H'var Steel Services Pty Ltd v TDC Concrete Pty Ltd
[2017] WASCA 63
•5 APRIL 2017
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: H'VAR STEEL SERVICES PTY LTD -v- TDC CONCRETE PTY LTD [2017] WASCA 63
CORAM: NEWNES JA
MURPHY JA
BEECH J
HEARD: 7 MARCH 2017
DELIVERED : 5 APRIL 2017
FILE NO/S: CACV 77 of 2016
BETWEEN: H'VAR STEEL SERVICES PTY LTD
Appellant
AND
TDC CONCRETE PTY LTD
First RespondentWEST COAST PREMIX PTY LTD
Second Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :MASTER SANDERSON
File No :COR 108 of 2016
Catchwords:
Corporations - Statutory demands - Application to set aside a statutory demand - Sufficiency of affidavit evidence concerning alleged offsetting claim - Whether primary court erred in not being satisfied of the existence of a genuine offsetting claim
Legislation:
Corporations Act 2001 (Cth), s 459G, s 459H
Supreme Court Act 1935 (WA), s 60(1)(f)
Result:
Leave to appeal refused
Appeal dismissed
Category: B
Representation:
Counsel:
Appellant: Mr J Marzec
First Respondent : Mr A P Hershowitz
Second Respondent : Mr A P Hershowitz
Solicitors:
Appellant: Zafra Legal
First Respondent : Paiker & Overmeire
Second Respondent : Paiker & Overmeire
Case(s) referred to in judgment(s):
Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd [2013] NSWCA 344; (2013) 85 NSWLR 601
Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5
Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91
Dream Money Pty Ltd v Bernhard [2016] WASCA 193
Elm Financial Services Pty Ltd v MacDougal [2004] NSWSC 560
H'var Steel Services Pty Ltd v Matthew Craig Pty Ltd t/as M 'N' M Rigging Services [2013] WASC 106
Pravenkav Group Pty Ltd v Diploma Constructions (WA) Pty Ltd [No 3] [2014] WASCA 132; (2014) 46 WAR 483
Rohalo Pharmaceutical Pty Ltd v R P Scherer SpA & Pharmagel SpA (1994) 15 ACSR 347
Royal Premier Pty Ltd v Taleski [2001] WASCA 48
REASONS OF THE COURT: This is an appeal against Master Sanderson's extempore judgment delivered on 11 August 2016, in which the learned master dismissed the appellant's (H'var's) application to set aside a statutory demand issued by the respondents (collectively TDC) for the sum of $113,631.32. H'var sought leave to appeal, and its application in that respect was referred to the hearing of the appeal by order on 8 September 2016.
Background
The evidence before the master included affidavits sworn by Mr Jerkovich on behalf of H'var as its sole director and secretary, dated 24 May 2016 and 21 July 2016. H'var also relied on an affidavit by its solicitor, Mr Marzec, dated 5 August 2016. TDC relied on an affidavit of Mr Halbwirth sworn on 7 July 2016. The evidence disclosed the following.
H'var is in the business of providing steel and concrete fabrication services in Western Australia. From October 2015 to February 2016 (defined by Mr Jerkovich as the 'Relevant Period'), H'var was engaged by Adco Constructions Pty Ltd (Adco) to assist in constructing concrete and precast panels for Adco's Port Coogee Village Shopping Centre Project (project).[1]
[1] Affidavit of Mr Jerkovich, 24 May 2016, pars 7 - 8; GB 3; affidavit of Mr Halbwirth, 7 July 2016, par 8; GB 25.
H'var engaged TDC to supply it with Spinifex mix and concrete premix for its construction works at the project site. On 21 September 2015, Mr Jerkovich on behalf of H'var executed a document entitled 'Application for Commercial Credit',[2] which provided, in effect, that TDC would supply H'var with concrete products on credit to an estimated monthly value of $50,000.[3] The Application for Commercial Credit contained various terms and conditions, including a term that H'var pay, without deduction or setoff, invoices rendered by TDC within 30 days of the date of the invoice.[4]
[2] Affidavit of Mr Jerkovich, 24 May 2016, pars 8 ‑ 9; GB 3; affidavit of Mr Halbwirth, 7 July 2016, par 6; GB 25, 27 ‑ 30.
