town House 1, Town House 2, Town House 3, 4 and 5, Town House 6, Town House 7 and 8, Architect Instruction Commercial Complex Commercial Walkway, Commercial Roofing and "Resulting in". Mr Turner's response, in his affidavit, at par 55 is under a series of different headings. I will consider the defects asserted by the architect and Mr Turner's response under Mr Turner's headings:
Roof Cowls: Town House 1 Item 1 & 2, Town House 2 Item 1, Town Houses 3-5 Item 2, Town House 6 Item 2, Town Houses 7 & 8 Item 1
20 I quote from Mr Sharp's comments on Town House 1:
"1: Roof cowl missing to upstairs bath.
2: Roof cowl 750 high should be 300mm above roof covering (Ref page 70 Item 4)."
- In relation to the other items mentioned for the other town houses, the objection is the same as Town House 1 Item 2, namely that the roof cowl was 750 high when it should have been 300 mm above roof coverings.
21 Mr Turner's response to this is:
"On behalf of the defendant, I previously offered to rectify these items. That offer remains open for acceptance."
- I will consider in a moment whether the height of the roof cowls is a genuinely disputed item. The defendant is seeking to recover the full payment for the job. But he is willing to carry out some rectification work, not only on the cowls but on other items, which I mention in a moment. He states, in par 57:
"On the whole the rectification works specified by the architect are minor in nature, and I would estimate would be in the vicinity of $500 worth of work. If asked to give an absolute maximum to the value of the rectification works, I would suggest that $1,000 could be allowed as an absolute maximum. I again note that rectification works would be expected at the
(Page 12)
- end of the building process, and does not affect the liability of a builder to make progress payments claims."
22 I consider that the missing roof cowl, and several cowls which are too high, are genuinely disputed items. The defendant, in offering to rectify them, is admitting the defective work. I will consider later whether these disputes should set aside the demand, or lead, as Mr Turner would like, to a reduction in the demand by no more than $1,000.
23 Mr Turner's second heading is "Rain Water Heads: Town House 1 Item 3, Town House 2 Item 2, Town House 6 Item 3, Town Houses 7 & 8 Item 2". The architect's objection to the rain water heads as installed, is:
"Rain water heads not constructed as per DWG 13 'B' details 23 and 21.".
- Mr Turner's comment on that is as follows:
"The rain water heads are items that meet downpipes as a type of 'funnel' effect : collecting the water which then runs down the downpipes. The drawing number 13 calls for 90 mm downpipes to be used. The specifications call for 75 mm downpipes. As a result of having to use the 75 mm downpipes as per specifications, the rainwater heads are slightly smaller. They must be, otherwise they simply would not perform the required function with the 75 mm downpipes specified. They have been installed to ensure that the item functions properly."
I consider this explanation is satisfactory and that this item is not genuinely disputed. In support, I note that the defendant's quote, which was orally accepted, was for 75 mm downpipes. The quote also contains this statement:
"This quote has been done on the basis that the specification overrides the plans."
"Valley gutters not built according to detail refer DWG A06 'B' Town House elevation section DWG A08 'B', AO7 'B' section B-B."
- Mr Turner's comments on this are:
(Page 13)
- "The valley gutters were built in accordance with drawing AO7 'B'. In order to address this item, it will be necessary to have greater specifics as to in what way it is alleged that the valley gutters do not comply, and further in what way the functionality of the gutters is compromised."
- I consider this item is genuinely disputed.
25 Mr Turner's fourth heading is: "Down Pipes: Town House 1 Item 5, Town House 2 Item 4, Town Houses 3-5 Item 4, Town House 6 Item 5, Town Houses 7 & 8 Item 4". The architect's objection to these downpipes is:
"Downpipes' diameter not built according to specification should be 75 mm, are only 69 mm diameter.
- Mr Turner's comment on this is as follows:
"The downpipes are of the correct diameter as supplied by BHP. They are in fact tapered to some extent, such that if you measure the item at the top of the pipe, they are clearly 75 mm, but at the end of the pipe, they have tapered down to 69 mm. They are the industry standard 75 mm downpipe."
