P and D Bulte Pty Ltd v Seafare Australia Pty Ltd

[1998] TASSC 23

23/1998

PARTIES:  P & D BULTE PTY LTD
  v
  SEAFARE AUSTRALIA PTY LTD

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  ORIGINAL
FILE NO/S:  259/1997
DELIVERED:  25 March 1998
HEARING DATE/S:  17 March 1998
JUDGMENT OF:  Slicer J

CATCHWORDS:

Interpretation - Admissibility of extrinsic evidence in relation to instruments - Matters particularly relating to contract - Collateral contracts - Consistency of collateral contract with main contract.

Esanda Ltd v Burgess (1984) 2 NSWLR 139, followed.
Aust Dig Interpretation [33]

Procedure - Supreme Court procedure - Tasmania - Practice under rule of court - Summary judgment - Action on deed - Existence of counterclaim.

Rules of the Supreme Court, O15.
Wallingford v The Director, etc, of the Mutual Society and the Official Liquidator Thereof (1880) 5 App Cas 685; James Lamont & Co Ld v Hyland Ld [1950] 1 KB 585, followed.
Aust Dig Procedure [270]

REPRESENTATION:

Counsel:
             Applicant/Plaintiff:  M J Temple-Smith
             Respondent/Defendant:                   J L Dewar
Solicitors:
             Applicant/Plaintiff:  Temple-Smith Barclay
             Respondent/Defendant:                   Piggot Wood & Baker

Judgment category classification:
Court Computer Code:  
Judgment ID Number:  23/1998
Number of pages:  7

Serial No 23/1998
File No 259/1997

P & D BULTE PTY LTD v SEAFARE AUSTRALIA PTY LTD

REASONS FOR JUDGMENT  SLICER J

25 March 1998

The plaintiff seeks summary judgment for moneys due under a deed executed by itself and the defendant.  The defendant does not deny that the money is due, but contends that there is no requirement to pay until the plaintiff performs certain obligations stated in the agreement.

The plaintiff was at all material times engaged in the business of boat repairs and the retail of marine equipment.  It had undertaken the refit of a fishing vessel owned or operated by the defendant.  Following the completion of the work, there was disputation concerning the standard of workmanship and the entitlement of the plaintiff to the sum claimed.  Following negotiations conducted by telephone, correspondence and a meeting, the plaintiff forwarded a draft deed to the defendant which contained the terms of settlement as understood by the plaintiff.  The defendant replied in the following terms:

"Thank you for your fax 11.11.96
Changes that should be made.

The item's (sic) in my letter to you on the 23 May 1998 should be included.  It was agreed that these would be repaired at your cost.

A price should be put on the repairs and if the work is not done then that amount would come off the total owed to Bulte.

The Agreement Recital

A        Agreed

BShould be deleted.  Seafare is not entering into this agreement because of any threat of legal action.

CAgreed

DAgreed

The Deed

1Agreed

2Amend - from the 31 January 1997.

a    Agreed
b    Amend
c    Agreed

3         Agreed

4         Agreed"

It would appear that an amended draft was forwarded to the defendant since the amendments proposed by the defendant have been incorporated into the executed document.  The deed was executed by the defendant and returned to the plaintiff.  At the same time, a facsimile was sent by the defendant bearing the date 10 February 1997, stating:

"... WE NOTE YOU HAVE NOT INCLUDED SLEWING SPRINGS REPLACEMENT AS DISCUSSED ALSO PAINTWORK SHOULD NOT BE RESTRICTED TO HULL ONLY.  HOWEVER WE HAVE SIGNED THE AGREEMENT IN ANTICIPATION OF THAT WORK BEING CARRIED OUT AS AGREED."

Taking a view most advantageous to the defendant, I will accept that the facsimile transmission was received and accepted by the plaintiff before it executed the deed.  For the purpose of the application, I will accept that the terms contained in the document constitute part of the concluded agreement.

