Mascarene Pty Ltd v Slater
[2016] VSC 395
•14 July 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S CI 2015 4133
IN THE MATTER of Mascarene Pty Ltd
| MASCARENE PTY LTD (ACN 099 531 834) | Plaintiff |
| v | |
| GEOFFREY SLATER | Defendant |
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JUDGE: | Randall AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 October 2015 |
DATE OF JUDGMENT: | 14 July 2016 |
CASE MAY BE CITED AS: | Mascarene Pty Ltd v Slater |
MEDIUM NEUTRAL CITATION: | [2016] VSC 395 |
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CORPORATIONS – Corporations Act 2001 (Cth) – Section 459G application to set aside statutory demand – Assignment of creditor’s judgment debt – Demand served by assignee – Off-setting claim – Extent of undertaking given to Dixon J to obtain entry to plaintiff’s property – Damage to concrete and roof not the subject of the undertaking – Independent contractor – Liability for acts of independent contractor.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | T W J Greenway | Kyrou Lawyers |
| For the Defendant | Mr A Phillips | Lloyd & Lloyd Solicitors |
TABLE OF CONTENTS
Statutory demand............................................................................................................................... 1
Background......................................................................................................................................... 1
The plaintiff’s position................................................................................................................. 4
The defendant’s position............................................................................................................. 4
Issues............................................................................................................................................... 4
The Law................................................................................................................................................ 5
The extent of the defendant’s liability with respect to the offsetting claim......................... 6
The Undertaking................................................................................................................................ 6
Off-setting Claim Not Covered by the Undertaking................................................................... 8
HIS HONOUR:
This is an application pursuant to s 459G of the Corporations Act 2001 (Cth) to set aside a statutory demand dated 16 July 2015.
Statutory demand
The schedule to the statutory demand dated 16 July 2015 describes the debt claimed as follows:
The amount of a cost judgment of the Supreme Court of Victoria dated 13 September 2012 in S CI 2012/05139 against the company in favour of Popular Pastime Pty Ltd ACN 006 332 350 which was assigned to the creditor by written instrument dated 6 November 2012 $10,000.
Interest pursuant to s 57(2) of the Supreme Court Act 1986 and Penalty Interest Rates Act 1983 as set out below.
There was then a table set out with the varying rates, totalling $2,953.42 for interest.
Background
The plaintiff, Mascarene Pty Ltd (‘the company’), was the registered proprietor of property situated at 60 Dudley Street, West Melbourne. Popular Pastime Pty Ltd (‘the assignor’) was the registered proprietor of an abutting property situated at 58 Dudley Street, West Melbourne.
In or around September 2012, the assignor was conducting renovations and extensions at 58 Dudley Street. In order to complete the works, the assignor required access to the company’s property so that various machines, including a scissor lift, could be utilised.
There had been a proposition put by Gino Babet, the director of the company, on behalf of the company, to permit access, including a requirement to pay a fee of $1,000 per day as compensation, as well as any damage to the company’s property being made good. Mr Babet deposed that there had been general consensus to the proposition but works commenced without him hearing back from Richard Helleren, the builder conducting the works for the assignor.
Thereafter, the building started at the rear of 58 Dudley Street and a scissor lift and various building materials had been placed on the company’s property without permission. A dispute arose.
The assignor made application to this Court. Dixon J made the following orders on 3 September 2012:
OTHER MATTERS: …
[The assignor] by its counsel undertook to pay for the restoration and/or repair of the concrete hard stand located in the access area coloured pink in the next diagram showing part of the land more particularly described in Volume 05690 Folio 892 and to provide to [the company] of one free parking spot within 100 metres during the times referred to in the orders below.
1.[The assignor] and its workmen and agents, may, between the hours of 7.00am to 4.00pm, for a period not exceeding any five (5) separate days or part thereof during the month of September 2012, with all necessary materials, including a portable scissor lift and by such other means of aerial access, to go into and upon (or over) the portion of land coloured pink in the annexed diagram that forms part of Certificate of Title Volume 05690 Folio 892 (known as 60 Dudley Street) to maintain, repair, waterproof, restore and/or attach to the party wall(s), or any part thereof, as described instruments No. 1266864 and 1262466 dated 1 October 1925 such structures (including brickworks, the completion of walls, drainage, conduit, pipe cable) as in the reasonable opinion of a licensed building practitioner or engineer retained by [the assignor] from time to time are necessary.
