Monaveen Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd)
[2006] WASC 263 (S)
MONAVEEN PTY LTD (Receivers and Managers Appointed) (Administrator Appointed) -v- ABB SERVICE PTY LTD (formerly known as ABB Engineering Construction Pty Ltd) [2006] WASC 263 (S)
| Link to Appeal : | [2007] WASCA 273 [2007] WASCA 273(S) |
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2006] WASC 263 (S) | |
| Case No: | CIV:2302/1998 | 3 NOVEMBER 2006, 20 & 21 FEBRUARY 2007 | |
| Coram: | TEMPLEMAN J | 22/11/06 | |
| 29/03/07 | |||
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Action dismissed | ||
| B | |||
| PDF Version |
| Parties: | MONAVEEN PTY LTD (Receivers and Managers Appointed) (Administrator Appointed) (ACN 009 309 175) ABB SERVICE PTY LTD (formerly known as ABB Engineering Construction Pty Ltd) (ACN 000 095 250) |
Catchwords: | Procedure Striking out for want of prosecution Termination of construction contract Complex accounting of payments by contractor to subcontractor Plaintiff applies to amend pleadings After seven years plaintiff concedes its calculations incorrect Whether action should continue on basis plaintiff's case much weaker but not doomed |
Legislation: | Nil |
Case References: | Monaveen Pty Ltd v ABB Service Pty Ltd [2004] WASC 5 Monaveen Pty Ltd -v- ABB Service Pty Ltd [2006] WASC 263 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
DECISION : 29 MARCH 2007 FILE NO/S : CIV 2302 of 1998 BETWEEN : MONAVEEN PTY LTD (Receivers and Managers Appointed) (Administrator Appointed) (ACN 009 309 175)
- Plaintiff (Respondent)
AND
ABB SERVICE PTY LTD (formerly known as ABB Engineering Construction Pty Ltd) (ACN 000 095 250)
Defendant (Applicant)
Catchwords:
Procedure - Striking out for want of prosecution - Termination of construction contract - Complex accounting of payments by contractor to subcontractor - Plaintiff applies to amend pleadings - After seven years plaintiff concedes its calculations incorrect - Whether action should continue on basis plaintiff's case much weaker but not doomed
(Page 2)
Legislation:
Nil
Result:
Action dismissed
Category: B
Representation:
Counsel:
Plaintiff (Respondent) : Mr B H Taylor
Defendant (Applicant) : Mr P B O'Neal & Ms R J Lee
Solicitors:
Plaintiff (Respondent) : Talbot & Olivier
Defendant (Applicant) : Minter Ellison
Case(s) referred to in judgment(s):
Monaveen Pty Ltd v ABB Service Pty Ltd [2004] WASC 5
Monaveen Pty Ltd -v- ABB Service Pty Ltd [2006] WASC 263
(Page 3)
1 TEMPLEMAN J: These reasons supplement those I delivered on 23 November 2006, in an application by the defendant to dismiss this action for want of prosecution: Monaveen Pty Ltd -v- ABB Service Pty Ltd [2006] WASC 263 ("the 2006 decision").
2 I held that the plaintiff's delay between January 2004 and July 2006 in formulating acceptable amendments to its statement of claim was inordinate, but excusable to some extent: par 86.
3 I therefore declined to dismiss the action for want of prosecution, but rather, to give the plaintiff a final opportunity to amend its pleadings. My conclusion (at par 91) was that:
"If it transpires that the plaintiff's pleadings are still defective, or that its case has very little merit, the balance would swing into the defendant's favour. That result would demonstrate that the delay since January 2004 had been inexcusable: and it would be unjust to the defendant to permit the action to proceed."
4 I have now heard the plaintiff's application to amend.
5 It was opposed by the defendant not only on its merits, but also on the basis that the amendments proposed only two weeks before the hearing and some nine years after the commencement of the action demonstrates that the plaintiff's delay is inexcusable.
6 The real issue in this application is not whether the proposed Amended Minute of Further Re-Amended Statement of Claim ("the Statement of Claim") discloses a cause of action, but whether the action has any prospects of success. For that reason, a considerable amount of documentary evidence was adduced at the hearing. By this means, the defendant sought to demonstrate that the action was not viable: and the plaintiff sought to demonstrate that it was.