[3] Affidavit of Mr Halbwirth, 7 July 2016, pars 6 ‑ 7; GB 25.
[4] Affidavit of Mr Halbwirth, 7 July 2016, annexure 'PH1'; GB 29.
According to a document described by Mr Jerkovich as setting out a 'detailed summary of specifications' (Specifications), the work for Adco involved the construction of the project's 'North‑Feature' and 'West‑Feature' panels. The North‑Feature panels were designated panels TP31 to TP37, and TP71. The West‑Feature panels were designated panels TP55 to TP57.[5]
[5] Affidavit of Mr Jerkovich, 24 May 2016, par 8, annexure 'AJJ-3'; GB 3, 15.
TDC provided Spinifex mix and concrete premix to H'var for this purpose, and between 21 and 24 October 2015 the concrete was poured for the panels.[6]
[6] Affidavit of Mr Jerkovich, 24 May 2016, par 9, annexure 'AJJ-3'; GB 3, 15. The appellant's written submissions do refer to an invoice dated 23 October 2015, but an invoice of that date is not annexed to any affidavit.
On 21 and 22 October 2015, TDC rendered invoices for the Spinifex mix provided to H'var.[7] The invoices were not paid within 30 days.
[7] Appellant's written submissions, par 9; WB 11; affidavit of Mr Jerkovich, 21 July 2016, annexure 'AJJ‑6'; GB 68 ‑ 69.
Mr Jerkovich, in his affidavit of 24 May 2016, annexed a document described as a 'list of defects required to be rectified by [H'var]' (Defects List).[8] The provenance of the document is not stated but it appears, from its contents, to relate to defects alleged by Adco in relation to the construction of the concrete panels at the project site. The Defects List was accompanied by photographs of what appeared to be small chips, blemishes or rough surface on several panels, although the photographed panels are not identified by their 'TP' number. The Defects List contained the information set out below.
[8] Affidavit of Mr Jerkovich, 24 May 2016, par 11, annexure 'AJJ-4'; GB 3, 16 ‑ 22.
Panel
Defect/comment
Assigned to
Due[9]
TP30
discolouration of smooth surfaces
H'var
26/11/15
TP30
poor finish to exposed aggregate
H'var
26/11/15
TP32
patchy finish, discolouration
H'var
28/11/15
TP34
exposed aggregate damaged, chips in smooth surface
H'var
26/11/15
TP35
requires skimming. poor finish
H'var
26/11/15
TP35
exposed aggregate damaged
H'var
26/11/15
[9] Owing to the small font size in the Defects List, the listed due dates are unclear, although all appear to have fallen in late November 2015. Nothing turns on the precise due dates.
Panel
Defect/comment
Assigned to
Due[10]
TP36
run marks, chipped aggregate and discolouration to panel
H'var
26/11/15
TP37
poor finish to concrete, discoloured
H'var
28/11/15
TP37
exposed aggregate is chipped
H'var
26/11/15
[10] Owing to the small font size in the Defects List, the listed due dates are unclear, although all appear to have fallen in late November 2015. Nothing turns on the precise due dates.
By email dated 16 December 2015, TDC requested H'var to 'please advise when [TDC] can expect payment for the October ($101,808.52) and November ($27,594.16) Invoices?' Mr Jerkovich, on behalf of H'var, replied on 17 December 2015, stating that 'payment for October will be processed in the first week of January and November will be processed for payment in the beginning of February'.[11]
[11] Affidavit of Mr Halbwirth, 7 July 2016, annexure 'PH2'; GB 31.
On 8 January 2016, TDC sent H'var a further email in the following terms:
Unfortunately we haven't received funds for October 2015 invoices as promised below [referring to the earlier email from Mr Jerkovich dated 17 December 2015]. Could you please advise an ETA for these invoices?
On 11 January 2016, Mr Jerkovich replied that he was 'planning to process payment this week'.[12]
[12] Affidavit of Mr Halbwirth, 7 July 2016, annexure 'PH2'; GB 31.