2.…
3.…
4.[The company] pay [the assignor’s costs] fixed at $10,000 including GST.
The company maintains that by reason of the assignor’s access to the property, the concrete area of approximately five by ten meters was damaged. A quotation for repair was for $7,100, including GST: [1]
to ‘Old concrete take away and put new concrete.
Includes excavation.
SL62 25MP.
[1]Exhibit GB-3.
In addition, the plaintiff contended that the scissor lift damaged the roof and drain pipes at the property. The company obtained a quotation for the repair of the roof.
A quotation for repair to the roof was: [2]
Remove existing sheeting from flat skillion roof at rear of property, and dispose of.
Supply and installation of Bluscope Zincalume roof sheeting 42BMT Longspan roof sheeting.
Supply and installation of all associated capping and flashing using 55BMT Bluescope Zincalume.
for the total sum of $3,520, including GST.
[2]Exhibit GB-4.
On 8 January 2013, the company wrote to the assignor’s solicitors in response to a demand made by the same. The letter relevantly set out:[3]
The order to carry out building words was given upon agreement reached with your client to re‑concrete rear car park and repair any damages caused. As a result of your client undertaking construction work several sheets of my roof were damaged by negligent operation of the scissor lift. Your client has failed to repair damages and the car park has also not been re-concreted as agreed. I also have had to clean the area on several occasions, due to the bad state left by the workers.
In order to compensate for these matters I have deducted an amount of $3,000 inclusive of GST, from your claim of $10,000. I therefore submit a cheque for $7,000 incl GST, as final settlement of this matter, and request an invoice.
[3]Exhibit GB-6.
The cheque was provided at about that time when the defendant came to inspect the property. He advised Mr Babet that he had instructed his solicitors at the time, AIF Lucas & Co not to bank the cheque.
The property has not been subsequently repaired.
Notice of the assignment of the debt was provided by the assignor’s solicitors accompanying a letter dated 9 July 2015 to the company secretary. Demand for payment of $12,953.42 was made on behalf of the defendant.
The defendant had been retained by the assignor in the proceeding before Dixon J. The assignment was made in consideration of the forgiveness of the fees then due to the defendant in the sum of $9,000.
The plaintiff’s position
The plaintiff contends that there is no liability to pay the interest on the judgment debt so assigned and that it has an offsetting claim in the total sum of $10,620. However, no cogent argument was developed as to why interest was not payable pursuant to section 57(2).
The defendant’s position
The defendant is a member of the New South Wales Bar. The defendant denied any conversation with Mr Babet at the time that Mr Babet deposed to or at all. The last time he recalled speaking to Mr Babet was at court when the matter was determined by Dixon J. Mr Slater produced records which demonstrated that he was not in Australia between 9 November 2012 and 3 March 2013.
Richard Helleren swore an affidavit on behalf of the defendant. He is a builder, employed by Lang Constructions Pty Ltd which actually carried out the work at 58 Dudley Street. Mr Helleren produced copies of before and after photographs which do not depict any obvious damage. Further, by virtue of the injunction application, he was well aware of the potential for claims by the plaintiff.
Issues
(a) Is it open to the plaintiff to rely upon an offsetting claim with respect to the sum of $7,100 to reinstate and/or repair the concreted area, and in the sum of $3,520 to repair the roof at the plaintiff’s property?
(b) Is there a genuine dispute about the quantum of the debt which includes the interest?
The Law
In TR Administration v Frank Marchetti & Sons[4] Dodds-Streeton JA (with whom Neave and Kellam JJA concurred) said:
No in-depth examination or determination of the merits of the alleged dispute is necessary, or indeed appropriate, as the application is akin to one for an interlocutory injunction. Moreover, the determination of the ‘ultimate question’ of the existence of the debt should not be compromised.[5]
Her Honour further outlined the evidentiary requirements with respect to making out an s 459H claim:[6]
As the terms of s 459H of the Corporations Act and the authorities make clear, the company is required, in this context, only to establish a genuine dispute or off-setting claim. It is required to evidence the assertions relevant to the alleged dispute or off-setting claim only to the extent necessary for that primary task. The dispute or off-setting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile. As counsel for the appellant conceded however, it is not necessary for the company to advance, at this stage, a fully evidenced claim. Something ‘between mere assertion and the proof that would be necessary in a court of law’ may suffice. …
[4][2008] VSCA 70.