I accept that explanation as satisfactory and consider that this item is not genuinely disputed.
26 Mr Turner's fifth heading is: "Rainwater Gutters : Town Houses 3-5 Item 3". The architect's objection to these is:
"Rainwater gutters not built according to detail, refer DWG AO6 'B' Town Houses elevation section."
- Mr Turner's comment on that is:
"The rainwater gutters are built in accordance with Drawing AO6 'B'. In order to address this item, it will be necessary to have greater specifics as to in what way it is alleged that the valley gutters do not comply, and further in what way the functionality of the gutters is compromised."
I consider this item is genuinely disputed.
27 Mr Turner's sixth heading is "Town House 6 Item 6". The architect's objection is:
(Page 14)
- "Item 6: Downpipe installed out of plumb in relation to stormwater. Downpipe is presently positioned over the courtyard wall. Refer drawing A08 'B' Townhouse roof plan."
- Mr Turner's comment on this is: "The defendant is prepared to rectify this item." I will comment on the significance of that later.
28 Mr Turner's seventh item is "Townhouse 7 and 8 Item 5". The architect's comment is:
"Roof sheeting to valley gutter cut too short on places, new [sheeting] with correct length need to be installed."
- The word "sheeting" has been added by me. Mr Turner's comment on that is: "The defendant is prepared to rectify this item." I will comment on that later.
29 I turn now to Mr Turner's eighth heading: "Commercial Walkway" Item 1. The architect's objection to this is:
"1. Commercial walkway not built according to details, refer DWG A11 'B' section DO4/AO7 detail shows 20 x 20 mm angle trims."
- Mr Turner's comment on that is as follows:
"Annexed hereto and marked with the letters 'DLT11' is a true copy of Drawing A11 'B' section DO4/AO7. As can be seen from that drawing, the requirement is stated to be '20 x 20 (nom) alum stop angle'. The word '(nom)' stands for nominal, which in the building industry means that this is the suggested item, but the builder must use discretion to use an item which best suits the purpose. In this case, a slightly larger angle trim was deemed necessary for additional strength on that application."
I consider that explanation is satisfactory and that this item is not genuinely disputed.
30 Items 2, 3 and 4 of the architect's comments on the commercial walkway are as follows:
"2. Angle trims around PVC pipes not completed.
3. Angle trims around outriggers not completed.
4. Angle trims around box section not completed."
(Page 15)
- Mr Turner's comment on items 2 and 3 are as follows:
"This item was not part of the work to be completed by the defendant."
I am unable to resolve that dispute. They appear to be disputed items.
31 I turn now to item 5 of the "Commercial Walkway". The architect's comment is:
"Box section should have been finished in colorbond to match mini orb".
- Mr Turner's comment on this is:
"This item was not specified in the drawings at all, let alone as colorbond. It was installed to rectify the incorrect installation of the built in downpipes by the plaintiff on the site. However, the defendant is prepared to paint the item to match the mini orb as requested."
33 The architect's objection in item 6 under the heading "Commercial Walkway", is as follows:
"6. Flashing to box gutters above walkway is not sealed adequately as rain penetrates through to the walkway underneath."
- Mr Turner's comment on that, is as follows:
"Drawing A-11 section detail 4 shows a built-in cavity flashing finished over the box gutter with weepholes. This item has not been completed by the plaintiff, and if completed, will stop any rain penetration."
I consider that this item is genuinely disputed.
34 Under the heading of "Commercial Roofing" the architect lists four items. I quote items 1 and 2:
"1. Sealing of all vertical joints to box gutters incomplete.
2. Sealing of all vertical joints to flashing incomplete."
- Mr Turner's comments on these are:
(Page 16)
- "All these joins are internally sealed and are waterproof."
- There is a conflict of evidence on whether the joints are sealed or not, which I cannot resolve on the evidence before me. I consider that these items are genuinely disputed.
