Firm Construction Pty Ltd v Firesafe Group Pty Ltd

[2022] WASC 288

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

CITATION:   FIRM CONSTRUCTION PTY LTD -v- FIRESAFE GROUP PTY LTD [2022] WASC 288

CORAM:   MASTER SANDERSON

HEARD:   14 JUNE 2022

DELIVERED          :   30 AUGUST 2022

PUBLISHED           :   30 AUGUST 2022

FILE NO/S:   COR 39 of 2022

BETWEEN:   FIRM CONSTRUCTION PTY LTD

Plaintiff

AND

FIRESAFE GROUP PTY LTD

Defendant

Catchwords:

Corporations Law - Application to set aside statutory demand - Turns on own facts

Legislation:

Corporations Act 2001 (WA)

Result:

Demand set aside

Representation:

Counsel:

Plaintiff	:	J M Healy
Defendant	:	J R Shepherd

Solicitors:

Plaintiff	:	Pinsent Masons
Defendant	:	Blackwall Legal

Case(s) referred to in decision(s):

Saferack Pty Ltd v Marketing Heads Australia Pty Ltd [2007] NSWSC 1143

MASTER SANDERSON:

1. This is the plaintiff's application to set aside a statutory demand.  The application is supported by an affidavit of Aidan Hugh Glenn sworn 1 March 2022.  A copy of the statutory demand is attachment AG‑1 to Mr Glenn's affidavit.  The amount claimed in the demand is $33,483.45.  The plaintiff also relied on a further affidavit of Mr Glenn sworn 7 April 2022.  In opposition to the application, the defendant relied on an affidavit of Jonathan Smallman sworn 1 April 2022.

2. The application is brought under s 459H(1)(b) of the Corporations Act 2001 (Cth). Reference is made to other sections of the Act, but really the matters argued focussed on s 459H(1)(b). It is the plaintiff's position it has an offsetting claim greater than the amount claimed in the statutory demand. There was no dispute between the parties as to the relevant law. The threshold to establish a genuine dispute is not high. Both parties were prepared to accept what was said on this issue in Saferack Pty Ltd v Marketing Heads AustraliaPty Ltd [2007] NSWSC 1143 [46].

3. The plaintiff puts its position in this way.  The plaintiff entered into a contract with the defendant which comprised, among other things, a purchase order, terms and conditions, scope of work, specifications, drawings and a works schedule 'R1'.  Mr Glenn in his affidavit refers to these documents collectively as the 'Contract'.  The defendant was to install wet and dry fire systems for a new Royal Perth Hospital helipad ('Works').  The Contract required the defendant (referred to in the Contract as the 'Supplier') to complete all Works including variations so directed by the plaintiff and to deliver compliant handover documents.  These documents included as constructed drawings and Operations and Maintenance Manuals.  This was to be done by 30 April 2021 ('Completion Date').

4. On 11 August 2021, as a consequence of the variations, the Contract quantum increased from $294,500 to $303,974.50 ('Contract Sum').  The plaintiff, according to its right to do so under cl 3.4 of the terms and conditions of the Contract, issued the defendant an updated Works Schedule ('Schedule R3').  Schedule R3 included four extensions of time issued by the plaintiff and referred to as 'E1, 2, 3 and 4' ('Plaintiff Issued EOTs').

5. It is the plaintiff's position that none of the Plaintiff Issued EOTs or any other amended Works milestones in Schedule R3 provided the defendant with the right to an adjustment of the Completion Date.  Clause 3.5 of the Contract terms and conditions reads as follows:

   [t]he exercise of the right in clause 3.4 does not provide the Supplier with the right to an adjustment to the Completion Date or Claim, and will not be construed as written approval for an adjustment to the Completion Date or Claim in accordance with clause 3.11.

6. Clause 3.11 of the terms and conditions of the Contract provide the mechanism for the plaintiff's assessment of any claim by the defendant for an extension of time.  Such extension is conditional on the claim complying with the requirements of cl 3.7 and cl 3.8 of the terms and conditions of the Contract.  Clause 3.7 requires the submission of a notice of delay within time and cl 3.8 requires the submission of a claim for an extension within time.  The plaintiff defines these provisions as 'time bars'.  The plaintiff says the time bars are clear and require that, firstly, within five business days of becoming aware of the occurrence or likelihood of any event which may delay an adjustment of the Completion Date, the defendant notify the plaintiff in writing ('Delay Notice').  Secondly, within 10 business days of the conclusion of the delay, if the cause of the delay was a 'qualifying delay', defined in cl 3.9 of the terms and conditions of the Contract to mean 'an act or omission of the purchaser or their employees, consultants or other contractors', the defendant submit a claim for adjustment to the Completion Date ('Claim for Extension of Time').  The plaintiff says the defendant submitted neither a Delay Notice, nor a Claim for Extension of Time to the plaintiff during the course of the Contract, or at all.  It is said by the plaintiff the defendant agrees that was the case.  Following on, the plaintiff says the defendant did not become entitled to any adjustment to the Completion Date.  The Works remained incomplete until 15 October 2021, after which, on 19 October 2021, the project building surveyor issued the defendant a certificate of construction completion.  The plaintiff says this certificate is definitive as to the date on which the defendant breached practical completion of the project.  It is not a new 'Completion Date' for the purposes of the Contract.  That date remained 30 April 2021 and accordingly the Works were in delay by 168 days.  The plaintiff says the Contract specified liquidated damages at the rate of $1,600 per day to a cap of 20% of the Contract Sum.  That sum is $60,794.90.  Accordingly, the plaintiff has a claim which exceeds the amount of the statutory demand and the demand should be set aside.

7. It is the defendant's position it was not required to complete the Works by 30 April 2021.  Clause 3.13 of the terms and conditions provided that 'in the event of delay such that Works are not delivered by the Completion Date, the Supplier shall be liable to pay the Purchaser Liquidated Damages'.  The terms and conditions of the Purchase Order defined 'Completion Date' as 'the date stated in the Principal's Schedule for the completion of the final activity comprising the Supplier's Works, as adjusted by the Purchaser in accordance with the Terms and Conditions of this PO'.  The parties agreed that the Principal's Schedule is Programme Revision 1, Programme Revision 2 and Programme Revision 3 which were issued by Royal Perth Hospital.  There is no Completion Date stated in the Principal's Schedule with the result that cl 3.13 is void for uncertainty.  The defendant says the fact the plaintiff has not been able to identify what the Completion Date is reinforces this uncertainty.

8. The position then is this.  The plaintiff, on the one hand, says that the Contract is clear in its terms and has been breached by the defendant consequent upon a failure to deliver the project by the Completion Date.  The defendant says the clause upon which the plaintiff relies is void for uncertainty because the Completion Date is not provided.  Really, it is not necessary to take the matter any further.  To attempt to determine in the context of an application to set aside a demand whether a provision of a reasonably complex Contract is void for uncertainty is to stretch the statutory demand regime too far.  The issue of what precisely are the terms of the Contract between the plaintiff and the defendant is a matter which should be determined in appropriate proceedings.  I am satisfied the plaintiff has made out there is a genuine dispute with respect to this debt and accordingly the statutory demand ought be set aside.

9. There would appear to be no reason why costs should not follow the event.  Accordingly, I will propose ordering the defendant pay the plaintiff's costs of the application including reserved costs.  Any party wishing to make an alternative submission should file short submissions within seven days of the publication of these reasons.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

AH

Associate to Master Sanderson

30 AUGUST 2022