The deed provides:

"RECITALS

ASeafare is indebted to Bulte in the sum of Forty One Thousand Eight Hundred and Eighty Five Dollars and Fourteen cents ($41,885.14) ('the debt') being the balance monies due and owing to Bulte by Seafare for work labour and materials provided by Bulte at the request of Seafare to Seafare's fishing vessel 'Moira Elizabeth'.

BSeafare has offered to repay the debt to Bulte as is further set out in this Agreement.

CIn consideration of Seafare repaying the debt as is hereinafter provided Bulte has agreed not to institute legal proceedings to recover the debt.

NOW THIS DEED WITNESSETH:

1The parties hereto confirm the recitals to this Agreement which recitals form part of this Agreement.

2Seafare shall repay the debt to Bulte in the following manner:

(a)Seafare shall make capital repayments of not less than Five Thousand Dollars ($5,000.00) per month from the 31st of January 1997.

(b)Seafare shall pay interest on the portion of the debt outstanding from time to time from the 1st of November 1996 until paid in full at the rate of ten percent (10%) per annum.

(c)The total debt plus interest accruing pursuant to subclause (b) hereof shall be repaid by Seafare to Bulte by no later than the 30th of June 1997.

3Should Seafare fail to repay the debt as is provided in the preceding paragraph the total amount of the debt and interest then outstanding shall be come immediately due and payable and Bulte may take such proceedings as Bulte deems appropriate to recover same from Seafare.

4Whilst Seafare repays the debt pursuant to paragraph 2 hereof Bulte shall not take any action against Seafare to recover repayment of the debt.

5Bulte agrees that pursuant to the Warranty provided by Bulte in relation to the work and labour carried out to the said fishing vessel Moira Elizabeth, it shall, at no cost to Seafare, carry out the following further work and labour provided such work and labour is carried out by Bulte at Bulte's work premises in Devonport Tasmania and providing the said Moira Elizabeth is delivered there to Bulte at a time to be mutually agreed.

(a)Repairs to the slewing winch to ensure it's [sic] proper operation

(b)The gilson winch shall be repaired to ensure that it correctly operates.

(c)The paintwork on the hull will be inspected and where unsatisfactory workmanship is evidenced shall be repainted.

(d)Complaints of improperly mounted electrical wiring shall be investigated and if such complaints are valid such electrical wiring problems shall be rectified."

The defendant had made payments totalling $20,000 between 20 January 1997 and 23 May 1997.  It has either declined or refused to make further payment.  On 7 August 1997, the plaintiff commenced proceedings for the recovery of the remaining portion of the debt.  The defendant denies that it is obliged to pay the moneys until the work is completed, and in its defence pleads:

"5Further, it was a term of the agreement embodied in the deed that the making of the payments by the defendant was conditional upon the plaintiff completing certain further work ('the warranty work').

PARTICULARS OF TERM

The term was both express and implied.  Insofar as it was express it is contained in the deed, a copy whereof is in the possession of the defendant's (sic) and may be inspected by arrangement.  Insofar as the term is to be implied, such implication arises from a custom in the trade or industry and/or is required by law so as to give business efficacy to the agreement embodied in the deed.

6The plaintiff has refused or failed to complete the warranty work or any part thereof.

7By its failure or refusal to complete the warranty work the plaintiff has repudiated the agreement embodied in the deed ('the repudiation') and the defendant has elected to accept the repudiation."

The defendant claims damages as a consequence of the claimed repudiation pleaded in its defence, par7.

It is common ground that the vessel has not been brought to Devonport to permit the undertaking of further work.  The plaintiff, through its director, avers that it remains willing to complete the warranty work, but that the defendant has not complied with requests to make the vessel available for the carrying out of such work.  The defendant claims that the plaintiff has declined to nominate a suitable time for the performance of the work.  It is not appropriate to attempt resolution of the difference in the hearing of an application for summary judgment.  The question is whether the deed requires performance of the warranty referred to in cl 5 as a pre-condition to the payment of moneys required by cl 2.