7 The plaintiff's claim arises out of a sub-contract with the defendant to supply labour, equipment and materials in the construction of a substantial civil engineering project for BHP Direct Reduced Iron Pty Ltd ("BHP") at Port Hedland. The defendant was BHP's head contractor.
8 The works were carried out between July and December 1996, during which period the plaintiff submitted a number of progress claims.
(Page 4)
9 It is common ground that progress claim 2 was for an amount of $519,417. However, the defendant has maintained from the outset that the claim was overstated by $153,000, being the value of unfixed materials on site.
10 The plaintiff has now accepted that the defendant is correct, and seeks leave to amend accordingly.
11 The plaintiff has also reduced its claim for the reimbursement of moneys paid to its workers. In reasons delivered on 22 January 2004, in relation to a previous application by the defendant to dismiss the action for want of prosecution, I noted that the plaintiff claimed to have paid its workers sums totalling $406,235. However, in its further and better particulars, the plaintiff stated that the amount was $146,584: Monaveen Pty Ltd v ABB Service Pty Ltd [2004] WASC 5 at par 16(1) ("the 2004 decision").
12 The plaintiff now accepts that this is the correct figure.
13 The form of words used by the plaintiff in relation to progress claims 3, 4 and 5 is that on the relevant date:
"the plaintiff duly submitted to the defendant its progress claim No … correctly calculated in the sum of $... "
14 These statements are misleading. The figures pleaded initially are the actual amounts of the claims as submitted. However, the plaintiff now accepts that these amounts were incorrect and seeks to amend them. It follows that the amended pleading would also be inaccurate. That is because the amounts now said to have been "correctly calculated" were not those submitted in the progress claims.
15 As I understand the plaintiff's present position, it contends that if the progress claims had been calculated correctly, they would have been submitted in the amounts now pleaded. In other words, the plaintiff complains about the defendant's failure to pay claims which are now admitted to have been calculated incorrectly.
16 The plaintiff seeks to justify its position by contending that irrespective of the amount claimed, the defendant should have identified any error and, in effect, certified the correct amount due. The obligation to "certify" is said to arise from cl 29.2 of the sub-contract which provides for the submission of progress claims. It includes the following:
(Page 5)
- "Within 30 days after ABB's receipt of the payment claim from the Subcontractor, ABB shall pay the amount due to the Subcontractor and, with the payment, shall provide written particulars of how the payment was calculated."
17 That is the way the plaintiff's position was explained in the course of argument (TS 282 - 283, 381). However, it is not the way the claim is pleaded. The pleading therefore remains seriously defective.
18 In the 2004 decision, at par 16(2), I noted that:
"The defendant contends that the amount of progress claims made by the plaintiff includes unpaid amounts from previous progress claims. In other words, there has been some duplication. The defendant contends that if the duplicated claims are taken out of account, then as at mid-December 1996, the defendant had paid more to the plaintiff than was required. If that is correct, it would have a substantial impact on the claim that the plaintiff entered into the second amendment to the subcontract as a result of improper pressure by the defendant. This is another matter which has been raised by the defendant's solicitors. The plaintiff's solicitors have not responded."
19 It now appears that the defendant's contentions were correct. This is shown by the proposed amendments, as set out in a table which forms part of the Further and Better Particulars of the Statement of Claim.
20 It is apparent from the table that the amendments proposed by the plaintiff have the result that as at 10 December 1996, the defendant had overpaid the plaintiff by $365,869.43. By 13 December, the amount of overpayment had increased to $431,522.49.
21 It is therefore clear that for nearly seven years (the statement of claim having been filed on 1 March 2000) the plaintiff has persisted in a claim which it now acknowledges to be incorrect. This is despite the fact that on 5 November 2002, Mr Kenneth Hetherington (who is, in effect, the plaintiff's alter ego) swore an affidavit in which he said that he had assisted counsel for the plaintiff to compile the particulars which are summarised in the table referred to above (in its original form) and that:
"It is compiled from company records and to the best of my knowledge and belief the details therein are true and correct."