35 Item 3 under the heading "Commercial Roofing", as stated by the architect, is as follows:
"3. Flashing around access hatch not done."
- Mr Turner's comment on this is as follows:
"As noted in paragraph 52 above and paragraphs 34 and 35 of the Demali affidavit, the access hatch was not installed by the defendant."
"Please also note that due to water penetrating into the commercial building through your non-completion of Penetrations and access hatches [sic] We have incurred delays to our program and damage to existing work.
These have been noted and will be addressed to you.
Can you please note the duty or non-attendance and adherence to the works schedule and the possibility of further water damage to the commercial complex we have been forced to arrange [sic] organise the construction and installation of the access hatch by other contractors. Can you please note that this cost will be deducted from your contract."
37 I consider, in the circumstances, that the defendant cannot be held liable for the lack of flashing around the access hatch. He did not install it. So the quality of his work on the access hatch is not disputed. However, there is a dispute over what sum of money should be deducted
(Page 17)
- for the defendant's failure to build the access hatch. I consider that a genuine dispute.
38 Under the heading "Commercial Roofing Item 4" the architect makes the following point:
"4. 300 wide gutters flashing not installed according to detail, refer DWG AO8 D10/A11, refer DWG A11 D10/AO8."
- Mr Turner's comment on that is:
"Soaker trays have been installed in place thereof, as further requirements of the Building Code of Australia. This was necessary due to the fact that the plaintiff had not trimmed the structural steel to support 300 mm wide flashings."
40 I summarise now this discussion. If the only items in dispute were those which could easily be rectified by the defendant, or by another tradesman, for the sum of $1,000 I would reduce the demand by that sum and say that there was no genuine dispute in relation to the defendant's claim for the reduced sum. However, they do not stand alone. There are a number of other items which are, I consider, genuinely disputed. This prompts me to conclude that I should not deduct a sum for the easily rectifiable defects, but to conclude that the demand is genuinely disputed and should be set aside.
41 I point out that the statutory demand jurisdiction is a summary one. The court is not required to weigh the merits of the dispute at length as it would at a trial. I consider that a number of matters are genuinely disputed on the test set out in Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd, cited above. It may well be at a trial or arbitration that the proved defects would lead to a reduction only in the sum due to the defendant, but that reduction is not quantified on the papers before me and it is not appropriate or just that I attempt to quantify it by some round sum and reduce the demand by that amount.
42 That is sufficient to determine this application but, for the sake of completeness, I propose to consider the plaintiff's claim that it is entitled to liquidated damages at the rate of $1,000 per day for the defendant's late completion of the work. I do not consider that the plaintiff has any claim for liquidated damages. The plaintiff never got the defendant to sign the written contract, which includes the liquidated damages clause. As I have said, I consider this contract is partly written, partly oral and partly
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- implied and, in the absence of a signed contract there is no way that the liquidated damages clause would be implied. It is not necessary to give business efficacy to the contract. I consider the plaintiff has not raised an offsetting claim in relation to the liquidated damages.
43 I do not consider that Mr Ellis' affidavit of 17 April 2001 is relevant to the application before me. It leads evidence that the plaintiff was in serious financial difficulties in late 2000 onwards and that may be the real reason why it would not pay the defendant's claim. The insolvency of the company is a question to consider in a winding up application based on the ground of insolvency. Non-payment of a statutory demand produces a deemed insolvency: s 459C(2)(a) of the Corporations Law. The defendant is not limited to this ground. If it can show other evidence of insolvency it can apply to wind up the company under s 459A without reliance on non-payment of a statutory demand. In deciding whether a statutory demand should be sustained, or set aside, or reduced in amount, the court is to consider the matters set out in s 459H and s 459J. It is not required to consider the company's underlying solvency or insolvency.
44 In conclusion, I consider that the plaintiff has raised sufficient objections to the quality of the work to justify the conclusion that the claim is genuinely disputed and that this demand should be set aside.
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