Logan Steel P/L v McNab Constructions Australia P/L
[2012] QMC 2
•8 February 2012
MAGISTRATES COURTS OF QUEENSLAND
CITATION:
Logan Steel P/L v McNab Constructions Australia P/L [2012] QMC 2
PARTIES:
LOGAN STEEL PTY LTD
(plaintiff)
v
MCNAB CONSTRUCTIONS AUSTRALIA PTY LTD
(defendant)
FILE NO/S:
M50196/11
DIVISION:
Magistrates Courts
PROCEEDING:
Claim- Application to set aside judgment
ORIGINATING COURT:
Magistrates Court at Toowoomba
DELIVERED ON:
8 February 2012
DELIVERED AT:
Toowoomba
HEARING DATE:
19 January 2012
MAGISTRATE:
Carroll D
ORDER:
I order that the judgment entered by the plaintiff against the defendant on 6 October 2011 be set aside. I further order the defendant file and serve its Defence, as per the draft exhibited to the affidavit of Peter Anthony Rosengren filed 2 February 2012, within seven days of the date of this judgment. I further order the applicant defendant pay the respondent plaintiff’s costs of and incidental to this application to be agreed or as assessed by the Court.
CATCHWORDS:
CLAIM - JUDGMENT – application to set aside default judgment
Uniform Civil Procedure Rules 1999, r 290
COUNSEL:
Walls for applicant
Upton for respondent
SOLICITORS:
Porter Davies Lawyers for applicant
MSB Lawyers for respondent
The Application
This is an application, pursuant to R 290 of the UCPR by the defendant for an order to set aside a default judgment entered by the plaintiff on 6 October 2011 for $82,198.39 including $16,285.32 for interest and $1,167 for costs.
Court Material
I have read the following material:
1. Claim and Statement of Claim filed 23 August 2011
2. Affidavit of Service of Kate Prior sworn 23 August 2011
3. Request for Default Judgment dated 4 October 2011
4. Affidavit of Richard MacLeod Thompson in support of Judgment sworn 4 October 2011
5. Judgment Order dated 6 October 2011
6. Application to Set Aside Judgment dated 7 December 2011
7. Affidavit of Peter Anthony Rosengren and exhibits thereto sworn 2 December 2011
8. Affidavit of Benjamin Thomas Giess sworn 13 January 2012-01-25
9. Further Affidavit of Peter Anthony Rosengren filed by leave 19 January 2012
10. Further Affidavit of Peter Anthony Rosengren filed 1 February 2012 to which is exhibited a draft Defence on behalf of the defendant.
The History
As appears from the affidavit material, in late 2007 the plaintiff respondent tendered as subcontractor to the contractor applicant defendant to undertake Prefabricated Steel Work and Original Steel Work for the construction of a three storey office complex in Railway Street, Milton. The tender was accepted. Work commenced on 23 June 2008 and was finished at the beginning of 2009[1].
[1] Affidavit of Benjamin Thomas Giess, paragraphs 4 to 7.
The defendant paid for all of the Prefabricated Steel Work but not for the Original Metal Work[2].
[2] Affidavit of Benjamin Thomas Giess, paragraphs 8 and 9.
On 9 March 2009 the defendant gave notice to the plaintiff formally notifying it of defects in the plaintiff’s work and requesting rectification[3].
[3] Affidavit of Peter Anthony Rosengren sworn 2 December 2011, paragraph 9 and paragraphs 4a and 4b of draft Defence.
In response to the letter of 9 March 2009 a Mr Giess, the brother of Benjamin Thomas Giess, Operations Manager for Logan Steel Pty Ltd, met with a representative of the defendant at the job site “to discuss the alleged defects and the finish of the Original Metal Work …”. Mr Giess’ brother told him that “they discussed rectifying the faults in the finish of the Original Metal Work…”[4]
[4] Affidavit of Benjamin Thomas Giess sworn 13 January 2012, paragraph 15
The plaintiff failed to rectify the defective work and on 19 May 2009 the defendant gave notice to the plaintiff that it intended to engage another contractor to complete the work[5].