Payments were not made as indicated by Mr Jerkovich.
On 2 May 2016, TDC issued a statutory demand in the sum of $113,631.32 to H'var. The statutory demand, received by H'var on 5 May 2016, attached an affidavit of Mr Halbwirth, sworn on 2 May 2016, verifying that the amount was due and payable.[13]
[13] Affidavit of Mr Jerkovich, 24 May 2016, pars 3 ‑ 4, annexure 'AJJ-2'; GB 3, 10 ‑ 13; affidavit of Mr Halbwirth, 7 July 2016, par 9; GB 25.
On 24 May 2016, H'var filed an application to set aside the statutory demand pursuant to s 459G of the Corporations Act 2001 (Cth).[14] The application stated that the application was made 'on the facts stated in the supporting affidavit', ie, in the affidavit of Mr Jerkovich dated 24 May 2016. In that affidavit, Mr Jerkovich stated, in effect, that H'var had a genuine offsetting claim in the sum of $107,800, and that the remainder of the debt, in the sum of $5,831.32, was 'uncontested'.
[14] BB 6 - 8.
In relation to the 'uncontested' portion of the debt, Mr Jerkovich deposed:[15]
[H'var] is preparing a cheque for service upon [TDC] in the Sum of $5,831.32, being the amount of [TDC's] Statutory Demand that is not the subject of an offsetting claim by [H'var]. (emphasis added)
[15] Affidavit of Mr Jerkovich, 24 May 2016, pars 14 ‑ 15; GB 4.
In relation to the contested portion of the debt, Mr Jerkovich annexed the Defects List and deposed:[16]
During the Relevant Period [October 2015 - February 2016], several issues arose with [TDC's] supply of goods to [H'var] causing [H'var] to suffer loss and damage, namely:
1.inconsistencies in the Spinifex Mix caused delamination on the feature concrete panels, resulting in significant additional patching and sand blasting work to be undertaken to make the good the product defects;
2.excess concrete was dumped by [TDC] near the western power station in Port Coogee Village, requiring [H'var] to mobilise to remove the concrete and dispose of it safely.
[16] Affidavit of Mr Jerkovich, 24 May 2016, pars 10 - 11; GB 3.
Mr Jerkovich also deposed that he had 'caused a Schedule of Contract Backcharge' dated 23 May 2016 to be prepared (Backcharge Document), which he annexed to his affidavit. The Backcharge Document refers to 'Panel Patching Due to Inconsistent Spinifex Mix' and 'Cleaning of excess concrete' as the two main 'inclusions'. In relation to 'Panel Patching', reference is made to 'Patching activity' by 'Patcher ‑ Simon', 'Patcher ‑ Gearoid', and 'Patcher ‑ Harip'. Against each name there is a reference to 120 hours at $150 per hour, giving a total of $18,000 per person. There is also a reference to the costs of safely carrying out sand blasting on the site, including the cost of boom lift hire and of mobilising the compressor and blasting equipment. The net amount against this item is $10,500. In relation to the cost of cleaning the excess concrete, there is also a reference to 'Mobilise/Hire breaker, compressor, cutter'; 'use breaker/cutter to reduce the size of concrete piles'; remove the concrete and dispose safely' and 'waste disposal fee.' Against those items is the single sum of $15,000. There is also a reference to 'Backcharge from the client for painting the panels' in the sum of $5,000. There is also a reference to 'Backcharge from the client for additional sandblasting of the panels as per Architect's instruction' in the sum of $10,500. These amounts total $98,000 which, with GST, gives a figure of $107,800.[17]
[17] Affidavit of Mr Jerkovich, 24 May 2016, annexure 'AJJ‑5'; GB 23.
In Mr Jerkovich's second affidavit, dated 21 July 2016, he said that '[H'var] had prepared' a document entitled 'Feature Panel Defect Report'.[18] The author of the document is unstated. The document refers to the 'Panels in question' as being TP31, TP32 and TP71. It refers to a timeline of events that is to the following effect:[19]
•On 21 October 2015, Spinifex mix was first poured for TP 31, TP32 and TP71.