(Page 6)
22 Presumably, the proposed amendments have been compiled from the same source. However, the only explanation offered by Mr Hetherington for the delay in formulating the amendments, in an affidavit sworn on 15 February 2007, is that the amendments were made after he had been "directed to further consider the progress claims by new counsel …"
23 In fact, the "new" counsel was instructed in 2004. There has therefore been ample opportunity for Mr Hetherington to provide proper instructions to counsel, knowing as he must have done of the importance of so doing. In a case such as this, counsel could not be expected to work out for himself the correct amounts of the progress and other claims.
24 In an affidavit sworn on 7 February 2007 in opposition to the defendant's application to have the action dismissed, and in support of the plaintiff's application to amend, Mr Hetherington said that the defendant had not certified any progress claims, and that "this practice made it impossible for the Plaintiff to follow the procedures normally applied for progress claims" (par 7).
25 I do not accept that contention. That is because the alleged failure of the defendant to certify has not, in the end, prevented the plaintiff from correcting the figures it included in the progress claims submitted over 10 years ago.
26 There is, therefore, no adequate explanation for the inordinate delay in formulating amendments to the statement of claim, so as to deal with objections made by the defendant which are now accepted as being valid, and issues to which I referred in the 2004 decision. In these circumstances, I consider the delay to be inexcusable.
27 That conclusion is sufficient to justify dismissal of the action for want of prosecution. However, even after the lengthy delay, I would hesitate to take that course if it appeared that the plaintiff had reasonable prospects of success.
28 This is a judgment which cannot ordinarily be made on the pleadings, which must be accepted at face value in a strike-out application. In this application, as I have noted above, a considerable amount of documentary evidence has been adduced by both parties in support of their respective positions. This evidence bears on alleged failures by the defendant to pay various claims. These include a claim made in respect of the defendant's removal of tie piles from the scope of the works, and claims for mobilisation delay and acceleration costs.
(Page 7)
29 In my view, it is not appropriate to attempt to resolve these issues on the documentary evidence. Nor is it necessary to do so in order to reach the conclusion that on the plaintiff's own figures, the action has very little merit.
30 The plaintiff's case is that on 21 November 1996 it executed an amendment to the sub-contract ("the first amendment") "under economic duress": Statement of Claim, par 55.
31 The plaintiff alleges that at the time, it was "experiencing difficulties in paying its creditors", as a result of the failure of the defendant to pay the sums due under the sub-contract: par 50.
32 The plaintiff then alleges that on 13 December 1996, it executed a further amendment to the sub-contract ("the second amendment"), also under economic duress: pars 74 - 75.
33 In pars 76 and 77, the plaintiff pleads:
"76 The defendant by its own actions in not paying progress claims on time, threatening to withhold payments from the plaintiff to which it was entitled and by forcing the plaintiff to accept the terms of the first amendment, which actions together had the effect of destroying the plaintiff's credit relationship with its suppliers and sub-contractors and its own capacity to manage its cashflow and creditors, exerted an illegitimate pressure on the plaintiff to submit to the terms of the second amendment and to execute the document.
77 The choice faced by Hetherington was between signing the second amendment or see the company which was his livelihood fail and himself and his family suffer substantial financial detriment which was in substance no choice at all."
34 In other words, the plaintiff contends that if it had not been subject to the alleged economic duress, it would not have executed the two amendments and would have been able to pay its creditors as and when required.
35 The defendant has explored these allegations by requests for particulars of the plaintiff's claim. As a result, it has emerged that on the
(Page 8)
- plaintiff's amended figures, it was probably insolvent by mid-December 1996, when it executed the second amendment.
36 I have referred above to the table forming part of the Further and Better Particulars of the Statement of Claim. As appears from that table, in response to progress claim 1, the defendant paid the amount which the plaintiff now accepts as being correct. This, incidentally, demonstrates that at least in relation to progress claim 1, the defendant did "certify" as the plaintiff says it should have done.
37 The defendant then paid the amount claimed by progress claim 2 (even though the plaintiff now accepts that claim to have been excessive by some $76,600). This resulted in an overpayment of $76,500 as at 18 September 1996.
38 On 18 October 1996, the defendant paid $469,011 against progress claim 3, in an amount claimed originally of $781,331 (now corrected to $809,289) and then made an ad hoc payment of $300,000, followed by payments of $103,642.68 and $108,088.26 for wages and $364,905.45 direct to creditors of the plaintiff. The result was an overpayment to the plaintiff of $31,048.39 by 27 November.
