Nevis Constructions P/L ACN 011 033 407 v M D Tiling Company P/L

[1994] FCA 214

Attention: Judgments Clerk

Please find herewith copy and
disk copy of judgment in the

matter of Nevis Constructions v.

MD Tiling Co. Pty. Ltd. QG3002

119 NORTH OUAY

of 1994.

JUDGES' CHAMBERS

FEDERAL-COURT-OF AUSTRALIA

2 , 9%

JUDGMENT No. ........ .,........ m . . . . . . . . . ,

IN THE FEDERAL COURT OF AUSTRALIA
OUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION	No. 003002 of 1994
BETWEEN:

NEVIS CONSTRUCTIONS PTY. LTD.

ACN 011 033 408

M D TILING CO. PTY. LTD.

JUDGE MAKING ORDER:	Cooper J.
WHERE MADE:	Brlsbane
DATE OF ORDER:	11 March, 1994

MINUTES OF ORDER

THE COURT ORDERS:

1. That the statutory demands dated 24 January, 1994 served by the

respondent on the appl~cmt be set aslde.

1. That the respondent pay the applicant's costs ot the application incurred on and from 17 February, 1994, to be taxed if not agreed.

Note: Settlement and entry of orders 1s dealt w~th in Order 36 of the Federal Court

Rules.

IN THE FEDERAL COURT OF AUSTRALIA
OUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION	No. OG3002 of 1994
BETWEEN:

NEVIS CONSTRUCTIONS PTY. LTD.

ACN 01 1 033 408

AND:

M D TILING CO. PTY. LTD.

CORAM:	Cooper J.
PLACE:	Brisbane
DATE.	3 1 March,  3994
REASONS FOR JUDGMENT

Th~s is an application by Nevis Constructions Pty. Ltd. for an order

setting aside two statutory demands made by the respondent M and D Tiling Co. Pty. Ltd., under paragraph 459H and 459J of the Corporat~ons Law and for an order that

the respondent pay the applicant's costs in relation to the application.

The respondent was a subcontractor to the applicant in relation to the

construction of certain building works at Coolun~	in the State of Queensland. The
applicant, in an affidavit of Mr. Larsen filed in support of the clalm, concedes that	there was a sum in excess of $30,000.00 owlng to the respondent for work done under
the sub-contract but contends that there are oHsetting claiins in relation to the cost of rectification and conipletion of the work, and for liquidated damages under the contractual arrangement between the parties. On the other hand Mr. Fry, in an
affidavit filed in court on behalf of the respondent, contends that the circumstance
giving nse to the delivery of the statutory notlces was that lnvolces were rendered and
not paid for a considerable period of time in relation to work. He further claimed that any delay in completion of the work was as a result of the conduct of others and not the respondent as the tlllng subcontractor, and that damage and rectification work was as a result of other subcontractors on ate. The respondent contends that at the tlme of the issue of the statutory notices there was no reason on the part of the respondent to expect that there was any countervailing claim or offset in relation to the statutory demands.

The application to set aside the notlces was filed on 17 February, 1994

together with the supporting affidavit of Mr. Larsen. The summons, together with the supporting affidavit, was served on Messrs. Duncan & Swanston, solic~tors, on 17 February, 1994 together wlth a letter whlch sald:

"We eizclose suntmons to set askle llze stahltoiy dernand retunzable in tlze Federal Coz~rl by wciy of service, together with a copy of the nIffidavit of Jzlstiiz Alexaizder Larseii, R I Z ~

a copy of 19 ex/tibils tlzerefo.

Our illstructiorzs ate tlzaf tlzeie is no debt due fo your clieizt, aizd cosis will be sougizt on llte lteariizg of the applic~iti~n".