[5]TR Administration v Frank Marchetti & Sons [2008] VSCA 70 [57].
[6]Ibid [71].
In Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd,[7] Barrett J said:[8]
…The [applicant] will fail in [the] task [of establishing a genuine dispute] only if … the contentions upon which it seeks to rely … are so devoid of substance that no further investigation is warranted. Once the [applicant] shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the [applicant], it must find that a genuine dispute exists, even where any case apparently available to be advanced against the [applicant] seems stronger.
[7][2002] NSWSC 411.
[8]Ibid [23].
There are a number of sub‑issues that need to be dealt with although I have set out the issues in short compass.
The defendant is the assignee of the debt constituted by the order made by Dixon J. Notwithstanding that he is an assignee and thus entitled to serve the statutory demand, the defendant takes the benefit of the assignment subject to the rights of the plaintiff to prosecute an offsetting claim.[9] Although the defendant is entitled to include the interest running on the judgment debt, he is also subject to the obligations (if any) imposed upon the assignor.[10]
[9]Corporations Act 2001 (Cth) s 459E(4); see also Re Steel Wing Co Ltd [1921] 1 Ch 349 cited in Rohan Trading Co Pty Ltd v Glengor Pastoral Co Pty Ltd [2003] NSWSC 1265; Kapoor v National Westminster Bank plc & Anor [2011] EWCA Civ 1083 [30]–[42].
[10]Supreme Court Act1986 (Vic) s 101; Penalty Interest Rates Act 1983 (Vic) s 2.
The extent of the defendant’s liability with respect to the offsetting claim
Putting aside the question of quantum for the time being, the issue is whether any offsetting claim encompasses both a requirement to reinstate the concrete and repair the roof.
The plaintiff’s 21 day affidavit raised the possibility of a contractual obligation to ‘make good’. However, I cannot distil from the affidavit that any concluded agreement is relied upon. In any event, it is clear that the undertaking given to Dixon J is the main platform for the offsetting claim. It was put on behalf of the defendant that ‘any contract must have merged in the judgment in any event’. I am not convinced that such a proposition is apposite to the judgment by Dixon J. Dixon J was not determining contractual issues but was considering whether the assignor ought to be granted access to the property. The plaintiff is free to pursue a contractual claim if any could be made out. However, I reiterate that there is no contract posited in the 21 day affidavit.
The Undertaking
I have taken it that the plaintiff relies upon the undertaking given to Dixon J and relies upon any liability for damages flowing from a breach of duty of care in carrying out the works by the assignor.
The undertaking given to the Court on behalf of the assignor was limited to ‘restoration and/or repair of the concrete hard stand located in the access area coloured pink in the annexed diagram …’. The diagram sets out the designated areas 2.5 metres by 9.3 metres. Looking at the plan and the photographs, that area appears to be something less but close to half of the concreted area at the rear of the plaintiff’s property.
There is a dispute as to whether or not any damage was caused to any of the shaded area or the full area of the concrete stand. The quotation produced by the plaintiff does not specify if the works to be carried out are with respect to the whole of the rear concrete area or that part included in the shaded plan annexed to the judgment by Dixon J. The onus of demonstrating a genuine offsetting claim remains upon the plaintiff.
As there is a quotation for the re-instatement of the hard stand, I cannot ignore the position that the plaintiff has raised that issue sufficiently to require further investigation as referred to by Barrett J in Solarite. Accordingly, I determine that there is an arguable off-setting claim but the issue is its quantification.
In Sewmail (Australia) Pty Ltd v Booby Traps Pty Ltd[11] Burley J said:[12]
…There needs to be evidence supporting the quantum of the offsetting claim so that the court may determine whether or not there is a genuine offsetting claim of a given amount. It is not necessary that the evidence be such as might be advanced at a trial but it is, in my view, necessary to adduce some evidence in that regard … In the absence of such evidence it is impossible for the Court to determine whether or not the statutory demand must be altered or set aside in accordance with the provisions of s 459H of the law (authorities omitted).
