John Holland Construction & Engineering PL v Seovic Civil Engineering PL
[1995] QSC 225
•8 September 1995
IN THE SUPREME COURT
OF QUEENSLAND
No. 1763 of 1994
Brisbane
Before: Mr Justice Ambrose
[John Holland Construction & Engineering PL v. Seovic Civil Engineering PL]
BETWEEN:
JOHN HOLLAND CONSTRUCTION & ENGINEERING PTY LTD
A C N 004 282 268
Plaintiff
AND:SEOVIC CIVIL ENGINEERING PTY LTD
A C N 002 764 169
DefendantREASONS FOR JUDGMENT - B W AMBROSE J.
Judgment delivered 08/09/1995
CATCHWORDS: CIVIL LAW - Interlocutory undertakings - alleged failure to comply with undertakings - payments were made without direction as to how to apply the money - open to the defendant to appropriate the money.
Undertaking - plaintiff alleged that by seeking payment of the undertaking evidentiary procedures and requirements appropriate to proof of contempt must be satisfied - RSC Order 47 considered.
Counsel:Mr D Fraser Q.C. for the plaintiff
Mr D Jackson Q.C. with him Mr P A Freeburn for the defendant
Solicitors:Ebsworth & Ebsworth for the plaintiff
Clayton Utz for the defendant
Hearing Date: 10 May 1995
IN THE SUPREME COURT
OF QUEENSLAND
No. 1763 of 1994
Brisbane
Before: Mr Justice Ambrose
[John Holland Construction & Engineering PL v. Seovic Civil Engineering PL]
BETWEEN:
JOHN HOLLAND CONSTRUCTION & ENGINEERING PTY LTD
A C N 004 282 268
Plaintiff
AND:SEOVIC CIVIL ENGINEERING PTY LTD
A C N 002 764 169
DefendantREASONS FOR JUDGMENT - B W AMBROSE J.
Judgment delivered 08/09/1995
This is an application made on 10 May 1995 by the defendant for an order that the plaintiff pay moneys owing pursuant to an undertaking it gave on interlocutory proceedings on 11 and 18 November 1994 and also for an order that it pay to the defendant costs reserved on those interlocutory proceedings and also on subsequent proceedings.
It is convenient to state briefly the nature of the issues canvassed in the proceedings that have led ultimately to this application by the defendant.
The plaintiff was contractor for the construction of an international airport at Brisbane in respect of work which proceeded during 1994.
The defendant was a subcontractor of the plaintiff under a written contract made in March 1994.
In the course of the performance of the subcontract work disputes arose between the plaintiff and the defendant and on 4 November 1994 the plaintiff instituted proceedings by writ of summons seeking in essence a declaration as to the proper construction of the written subcontract, damages for breach of contract and an injunction restraining the defendant until trial of the action or earlier order from withdrawing any plant hired to the plaintiff under the subcontract or preventing in any way the performance of the plaintiff's work as contractor for the construction of the airport. It also sought a mandatory injunction requiring the defendant to permit the plaintiff to use the defendant's plant for its own purposes in connection with airport construction work.
Although the express terms of the subcontract required the defendant to make available its equipment and operators to use it as required by the plaintiff during a 6 day/60 hour week, it was contended for the plaintiff that under its terms the plaintiff was also entitled to use that equipment outside of the specified period of a 6 day/60 hour per week at the option of the plaintiff who could provide operators other than those employed by the defendant for that use. It was contended that upon the proper construction of the subcontract the plaintiff was entitled to use the equipment (albeit without it being manned by the defendant's employees) for no additional payment or alternatively at the rate of payment provided for in one of the clauses of the subcontract relating to the use of manned equipment or alternatively "at a reasonable price".
Apart from a claim for "damages" which the plaintiff alleged it suffered by reason of the defendant supplying defective equipment under the subcontract, the relief sought really was based upon the success of the plaintiff's contentions as to the proper construction of the subcontract.
By the time the action was instituted the subcontract work was nearing completion. Indeed the material before me demonstrates that it was completed by 14 December 1994.
