MTF Investments Pty Ltd v Prestige Building Services Pty Ltd

[2004] NSWSC 965

CITATION:	MTF Investments Pty Ltd v Prestige Building Services Pty Ltd [2004] NSWSC 965
HEARING DATE(S):	17/09/04
JUDGMENT DATE:	17 September 2004
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Young CJ in Eq
DECISION:	Order that the statutory demand be set aside and that the defendant pay the plaintiff's costs of the proceedings.
CATCHWORDS:	CONTRACTS [41]- Joint and several contracts- Building contract in one document- Proprietor liable only in fixed percentages- Held several contract only. CORPORATIONS [213]- Setting aside demand- Building contract- Proprietor only liable for 26%- Statutory demand for whole cost- Set aside.
PARTIES :	MTF Investments Pty Limited (P) Prestige Building Services Pty Limited (D)
FILE NUMBER(S):	SC 1504/04
COUNSEL:	G Thomas (P) A P Coleman (D)
SOLICITORS:	Levitt Robinson (P) Henry Davis York (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

YOUNG CJ in EQ

Friday 17 September 2004

1504/04 – MTF INVESTMENTS PTY LTD v PRESTIGE BUILDING SERVICES PTY LTD

JUDGMENT

1 HIS HONOUR: This is an application made by MTF Investments Pty Ltd, which was served with a creditor’s statutory demand under the Corporations Act 2001 in January 2004.

2 The relationships between the parties was defined by a contract headed "Formal Instrument of Agreement", which was by deed made 9 July 2004. The defendant, therein called "the Builder", was one party. The other party was constituted by four corporations, one of which was the plaintiff.

3 The contract involved the builder constructing work of 42 units and one terrace in Botany Road, Alexandria. It was a middle of the range building contract for seven and a half million dollars.

4 Clause 6 of the contract is headed:

“REPRESENTATIVE AND LIABILITY OF THE PROPRIETOR”

“(1) It is agreed between the parties that Signature is the authorised representative of the Proprietor for all purposes relating to this Agreement and any action, matter or thing done by Signature under the provisions of this Agreement shall be deemed to have been done by the Proprietor and any notice given by the Builder under this Agreement to Signature shall be deemed to have been given to the Proprietor.
(2) It is agreed between the parties that any liability of the Proprietor to the Builder under this Agreement is limited to several liability between each of (the four parties who constituted the Proprietor's name) in the following proportions ... ".

5 So far as the plaintiff is concerned, the proportion was set at 24 percent. "Signature" was the designation of one of the proprietors, "Signature Design and Construction Pty Ltd" of Redfern.

6 It is not completely clear, but it would seem from what I have been told at the Bar table, that the plaintiff is a company of which Mrs Michelle Tania Foster is the sole shareholder and director, and that another company is controlled by her estranged husband. That company is severally liable for 26 percent of the cost. The other 50 percent is shared between two companies, which are controlled by another individual.

7 The contract made provision for progress claims, and the contract contemplated that a progress claim would be made to the proprietor, and, it would seem, to the proprietor care of Signature.

8 Unfortunately, no consideration appears to have been given to the fact that this was not a joint and several contract, nor a joint contract, but a several contract only, so that the claims needed to be addressed to each of the proprietors for their several proportion.

9 Indeed, after the first progress claim there would need to be an accounting as to what each proprietor had previously paid to work out what was owing by each and every one of the several proprietors.

10 However, doubtless in accordance with standard practice, only one progress claim was certified. It is a little difficult to comprehend these claims because the only material that I seem to have concerns progress claim number 1 and numbers 15 and 17.

11 I am told by Mr Vizard's affidavit, filed for the defendant, that the works were commenced about July 2002 and completed about 22 October 2003. The statutory demand was dated 21 January 2004. It stated:

“The company owes Prestige Building Services Pty Ltd ("the Creditor") the amount of $107,988.87, being the amount of the debt described in the schedule.”

12 The schedule said merely "Description of the Debt" without any words, and then on the right hand column "amount of the debt $107,988.87" twice. There was then an affidavit verifying.

13 The affidavit verifying was by a director of the creditor, which merely said:

“The debt mentioned in paragraph 1 of this affidavit is due and payable by the debtor company”

and that he knew of no genuine dispute about the existence or amount of debt.

14 That affidavit must be false (in the sense of being wrong in fact) because on the evidence before the court there was never any liability of this company to pay anything more than 24 percent of that $107,000, plus any arrears that it had not previously paid. Just what amount might have been owing is completely obscure by the complete lack of information given by the creditor in that affidavit, which merely says, "You owe me $107,988". Whilst that might be satisfactory if there is a single transaction for the sale of goods, it is not satisfactory when there is a contract such as the present with progress claims.

15 The current affidavit of Mr Vizard shows that some of the amount claimed by the defendant has been paid, and that $68.146.43 remains outstanding. However, I have not been favoured with any information as to how the amount was reduced from $107,000 to $68,000. I strongly suspect that that payment was made by the two non-Foster companies, so that one cannot merely say that the current amount of the defendant's claim against the present plaintiff is 24 percent of $68,000.

16 The court is clearly in the position where there is what appears to be a false affidavit, a claim that cannot be sustained and very inefficient and unsatisfactory paperwork. The consequences of allowing the statutory demand to remain are dire for the plaintiff. It is, accordingly, a situation where the court must, because substantial injustice will be caused unless the demand is set aside, set it aside.

17 The court, accordingly, orders that the statutory demand be set aside and that the defendant pay the plaintiff's costs of the proceedings.

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Last Modified: 10/18/2004