[11](1997) 23 ACSR 339.
[12]Ibid 343.
In Federico’s Restaurant Pty Ltd v Warwick Entertainment Centre Pty Ltd,[13] Lehane J was faced with the difficulty in assessing an off-setting claim. Lehane J said:[14]
…[T]hat I must be satisfied for the purposes of the calculation required by s 459H(2) of the existence of an off-setting claim. The difficulty, however, is that the calculation requires the attribution of the off-setting claim of an amount. The particular difficulty is that this claim in any ordinary sense of the word does not have an amount. Its amount or value is on the material before me indeterminate. The provisions of the Corporations Law do not give me any clear guidance as to what in these circumstances I should do, particularly as to what, in which the word is used in the provisions, the amount of this particular off-setting claim is. I do not believe, however, that that difficulty means that I must take the amount of the claim as nil. That conclusion, seems to me, would be almost a perversion of what the statutory scheme is intended to do.
…
I have of course as yet said nothing, about value to be attributed to the goods themselves. This is perhaps one of the most difficult aspects of this case, to the point almost of impossibility. Unfortunately, I do not think that the statute allows me simply to throw up my hands and say, as I might be tempted to, it is impossible...
[13](1995) 18 ACSR 702.
[14]Federico’s Restaurant Pty Ltd v Warwick Entertainment Centre Pty Ltd (1995) 18 ACSR 702, 708–709.
Following the deliberation by Lehane J, I assess the quantum of the reinstatement to the hard stand at 50 per cent, being the sum of $3,550. That has been calculated by me using the attachment to the order by Dixon J to roughly work out the percentage of the area which might have been covered by the undertaking.
Off-setting Claim Not Covered by the Undertaking
It is common ground that Lang Constructions Pty Ltd carried out the work at the assignor’s property. It is also common ground that Lang Constructions Pty Ltd was an independent contractor.
The plaintiff, in its initial outline, set out at [16]:
16.The set-off concerning the concrete is based upon the undertaking of the Popular Past Time and now, the Defendant as assignee, to ‘pay for the restoration of the concrete area’. The quantum of that undertaking is properly a matter for a damages hearing, namely what is the fair and reasonable amount.[15] At this stage of the proceeding, it is not appropriate for this Court to enter into the ‘merits’ and ‘quantum’ of the damages. Rather, it must be satisfied that there is sufficient objective evidence in existence.
17.The ‘roof damage set off’ arises from out of the same factual matrix as the damages/restoration set off. There is a mutuality (sic) between the Order access to the Property, the undertaking and the costs awarded.
[15]Bellgrove v Eldridge (1954) 90 CLR 613.
In the plaintiff’s supplementary outline at [4], it contended:
[4]The builder may be performing works on Popular Past Time Pty Ltd’s site as an independent contractor, however when the builder performs work to give effect to an agreement between the plaintiff and Popular Past Time Pty Ltd (as is the case here) it does so in its capacity as agent for the principal. The principal is disclosed (as Ms Amos (an employee of Popular Past Time Pty Ltd) was present at the formation of the agreement to do the work.)
…
[6]Where the principal authorises or directs the act constituting the tort or some act necessarily leading to it, the principal’s duty cannot be displaced (Stoneman v Lyons (1975) 133 CLR 550 … )
[7]Ms Donna Murdoch, director of Popular Past Time Pty Ltd sworn 4 September 2012, deposes to the scope of the agency:
The builder and/or Mr Richard Helleren [building project manager of the builder] were authorised as the plaintiff’s agent to deal with the neighbour at No 60 for reasonable access to the land for the purposes of repairs and/or building a new wall to replace a fence. [One such transaction was the replacement of his concrete car park in return for our access … ]
The defendant submitted that reference to the two prior affidavits and an argument based upon contract offends the Graywinter principle. I do not accept that. The dispute was sufficiently defined in the 21 day affidavit. However, the plaintiff’s difficulty, is that having set out the application to Dixon J in the first affidavit, it is clear that no concluded contract was postulated or was accepted. Put at its highest, the effect of the submission is that the builder was authorised to deal with the plaintiff to obtain access, therefore it follows that the assignor was acting as a principal with full control over the building works. That control included the direction as to how the building works were to be carried out. The plaintiff’s submission is a ‘non sequitur’. There is simply no evidence or platform to argue that the assignor had any control over how the work was to be completed.
