Melco Engineering Pty Ltd v Eriez Magnetics Pty Ltd

In the Supreme Court of Queensland, Melco Engineering Pty Ltd, the applicant, sought to recover the contractual price for fabricating and constructing six microcel flotation units and some agreed extras from Eriez Magnetics Pty Ltd, the respondent. The respondent alleged that the contract was not merely to construct the units, but also to assemble them on site, and that the applicant refused to assemble the units and thereby repudiated the contract. The applicant, in turn, pleaded that it was not required to assemble the units because of an agreement between the parties whereby the contract was varied to exclude that obligation and the price reduced accordingly. The respondent alleged that the applicant had not properly traversed allegations of fact in the defence and counterclaim, resulting in deemed admissions under rule 166 of the Uniform Civil Procedure Rules 1999 (Qld). The court was required to determine whether the applicant was deemed to have admitted the facts pursuant to rule 166(5) of the UCPR. The court held that the applicant's pleadings were sufficient to avoid the operation of rule 166(5). The court found that the applicant's Further Amended Reply and Answer sufficiently traversed the allegations in the respondent's Third Amended Defence and Counterclaim. The court held that the purpose of the Defence as a document is to set out the basis on which the plaintiff’s claim is not maintainable, and that there is no obligation on the plaintiff to reassert the original facts in its statement of claim. The court also found that the plaintiff had incorporated the SOC into the RAA as part of its general reply to the defence and answer to the counterclaim. The court held that the material fact alleged in paragraphs 11 and 12 of the DAC was that the plaintiff said it would not and in fact did not assemble the units on site, and that the balance of the paragraphs simply sets out the evidence by which the defendant intends to prove the material facts. The court held that there is no obligation on the plaintiff to plead to evidence, and that rule 166 is concerned only with facts and not with the evidence by which it is hoped facts can be established. In the result, the court declared that none of the paragraphs of the Third Amended Defence and Counterclaim enumerated in paragraph 2(a) and 2(b) of the Rejoinder are deemed to be admitted by reason of the operation of rule 166(1) of the UCPR, and ordered that the respondent pay the applicant's costs of the application to be assessed on the standard basis.