The application for interlocutory relief included a claim for a mandatory injunction requiring the defendant to permit the plaintiff to use the defendant's plant as it saw fit to complete its contract work. The application first came on in chambers on 11 November 1994 when by consent it was adjourned to 18 November 1994 upon mutual undertakings given by the parties relating to the use of the defendant's plant and the obligations of the plaintiff to pay for such use.
On 18 November 1994 the application was argued at some considerable length and the decision upon it was reserved. The notice of motion was adjourned to 9 December 1994 upon the plaintiff and the defendant giving mutual undertakings of the sort given on 11 November 1994.
Judgment upon the motion for injunction was delivered in Brisbane on 9 December 1994. (Reasons published in Cairns on 7 December 1994).
The plaintiff's application for injunction was dismissed.
Costs were reserved on the hearings of the application on 11 November and 18 November 1994 and upon an application by the defendant in Brisbane on or about 9 December 1994 for an injunction which resulted in the plaintiff undertaking not to do what it had threatened to do.
Although the plaintiff's application was interlocutory in form, its outcome was final in effect. The essence of the plaintiff's application was to require the defendant to permit the use of its plant and equipment brought to the airport site for the purpose of fulfilling its subcontractual obligations to the plaintiff for periods of time which fell outside the 6 day/60 hour week referred to in the subcontract without the necessity of negotiating in an ordinary commercial way the quantum of hiring charges for the use of the defendant's equipment for weekly periods in excess of a 6 day/60 our week.
It is necessary to refer only to the following undertakings given by the plaintiff on 11 (18) November 1994:"(c)...
(i)to pay to the Respondent (i.e. the defendant) the sum of $40 per hour for labour performed in excess of 60 hours during the period 11 November 1994 (18 November 1994) to the cessation of shift commencing on Friday 18 November 1994 (9 December 1994);
(ii)to pay the Respondent for the use of the plant from the period 11 November 1994 (18 November 1994) to the cessation of shift commencing on Friday, 18 November 1994 (9 December 1994) pursuant to the terms of the Agreement for use up to 60 hours;
(iii)to pay to the Respondent the hire rates for use of the plant for time in excess of 60 hours for the period 11 November 1994 (18 November 1994) to the cessation of shift commencing on Friday, 18 November 1994 (9 December 1994) as may be determined by the Court upon the proper construction of the Agreement or as agreed between the parties;
(iv)to continue to pay the Respondent the hire fees payable pursuant to the Agreement and pursuant to the provisions herein for the period 11 November 1994 (18 November 1994) to the cessation of shift commencing on Friday, 18 November 1994 (9 December 1994)."
The plaintiff's undertakings given on 18 November 1994 were qualified in these terms:
"2.The above undertakings apply until judgment is delivered in the application made by the Notice of Motion or until the end of the shift commencing Friday, 9 December 1994 whichever is the earlier."
Upon the material in this application it is the contention of the defendant that there is a sum of at least $55,877.93 owing by the plaintiff to the defendant under the terms of its undertaking, quite apart from moneys owing in respect of work performed in excess of a 6 day/60 hour week. The period of that undertaking as I have indicated is between 11 November and 9 December 1994.
The matter of calculation is somewhat complicated because progress payments were made with respect to the defendant's supply of plant and labour for periods not in excess of the 6 day/60 hour working week in periods other than those covered by the undertaking. Thus progress payment number 6 in the sum of $132,506 was made with respect to the period 23 October to 23 November 1994 and progress payment number 7 was made with respect to the period 23 November to 14 December 1994.
The period covered by the court undertaking is from 11 November to 9 December 1994.
Mr Langhorn, a building surveyor, has analysed the work done and has sworn that the sum of at least $55,877.93, which the plaintiff undertook to pay, remains outstanding for work performed between 23 November and 9 December 1994.
Mr Langhorn's figures have not been shaken in my view upon the evidence.
The plaintiff, however, contends that in effect in seeking payment of this sum the defendant asserts that the plaintiff is in contempt of court and consequently the evidentiary procedures and requirements appropriate to proof of contempt must be satisfied and that for a variety of reasons set forth at length in written submissions provided on behalf of the plaintiff the defendant has failed to satisfy those requirements.