•On 22 October 2015, there was a '[p]roblem detected and notified' before the second pour.
•the second pour was for TP35, TP36 and TP37.
•On 23 October 2015, Spinifex mix was poured for TP33 and TP34, and there was '[n]o major problem detected afterwards'.
•On 24 October 2015, Spinifex mix was poured for TP55, TP56 and TP57, and there was '[n]o major problem detected afterwards.
[18] Mr Jerkovich's July affidavit refers to the report being dated 12 July 2016, although no date appears on the face of the report.
[19] Affidavit of Mr Jerkovich, 21 July 2016, annexure 'AJJ-6'; GB 52.
After the references to the completed pours, the timeline continued:
•On 26 October 2015, the panels were erected on the north side of the Port Coogee project and the client expressed dissatisfaction with the finish.
•On 31 October 2015, Mr Halbwirth of TDC attended the site and recommended a patching procedure.
•From 11 November 2015, patching and acid watching was tried for two weeks.
•On 18 November 2015, the client again expressed dissatisfaction with the finish.
•On 20 November 2015, deeper sand blasting was carried out on the north side.
•On 20 January 2016, there was ongoing skimming of smooth surfaces.
•On 10 February 2016, the client tried anti-graffiti coating on the panels and 'rejects smooth Surface'.
The Feature Panel Defect Report also stated:
Panels were erected onsite and NCR was raised.
As per advice from TDC QA (Paul Halbwirth) patching attempts were made onsite. This involved:
1.Patching the panel with parchem's fairing coat (FC) - to fill the access void created due to delamination.
2.Acid washing the patched area to expose the aggregate to the desired depth.
The problem with this procedure was that the colour of the original concrete and the patching could not be matched.
After a lot of efforts, the uniformity in the depth was achieved but the colour difference was not acceptable to the client.
The Feature Panel Defect Report also included photographs purporting to show evidence of defects in certain panels as constructed.[20] It also included 'Inspection & Test Plan[s]' for TP31, TP32 and TP71,[21] and other documents, the significance of which is not apparent from their face, but which counsel for H'var submitted showed that H'var had its own 'policies and protocols for how, for example, tolerances on precast panels are assessed'.[22] Counsel for H'var submitted that some of these materials required 'an interpretation of an expert to understand'.[23] However, there was no explanation, expert or otherwise, in the evidence before the master to assist in the interpretation of the materials.
[20] Affidavit of Mr Jerkovich, 21 July 2016, annexure 'AJJ‑6'; GB 71 ‑ 80.
[21] Affidavit of Mr Jerkovich, 21 July 2016, annexure 'AJJ-6'; GB 62 ‑ 67.
[22] ts 30.
[23] ts 30.
Mr Halbwirth in his affidavit of 7 July 2016, annexed a report from RSA Consulting Engineers dated 24 June 2016. The expert report concluded that:[24]
The claims by [H'var] that the concrete supply is to blame for the Rugasol 90 not working are baseless. Its [sic] either the application workmanship or the Rugasol 90 batch supplied [that] is defective. From our experience with major suppliers of construction chemicals like Sika, the latter option is unlikely.
[24] Affidavit of Mr Halbwirth, 7 July 2016, annexure 'PH3'; GB 38.
In his affidavit of 5 August 2016, Mr Marzec, H'var's solicitor, deposed to the effect that on 4 August 2016, H'var had transmitted to TDC the sum of $5,831.32.
The grounds of appeal
Ground 1 alleges that the master erred in law in failing to apply the correct test in relation to 's 459(1)(b)' [sic - s 459H(1)(b)] of the Corporations Act in his consideration of the evidence. H'var submits that, on a proper understanding of the master's reasons, the master determined that H'var's evidence did not allow him to make conclusions in fact about the issues raised in Mr Jerkovich's affidavits, and that the test adopted by the master is 'at a significantly higher level' than the settled case law.[25] Amongst other things, counsel for H'var referred to another decision of the master where, on different evidence, the master found that there was an offsetting claim: H'var Steel Services Pty Ltd v Matthew Craig Pty Ltd t/as M 'N' M Rigging Services.[26]
[25] Appellant's grounds of appeal, par 1; WB 6; appellant's written submissions, pars 31 ‑ 33; WB 15 ‑ 16.