39 In its original claim, the plaintiff contended that it had been underpaid by $200,487 as at that date.
40 On 3 December, the defendant paid $352,040.82 to the plaintiff. As a result of that payment, as the plaintiff now accepts, it was overpaid by $197,920.79. Previously, the plaintiff had alleged that it was owed $517,058 as at that date.
41 The defendant has compiled a table from the Further and Better Particulars of the Statement of Claim and from information contained in an affidavit sworn by Mr Hetherington on 7 February 2007. The table forms part of par 53 to the Defendant's Responsive Submissions dated 12 February 2007.
42 The table lists amounts due from the plaintiff to various creditors in the first half of December 1996. The total is at least $636,486.98. The precise amount is not known, because the plaintiff has been unable to say what it owed to three creditors: BOC Gases, Extraman and Wreckair.
43 In addition, Mr Hetherington has deposed to the fact that as at 28 November, the plaintiff was required to reduce its bank overdraft by
(Page 9)
- $80,000: see exhibit 49 to the affidavit sworn 7 February 2007. The plaintiff's indebtedness was therefore greater than $716,486.98.
44 As appears from the table, the plaintiff's two major creditors were CSR which was owed $254,290 for concrete and P&O which was owed $178,880.08 for providing accommodation for the plaintiff's employees.
45 As appears from the plaintiff's table, the defendant paid $183,676 to P&O on 6 December and paid $259,479.59 to CSR on 10 December.
46 The plaintiff accepts that as a result of the payment to CSR and a payment of $120,636.63 made by the defendant on the same day, in respect of wages, the plaintiff was overpaid by $365,869.43.
47 The overpayment increased to $431,522.49 on 13 December (the date on which the second amendment was executed) when the defendant paid $65,653.06 to a creditor identified as Bertoncini, for an outstanding account.
48 Originally, the plaintiff alleged that on the day it executed the second amendment it was owed $110,386. In other words, the plaintiff now accepts that its claim was overstated by over $542,000.
49 In the 2004 decision, after some hesitation, I did not dismiss the action for want of prosecution. I gave "considerable weight to the fact that the claim is now statute barred and to the plaintiff's contention that its impecuniosity has been caused by improper conduct on the part of the defendant" (par 87).
50 The picture which emerges from the analysis referred to above, casts a different light on the defendant's conduct. I accept that it does not answer the plaintiff's case that money was withheld improperly in the early stages of the sub-contract: and that if payment had been made, the plaintiff would have been able to maintain credit arrangements with its creditors, thereby avoiding the need to make the substantial payments demanded subsequently, and the loss of control over its affairs which resulted from the first and second amendments.
51 However, it must now be accepted that although the defendant was faced with excessive progress claims, it made significant over-payments to the plaintiff. In my view, the inference to be drawn from the plaintiff's table is that the defendant wanted to keep the plaintiff in business so as to enable the sub-contract works to be completed. This was clearly to their mutual advantage.
(Page 10)
52 I do not say that the plaintiff's case is unarguable, or is doomed to failure. However, it now appears to be a very much weaker case. In my view, there is likely to be a finding that the plaintiff was not driven into insolvency by the improper conduct of the defendant but because (despite the substantial overpayments it received) it was unable to pay its creditors.
53 In the 2006 decision, I considered the matters relevant to the exercise of the discretion to dismiss an action for want of prosecution: see pars 63 - 91. I was unable to reach a decision because of the outstanding pleading issues. It was therefore difficult to form a view about the plaintiff's prospects of success (par 80) and therefore, to gauge the hardship to the plaintiff if the action was dismissed. I concluded:
"If it transpires that the plaintiff's pleadings are still defective, or that its case has very little merit, the balance would swing into the defendant's favour. That result would demonstrate that the delay since January 2004 had been inexcusable: and it would be unjust to the defendant to permit the action to proceed."
54 In my view, for the reasons given in the 2006 decision and above, the plaintiff's delay in prosecuting its claim has been inordinate and inexcusable. The plaintiff has made no proper effort to deal with what have now been shown to be proper objections to significant aspects of the claim. And even at this stage, the statement of claim is defective in the way it refers to the progress claims.
55 In all the circumstances, I consider that the appropriate course is to refuse the plaintiff leave to amend and to dismiss the action for want of prosecution.
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