During the course of the hearing, the defendant provided evidence by way of affidavit sworn by its director Joseph Pirrello.  That material traversed grounds wider than those pleaded in the defence.  Counsel for the plaintiff contended that the defendant ought be confined to its own pleading and not be permitted to advance additional matters supporting its opposition to any entry of judgment.  Rules of the Supreme Court, O15, r3, provides:

"3—(1)    On the hearing by a judge of an application under rule 1 of this Order, unless —

(a)     the judge dismisses the application; or

(b)     the defendant satisfies the judge with respect to the claim, or the part of the claim, to which the application relates that there is an issue or question in dispute that ought to be tried or that there ought for some other reason to be a trial of that claim or part,

the judge may give such judgment for the plaintiff against the defendant on that claim or part thereof as may be just, having regard to the nature of the remedy or relief claimed.

(2)       Notwithstanding anything in rules 17 and 18 of Order 47, a judge may, by order and subject to such conditions (if any) as may be just, stay execution of a judgment given against a defendant under this rule until after the trial of a counter-claim made or raised by the defendant in the action."

Rules of the Supreme Court, O15, r1, permits application on the grounds that a defendant "has no defence to claim included in the writ or to a particular part of such claim."  It is incumbent on a plaintiff to establish that there exists "no defence to a claim" and it is open to a defendant to satisfy the Court that "there is an issue or question in dispute that ought to be tried."  The application may be determined upon the filing of an appearance (Rules of the Supreme Court, O15, r1) and before any defence has been served.  The Court may give leave to defend with conditions, O15, r4(c).  The purpose of the procedure is as stated by Lord Halsbury in Jones v Stone [1894] AC 122, when he said at 124:

"The proceeding established by that order [O14 Eng] is a peculiar proceeding, intended only to apply to cases where there can be no reasonable doubt that a plaintiff is entitled to judgment, and where, therefore it is expedient to allow a defendant to defend for mere purposes of delay."

It is for the plaintiff to establish its cause of action in the statement of claim (Scamander Contracting and Plant Hire Pty Ltd & Ors v Australia and New Zealand Banking Group B28/1993) and for the Court to consider entitlement on the basis of material placed before it.  The service of a defence does not preclude a plaintiff from applying for summary judgment (Griffith v Levy [1921] VLR 29), but its existence does not relieve an applicant from the responsibility of establishing that there exists no "reasonable doubt" as to entitlement, or preclude a respondent from showing cause. The effect of a defence is evidentiary. In this case, the defendant has adduced evidence relevant to the nature and implications of the deed, and, if such evidence raises an arguable defence, then it is entitled to succeed. The converse of this proposition was considered by the Court of Appeal in Ray v Newton [1913] 1 KB 249, when Hamilton LJ observed at 258:

"The position of the action, however, is that there is unconditional leave to defend and no defence put in, and although no doubt it would be a matter of comment if the defence travelled beyond the affidavit under Order XIV, that affidavit is not conclusive, and it is impossible to tell what facts may be discovered and relied on by the time the trial comes on.  I think we cannot assume that there is no defence to this action, and I express no opinion at all as to the chances of the action succeeding or failing."

In this case, the defendant would be entitled to seek leave to amend its defence and counterclaim.  It is entitled to put to the Court material, in addition to its pleadings, showing cause why the application should not be granted.

The defendant, in the affidavit filed on its behalf, claims that there exists a separate collateral contract and, further, that a term can be implied by the conduct of the parties that payment of the moneys due under the deed was dependent on the performance of the warranty work.  The claim that there existed a collateral agreement is made in an affidavit sworn by a director of the defendant company on 16 March 1998, par3, of which states:

"3At the time of executing the Deed a collateral agreement was entered into by the parties in connection with the warranty items referred to in clause 5 of the Deed and the terms of which are not reflected in the Deed.  The collateral agreement is partly oral and partly in writing as evidenced as a result of a series of correspondences that have exchanged between the parties prior to and at the time the Deed was executed."