[26] H'var Steel Services Pty Ltd v Matthew Craig Pty Ltd t/as M 'N' M Rigging Services [2013] WASC 106; ts 16; see also appellant's submissions, par 19.2; WB 13.
Ground 2 alleges that the master erred in law and fact in failing to find that H'var had not asserted with sufficient specificity evidence that, if accepted, would be capable of establishing that it had a genuine offsetting claim in the sum of $5,831.32. In this regard, it is said that the master:
(a)failed to give any or sufficient weight to H'var's evidence that it had already paid $5,831.32 to TDC prior to the hearing of the application;
(b)failed to find that this evidence was sufficient to indicate the nature of H'var's offsetting claim and the way it was calculated; and
(c)failed to find that this evidence, at a minimum, established a plausible contention requiring investigation, being the applicable legal test.
Ground 3 alleges that the master erred in law and fact in failing to find that H'var had not asserted with sufficient specificity evidence that, if accepted, would be capable of establishing that it had a genuine offsetting claim in the sum of $92,800. In this regard, it is said that the master:
(a)failed to give any or sufficient weight to H'var's evidence that TDC's defective product required substantial remedial works, causing loss in the sum of $92,800;
(b)failed to find that this evidence was sufficient to indicate the nature of H'var's offsetting claim and the way it was calculated; and
(c)failed to find that this evidence, at a minimum, established a plausible contention requiring investigation, being the applicable legal test.
Ground 4 alleges that the master erred in law and fact in finding that the expert report adduced by TDC established that TDC's defective product was not defective.
Ground 5 alleges that the master erred in law and fact in failing to find that H'var had not asserted with evidence its contractual obligation which led to a genuine offsetting claim in the sum of $15,000. It is submitted, in effect, that the master:
(a)Failed to give any or sufficient weight to H'var's evidence that TDC had negligently dumped product on its worksite, requiring remedial work to be performed and causing H'var to suffer loss of $15,000 in having it removed.
(b)Failed to find that this evidence, and the uncontested evidence of a supply of goods contract between H'var and TDC, gave rise to an express, implied or inferred term that TDC would be required not to dump excess product on H'var's worksite. Further, and in any event, dumping of the concrete would give rise to an action in continuing trespass and in nuisance.
(c)Failed to find that H'var's evidence was sufficient to indicate the nature of its offsetting claim and the way it was calculated.
(d)Failed to find that H'var's evidence, at a minimum, established a plausible contention requiring investigation, being the applicable legal test.
Finally, ground 6 alleges that the master erred in law in finding that H'var should pay TDC's costs of the application, including reserved costs, in circumstances where he ought to have upheld the application in whole or in part.
Legal principles
Pursuant to s 459G(1) of the Corporations Act, a company served with a statutory demand may apply to the court for an order setting it aside. The application must be made within 21 days after the statutory demand was served.[27] Section 459G(3) provides that:
(3)An application is made in accordance with this section only if, within those 21 days:
(a)an affidavit supporting the application is filed with the Court; and
(b)a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.
[27] Section 459G(2) of the Corporations Act.
Section 459H provides that if the court is satisfied that there is a 'genuine dispute' about the existence or amount of a debt to which a statutory demand relates and/or that a company has an 'offsetting claim' then it 'must calculate the substantiated amount of the demand in accordance with the formula: Admitted total - Offsetting total'.
Section 459H(3) and s 459H(4) provide:
(3)If the substantiated amount is less than the statutory minimum, the Court must, by order, set aside the demand.
(4)If the substantiated amount is at least as great as the statutory minimum, the Court may make an order:
(a)varying the demand as specified in the order; and
(b)declaring the demand to have had effect, as so varied, as from when the demand was served on the company.
On an application under s 459G, the court may make an order setting aside a statutory demand if it is satisfied that, because of a defect in the demand, substantial injustice will be caused unless the demand is set aside, or there is some other reason why the demand should be set aside.[28]
[28] Section 459J(1) of the Corporations Act.
