Mallan v Coffey Geosciences

[2004] QSC 7

SUPREME COURT OF QUEENSLAND

CITATION:

Mallan v Coffey Geosciences [2004] QSC 007

PARTIES:

F J MALLAN PTY LTD
(applicant)
v
COFFEY GEOSCIENCES PTY LTD
(respondent)

FILE NO:

482 of 2004

DIVISION:

Trial Division

PROCEEDING:

Application

DELIVERED ON:

4 February 2004

DELIVERED AT:

Brisbane

HEARING DATE:

2 February 2004

JUDGE:

Wilson J

ORDER:

That the statutory demand be set aside.

CATCHWORDS:

CORPORATIONS – WINDING UP – WINDING UP BY THE COURT – GROUNDS FOR WINDING UP – INSOLVENCY – APPLICATION TO SET ASIDE DEMAND – GENUINE DISPUTE AS TO INDEBTEDNESS – where there is a dispute as to the identity of the contracting parties – where original creditor company is subsidiary of company that issued statutory demand - whether any debt is owed to parent company.

CORPORATIONS – WINDING UP – WINDING UP BY THE COURT – GROUNDS FOR WINDING UP – INSOLVENCY – APPLICATION TO SET ASIDE DEMAND – OFFSETTING CLAIMS – where plaintiff claims damages for breach of contract and misleading and deceptive conduct

CORPORATIONS – WINDING UP – WINDING UP BY THE COURT – GROUNDS FOR WINDING UP – INSOLVENCY – APPLICATION TO SET ASIDE DEMAND – FOR DEFECT OR ‘SOME OTHER REASON’ – whether statutory demand served on wrong entity  - whether statutory demand issued by wrong entity

Corporations Act 2001 (Cth), s 459G

COUNSEL:

MJ Byrne for the applicant
MR Bland for the respondent

SOLICITORS:

Greves Solicitors for the applicant
McCullough Robertson for the respondent

1. WILSON J: This is an application pursuant to s 459G of the Corporations Act 2001 to set aside a statutory demand.

1. The statutory demand was served on or about 5 January 2004.  The respondent demanded payment of the sum of $11,155.62 being the amount of debt described in a schedule to the notice in these terms:

“SCHEDULE

Dates of the debt being incurred: 24 August 2003 and 28 November 2003

Description of the Debt  Amount of the Debt

Work completed by the Creditor as   $11,155.62 
requested by the Company in relation
 to a Stormwater Management
Plan at Ann Street, Kallangur

Balance of the debt as at 18 December 2003         $11,155.62.”

1. The applicant submits that the statutory demand should be set aside because –

(a)there is a genuine dispute about the existence or amount of the debt;

(b)it has an offsetting claim for damages for breach of contract and misleading and deceptive conduct pursuant to the Trade Practices Act;

(c)the respondent’s use of the statutory demand procedure is an abuse of process;

(d) the statutory demand was served on the wrong entity;

(e)it did not contract with the respondent but with another company; and

(f) it is solvent.

1. The applicant is a land developer.  The respondent provides water studies reports in relation to proposed developments.  In about July 2002 an oral agreement was made for the provision of a stormwater management plan for the development of property at Ann Street, Kallangur. The applicant has submitted that the agreement was between Mallan Earthmoving Pty Ltd and Water Studies Pty Ltd, with the consequence that the statutory demand was issued by the wrong entity and served on the wrong entity. I shall return to these arguments below, but for the present refer to the contracting parties as the debtor and the creditor.

1. It is common ground that the contracting parties envisaged that the work would be done in two stages and that the creditor provided a preliminary estimate of the work and costs.  There was no fixed price agreed; the work was to be conducted on a time spent basis.  The preliminary estimate was $4,180 for stage 1 and $7,000 or $8,000 for stage 2.  Work was performed, and three invoices were issued and paid as follows –

(i)            17.10.02               $  8,551.85

(ii)           17.12.02               $  9,939.27

(iii)          20.02.03                $ 1,320.00
  $19,811.12

1. The local Council (apparently on the advice of its consulting engineers) required further work to be performed.  Its additional requirements were notified to Water Studies Pty Ltd on 27 June 2003 and 26 September 2003.  It was this additional work which was the subject of the two further invoices on which the statutory demand was based.  They were as follows -

(i)         14.08.03                $ 5,481.86

(ii)         28.11.03                $ 5,673.76
  $11,155.62

1. It is not clear whether response to the Council’s additional requirements was within the scope of parts 1 and 2 of the original work, whether those additional requirements were the result of shortcomings in the work done in stages 1 and 2, or whether they were truly additional. The applicant relies on an affidavit by one Maxwell Francis Winders, a consulting engineer whose company was retained to prepare an environmental assessment report in response to a request from the Council in August 2002. Unfortunately the contents of that affidavit are confusing and do not shed any real light on this question. On one interpretation Mr Winders is saying that the Council’s consulting engineers were under some misunderstanding and that the creditor should have been able to resolve their concerns without running up bills in the amounts it did.  In his view $1,500 would have been a fair and reasonable fee for responding to the concerns of the Council’s consulting engineers contained in a letter of 23 February 2003. It is not altogether clear that those were the concerns which prompted the Council’s notifications of 27 June and 26 September 2003. Be that as it may, it seems always to have been agreed that work would be charged on a time spent basis.

