Precast Industries Pty Ltd v Nuform Constructions Pty Ltd

[2005] WADC 148

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   PRECAST INDUSTRIES PTY LTD -v- NUFORM CONSTRUCTIONS PTY LTD [2005] WADC 148

CORAM:   REGISTRAR KINGSLEY

HEARD:   26 MAY 2005

DELIVERED          :   1 AUGUST 2005

FILE NO/S:   CIV 219 of 2005

BETWEEN:   PRECAST INDUSTRIES PTY LTD

Plaintiff

AND

NUFORM CONSTRUCTIONS PTY LTD
Defendant

Catchwords:

Practice - O 14 - Action on dishonoured cheques - Defence that there is a partial failure of consideration and there is a set-off for liquidated damages

Legislation:

Cheques Act 1986

Rules of the Supreme Court 1971

Result:

Judgment given

Representation:

Counsel:

Plaintiff:     Mr G Lawton

Defendant:     Mr B Grubb

Solicitors:

Plaintiff:     Lawton Gillon

Defendant:     Arthur Metaxas & Co

Case(s) referred to in judgment(s):

Agra and Mastermans Bank v Leighton (1866) LR 2EX56

Amalta Holdings Pty Ltd v Richard Luff, unreported; SCt of WA; Library No 8003A; 21 December 1989

Case(s) also cited:

Brown, Shipley and Co Ltd v Alicia Hosiery Ltd [1966] 1 Lloyd's Rep 668

Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18

Hospitals of Contribution Fund of Australia v Hunt (1983) 44 ALR 365

James Lamont and Co Ltd v Hyland [1950] 1 KB 585

Nova (Jersey) Knit Ltd v Kammgarn Spinnerei GmbH [1997] 1 Lloyd's Rep 463

Warwick v Nairn (1855) 10 Exch 762

1. REGISTRAR KINGSLEY: The plaintiff has brought an application under O 14 Rules of the Supreme Court 1971 seeking to enter judgment against the defendant.  The plaintiff also brings an application for leave to bring the application.

2. The plaintiff's application concerns five cheques drawn on the Bendigo Bank in favour of the plaintiff totalling $51,010.24.  It is the plaintiff's case that the plaintiff presented the cheques to its account with the National Australia Bank on 31 January 2005.  By notice dated 2 February 2005 the plaintiff received notification from National Australia Bank that payment had been stopped on the cheques.

3. The payment of the cheques by the defendant arose out of an agreement between the defendant and plaintiff.  In June 2004 the plaintiff provided the defendant with a quotation for labour and for the fabrication of precast panels for a proposed building in Bennett Street East Perth.  In June 2004 the defendant accepted the plaintiff's quotation.  Colin Michael Parker, a director of the plaintiff, in an affidavit sworn 18 February 2005, deposes that it was a term of agreement that payment was to be made by the defendant to the plaintiff within 30 days from the making of the panels.  The plaintiff in December 2004 delivered five invoices to the defendant in purported payment of the invoices the defendant delivered the five post dated cheques.  The dates were between 3 January 2005 and 17 January 2005.

4. The plaintiff presented the cheques for payment on 31 January 2005 and by notice dated 2 February 2005 the plaintiff received notification from the National Australia Bank that payment had been stopped on all five cheques.

5. It is the defendant's case, in an affidavit of Frank Turibaka sworn 10 March 2005, that the plaintiff accepted the defendants order for delivery of pre-cast concrete panels.  On the basis that the panels were to comply with AU with all panels to be smooth steel trowel finish, class two formwork, fillet edge corners and cast end items.  Turibaka goes on to say that by September 2004 he was complaining that many of the panels were not manufactured to a class two finish.  Turibaka deposes that the plaintiff's representative agreed that the panels had not been finished as required.  In December 2004 the plaintiff demanded the post dated cheques otherwise the plaintiff would not release the final delivery of pre-cast panels.  It was on this basis the defendant delivered the cheques.

6. Turibaka goes on to say that through January he met with representatives of the plaintiff and was told that the plaintiff's workers would go to the site to complete rectification work.  Turibaka says that the rectification work proceeded slowly, if at all.  On 1 February 2005 the defendant engaged a licensed builder to prepare a report on the plaintiff's pre-cast panels.  The registered builder's report of February 2005 indicated that a considerable number of panels did not meet a class two finish.  It would appear that as a result of that report the defendant countermanded the cheques.

7. Where cheques are concerned the general rule is that a defendant will not be allowed to counterclaim damages or to set-off for breach of some other contract ie not on the cheque itself.  A plaintiff would be entitled to a summary judgment unless there is a total failure of consideration or a liquidated partial failure as between the immediate parties.  In Amalta Holdings Pty Ltd v Richard Luff, unreported; SCt of WA; Library No 8003A; 21 December 1989 Kennedy J stated:

   "As between the immediate parties, a partial failure of consideration may be relied upon as a pro tanto defence, but only when the amount involved is ascertained and liquidated."

8. By his defence the defendant has pleaded a failure of consideration and has claimed a liquidated sum by way of set-off.

9. The issue of whether the damages claimed are liquidated or unliquidated can be shortly dealt with.  The defendant claims a liquidated sum based on a report by the registered builder and a quotation from Industrial Building Services dated 16 February 2005 in the sum of $110,307.  In my opinion the defendant is claiming unliquidated damages and the defendant will need to prove the sum claimed.  The amount sought is not an amount ascertained by calculation or is fixed by scale or other positive data.

10. Having arrived at that conclusion the authorities agree that a partial failure of consideration will constitute no defence if the quantum to be deducted on the account is not of definite computation but of unliquidated damages (Agra and Mastermans Bank v Leighton (1866) LR 2EX56).

11. Section 69 of the Cheques Act 1986 provides that a cheque is dishonoured if a cheque is presented for payment, payment is refused and the refusal is communicated by the bank to the presenter of the cheque. Section 71 of the Cheques Act provides that the drawer of a cheque undertakes that on due presentment the cheque will be paid according to its tenor and that if the cheque is dishonoured when presented for payment the drawer will compensate the holder of the cheque.

12. In my opinion the claim of the defendant is one for unliquidated damages and that the defendant has no defence to the claim of the plaintiff under the cheques.  I give judgment to the plaintiff and will hear counsel on formal orders and on costs.