An offsetting claim is defined in s 459H(5) as 'a genuine claim that the company has against the respondent by way of counterclaim, set‑off or cross‑demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates)'.
As Lindgren J explained in Rohalo Pharmaceutical Pty Ltd v R P Scherer SpA & Pharmagel SpA:[29]
Paragraph (a) of subs 459H(1) and the definition of 'admitted amount' in subs 459H(5) both refer to the existence of a 'genuine dispute', and the definition of 'off setting claim' in s 459H(5) refers to the existence of a 'genuine claim'. Plainly, the intention is to refer to something more than the mere 'raising' of a dispute and the mere 'making' of a claim. The provisions assume that the dispute and offsetting claim have an 'objective' existence the genuineness of which is capable of being assessed. The word 'genuine' is included to sound a note of warning that the propounding of spurious disputes and claims is to be expected but must be excluded from consideration. (original emphasis)
[29] Rohalo Pharmaceutical Pty Ltd v R P Scherer SpA & Pharmagel SpA (1994) 15 ACSR 347, 353; Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5 [13].
Ultimately, in determining whether it is satisfied that the company has a genuine offsetting claim, the court considers both the sufficiency of the evidence relied on to support the existence of an offsetting claim, and the sufficiency of the evidence in relation to the amount of the claim.[30]
[30] Dream Money Pty Ltd v Bernhard [2016] WASCA 193 [24]; Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd [2013] NSWCA 344; (2013) 85 NSWLR 601 [57].
A company seeking to set aside or reduce a statutory demand on the basis of an offsetting claim does not need to set out evidence supporting the claim in meticulous detail.[31] The evidence need only be sufficient for the court to make a reasonable assessment or estimate of the amount of the offsetting claim.[32] It is sufficient that there be, on the evidence, a plausible and coherent basis for quantifying the genuinely asserted claim, or showing that the claim, despite elements of uncertainty, can be seen to be, in any event, greater than the debt demanded. The narrower the margin between the alleged debt and the plaintiff's estimate or initial quantification, the greater will be the need for particularity in assessing the amount of the offsetting claim.[33]
[31] Royal Premier Pty Ltd v Taleski [2001] WASCA 48 [57].
[32] Taleski [57]; Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91 [90]; Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [No 3] [2014] WASCA 132; (2014) 46 WAR 483 [81].
[33] Elm Financial Services Pty Ltd v MacDougal [2004] NSWSC 560 [19]; Dream Money [60].
In conducting this exercise, the court must keep in mind that the task which it is performing is the determination of the amount of a genuine claim, which must exist in fact, rather than resolving the claim or attempting to predict its outcome.[34]
[34] Dream Money [61].
Disposition
Ground 1
Applications of this kind have been dealt with routinely in the master's court over many years. There could be no doubt that the master is aware of the relevant principles to be applied to such an application. The master's reasons were directed to the sufficiency of the evidence before him. Although there was perhaps some infelicity at one point in the expression of the extempore reasons, the master ultimately concluded that:[35]
In my view, there's nothing in the evidence which would reach the requisite standard of establishing that there's a genuine offsetting claim and, accordingly, the application to set aside the demand should be dismissed and [H'var Steel] should pay the costs of the application, including the reserve costs. (emphasis added)
[35] ts 3.
When the reasons are read as a whole, it cannot be inferred that the master applied the incorrect test. Rather, it can be inferred that the master determined that, on the evidence, there was no plausible or coherent basis for quantifying H'var's claim and for determining whether the claim was genuine.
The case of H'var Steel v Matthew Craig, referred to by counsel for H'var, is of no assistance in the disposition of ground 1 of this appeal. Ground 1 turns upon a proper construction of the master's reasons in this particular case. The disposition of ground 1 is not assisted by reference to the master's reasons in other cases on other evidence. Ground 1 should be dismissed.
Further, even if the master did apply the wrong test, as discussed below, the evidence was insufficient to establish that there was a genuine offsetting claim.
