Ops Screening and Crushing Equipment Pty Ltd v Papst
[2018] WADC 23
•19 FEBRUARY 2018
OPS SCREENING & CRUSHING EQUIPMENT PTY LTD -v- PAPST [2018] WADC 23
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2018] WADC 23 | |
| Case No: | CIV:681/2017 | 5 FEBRUARY 2018 | |
| Coram: | DEPUTY REGISTRAR HEWITT | 19/02/18 | |
| PERTH | |||
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| PDF Version |
| Parties: | OPS SCREENING & CRUSHING EQUIPMENT PTY LTD DARREN WAYNE PAPST |
Catchwords: | Practice and procedure Action on guarantee Equitable set-off Misleading and deceptive conduct Turns on own facts |
Legislation: | Competition and Consumer Act 2010 |
Case References: | Cellulose Products Pty Ltd v Truda (1970) 92 WN (NSW) 561 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
DARREN WAYNE PAPST
Defendant
Catchwords:
Practice and procedure - Action on guarantee - Equitable set-off - Misleading and deceptive conduct - Turns on own facts
Legislation:
Competition and Consumer Act 2010
Result:
Application dismissed
Representation:
Counsel:
Plaintiff : Mr A G Norwood
Defendant : Mr T R Stephenson
Solicitors:
Plaintiff : Trinix Lawyers
Defendant : D G Price & Co
Case(s) referred to in judgment(s):
Cellulose Products Pty Ltd v Truda (1970) 92 WN (NSW) 561
1 DEPUTY REGISTRAR HEWITT: This action was commenced by a writ filed on 8 March 2017 and has proceeded fairly slowly due in part to some difficulties in serving the defendant. Nonetheless the defendant has been served and a memorandum of appearance was filed on 4 August. A statement of claim was lodged on 18 August, and on 15 September 2017 the summary judgment application with which I am required to deal was filed. The application was brought somewhat out of time but the defendant has taken no issue with that aspect of the matter.
2 It is trite law to say that summary judgment should only be granted in the clearest of cases where there is no issue to be tried.
3 The action concerns a claim brought by the plaintiff against the defendant as the guarantor of hiring agreements made between the plaintiff and a company of which he was the sole director named Drilling Maintenance Australia Pty Ltd. It is common ground that company is in liquidation.
4 The claim comprises a number of discrete elements those being hire charges, demobilisation charges, the costs of certain repairs undertaken to the equipment on its recovery by the plaintiff, interest on amounts due and a number of other charges which are costs incurred by the plaintiff said to be recoverable on an indemnity basis under the terms of the contract between them. Of these various claims that for repairs in my view is controversial. It is clear from the materials before me that complaints were made about the state of repair of the hired equipment during the currency of its hire and it is also apparent from the terms of the hiring agreements that responsibility for repairs occasioned for fair wear and tear rested with the owner not the hirer. The materials which have been provided do not make it clear whether any and if so which repairs required to be undertaken to the equipment are due to wear and tear, which were occasioned by some misuse or abuse by the hirer and which were defects pre-existing the hire for which presumably the hirer could not be held responsible. Therefore insofar as the plaintiff claims a sum of $99,669.51, I think there is a clear triable issue. Likewise the claim for indemnity costs includes lodging a caveat under the terms of the agreement and a letter of demand and so forth, gives room for dispute. In my view it is not open for those providing services to the plaintiff to simply charge what they like and for the plaintiff to be able to pass on those charges to the defendant. The charges have to be for work properly undertaken and likewise have to be reasonable in the circumstances. I wish to make it clear that I do not characterise the charges as being unreasonable or improper but simply that they require scrutiny before they are simply passed on to the defendant.
5 The major portion of the claim relates to unpaid hire charges. On that score there is no doubt that invoices for those charges were rendered to the hirer and there is no doubt that save for one small sum they have not been paid. What requires consideration is whether or not this defendant has an arguable defence to the claims. The affidavit of the defendant outlines in pars 12 and following communications between himself and the representatives of the plaintiff which led up to the defendant signing a credit agreement with the plaintiff which incorporated the guarantee upon which the plaintiff now sues. In essence the defendant alleges that having made known to the plaintiff the tasks which he wished to perform with the hired equipment he accepted and acted upon the recommendations of the plaintiff that the equipment to be supplied would be well maintained, in good working order and capable of meeting the output requirements necessary for the hirer to meet its own obligations. It said by the defendant that it was upon receiving those assurances that the hirer and he entered the contractual arrangements for the hire of various pieces of equipment with which to operate its business and the guarantee. It is said by the defendant that the representations were false and misleading in that the equipment was not in good condition, did not function properly, suffered numerous breakdowns, and was not capable of the performance necessary for the hirer to successfully conduct its business. It is argued on behalf of the defendant that these misrepresentations afford both the hirer and himself defences to the claim brought by the plaintiff.