In my view, this contention on the part of the plaintiff is not well founded. It is clear from the terms of RSC Order 47 that whether or not a failure on the part of the plaintiff to comply with this undertaking amounts to a contempt, O. 47 r. 8 clearly distinguishes between breach of an undertaking to do or refrain to do some act other than pay money to a person and a breach of an undertaking to pay money to a person. Order 47 r. 8 provides:"8(1)An undertaking to do any act other than the payment of money to some person may be enforced in the same manner as a judgment requiring a person to do an act and an undertaking to abstain from doing an act may be enforced in the same manner as a judgment requiring a person to abstain from doing an act.
(2)In the case of non performance of an undertaking to pay money to any person the court or a judge may make an order for payment of the money which may be enforced in the manner prescribed by Rule 3."
Order 47 r. 6 deals with enforcement of judgments or orders other than those for the payment of money to some person while O. 47 r. 3 provides the method for enforcing a judgment for the payment of money "to any person". Inter alia, such a judgment may be enforced by writ of fi fa.
In my view, in its clearest terms O. 47 r. 8(ii) contemplates the making of an order that the plaintiff pay to the defendant moneys which it has failed to pay pursuant to the undertakings it gave on 11 and 18 November 1994. If such an order were not complied with then it may be enforced as a judgment or order for the payment of money by the plaintiff to the defendant under O. 47 r. 3.
The only issue, in my view, is whether upon the material it appears more probable than not that the plaintiff has in fact failed to pay the sum of at least $55,877.93 (or the larger sum of $85,272.73 for which the defendant contends). This larger sum includes $24,825 which is the cost claimed for work performed in excess of a 6 day/60 hour week.
In my view, quite apart from the undertakings given in support of its application for interlocutory relief, the plaintiff will be obliged to pay to the defendant or at least bring into account all moneys to which the defendant is entitled with respect to work performed within the constraints of the subcontract. There may be other moneys which the plaintiff is obliged to pay by reason of work performed outside the constraints of the written subcontract or the undertakings.
It is also clear that the plaintiff may pursue whatever claims for breach of contract it may have against the defendant in the current or some other action.
This application only relates to the alleged failure of the plaintiff to comply with the terms of its undertakings, to which I have referred.
One of the plaintiff's contentions is that in making a payment of $132,506 on 23 November 1994, it did in fact appropriate part of that sum to moneys it was obliged to pay under the undertakings given, as indeed was the case with respect to the payment of $97,513.67 made on 14 December 1994. This contention seems to be ancillary to the primary contention that the defendant must prove contempt according to the requisite degree of proof before the plaintiff can be compelled to pay money for breach of an undertaking to pay it to the defendant.
For the defendant it is contended that in fact payments of money by the plaintiff were made without communication of any express appropriation as between progress payments and moneys payable under the undertakings. Certainly there was no communication of any direction to apply the moneys paid to moneys due under the undertakings. Perhaps this is not surprising because quite to the contrary reference to the plaintiff's records etc. prepared at the time the payments in issue were made discloses that no part of those funds was attributed to moneys payable pursuant to the undertakings.
The obligation of the plaintiff to make payments under the undertakings given upon its application for interlocutory relief is distinct from its obligation, whatever it may be, to make payments under the subcontract in respect of work performed by the defendant under the terms of that subcontract.
An essential element of appropriation whether by debtor or creditor is notification by the party making it of that part of the indebtedness of one party to the other to which the payment in issue is applied. A creditor who accepts payment from a debtor who directs its manner of application where the indebtedness exceeds the amount paid, is bound to apply it as directed.
Where money is received by a creditor free of direction from the debtor whose indebtedness exceeds the amount paid the creditor may elect to apply the money received to discharge a specified part of that indebtedness and once that election is communicated or notified to the debtor both creditor and debtor are bound by the appropriation.
I refer merely to Halsbury's Laws of England 4th ed. Vol. 9 paras. 505 and 506.