Ground 2
Ground 2 should be dismissed. An application to the court to set aside a statutory demand must be accompanied by an affidavit 'supporting' the application: s 459G(3).[36] In this case, H'var's 'supporting' affidavit, for the purposes of s 459G(3), was sworn by Mr Jerkovich on 24 May 2016. Mr Jerkovich deposed, on behalf of H'var, that the sum of $5,831.32 was 'not the subject of an offsetting claim'.[37] Further, the effect of Mr Marzec's affidavit evidence is that H'var did not pay an undisputed amount in relation to concrete mix supplied in October/November 2015 until some 10 months after the date of supply. Whatever inference may be drawn from this, it is not that the master erred in failing to find that the sum of $5,831.32 was an offsetting claim. As counsel for the appellant acknowledged,[38] there is no ground of appeal alleging that the master erred in failing to find that the payment of $5,831.32 reduced the appellant's indebtedness and that there was some power which the master should have exercised to reduce the statutory demand accordingly.
Grounds 3 and 5
[36] See also Pravenkav [64].
[37] Affidavit of Mr Jerkovich, 24 May 2016, par 14; GB 4.
[38] ts 21.
Grounds 3 and 5 relate to the sufficiency of H'var's evidence concerning the question of whether there was a genuine offsetting claim. The following observations may be made.
First, as noted earlier, the Defects List appears on its face to refer to defects alleged by Adco in relation to H'var's construction of panels TP30, TP32, TP34, TP35, TP36 and TP37. It is not itself evidence of defective product supplied by TDC. Further, panel TP30 was not included in the Specifications.
Secondly, Mr Jerkovich's first affidavit involved mere assertion, and provided no evidence from which the court could find a plausible contention requiring investigation that any defects in the panels as constructed were caused by the Spinifex mix supplied by TDC. Mr Jerkovich did not depose to observing any inconsistencies in the mix prior to its pour, and he did not depose that he was qualified to give expert evidence as to whether TDC's mix contained inconsistencies. The court could not find that there was a genuine offsetting claim absent some evidential basis for the assertion that the Spinifex mix caused the defects alleged by Adco in the construction of the panels. As explained below, the evidentiary gap was not filled by Mr Jerkovich's second affidavit generally, nor, in particular, by his annexure of the Feature Panel Defect Report.
Thirdly, while Mr Jerkovich stated in his second affidavit that H'var had prepared the Feature Panel Defect Report, he did not state who was the author of the report.[39] Insofar as that document purported to contain statements of fact and/or opinion, he did not depose that he knew of those facts or that he held, or was qualified to hold, those opinions. The mere annexure of a document from an unknown source containing assertions of fact or opinion is not evidence of the facts or opinions asserted.
[39] Affidavit of Mr Jerkovich, 21 July 2016, par 10; GB 51.
Fourthly, even if this document were regarded as evidence of statements of fact or opinion, it appears to relate to panels TP31, TP32 and TP71. Of these three panels, only TP32 appears in the Defects List.
Fifthly, the Inspection & Test Plan documents and similar documents forming part of the Feature Panel Defect Report do not, on their face, refer to any inconsistencies in the mix supplied by TDC. Counsel for H'var submitted, in effect, that these documents are to be understood as indicating that H'var's workmanship was adequate, and thereby they assist in drawing an inference that there was a plausible contention, requiring investigation, that TDC's product was at fault.[40] However, absent any evidence from a witness as to the meaning, scope, nature and purpose of the documents, counsel's submission merely invites speculation by the court, and does not provide a basis for the drawing of any inferences for the purpose of s 459H(1)(b).
[40] ts 30.
Sixthly, even if there were admissible evidence capable of supporting a finding of the existence of an offsetting claim in respect of panel TP32 (the subject of the Feature Panel Defect Report relating to the Defects List), there was no evidence which would enable the court to make an estimate of the amount of such a claim. The Backcharge Document is expressed in extremely general terms. It makes no reference to any panel numbers.