There is, on the materlal beiore me, noth~ng to indlcate what response

was made to that letter. On 8 March, 1994, the solicitors tor the applicant again

wrote a letter to Messrs. Duncan & Swanston wh~ch lncluded the following:

"Substarttial funds will be speilt iiz relation to tltk applicatioiz, (ind we iitvite your clie?zls to witlzdran~ the izotices ltnving regard to tlte inriteiial set out ill flze ajjWavit of Jusiiit Alexarzder Lar.ven. Mr. Jzili(in Wagizer 110s beeit reiaiited aild briefed, ui~d obvio~~sly iJ tlie nlatter is to be resolved costs will be coi~siderable."

Today, on the return date of the appl~cahon, the respondent by its legal

representative concedes that there 1s a disputed issue of fact as to whether or not the applicant 1s entitled to a countemailing clalm or offset in relatlon to the money sum the subject of the statutory demands, and that the order sought ought properly to be made. However, the respondent reslsts the making of an order for costs.

On the material before me, and having regard to Mr. Fry's affidavit, it

seems reasonable that the notlces were served under the Corporations Law because the work had been done and not paid for and at that tlme no cross-demand or set-off had been claimed. There is nothing in the materlal to Indicate that any application

was made to the respondent or any opportunity given to it to withdraw the notices without the need to approach the Court prior to the apphcation to set aside the notices belng filed. However, once the respondent received the apphcation and affidavit of Mr. Larsen, it was clear from the material that what was being asserted as justification for non-payment of the demands was a countemailing or offsetting claim

equal to the claim the subject of the statutory demands. In those circumstances, the

respondent must have known that there was clearly a dispute as to what sum was in
fact due and payable. At that stage the notices ought to have been w~thdrawn	or the

orders sought consented to m order to llmit or avold the incurring of costs thereafter. That opportunity was given to the respondent on 17 February and relnaln open

thereafter.

I have been referred to a dec~s~on of Thomas J. in Re Morris Cater~nrr

(Australia) Ptv. Ltd. (1991) 11 ACSR 601. His Honour concludes at 605-606 after

setting aside the delnand in that case:

"There was r u , elemcrtt of surprise irz tlte riiisir~g hy the compniql of its cli~p~ltes nizd it3 clair?zs, and it is [ippropriate

t l~at tlze ui~srrcces~fi~l respoizdeizt slzould paj~ tlze applicarzr

coinpaity 'S COS~S."

On the material betore me there is nothing to suggest that the

respondent had any Idea prior to the recelpt of the affidavit of Mr. Larsen that it was intended to assert a cla~m m the amount and of the nature now contended for by the

apphcant. For example, there is nothing m the materlal wh~ch would suggest that at the tlme the notlces were served there was any response on the part of the applicant to suggest that the claims now asserted would be sought to be litigated and offset against the monies due under the subcontract. Therefore, I am prepared to accept that it was a surprise, or I ought to treat it as a surprise, that the application was made. However, once made, there was no surpr~se thereafter. In my view, the respondent ought to pay all of the costs of the apphcant incurred after 17 February,

1994. However, the costs incurred prlor to that date ought to be borne by the

applicant, it having failed, in effect, to make full disclosure of its claim to the

respondent prior to the institution of process in the Court.

THE COURT ORDERS:

1. That the statutory demands dated 24 January, 1994 sewed by the

   respondent on the applicant be set aslde.

   That the respondent pay the applicant's costs of the application incurred on and from 17 February, 1994, to be taxed if not agreed.

   I certify that this and the preceding four (4) pages are a

true copy of the reasons for judgment herein of his
Honour Mr. Justice Cooper.

Date:  22 April, 1994

Counsel for the Applicant:	Mr. J. Wtlgner
Solicitors for the Applicant:	Goss Downey Carne as Town Agents for Cartwrlght Richardson & Strlnger
Solicitor for the Respondent:	Mr. A. Henley of Bayllss Rodgers as Town Agents for Duncan & Swanston
Date of Hearing:	11 March, 1994
Place of Hearing:	Brisbane
Date of Judgment:	11 March, 1994