1. I am not satisfied that the contention of overcharging is a plausible one requiring investigation. On the material before the Court, it is speculative only.

1. The debtor asserts that it has offsetting claims for damages for breach of contract and misleading and deceptive conduct. It relies primarily on the contents of an email from one of Water Studies Pty Ltd’s employees (dated 1 October 2003) suggesting that work done by a contractor may not have been thoroughly checked, and that the matter should be discussed with Mr Walton on his return from leave. However, I attach little significance to that email given the terms in which it is expressed. As I have already said, I do not find Mr Winders’ affidavit helpful. In the circumstances I am not satisfied that the debtor has an offsetting claim.

1. The applicant contends the respondent has used the statutory demand procedure as a debt collecting procedure in circumstances where it knew the debt was disputed, and that this is an abuse of process. It is true that the debtor raised complaints of delay and overcharging from at least 19 November 2003, but I am not satisfied that either of those factors has been sufficiently established to raise a genuine dispute as to the existence or amount of the debt. Accordingly I would not be prepared to order that the statutory demand be set aside as an abuse of process.

1. Negotiations culminating in the agreement appear to have been conducted between Mr Frank Mallan and Mr Richard Walton.  The applicant contends that the agreement was made with Mallan Earthmoving Pty Ltd (a related company) rather than with it.  However, from as early as 22 July 2002 the creditor’s correspondence and invoices were all addressed to the applicant.  There is no evidence of any demur to this until January 2004.  In the meantime on 19 November 2003 the applicant had written to Water Studies Pty Ltd complaining about delays and overcharging.  Mr Mallan has deposed that payments were made by Mallan Earthmoving Pty Ltd, but there could be many reasons why this was so.  The only letter before the Court on the letterhead of Mallan Earthmoving Pty Ltd was written on 27 November 2003 and does not take the point that it was the contracting party.

1. On the evidence, I am unpersuaded that there is any genuine dispute about the identity of the applicant as the debtor.

1. There is, however, reason to question whether the respondent was the other party to the contract.  The letter of 22 July 2002 was on the letterhead of Water Studies Pty Ltd ACN 090 062 294, ABN 59 090 062 294.  Mr Walton has deposed that the respondent is the ultimate holding company of Water Studies Pty Ltd.  However, the ASIC search results exhibited to his affidavit show that Water Studies Pty Ltd was incorporated in October 1999, and that its ultimate holding company is Coffey International Limited.  Its principal place of business since 21 October 1999 (142 Wicks Road, Macquarie Park, NSW) is the same as that of Coffey International Limited.  Water Studies Pty Ltd and the respondent may both be part of the Coffey Group, but they are separate legal entities. 

1. Of the first three invoices, that dated 17 October 2002 for $8,551.85 was headed “Water Studies” and then “Coffey Geosciences Pty Ltd ACN 056 335 516, ABN 57 056 335 516”. The other two were on the letterhead of Water Studies Pty Ltd and bore its ABN and ACN numbers.

1. The two disputed invoices were both headed –

“WATER STUDIES
A division of COFFEY GEOSCIENCES Pty Ltd”

and bore the respondent’s ABN and ACN numbers. The first was sent with a covering letter on the letterhead of Water Studies Pty Ltd outlining the additional work undertaken and explaining that it had been notified of the Council’s additional requirements only on 27 June 2003.

1. On 4 November 2003 Water Studies Pty Ltd wrote to the applicant in these terms –

“On Friday 26 September we were advised that Council had undertaken another review of the above report.  A number of items of clarification raised by Council have been addressed at our own expense.

All further work on the above study since our last invoice, including the assessment of alternate site layouts, will continue to be charged on a time and expenses basis.

The work will be carried out in accordance with our Terms of Agreement for Professional Services Issue 1 Revision 9 1 July 2003, a copy of which is attached.  Note that Water Studies is part of the Coffey Group.” (underlining added)

The attached document bore the word “Coffey” in bold type along the right margin and the name of the respondent with its ABN and ACN numbers at the bottom.

1. The applicant wrote to Water Studies Pty Ltd (attention Mr Richard Walton) on 19 November 2003 complaining about overcharging and delays. This provoked a response dated 20 November 2003 on combined letterhead of the respondent and Water Studies Pty Ltd (the latter being described as a division of the respondent).

1. On 27 November 2003 the applicant wrote to the respondent –

“We are in receipt of your letter dated 20^th November 2003. I refer you to our letter of 19^th November 2003 addressed to Richard Walton re the outstanding invoices. I consider that I have been overcharged and am considering requesting a refund on my previous payments.”

1. Counsel for the respondent submitted that it made no difference to the debtor which company performed the work. Perhaps so, but the point taken, though technical, has substance. I am satisfied that the original contract for stages 1 and 2 was with Water Studies Pty Ltd and not the respondent. There is no evidence that the debtor’s agreement with respect to the work the subject of the first disputed invoice was with the respondent rather than with Water Studies Pty Ltd. There may be grounds to argue that its agreement with respect to the work the subject of the second disputed invoice was with the respondent, but the issue is by no means clear cut.

1. I am satisfied that there is a genuine dispute as to the existence of a debt owing by the debtor to Coffey Geosciences Pty Ltd.

1. I order that the statutory demand be set aside.