Performa Real Estate Pty Ltd v Adelaide Civil Pty Ltd No. Scciv-02-1463

[2003] SASC 129

PERFORMA REAL ESTATE PTY LTD V ADELAIDE CIVIL PTY LTD

[2002] SASC 129

Magistrates Appeal

Gray J

Introduction

1. This is an appeal against an order for summary judgment made by a magistrate in favour of a plaintiff.

2. The plaintiff, Adelaide Civil Pty Ltd, is a civil engineering contractor. The defendants Performa Real Estate Pty Ltd and Estoril Developments Pty Ltd are civil works developers. Adelaide Civil lodged a claim against Performa and Estoril for non-payment of a sum allegedly due pursuant to a building contract.

3. A building development occurred at a city site. Adelaide Civil entered into a contract with a developer to undertake the building works. A number of progress payments were certified by the superintendent and were paid to Adelaide Civil. However, payment of a further progress payment was not made. There was no dispute about the amount of the progress payment or that it was due and payable. The dispute related to the identity of the developer and whether the proceedings should be stayed pending the resolution of related proceedings in the Supreme Court.

4. On 9 August 2001 the further progress claim for $31,386.28 was made by Adelaide Civil. The claim was certified by the superintendent. Neither Performa nor Estoril paid the progress claim. Adelaide Civil issued proceedings in the Magistrate’s Court seeking payment of the further progress claim. An application for summary judgment was made on 19 July 2002. The magistrate granted the application on 2 October 2002 and entered judgment in favour of Adelaide Civil against Performa and Estoril. This appeal is only in respect to the judgment against Performa.

5. The magistrate observed that counsel for the defendants did not oppose the entry of judgment. He noted that counsel had only requested that proceedings be stayed pending the result of a related Supreme Court action. The court was informed that in the Supreme Court, Adelaide Civil together with other defendants, including Performa and Estoril were being sued for damage caused during related building works. The magistrate rejected the application for a stay.

   The Hearing Before the Magistrate

6. The documents before the magistrate reveal a level of confusion on the part of all parties about the identity of the contracting parties. The plaintiff’s claim recognised this difficulty. The defendants were sued on an “and/or” basis. The particulars of claim inter alia alleged;

   In about September 1999 Performa and/or Estoril through its agent Allan Gilbert & Associates Pty Ltd … sought from ADCIV an invitation to tender…

   On 21 September 1999 ADCIV submitted to Performa and/or Estoril a tender price…

   On 27 September 1999 ADVIC and Performa/Estoril entered into a contract for the performance of the Works…

   Estoril and/or Performa have failed and refused to pay to ADVIC the amount shown in the Certificate…

7. The defendants’ material also demonstrated confusion. In the written outline of argument of Performa and Estoril, counsel treated both as parties to the contract.

   OUTLINE OF ARGUMENT OF THE DEFENDANTS

   The defence to the plaintiff’s claim is not a set off under clause 42.10. It is not a set off at all, in the sense used in the contract. It is more appropriate to categorise it as a counterclaim and consequently, the cases relied on by the plaintiff are not applicable.

   By clause 17.1 of the contract the contractor provides an indemnity to the principle for loss or damage resulting from work carried out under the contract by the contractor. This is the substance of the defendants’ counterclaim.

   The pleadings in the Supreme Court action clearly demonstrate that loss and damage occurred as a result of work carried out under the contract. This is not in dispute. What is in dispute is the liability for that loss and damage. In the Supreme Court action, the defendants assert that the plaintiff is liable. If this is correct, then the defendants have a right to rely on the indemnity clause 17.1.

8. The magistrate in his reasons for judgment refers to “the defendants” and at other times to “the defendant”. The reasons make it clear that the magistrate did not understand the defendants to be contesting the entry of judgment.

   From the outset, defendant’s counsel indicated that the application for summary judgment was not opposed, but the judgment should be stayed pending the result of a Supreme Court action in which the plaintiff in this action together with three or four other defendants are being sued…The plaintiff is entitled to summary judgment (which was not contested) and a stay on the judgment is refused.

   The magistrate understood the dispute to be whether there should be a stay pending the resolution of the Supreme Court proceedings.

9. Following entry of judgment an affidavit filed by a director of Performa deposed to there being a misunderstanding at the time that the application was heard by the magistrate. An apparent concession that both defendants were liable in respect of the claim sum had been incorrectly made.

   I am a director of the defendants (‘Estoril’ and ‘Performa’)…In about September 1999, the first defendant (‘Estoril’) through Allan Gilbert & Associates sought from the plaintiff an invitation to tender for the performance of works…Although the tender documents then provided identified Performa as the principal, Estoril was always intended to be the principal.

   On or about 27 September 1999 the plaintiff entered into a contract with Estoril for the performance of works. While the written contract had been prepared in the name of Performa, this was altered to refer to Estoril as the principal prior to the plaintiff entering into the contract. The contact was executed by Estoril.

   At no time did Performa and the plaintiff enter into any contractual relationship.

   All monies paid to the plaintiff pursuant to the contract were paid by Estoril. No monies were paid to the plaintiff by Performa.

   Consideration of the Issues

10. As earlier observed there appears to be uncertainty concerning the identity of the contracting parties. There appears to be a genuine dispute as to whether Performa or Estoril or both, were contracting parties. Having regard to the submissions made on the summary judgment application by counsel for Performa and Estoril, it is understandable that the magistrate considered that liability was not in dispute and that the issue was whether there should be a stay.

11. An injustice may well arise if the judgment against Performa is allowed to remain. The magistrate did not address the real dispute between the parties - the identity of the contracting parties. In these circumstances the judgment against Performa should be set aside and the application for summary judgment remitted to the Magistrate’s Court for rehearing. However, as it appears that counsel for Performa and Estoril was at least partly responsible for the magistrate’s apprehension, the appeal should only be allowed on terms. The defendants should pay costs of the application for summary judgment and the defendant Estoril to pay the costs of this appeal in any event. There is further prejudice that must be addressed. Estoril is now said to be insolvent. There is a risk that the delay in resolving the application for summary judgment may affect the recovery of any judgment that Adelaide Civil may obtain. In the circumstances it is appropriate that Performa pay into court within 14 days the amount of the claim, namely $31,386.28. The parties are to be at liberty to apply for payment out following the determination of the summary judgment application.