Diploma Construction (WA) Pty Ltd v CTC Commercial Pty Ltd
[2016] WASC 282
•06/09/2016
DIPLOMA CONSTRUCTION (WA) PTY LTD -v- CTC COMMERCIAL PTY LTD [2016] WASC 282
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASC 282 | |
| 06/09/2016 | |||
| Case No: | COR:102/2016 | 18 AUGUST 2016 | |
| Coram: | MASTER SANDERSON | 6/09/16 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | DIPLOMA CONSTRUCTION (WA) PTY LTD CTC COMMERCIAL PTY LTD |
Catchwords: | Corporations law Application to set aside statutory demand Turns on own facts |
Legislation: | Corporations Act 2001 (Cth) |
Case References: | Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- COR 112 of 2016
- Plaintiff
AND
CTC COMMERCIAL PTY LTD
Defendant
Catchwords:
Corporations law - Application to set aside statutory demand - Turns on own facts
Legislation:
Corporations Act 2001 (Cth)
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff : Mr K A Dundo
Defendant : Mr B G Grubb
Solicitors:
Plaintiff : HopgoodGanim
Defendant : Metaxas & Hager
Case(s) referred to in judgment(s):
Nil
1 MASTER SANDERSON: This was the return of two separate originating processes each of which sought to set aside a statutory demand. Although they were heard together there were two separate actions with only slightly overlapping arguments. It is convenient to begin with COR 102 of 2016.
2 The application was supported by three affidavits. The affidavit of Anthony John Ciprian was sworn 18 May 2016, the affidavit of Richard Steven King sworn the same day and the affidavit of Andrew Clements which was sworn 9 August 2016. In opposition to the application the defendant relied on an affidavit of Julian Monaco sworn 4 July 2016.
3 A copy of the statutory demand appears as attachment AC1 to Mr Ciprian's affidavit. The schedule to the demand reads as follows:
Debt of $50,000.59 being the amount payable by the company to the creditor as deposed in the affidavit of Julian Monaco sworn 19 April 2016 and being for goods and services supplied by the creditor to the company pursuant to the subcontract dated 12 December 2014 for the project, 'Precinct on Ogilvie' as certified by the company's progress claim notice of assessment dated 20 November 2015.
4 The statutory demand was accompanied by an affidavit as is required by the Corporations Act 2001 (Cth). Mr Monaco's sworn affidavit of 19 April 2016 is attachment AC-2 to Mr Ciprian's affidavit. Appearing as attachment 1 to Mr Monaco's affidavit is a document issued by the plaintiff entitled 'Progress Claim Notice of Assessment'. It shows an amount of $50,000.59. It shows the date of issue as 20 November 2015.
5 There is no dispute as to the existence of the debt the subject of the demand. The plaintiff says it has an offsetting claim greater than the demand and that the demand should be set aside under s 459H(1)(a) of the Act. The way in which the offsetting claim is said to arise can be summarised as follows.
6 On or about 12 December 2014 the plaintiff and the defendant entered into a written agreement known as subcontract 1404/2072 in respect of the plaintiff's project known as Precinct on Ogilvie (Precinct Subcontract). Under the Precinct Subcontract the defendant was required to supply, deliver, install, rectify defects and complete tiling works as indicated on drawings, specifications and scope of works. At sch 4 of the Precinct Subcontract is a construction programme setting out the procedures and timing to be followed in carrying out the works.
7 Pursuant to the Precinct Subcontract the defendant was to:
(a) perform the works in accordance with the Precinct Subcontract (including directions from the plaintiff given under the Precinct Subcontract) and to the entire satisfaction of the plaintiff: see schedule 5 condition 4.2(a);
(b) commence works when called upon to do so by the plaintiff: see schedule 5 condition 4.8(a);
(c) complete each stage of the works within the duration shown in the construction programme: see schedule 5 condition 4.8(b);
(d) bring the works to practical completion by the last date for completion as shown in the construction programme: schedule 5 condition 4.8(c); and
(e) commence on site when it was called upon to do so and complete the works by the date for practical completion: schedule 5 condition 4.4(a).
8 The Precinct Subcontract provided that if the commencement date was earlier or later than the date the commencement of the works as shown in the construction programme the dates in the construction programme would be adjusted accordingly: schedule 5 condition 4.8(a). On the plaintiff's case the construction programme dated 8 April 2015 adjusted the date for practical completion of the works under the subcontract to 11 August 2015. The defendant issued Progress Claim 7 dated 21 September 2015 and Progress Claim 8 dated 20 October 2015 in respect of the subcontract. It is alleged by the plaintiff the defendant had not completed the works by 11 August 2015. In fact the plaintiff says the works were not completed until 15 October 2015 at the earliest with defect works completed no earlier than 3 December 2015. On this basis the plaintiff says the defendant is liable to pay the plaintiff liquidated damages at the rate of $5,000 per calendar day from at least 11 August 2015 until the date of practical completion of the works on or about 15 October 2015. Reliance is placed on schedule 5 condition 5.10(a).