Seventhly, the statement by Mr Jerkovich that he 'caused' the Backcharge Document to be prepared is not evidence that he observed or undertook the activities referred to in it, or (assuming hearsay evidence is admissible) that he is informed by, and verily believes, other persons who say that they observed those things and carried out those activities. Also, there is no evidence that the Backcharge Document was prepared in the ordinary course of business. It is not addressed to any party. There was no evidence that it was sent to any party. There are no accounting records to support the statements in the document that certain persons were paid money, that expenditure was made on consumables, that plant and equipment were hired, or that H'var was invoiced for or required to, or did, pay the 'client' (Adco) the amounts referred to.[41]
[41] Affidavit of Mr Jerkovich, 24 May 2016, annexure 'AJJ-5'; GB 23.
Eighthly, the following observations may be made with specific reference to ground 5, concerning the allegation that concrete was 'dumped' which required removal at a cost of $15,000. Even if it were assumed that there might be some legal basis upon which TDC could be liable to H'var for concrete which was 'dumped', the evidence on this topic lacks particularity. Mr Jerkovich's evidence was to the effect that 'excess concrete was dumped' in the 'Relevant Period', ie, sometime between October 2015 and February 2016.[42] Although Mr Jerkovich in his first affidavit stated that the facts deposed to were within his own knowledge save otherwise stated, Mr Jerkovich's evidence on this topic is essentially conclusory in nature, rather than a statement as to something that he observed. Further, it would seem improbable that it was dumped in the period after the pour was finished on 24 October 2015. Yet there is no evidence that it was the subject of any communication or claim prior to Mr Jerkovich, in his emails dated 17 December 2015 and 8 January 2016, effectively promising payment of the TDC invoices. Nor was there any evidence that it was the subject of any communication or claim after 8 January 2016 and prior to the issue of a statutory demand. Indeed, there was no suggestion of such a claim until after the statutory demand was served. There is no evidence of any contemporaneous documentary record of the concrete being 'dumped' or being cleared up. Also, the Backcharge Document does not assist in providing any particularity, as it contains no indication of when the equipment was allegedly hired or mobilised to carry out the alleged work, or when the work was allegedly done.
[42] Affidavit of Mr Jerkovich, 24 May 2016, par 10; GB 3.
In these circumstances, it may be doubted that H'var's evidence was sufficient to disclose the existence of any genuine claim for 'dumped' concrete in the period between October 2015 and February 2016. However, it is unnecessary to reach a concluded view on that matter. That is because, even if it were accepted that H'var had some arguable claim, there is no evidence capable of supporting a finding that $15,000 was, even arguably, a reasonable assessment or estimate of any such claim for present purposes. As noted earlier, the Backcharge Document involves mere unsworn assertion and is inadmissible for this purpose. There are no accounting records which would indicate that any equipment was hired, or any work was done at any cost to H'var, in removing the 'dumped' concrete. Even if the Backcharge Document were treated as admissible, and its deficiencies treated as merely going to weight, the evidence as a whole lacked the cogency which would enable a conclusion to be drawn that there was a genuine offsetting claim in the sum of $15,000 in respect of 'dumped' concrete.
Finally, it should be observed that TDC, in its submissions, contended that the provision in the Application for Commercial Credit, which is to the effect that payments were to be made without deduction or setoff, provided a complete answer to the appeal.[43] In reply, H'var contended that this matter was not argued before the master below.[44] It is unnecessary to consider this point. The appeal must fail for the reasons given above.
[43] Respondents' written submissions, par 22; WB 33.
[44] Appellant's submissions in reply, par 1; WB 37.
Conclusion
Unless H'var succeeded on grounds 1, 2, 3 and 5 of the appeal, it could not succeed in the appeal. For the above reasons, the appeal must fail. Ground 6 falls away in consequence of the dismissal of grounds 1, 2, 3 and 5. It is unnecessary to consider ground 4.
The parties approached the appeal on the basis that leave to appeal was required. As in the case of Pravenkav,[45] it is unnecessary, in the absence of argument on the point, to consider whether, for appeal purposes, the master's order to dismiss H'var's application is an 'interlocutory order' for the purposes of s 60(1)(f) of the Supreme Court Act 1935 (WA). On the assumption that leave is required, it should be refused. The appeal should be dismissed.
[45] Pravenkav [100].
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