[5] Affidavit of Peter Anthony Rosengren sworn 2 December 2011, paragraph 10 and paragraphs 4c and 4d of draft Defence.
The defendant engaged Watkins Steel Pty Ltd to rectify the plaintiff’s defective work. On or about 20 November 2009 the defendant issued a payment schedule to Watkins Steel approving its payment claim in the sum of $46,690[6]. The cost of rectification also included an amount of $19,967 plus GST being the defendant’s reasonable cost of arranging the supervision of the third party rectification of the defects in the plaintiff’s work. [7]
[6] Affidavit of Peter Anthony Rosengren sworn 2 December 2011, paragraph 11.
[7] Affidavit of Peter Anthony Rosengren sworn 19 January 2012, paragraph 4g of draft Defence.
After the rectification work was carried out Mr Benjamin Thomas Giess of the plaintiff company inspected the rectification works. He “observed that they rectified the sundry defects and they finished the Original Metal Work by painting it”.[8]
[8] Affidavit of Benjamin Thomas Giess, paragraph 19.
Mr Giess estimates the cost of rectifying the Original Metal Work to have been approximately $2,500[9]
[9] Affidavit of Benjamin Thomas Giess, paragraph 20.
On 4 August 2011, Mr Rosengren, Corporate Services Manager for the defendant, received a letter entitled “Final Demand” from Professional Collection Services on behalf of the plaintiff. The letter demanded payment of $64,746 in respect of a debt of 11 February 2009[10].
[10] Affidavit of Peter Anthony Rosengren sworn 19 January 2012, paragraphs 4 and 5, and page 2 of the exhibit thereto.
On 5 August 2011, Peter Anthony Rosengren, sent an email to Professional Collection Services explaining why the defendant was not indebted to the plaintiff. The email is in these terms “Logan Steel failed to complete required works on the job and we were required to obtain alternate contractors to complete it. The completion costs were well in excess of the amount claimed. There will be no payment made to your client.”[11]
[11]Affidavit of Peter Anthony Rosengren sworn 19 January 2012, paragraph 6 and 7
On 8 August 2011 Mr Rosengren received an email from Professional Collection Services requesting provision of “all appropriate documentation proving you do not owe this debt”. He responded on the same day to the effect that he would do so[12].
[12] Affidavit of Peter Anthony Rosengren sworn 19 January 2012, paragraphs 8 to 10, and exhibits thereto.
On 16 August 2011 the defendant issued a payment schedule to the plaintiff for the work done by it and bringing to account the back-charge for the work undertaken by Watkins Steel Pty Ltd. The payment schedule indicated that rather than the defendant owing any money to the plaintiff, the sum of $12,199.28 was owed by the plaintiff to the defendant[13].
[13] Affidavit of Peter Anthony Rosengren sworn 2 December 2011, paragraph 12 and summary subcontract payment schedule dated 16 August 2011. Refer also to paragraph 4h to 4m of draft Defence.
On 23 August 2011 the Claim and Statement of Claim were filed in the Court registry at Toowoomba.
On 23 August 2011 the Claim and Statement of Claim were sent by prepaid post to the defendant at its registered office at level 1, 12 Neil Street, Toowoomba[14].
[14] Affidavit of Service of Kate Prior sworn 23 August 2011.
Judgment by Default was signed on 6 October 2011 following the filing of a Request for Judgment by Default and the affidavit in support thereof by Richard McLeod Thomas sworn 4 October 2011.
Discussion
Rule 290 of the UCPR is in these terms:
290 Setting aside judgment by default and enforcement
The court may set aside or amend a judgment by default under
this division, and any enforcement of it, on terms, including
terms about costs and the giving of security, the court
considers appropriate.
It is trite law that an irregularly entered judgment can be set aside at the request of the defendant as of right[15].
[15] Cusack v DeAngelis 2007 QCA 313 at paragraph 23.