9 Counsel for the defendant started by pointing out that the claim related to Precinct on Ogilvie and to the unique ID No 501. Counsel then turned to the contractual provisions which he analysed in some detail. He began with schedule 5. Under cl 1.1 'Definitions' there is a definition of 'Diploma's Construction Programme'. It is said to mean 'the programme submitted by Diploma to the subcontractor as varied by Diploma from time to time setting out the procedures and timing to be followed in carrying out the works'. Counsel then went to cl 15(a) of the schedule. The subheading to cl 15 is 'Notices'. Relevantly the clause reads as follows:
Any notice, certificate, direction, request, approval, consent, report, agreement, statement and other document authorised or required to be given or made under this subcontract must unless otherwise specifically provided in this subcontract be given or made in writing and either personally served on the authorised representative of the party to whom it is given or made or mailed by certified mail, postage prepaid or sent by facsimile message … (emphasis added)
10 Counsel made the point that if there is to be any claim for liquidated damages it must be made in writing pursuant to the provision of the schedule. That much can be accepted and it was not argued otherwise by counsel for the plaintiff.
11 Returning to the definition the 'Date for Practical Completion of the Works' is said to mean the date for practical completion of the Works referred to in Diploma's construction programme as may be varied under this subcontract. Counsel then referred to the definition of the 'Subcontract Sum' and pointed out pursuant to the contract it must necessarily be done in writing. Once again that interpretation of the contract can be accepted.
12 Clause 3.2 of the schedule is headed 'Payment'. It reads as follows:
As full consideration for the performance of the Works, Diploma must pay to the subcontractor the subcontract sum with any additions or reductions as may be made under clause 5.1 of the subcontract.
13 It would appear the reference to cl 5.1 in cl 3.2 is an error. In fact the copy of the subcontract does not make it clear that the reference is to cl 5.1 - there is a gap between the 5 and the 1. For reasons which will become apparent below I think the reference should be to cl 5.4. In the end nothing turns on this drafting error.
14 Clause 5.4 has the subheading 'Progress Claims'. The relevant subclauses are (e) and (f). They are in the following terms:
(e) Diploma must provide the subcontractor with written notice of either the value agreed or its assessment of the progress claim and any deductions or set offs together with payment of such amount within the time referred to in item 17. The notice must itemise all claimed adjustments to the subcontract sum and either the agreed value or the assessment of each. To the extent the value assessed by Diploma is lower than the progress claim, the progress claim is disputed.
(f) The assessment of any progress claim under cl 5.4(d) is provisional only and does not constitute approval of any work. Diploma may, if it reasonably considers the circumstances warrant it, adjust its assessment of any progress claim and issue a revised notice under cl 5.4(c).
15 For its part the plaintiff relies on a letter dated 26 May 2016 (attachment AC-2 to Mr Clements' affidavit) which it says is a claim under cl 8.4. That letter reads as follows:
Dear Directors
Subcontract Agreement For Precinct on Ogilvie - 1404/2072
1. Diploma Construction (WA) Pty Ltd (Diploma) refers to Schedule 5 conditions 4.2(a), 4.8(a) to (c) and unique ID number 501 of the updated construction programme issued on 8 April 2015.
2. Those provisions provide that CTC Commercial Pty Ltd (CTC) was to practically complete its subcontract works by 1 August 2015.
3. Unfortunately, CTC did not achieve practical completion prior to 20 October 2015.
4. Schedule 5 conditions 5.10(a) and 8.4(a) provide that:
a. CTC's failure to practically complete its subcontract works by 1 August 2015 would result in CTC being liable for liquidated damages at a rate of $5,000.00 per calendar day from 1 August 2015 until the date that CTC's subcontract works were actually completed;
b. monies payable by CTC to Diploma as a result of CTC's failure to comply with the Subcontract (ie complying with the date for practical completion) are deemed to be a debt due and payable by CTC to Diploma; and
c. Diploma may deduct or set off against any amount owing by Diploma to CTC any debt that is due and payable.