The plaintiff relies upon Stoneman v Lyons (WH) and Others[16] (‘Stoneman’) in support of that proposition. However, Stoneman does not assist the plaintiff in these circumstances. The High Court held (McTiernan J dissenting) relevantly that:[17]
… In this circumstance the trespass by the builder could not be attributed to the appellant, in as much as for the purposes of trespass the act of an independent contractor does not become the direct act of the defendant unless he orders to be done the act which constitutes the trespass, some act which comprises the act or some act which leads by physical necessity to the trespass.
[16](1975) 8 ALR 173; (1975) 133 CLR 550.
[17]Ibid [573].
After considering Mason J’s analysis of the terms of the contract, Stephen J said:
This conclusion is in itself enough to dispose of the respondents’ cause of action in trespass; had the builder’s workmen been the employees of the appellant, instead of being employed by his independent contractor, the appellant would not in these circumstances been liable for the trespass upon the respondent’s land, for he had neither ordered the trespass or any act comprising it nor any act leading by a physical necessity to the trespass. …
The present case, in which the workmen were not the employees of the appellant, is a fortiori.
As to the liability in negligence there is, as I have said, no doubt but that the workmen were grossly careless and unskilful in what they did; but how is this to be visited upon the appellant, who had, without negligence, engaged the builder to carry out the contract work for him and who by that contract had neither authorised or directed the dangerous mode of digging the trench and pockets which caused the collapse of the wall? Two difficulties appear to lie in the respondents’ path. The first flows from the fact that the workmen were not the appellant’s servants, but were the servants of his independent contractor; this will suffice to exclude the appellant from liability unless the cause can be shown to fall within one or other of the several exceptions to the general rule that ‘an employer is under no liability for the negligence of his independent contractor. [18]
[18]Stoneman v Lyons (WH) and Others (1975) 133 CLR 550 [562]-[563].
The plaintiff has not posited that any exception to the general rule is applicable in these circumstances.
There is no concept of trespass in this particular application. Access flowed from the order made by Dixon J rather than the preceding negotiations to gain access. Accordingly, if any damage occurred it was as a result of want of due care rather than a consequence of trespass. If there were any failing by Lang Constructions Pty Ltd or any of its employees or agents, the plaintiff does not bring itself outside the general rule that the assignor (as employer of an independent contractor) has no liability for the negligence of its independent contractor. That is the end of the matter.
I further note that the material provided on behalf of the plaintiff is far from convincing. The before and after photographs produced do not point to any obvious damage. However, Mr Helleren, at [10], notes that the bottom of the roof is bent down but posits that this was after his company had ceased the works.
Mr Helleren observed:
Based on my supervision of the site at the conclusion of the works in contemporaneous photographs, in my opinion and experience, the site, meaning the roof and concrete parking area, was left as we found it before works commenced.
There is sufficient material for me to consider that but for the impediment as to preventing sheeting liability home to the assignor, dealing with this claim would involve me in determining whether or not the damage had occurred rather than just identifying whether there is a genuine dispute about whether the damage occurred. But for the legal impediment, I would have declined to deal with that dispute other than to identify it. The quotations for repair obtained in both cases do not assist me in determining whether the works to be carried out are for repair or merely because of age and due wear and tear in respect of the concrete or the roof repair. However, for the reasons previously set out I will allow 50% of the re-instatement of the concrete stand. It follows that interest also needs to be adjusted.
I will rewrite the statutory demand to reduce it by the sum of $3,550. Accordingly, I find that the admitted total is $12,953.42. The offsetting total is $3,550 plus $753.12 for adjusted interest. The substantiated amount is $8650.30.
Pursuant to s 459F, the time for compliance with the statutory demand is 4.00pm on 21 July 2016.
The plaintiff pay the defendant’s costs, including reserved costs on a standard basis.
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