Mr Walls for the applicant makes a faint submission that the judgment was irregularly entered. He submits that the plaintiff knew or ought to have known that the claimed debt was not owed. He relied on a passage from the judgment of McGill DCJ in Hill v Robertson Suspensions Systems Pty Ltd[16]. In the present case there is a dispute as to the amount owing. It could not be said of the plaintiff that it “knew or ought to have known” that the debt was not owing, “because credit had been given for the amounts paid by the defendant which had the effect of reducing the claim”. In my view the judgment was regularly entered.
[16] [2009] QDC 165 at paragraph 13.
Mr Walls’ more substantial submission is that the Court should exercise its discretion and set aside the regularly entered judgment.
Where a judgment in default of appearance has been regularly entered, the Court, on application to set aside the judgment, would generally consider the following matters:-
1. Whether or not the defendant has given a satisfactory explanation for its failure to appear;
2. Whether or not there has been any delay in making the application;
3. Whether or not the defendant has a prima facia defence on the merits to the claim on which the judgment is founded[17].
[17] Aboyne Pty Ltd v Dixon Homes Pty Ltd [1980] QldR 142, Kelly J.
McPherson J in National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd[18] citing Attwood v Chichester[19] and Rosing v Ben Shemesh[20] said that the issue whether the applicant defendant had a prima facie case on the merits ‘is the most cogent’ of the three matters referred to by Kelly J in Aboyne Pty Ltd v Dixon Homes Pty Ltd.
[18] [1983] 2QdR 441 at 449-50.
[19] (1878) 3QBD 722
[20] [1960] VR 173
Before proceeding to deal with the issues in this matter, there are two other relevant statements of principle made by the Queensland Court of Appeal in relation to applications of this nature.
In Cook v DA Manufacturing and Anor[21] the Court comprised Chief Justice DeJersey and Justices in Appeal McPherson and Williams. It was a particularly strong Court. Williams JA wrote the judgment of the Court with the other members concurring. At paragraph 16 his Honour said, referring to the three matters above, “it is not the law that the applicant seeking to have a default judgment set aside must establish each of those three matters before the discretion to set aside the judgment can be exercised….”
[21] [2004] QCA 52
At paragraph 19 of his reasons his honour said, “…of more importance for present purposes is the significance which Courts in recent times have placed on the fact that the applicant is able to demonstrate an arguable defence on the merits. McPherson J in National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd[22] citing Attwood v Chichester[23] and Rosing v Ben Shemesh[24] said that the issue whether the applicant defendant had a prima facia case on the merits “is the most cogent” of the three matters referred to by Kelly J in Aboyne Pty Ltd v Dixon Homes Pty Ltd[25]. … McPherson J went on to say ‘It is not often that a defendant who has an apparently good ground of defence would be refused the opportunity of defending, even though a lengthy interval of time had elapsed provided that no irreparable prejudice is thereby done to the plaintiff’. That passage has received the express approval of this Court (Davies, McPherson and Pincus JJA) in National Australia Bank Ltd v Singh[26]…”
[22] [1983] 2QdR 441 at 449-50.
[23] (1878) 3QBD 722
[24] 1960] VR 173
[25] Aboyne Pty Ltd v Dixon Homes Pty Ltd [1980] QldR 142, Kelly J
[26] [1995] 1QdR 377 at 380
In Cusack v DeAngelis[27] the Court of Appeal comprised the President, Muir JA and Lyons J. At paragraph 21 Muir JA said “it is contended by counsel for the appellant that when regard is had to the evolution of the rule (rule 290) it should be construed as sanctioning only amendments which correct ‘errors arising from a slip or omission’. On the hearing of the appeal the Court was not referred to authority which directly supported such an unlikely proposition and there is good reason why the provision should be regarded as one which empowers a Court to do whatever is necessary to achieve justice between the parties and to avoid unnecessary delay and expense’. (The emphasis is mine).
[27] [2007] QCA 313
I now deal with the three issues referred to above.