6 That brings into play the nature of the defence which is proposed to be advanced by the defendant. There are two scenarios, the first is that the defendant is possessed of a cause of action under the Australian Consumer Law one potential remedy of which would be to rescind the contract between himself and the plaintiff insofar as it relates to the guarantee. The second scenario is that the hirer would have a cause of action against the plaintiff which, since it is in liquidation it is not able to pursue and is available to the defendant as a set-off.
7 That in turn gives rise to a further argument because under the terms of the trading agreement and guarantee entered between the plaintiff, the hirer and the defendant there is a clause in the following terms:
The applicant agrees to pay, without any deduction or set off in law or in equity whatsoever, the price within 30 days of the date of the invoice rendered by the company or within such other period of time as may be notified to the applicant from time to time by the company.
8 Those terms however do not match the terms and conditions of hire which were entered between the hirer and the plaintiff in respect of the individual items of equipment which were taken on hire. There is no exclusion within those terms of hire or any restriction on the ability to raise a set-off against the hire charges. That discrepancy presumably arises because the forms are different forms as is obvious from the heading which in addition to the plaintiff's logo refers to a company called Terex Finlay Exclusive Authorised Detailer. One thing is obvious and that is there is a clear discrepancy between the credit agreement and guarantee signed by the defendant and the actual terms and conditions of hire which relate to the individual items of equipment taken on hire by the hirer. In answer to that proposition the plaintiff refers to par 25 of the trading agreement and guarantee which provides:
Where there is any inconsistency between the terms and conditions of this agreement and any prior or subsequent agreement between the company and the applicant, any such prior or subsequent agreement shall be read down to the extent necessary to give full force and effect to the terms and conditions of this agreement.
9 I am a little unsure as to what this clause can mean. I always understood that the process of reading down meant to narrow the effect of a clause whereas the argument advanced suggests that it would be interpreted to permit an amplification of the meaning of the clause. That is not my understanding of what those words mean and even approaching the problem from the point of view of plain English the clear sense of the process of reading down does not appear to me to include the inclusion of quite important terms which simply do not feature in the document. These are standard documents and they are prepared by the plaintiff. I think it well established a law that in the case of ambiguity an interpretation favourable to the defendant should be adopted. If that analysis is right then it follows that the restriction imposed upon the defendant to raise set-offs and the like against claims brought by the plaintiff should not apply to the individual hiring agreements which were entered between the plaintiff and the hirer and which form the basis of the plaintiff's claim.
10 Furthermore cl 6(iii) of the terms of trading forming part of the guarantee provide that the company with or without the guarantor's prior knowledge may vary the terms and conditions of the trading account even if doing so increases the guarantor's liability. I am of the view that the discrepancy between the terms is covered by this provision so that the terms of hire no longer would preclude the hirer from raising a set-off.
11 The set-off advanced by the defendant is clearly not a legal set-off and if it exists at all it must be an equitable set-off. In order for a set-off to be so characterised, the circumstances of the set-off must be so intimately involved with the subject matter of the claim that it would not be appropriate to adjudicate on the claim without considering the set-off. In this case the issue raised at least in so far as it relates to the performance of the machinery hired would satisfy that criteria.
12 In so far as the defendant raises propositions in regard to the Australian Consumer Law as well as equitable set-off, the company itself being unable to raise the matters, there is authority to support the proposition that a guarantor can do so by way of defence to a creditor's claim: Cellulose Products Pty Ltd v Truda (1970) 92 WN (NSW) 561, 585.
13 That right only extends to the raising of a defence and does not allow the pursuit of a counterclaim.
14 In my view it is arguable that:
(a) the defence of set-off is not excluded by the guarantee;
(b) the matters raised by the defendant are capable of giving rise to an equitable set-off; and
(c) the defendant is entitled, in the circumstances of this case, to rely on those defences in this action.
(d) in addition the defendant has (potentially) a personal right of action to avoid the guarantee on the ground of the misleading and deceptive conduct alleged.
15 Reliance is also placed by the defendant on the provisions of par Y of the further terms of the agreement which is relevant because the goods have been recovered from the possession of the hirer. The clause provides that the hirer should pay all monies due and owing by the hirer to the company failing which the plaintiff had certain rights such as the continuation of the obligation to pay the hire payments until return and the like. It is said that these terms subvert the prohibition on set-offs and the like on the basis that the requirement is to pay the monies due and owing. The argument being that if a valid set-off exists then it cannot be said that the monies are due and owing without taking into account the set-off. Whilst it is an argument it is not one which I think is particularly powerful but nonetheless it does add some strength to the arguments being advanced by the defendant in this case.
16 Taking into account all the matters I have canvassed I am of the view that this is not an appropriate case for the grant of a summary judgment and that there are issues that justify the matter going to trial and require the plaintiff to prove its case.
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