5. In respect of the period 1 August 2015 to 20 October 2015 (ie 71 calendar days), CTC is liable to Diploma for liquidated damages in the amount of $335,000.00
6. Diploma demands the same from CTC and will deduct that sum from monies owed by Diploma to CTC (if any).
Yours faithfully
Signature
Richard King
16 It is the defendant's position this letter even if it is a claim under cl 8.4 is ineffective because of the requirements of cl 5.4(e) and (f). The defendant says the plaintiff did not give written notice within the time limited in cl 5.4(e). Item 17 found in the annexure to the subcontract deals with 'date for lodging progress claims'. It is said to be:
20th of each month. Payments 45 days from this date (subject to clause 5.4(e)).
17 Furthermore, the defendant says no revised figure has been advised under cl 5.4(f).
18 Clearly there is tension in the interplay between cl 5.4 and cl 8.4. It is arguable in my view cl 8.4 operates independent of cl 5.4 and allows a claim to be made after the time has passed for payment of claims as specified in Item 17. I express no concluded view on that issue - this is not the forum to do so. But I would accept for present purposes it is arguable the plaintiff can maintain a claim for liquidated damages consequent upon a failure to meet the date of practical completion.
19 Central to the plaintiff's case is a claim the parties were bound by what is referred to in the affidavits as the '8 April programme'. Mr Ciprian says in his affidavit this programme was issued under the subcontract and it 'adjusted the date for practical completion of the works to 11 August 2015 … being a date after the date referred to in schedule 4 of the agreement'. Mr Monaco in his affidavit sworn 4 July 2016 says that he has never seen the 8 April programme and what knowledge he has of it comes from reading Mr Ciprian's affidavit. When confronted with that evidence from Mr Monaco the plaintiff was unable to produce any evidence to show the 8 April programme was forwarded to the defendant. There was an email exchange on 8 April 2016 but no mention of the 8 April programme. In the circumstances the evidence is all one way. There is nothing to show the 8 April programme governs the relationship between the parties.
20 That being so the practical completion date is the date found in the subcontract. Item 14 of the annexure to the subcontract deals with 'date for practical completion of the works'. There is a reference to schedule 4. Schedule 4 does not include a provision dealing with the date for practical completion. Accordingly it seems clear the parties never agreed on a date for practical completion - either 11 August or any other date. Therefore the plaintiff cannot rely on the provisions of the contract to claim liquidated damages for a failure to make practical completion by the due date. There is accordingly no setoff available and no basis upon which the demand can be set aside.
21 Turning then to COR 112 of 2016 the plaintiff relies on two affidavits of Mr Ciprian, one sworn 31 May 2016 and one sworn 26 July 2016. It also relies on an affidavit of Richard Steven King sworn 31 May 2016 and an affidavit of Scott Albert Jager sworn 31 May 2016. There is also an affidavit of Michael Kenneth Murphy sworn 26 July 2016. Once again the defendant relies on an affidavit of Mr Monaco which was sworn 4 July 2016.
22 A copy of the statutory demand appears as attachment AC1 to Mr Ciprian's first affidavit. The schedule reads as follows:
Debts totalling of $71,689.41 being the total amount of the debts payable by the company to the creditor as deposed in the affidavit of Julian Monaco sworn 10 May 2016 and being for goods and services supplied by the creditor to the company pursuant to the subcontract dated 27 October 2015 for the project, 'Mounts Bay Road, Hotel'.
23 The relevant facts can be summarised as follows. On or about 27 October 2015 the plaintiff and the defendant entered into a written agreement known as subcontract 1403/2261 in respect of the plaintiff's project known as the Mounts Bay Road Project (Mounts Bay Subcontract). Under the Mounts Bay Subcontract the defendant was required to supply, deliver, install, rectify defects and complete tiling works as indicated on the drawings, specification and scope of works. Once again the 'Date for Practical Completion of the Works' is found in Item 14 of the annexure to the subcontract. Reference is made to schedule 4. Schedule 4 refers to the 'attached construction programme'. It was accepted by the defendant this construction programme provided any relevant time limits. Item 629 refers to 'floor tiling'. It is said to take 10 days. Next to the entry is a handwritten notation: 'Duration accepted, start date TBC'.
24 Item 664 refers to 'install waterproofing'. The time estimated for that is two days. The same handwritten notation appears next to that entry.
25 Mr Monaco says in his affidavit the plaintiff did not give the defendant written notice of the start date appearing in items 629 and 664 of schedule 4 of the subcontract. Further, no date was provided to start works on the reception and level 1 of the hotel or the date for practical completion for those works. No evidence was filed by the plaintiff to support the proposition the defendant was advised of the start date and the date of practical completion. It is worth bearing in mind pursuant to the subcontract the plaintiff had to advise the defendant in writing of both the start date and the date of practical completion.
26 In my view there is no offsetting claim in this matter and the plaintiff's application should be dismissed.
27 In summary then I would dismiss both applications. I will hear the parties as to the form of orders and as to costs.
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