Has the applicant given a satisfactory explanation as to the delay in filing an appearance?
I accept the evidence of Mr Rosengren that he had not read the Claim and Statement of Claim until 18 January 2012[28]. Obviously, these documents had not been brought to his attention upon service thereof shortly after 23 August 2011. This factual situation is somewhat similar to one of the relevant facts in Gavin Boyle Constructions Pty Ltd v Fabrok Pty Ltd and Anor[29]. In that case service of the Claim and Statement of Claim was effected on a firm of accountants whose office was the registered office of the defendant. The documents were scanned and emailed to the defendant but were not received due to some problem with its email provider.
[28] Affidavit of Peter Anthony Rosengren sworn 19 January 2012, paragraph 3.
[29] [2011] QDC 214
In the present case the Claim and Statement of Claim were filed and served on 23 August 2011. In correspondence between the parties between 5 August 2011 and 16 August 2011 the plaintiff was told by the defendant that it would not be paid for its work because the defendant considered that there were defects therein. In particular, on 16 August 2011, a week prior to proceedings being commenced, the defendant provided the plaintiff with details of the costs of rectification work which it claimed resulted in the plaintiff being indebted to the defendant in the sum of $12 199.28.
Although solicitors had not been engaged by the parties before issue of proceedings, the comments made by McGill DCJ at paragraph 13 to 17 in Gavin Boyle Constructions Pty Ltd v Fabrok Pty Ltd and Anor are apt here. In the present case the plaintiff was clearly on notice, not only that the defendant intended to defend the claim but the basis on which he intended to defend the claim. I am satisfied that had the defendant been aware of service of the Claim and Statement of Claim it would have filed the defence within time.
Although it was not required to notify the defendant of its intention to commence proceedings, the plaintiff’s failure to do so “…is relevant to some extent to the issues that arise in relation to the discretion to set aside a regularly obtained judgment…”[30]
[30] Gavin Boyle Constructions Pty Ltd v Fabrok Pty Ltd and Anor, paragraph 16
Mr Upton of counsel for the respondent plaintiff submits there has been an inadequate explanation by the defendant for its failure to file a defence within time. He refers to Yankee Doodles Pty Ltd v Blenvale Pty Ltd[31] where her Honour Justice Atkinson said “An affidavit in support of an application to set aside judgment entered into in default of appearance must demonstrate ‘a very compelling reason’ for the failure to appear.”[32]
[31] [1999] QSC 134
[32] Yankee Doodles Pty Ltd v Blenvale Pty Ltd, paragraph 13
Yankee Doodles Pty Ltd v Blenvale Pty Ltd was followed by Dearden DCJ in Max Christmas Real Estate Pty Ltd v Hockley[33]. Mr Upton submits that I am bound by that decision. With respect, I disagree. I consider I am bound by the decisions of the Queensland Court of Appeal, in particular the statements of principle made by Williams JA in Cook v DA Manufacturing Pty Ltd and Anor[34]. In fact in that case his Honour found that the trial judge had “erred in fettering his discretion by over-rigidly applying tests generally relevant to applications pursuant to rule 389 and rule 290 of the UCPR”. I refer in particular to his Honour’s comments at paragraph 16 of that judgment. I note that Yankee Doodles Pty Ltd v Blenvale Pty Ltd was not cited or referred to in His Honour’s reasons.
[33] [2005] QDC 404
[34] [2004] QCA 52, [1995] 1QdR 377 at 380
In the light of the statements of Williams JA in Cook v DA Manufacturing Pty Ltd and Anor, one should be careful to avoid placing too much emphasis on any one of the three considerations identified by Kelly J in Aboyne[35] at the expense of looking at those considerations in their totality.
[35] Aboyne Pty Ltd v Dixon Homes Pty Ltd [1980] QldR 142, Kelly J.
I am satisfied that the defendant has given an adequate explanation for its delay in filing a defence.
Has there been any delay in making the application?