It is not sufficient for a defendant to merely allege a collateral contract.  The material advanced to show cause must particularise the facts relied upon to establish the claim. As Lord Blackburn said in Wallingford v The Director, etc, of the Mutual Society and the Official Liquidator Thereof (1880) 5 App Cas 685 at 704 (in his speech approved by the High Court in Cloverdale Lumbar Co Pty Ltd v Abbott (1924) 34 CLR 122 at 128):

"There may very well be facts brought before the Judge which satisfy him that it is reasonable, sometimes without any terms and sometimes with terms, that the Defendant should be able to raise this question, and fight it if he pleases, although the Judge is by no means satisfied that it does amount to a defence upon the merits.  I think that when the affidavits are brought forward to raise that defence they must, if I may use the expression, condescend upon particulars.  It is not enough to swear, 'I say I owe the man nothing.'  Doubtless, if it was true, that you owed the man nothing, as you swear, that would be a good defence.  But that is not enough.  You must satisfy the Judge that there is reasonable ground for saying so.  So again, if you swear that there was fraud, that will not do.  It is difficult to define it, but you must give such an extent of definite facts pointing to the fraud as to satisfy the Judge that those are facts which make it reasonable that you should be allowed to raise that defence.  And in like manner as to illegality, and every other defence that might be mentioned."

The most that can be said about evidence supporting the claim of a collateral contract is that it does not establish the claim that payment of the moneys due was dependent upon performance of the warranty work.  Accepting that the terms of the facsimile of 10 February constitute part of the deed, then there is no additional material capable of constituting a further collateral contract as to the time for the payment of money.  If it is claimed that the facsimile constitutes a collateral contract in its own right, then its terms do not advance the defendant's claim.  There is a suggestion in the November document that:

"A price should be put on the repairs and if the work is not done, then that amount would come off the total owed to Bulte."

There is no evidence that the plaintiff agreed to this suggestion, and, given the nature of the agreement, it is unlikely that any such sum could be quantified until the vessel was brought to Devonport.  Any claim that such constitutes a collateral contract must be seen in the light of the deed executed by the defendant in which no attempt is made to quantify the cost of the warranty work.  There is further evidence militating against the existence of a collateral contract of the nature claimed.  The defendant commenced the payment of instalments.  That runs counter to the contention that payment of moneys was not required until the performance of the warranty work.  The defendant, through its director, attempts to deal with this issue in the following way:

"13After executing the Deed I caused the Defendant to make the initial payments under the Deed however I later became concerned that as I was experiencing difficulties with the Plaintiff in arranging repairs of the warranty items that the Plaintiff would not perform the works to rectify and replace the warranty itself.  The Defendant continued to make payments until an amount equivalent to my estimation of the outstanding warranty item works to be performed by the Plaintiff was reached and thereafter caused all further payments to be stopped."

But such concern was subsequent to the deed and does not constitute a collateral contract.  Rather, it supports a conclusion that the defendant unilaterally decided on a value of the claimed work and attempted to deduct his estimate from the amount due under the deed.  That conclusion is strengthened by the claims made in Pirrello's affidavit sworn 11 December 1997, pars13 and 14, that work was performed subsequent to the execution of the deed as "a matter of urgency".  There is no basis for concluding that the defendant has established an arguable case involving a collateral contract.  The preceding matters also warrant the conclusion that there is no arguable case involving the existence of an implied term that payment of the debt was dependent on completion of the warranty work.

There remains the central issue of the interpretation of the deed.  It comprises distinct parts.  The first provides for an acknowledgment of a quantified debt existing as of the date of the agreement.  The manner of payment by instalment is determined and a time-frame fixed which commences on 31 January 1997.  It provides for the payment of interest from 1 November 1996, whilst cl 2(b) provides that all moneys are to be paid no later than 30 June 1997.  Clause 3 provides that the whole of the debt and interest become immediately due in the event that there is default in the payment of any instalment.  Those terms are inconsistent with an interpretation that payments of instalments and/or interest ought not commence until after the completion of the work referred to in cl 5.  For any collateral contract to have effect, it must be consistent with and not contradict, or be in conflict with the terms of the main agreement (Esanda Ltd v Burgess (1984) 2 NSWLR 139). In this case, the claimed term of the collateral contract could contradict the precise timetable fixed for the payment of the instalments or the date by which the whole of the amount was required to be paid.

