Paul Michael Pty Ltd v Urban Traders Pty Ltd - [2010] NSWSC 1246

CITATION: Paul Michael Pty Ltd (subject to deed of company arrangement) v Urban Traders Pty Limited [2010] NSWSC 1246

HEARING DATE(S): 10 and 11 May 2010

JUDGMENT DATE :
29 October 2010

JURISDICTION: Equity

JUDGMENT OF: White J

DECISION: Refer to paras 77-79 of reasons.

CATCHWORDS: BUILDING AND CONSTRUCTION – application for stay of execution of judgments obtained pursuant to adjudications made under Building and Construction Industry Security of Payment Act 1999 and consequential orders – defendant owned land and engaged plaintiff as builder under construction agreement – both parties alleged breaches of construction agreement – plaintiff obtained judgments pursuant to adjudications and consequential orders – plaintiff subsequently subject to deed of company arrangement – defendant lodged proof of debt with deed administrator – proof of debt pending determination - BUILDING AND CONSTRUCTION – whether adjudications would operate practically as final determination of parties’ rights if judgments not stayed – effect of builder’s insolvency on operation of Act – where defendants may be prejudiced by inability to recover money paid under judgments if not stayed – whether serious question that defendant not indebted to plaintiff or debt discharged by set-off on ultimate determination of proof of debt – where defendant elected to take work out of plaintiff’s hands instead of terminating contract for plaintiff’s breach – where defendants subsequently repudiated contract – whether serious questions that defendants entitled to damages claimed in proof of debt – where no security proffered by defendants for outstanding judgments – plaintiff’s entitlement to enforce judgments in absence of security – moneys to be held on trust until proof of debt ultimately determined - PROCEDURE – where plaintiff obtained charging order under Civil Procedure Act 2005, s 106 against defendant’s land – whether charging order over land valid – whether Registrar-General empowered to register restraining order against land – orders to be discharged

LEGISLATION CITED: Civil Procedure Act 2005 (NSW)
Building and Construction Industry Security of Payment Act 1999 (NSW)
Corporations Act 2001 (Cth)
Judgment Creditors’ Remedies Act 1901 (NSW)
Real Property Act 1900 (NSW)

CATEGORY: Principal judgment

CASES CITED: Brodin Pty Ltd v Dasein Constructions Pty Ltd [2004] NSWSC 1230
Veolia Water Solutions v Kruger Engineering (No 3) [2007] NSWSC 459
Brodyn Pty Ltd v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421
Quint v Robertson (1985) 3 NSWLR 398; DM & BP Wiskich Pty Ltd v Saadi (New South Wales Supreme Court, 16 February 1996, Bryson J, unreported)
Wentworth v Rogers [2004] NSWSC 1176

PARTIES: Plaintiff: Paul Michael Pty Ltd (subject to deed of company arrangement)
1st Defendant: Urban Traders Pty Limited
2nd Defendant: J A Westaway & Son Limited

FILE NUMBER(S): SC 2009/297276

COUNSEL: Plaintiff: P Taylor SC with S Goldstein
Defendants: T Alexis SC with A Greinke

SOLICITORS: Plaintiff: CCS Legal Pty Ltd
Defendants: Cara Marasco & Co

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Friday, 29 October 2010

2009/297276 Paul Michael Pty Ltd (subject to deed of company arrangement) v Urban Traders Pty Limited…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] NSWSC 1246
Decision Date: 29 October 2010

CaseChat Overview and Summary

The case of Paul Michael Pty Ltd v Urban Traders Pty Ltd involved the plaintiff, a building company, and the defendant, a land owner, who engaged the plaintiff to build on their land. Following the construction agreement, both parties alleged breaches, leading the plaintiff to seek adjudications under the Building and Construction Industry Security of Payment Act 1999. The adjudications resulted in judgments in favour of the plaintiff, with consequential orders. The plaintiff later entered a deed of company arrangement, and the defendant lodged a proof of debt with the deed administrator, which was pending determination. The defendant sought a stay of execution of the judgments, arguing that the adjudications would operate practically as a final determination of the parties' rights if the judgments were not stayed, and that their inability to recover money paid under the judgments if not stayed would cause them prejudice.

The legal issues before the court included whether the adjudications would operate practically as a final determination of the parties' rights if the judgments were not stayed, the effect of the plaintiff's insolvency on the operation of the Act, and whether the defendants were prejudiced by their inability to recover money paid under the judgments if not stayed. Additionally, the court considered whether there was a serious question that the defendants were not indebted to the plaintiff or that the debt was discharged by set-off on the ultimate determination of the proof of debt, and whether the defendants were entitled to damages claimed in the proof of debt. The court also examined whether the plaintiff was entitled to enforce the judgments in the absence of security, and whether the charging order over the defendant's land was valid.

In its decision, the court found that there were serious questions to be tried, particularly regarding the defendants' liability to pay the amounts claimed by the plaintiff. The court also considered the defendants' election to take the work out of the plaintiff's hands instead of terminating the contract for the plaintiff's breach, and the defendants' subsequent repudiation of the contract. The court held that the defendants were not entitled to damages claimed in the proof of debt, and that there was no security proffered by the defendants for the outstanding judgments. The court ordered that the moneys be held on trust until the proof of debt was ultimately determined. Furthermore, the court held that the charging order over the defendant's land was valid, and that the Registrar-General was empowered to register a restraining order against the land. Consequently, the orders to discharge were made.

Orders