Here the delay was a period of approximately two months from when judgment was entered from 6 October 2011 to 7 December 2011 when the application was filed. Mr Upton submits that the delay was not unreasonable and should not disentitle the applicant to relief. I agree with this submission.
Prejudice
The work for which the plaintiff was entitled to be paid (assuming it can make out its claim) was completed in early 2009. The plaintiff did not make demand for payment until August 2011, some two and a half years later. In my view the plaintiff would not suffer irreparable prejudice if the judgment was set aside.
Does the defendant have a prima facia case on the merits?
When the matter came on for hearing on 19 January 2012 the only information before the Court on this issue was the affidavit material. I gave leave to Mr Walls for the defendant to file a further affidavit exhibiting a draft defence. This has been done.
As noted earlier, the defendant engaged Watkin Steel Pty Ltd to rectify the plaintiff’s defected work at a cost of $66,657 plus GST.
Paragraph 4h to 4m of the draft Defence are in these terms:
“h. In accordance with the provisions of the subcontract, the defendant deducted the cost to the defendant to rectify the plaintiff’s defective work from the amount claimed in the plaintiff’s invoice 2721;
i. The cost to the defendant to rectify the defective work ($66,658 plus GST), was greater than the amount claimed by the plaintiff in invoice 2721($58,860 plus GST);
j. Further, the contract sum certified by the defendant was for $121,965.80 ($110,878 plus GST). The particulars of the certified contract amount were provided to the plaintiff on or about 16 August 2011 by way of a subcontract payment schedule;
k. The defendant has previously paid the sum of $134,165.63 ($121,968.25 plus GST) to the plaintiff for works performed under the subcontract;
l. The amount already paid to the plaintiff exceeds the amount payable to the plaintiff in accordance with the subcontract;
m. In the premises, the plaintiff owes the sum of $12,199.28 ($11,090.25 plus GST) as a debt.”
Mr Upton for the plaintiff/respondent submits that in response to the defendant’s claim to establishing a prima facie defence on the merits, the respondent deposes to:-
(i) Having completed the work subject to the Original Contract.
(ii) The applicant requesting variations to the Original Contract but there being no consideration offered for the variations and that request had either no legal effect or was a separate agreement from the Original Contract;
(iii) Completing the work the subject of the Original Contract;
(iv) Receiving correspondence setting out defects in the work that required rectification;
(v) Its estimate that the cost of rectifying the defects identified by the respondent that were the subject of the Original Contract was approximately $2 500;
(vi) Its belief that the other defects that were identified were in fact complaints about work that was not the subject of the Original Contract;
(vii) Its belief that it discharged its obligations under the Original Contract and is entitled to be paid…”
Mr Upton’s submission, and in particular items (ii), (iii), (vi) and (vii) are somewhat at odds with the facts contained in his client’s affidavit. Then one would have thought that upon receipt of the notice of alleged defects, the plaintiff would have advised the defendant that it denied any obligation to rectify the defects for the reasons set out in (ii) above, albeit expressed in layman’s language. On the contrary, Mr Giess’ brother attended the site and “discussed rectifying the faults”[36]. Furthermore, Mr Giess admits to having inspected the works himself and estimates the cost of rectification in the sum of approximately $2,500. [37]
[36] Affidavit of Mr Giess sworn 13 January 2012, paragraph 15.
[37] Affidavit of Mr Giess sworn 13 January 2012, paragraph 19 and 20.
The plaintiff estimates that the cost of rectifying the defects is approximately $2,500. The defendant alleges that the cost is of the order of $66,657 plus GST. In my view the defendant has raised a prima facie defence.
Conclusion
Accordingly in the exercise of my discretion I order that the judgment entered by the plaintiff against the defendant on 6 October 2011 be set aside. I further order the defendant file and serve its defence, as per the draft exhibited to the affidavit of Peter Anthony Rosengren sworn 1 February 2012, within seven days of this date. I order the applicant to pay the respondent’s costs of and incidental to this application to be agreed or as assessed by the Court.
D Carroll
Magistrate
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