The second part of the deed is independent of the first.  It provides for the performance of work at the plaintiff's yard, provided that the vessel is delivered to such place "at a time to be mutually agreed".  If the terms are interdependent, then in the event that the vessel was destroyed, there would be no obligation for the defendant to pay the moneys acknowledged by it as being owed.  Likewise, the defendant could defer or avoid payment by declining to deliver the vessel.  Further, the term included investigation and possible rectification (which could, in turn, lead to further disputation) and contained no agreed sum which could be credited against moneys already due.  The operations of the two parts of the agreement were separate in time and the terms do not permit a conclusion that one operated as a pre-condition to the other.  The defendant is entitled to claim compensation for a claimed breach of cl 5 and has done so by its counterclaim in these proceedings.  But such is an issue and entitlement separate from the right of the plaintiff to enforce its claim for moneys due as of the date of the agreement.  The circumstances of this case are similar to those considered by the Court of Appeal in James Lamont & Co Ld v Hyland Ld [1950] 1 KB 585. In that case, the plaintiff had obtained summary judgment with respect to a bill of exchange provided for shipbuilding work on a vessel, notwithstanding that the defendant had made defence and counterclaims on the grounds that the plaintiff was obliged to pay moneys for repairs, the estimate of which exceed the amount claimed, and had failed to complete those repairs within the stipulated time. The court (Tucker and Asquith LJJ and Roxburgh J) defined the issues, at 590 - 591, in the following terms:

"The question raised in the present appeal is whether this rule applies to an action between immediate parties to a bill of exchange, where the matters relied upon by the defendant afford no defence under the Bills of Exchange Act.  In such cases, although it is not easy wholly to reconcile the authorities, a rule more favourable to the plaintiff has in general prevailed, the court treating the execution of a bill of exchange either as analogous to a payment of cash, or as amounting to an independent contract within the wider contract in pursuance of which it was executed and not dependent as regards its enforcement on due performance of the latter."

Referring to earlier equity cases of Glennie v Imri (1839) 3 Y & C 436, Warwick v Nairn (1855) 10 Ex 762, and Jackson v Murphy [1886] 4 TLR 92, the court observed at 592:

"There might, it appears, have been a defence if it had been alleged that the goods tendered had not been of the contract description and had been rejected, for then there would have been a total failure of consideration, and this is a defence to an action on a bill of exchange; but in the actual case the 'inferior' goods were retained by the deliveree, and the failure of consideration therefore was partial only.  So also in the present case."

And concluded at 593:

"Having regard to the tenor of the authorities summarized above in cases where the action is on a bill of exchange, it is impossible to say that in giving liberty to sign immediate judgment without a stay the judge in chambers was guilty of an improper exercise of the discretion vested in him.  In our view the appeal fails."

The defendant was conclusively bound by what it stated in the deed it would undertake, namely, the payment of a debt already incurred, by means of instalments.  It ought not to be relieved of that undertaking by a separate claim that the plaintiff was required to give effect to a warranty.  Ordinarily, an executing party is estopped from denying the truth of a precise and unambiguous representation of the facts contained in the deed (Greer & Anor v Kettle [1938] AC 156). Here, the defendant does not dispute that the debt is owed.

The Rules of Court make provision for the separation of issues such as are the subject of these proceedings (Rules of the Supreme Court, O15, rr3(2) and 6(1)(b)).  Entry of judgment in favour of the plaintiff will in no way affect the right of the defendant to pursue its counterclaim.

Conclusion

The plaintiff is entitled to summary judgment.  It is entitled to judgment for the debt of $21,885, and interest calculated in the statement of claim up to 23 May 1997 in the sum of $2,013.  Thereafter it is claimed at the rate of $6 per day.  Accepting that, as an accurate figure (no submissions were put to the contrary) that entitlement becomes as of 25 March 1998 a further sum of $1,836.

Order

That judgment be entered for the plaintiff in the sum of $25,734.