In A. Smith & Son (Bognor Regis) Ltd v. Walker (1952) 2 QB 319 the Court of Appeal considered whether a creditor who had performed work for a debtor part of which was illegal and so not giving him an enforceable cause of action could in the absence of any communicated appropriation on the part of the debtor elect to apply moneys paid generally on account towards payment for that illegal work. The decision and dicta in that case gives no assistance in determining the issue in this case.
In making the payments to the defendant which it did on 23 November and 14 December 1994, the plaintiff had the right if it so desired to appropriate the moneys paid to either the work performed by the defendant prior to and independent of the undertakings given by both parties upon the interlocutory proceedings or to the work performed subsequent to and coming within the category of work covered by those undertakings.
On the material I find that it would have been open to the plaintiff to appropriate moneys paid subsequent to the giving of the undertakings to work done subsequent to the giving of and covered by those undertakings. However, on the material the plaintiff did not do this.
The plaintiff having failed to appropriate the payments made to any specific debts owing to the defendant, the right of such appropriation devolved upon the defendant. It is clear on the facts that the defendant appropriated a significant part of the funds paid by the plaintiff to its indebtedness to the defendant which arose prior to and/or independently of the period of work covered by the undertakings.
In my view, it was open to the defendant to make the appropriation of the moneys paid by the plaintiff in respect of work done by the defendant in the way which it clearly did. It clearly notified the plaintiff of that appropriation. The consequence is that in fact at the very least the plaintiff has not yet paid to the defendant the sum of $55,877.93 in respect of the provision of work and labour during the period of 23 November and 9 December 1994 which it undertook to do. In this respect I accept the evidence and calculations of Mr Langhorn in his affidavit filed 8 May 1995. Upon the state of the evidence, I am not prepared to make a finding as to the value/amount of work performed in excess of a 6 day/60 hour week because this issue has not been sufficiently addressed. No doubt it will be further addressed in the current proceedings between the parties.
In March - April 1995 the plaintiff sought cancellation of claims of charge under the Subcontractors' Charges Act 1994 in respect, inter alia, of progress claim number 6 for $132,506.23, given on 23 December 1994, and progress claim number 7 for $97,513.67, given on 23 December 1994 and revised on 13 February 1995.
After hearing detailed arguments on the material referred to in her judgment, White J concluded that the plaintiff did not appropriate moneys paid to the defendant to indebtedness under its undertakings and that the defendant appropriated the moneys it received from the plaintiff primarily in respect of its indebtedness in the provision of plant and labour not covered by the undertaking.
I have had the opportunity to consider the careful consideration given to the matter by White J, and while not persuaded that the defendant may rely upon arguments of estoppel, I am unpersuaded by any submissions made on behalf of the plaintiff that I should adopt any different approach or come to any different conclusion from that of White J.
Much the same material seems to have been canvassed before me as was canvassed before White J and I have come to the same conclusion as did White J.
Whether the plaintiff is obliged to pay to the defendant under its undertakings the whole of the sum of $85,272.73 may be arguable. However, there seems to be no significant factual argument which has emerged upon this application to support the proposition that the sum of $55,877.93 which the plaintiff undertook to pay to the defendant is not payable. No part of that sum has been paid.
I order therefore that the plaintiff pay to the defendant in respect of the undertakings it gave on 11 November 1994 and 18 November 1994 the sum of $55,877.93.
With respect to the question of costs, the defendant has succeeded upon each of the four matters pursued in this action before me. Those were -
the plaintiff's application of 11 November 1994 for interlocutory relief;
the plaintiff's application of 18 November 1994 for interlocutory relief;
the defendant's application of 9 December 1994 which resulted in the plaintiff's undertaking; and
this application of the defendant for payment of money due under the undertaking - to the extent that it proved entitlement to the lesser of the sums claimed in the alternative upon that application.
In the circumstances I can see no reason why the plaintiff should not pay the costs of each of those applications upon which the defendant has succeeded. I order that the plaintiff pay to the defendant its costs of and incidental to each of those matters (1), (2) and (3) to be taxed.
The defendant has succeeded upon this application (4) and I order that the plaintiff pay to the defendant its costs of and incidental to this application to be taxed.
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