Group Kildey Pty Ltd v J M Kelly (Project Builders) Pty Ltd

[2005] QSC 264

SUPREME COURT OF QUEENSLAND

CITATION:

Group Kildey Pty Ltd v J M Kelly (Project Builders) Pty Ltd [2005] QSC 264

PARTIES:

GROUP KILDEY PTY LTD (ACN 010 207 480)
(applicant)
v
J M KELLY (PROJECT BUILDERS) PTY LTD
(ACN 010 280 412)
(respondent)

FILE NO/S:

BS 5377 of 2005

DIVISION:

Trial Division

PROCEEDING:

Application

DELIVERED ON:

23 September 2005

DELIVERED AT:

Brisbane

HEARING DATE:

5 September 2005

JUDGE:

Mackenzie J

ORDER:

The statutory demand is set aside  1.    

The respondent is ordered to pay the applicant’s costs of and incidental to the application to be assessed2.    

CATCHWORDS:

CORPORATIONS – GROUNDS FOR WINDING UP – INSOLVENCY – APPLICATION TO SET ASIDE DEMAND – where applicant and respondent engaged in construction management contract – where works not completed within time stipulated in contract and deed entered into in relation to completion of works – where applicant contends outstanding works stipulated in deed not completed and therefore they are entitled to withhold payment – whether statutory demand should be set aside due to the existence of genuine dispute as to existence of the debt

Corporations Act 2001 (Qld) s459G

D & S Group of Companies Pty Ltd v O’Connor Investments Pty Ltd (1997) 15 ACLC 1,794
Process Machinery v ACN 057 260 590 [2002] NSWSC 45
Raffles Corporation Pty Ltd v Cech [2001] QSC 120

COUNSEL:

C Francis for the applicant
S Couper QC for the respondent

SOLICITORS:

BCI Law for the applicant
Hunt and Hunt for the respondent

1. MACKENZIE J: This is an application pursuant to s 459G of the Corporations Act 2001 to set aside a statutory demand claiming a debt of $165,000.

1. The underlying facts are that the applicant and the respondent entered into a construction management contract, with the applicant as principal and the respondent as construction manager, under which the respondent was to complete a multi-story residential complex after the original builder had gone into liquidation.  The estimated duration until completion was 24 weeks but after 62 weeks had elapsed and the project was still not completed a deed was entered into in relation to completion of the works.  It provided for three payments, two of which have been made.  The third, which was to fall due upon completion of the “the Outstanding Works” defined in the deed has not been paid and forms the basis of the statutory demand.  If the works were not completed by the agreed date the applicant was entitled to withhold payment until the Outstanding Works were completed. 

1. The applicant’s application contends that the outstanding works in the list incorporated in the deed are not yet completed.  There are other complaints about work allegedly not done or not properly done although those matters are not in the list of Outstanding Works.  Prima facie these works are not relevant in the present application since they are not within the deed.  Any consequences of allegations as to the circumstances in which they were left off the list may be agitated in appropriate proceedings. 

1. There is also an issue about access being denied to a unit apparently owned by a director of the applicant.  On the face of it, there is reason to be concerned that he has been making it difficult, to use a neutral word, for the respondent to enter that part of the premises.  However, to the extent that there is a contest about that issue and the consequences of it, it cannot be resolved within the confines of this application. 

1. The schedule of works referred to in the deed contains a number of items described in quite a general way.  There are reports from expert architects on each side as to whether certain items have been “completed”, although defectively, or whether the way in which they have been does not amount to completion.  One difficulty with the applicant’s architect’s report is that it does not identify particular things referred to by him as examples of non-completion, with items in the schedule of other works.  Nevertheless on the respondent’s architect’s report, there is a question, dependant on expert evidence to resolve, as to whether there had been “completion” within the meaning of the contract or not.  The deed does differentiate between completion and defects in that there is an obligation for defects to be rectified.  However it seems highly likely that questions of degree may be involved in relation to some items and only evidence can resolve issues of that kind.

1. There are also a number of issues that can only be resolved by evidence, since the extent of the obligation under the deed may be, on the material before me, influenced by conversations held and states of knowledge attributed to persons connected with the project at and around the time of the compilation of the list of Outstanding Works annexed to the deed.  By that I mean that some of the items alleged to be non-completion are alleged to have been the subject of discussion or were known to be in a particular state during discussions leading up to the compilation of the schedule.  The generality of the description in the schedule of items which had to be completed leaves room for elaboration by evidence, of what was actually required to be done.

1. It should be recorded that the respondent objected to certain items being considered for the purposes of the application since they were not raised in affidavits filed within the 21 day period allowed for the making of the application, although they are still of the general description of works alleged to be incomplete.  It was submitted that it was a consequence of D & S Group of Companies Pty Ltd v O’Connor Investments Pty Ltd (1997) 15 ACLC 1,794, Raffles Corporation Pty Ltd v Cech [2001] QSC 120 and Process Machinery v ACN 057 260 590 [2002] NSWSC 45 that the items could not be relied on for the purposes of an application under s459G. The analysis above means that the application must succeed, since there is a genuine dispute as to the existence of the debt, even if it is based only on matters which are not in the category objected to. It is therefore not necessary to express a conclusion on the validity or otherwise of this aspect of the respondent’s argument on the particular facts of the case.

1. The orders are as follows:

1.          The statutory demand is set aside. 

2.          The respondent is ordered to pay the applicant’s costs of and incidental to the application to be assessed.