Sceam Construction Pty Ltd v B. T. Windows Pty Ltd
[2018] VSC 769
•7 December 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S CI 2018 00783
| SCEAM CONSTRUCTION PTY LTD (ACN 141 136 816) | Plaintiff |
| v | |
| B. T. WINDOWS PTY LTD (ACN 080 431 812) | Defendant |
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JUDGE: | GARDINER AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 12 June 2018 |
DATE OF JUDGMENT: | 7 December 2018 |
CASE MAY BE CITED AS: | Sceam Construction Pty Ltd v B. T. Windows Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2018] VSC 769 |
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CORPORATIONS – Corporations Act 2001 (Cth), ss 459G – Application to set aside statutory demand by reason of alleged genuine dispute and offsetting claim in respect of the debt – Application to set aside statutory demand for some other reason under s 459J of the Corporations Act 2001 (Cth) – Plaintiff’s evidence in relation to alleged claims and disputes inconsistent with contemporaneously generated electronic communications and not plausible or genuine – Application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Greenway | SLF Lawyers |
| For the Defendant | Mr D Harrison | JBT Lawyers |
HIS HONOUR:
The plaintiff, Sceam Construction Pty Ltd (ACN 141 136 816) (‘Sceam’), applies under ss 459G and 459J of the Corporations Act 2001 (Cth) (‘the Act’) by originating process filed 2 March 2018 to set aside a statutory demand served on it by the defendant, B. T. Windows Pty Ltd (ACN 080 431 816) (‘BT Windows’), on 12 February 2018.
The demand claims that Sceam owes BT Windows $146,352.00 (‘the debt’). The debt is described in the schedule to the demand as money due and payable by Sceam to BT Windows pursuant to invoices for the supply and installation of aluminium windows and doors in the period December 2016 to July 2017.
In or about November 2015, Sceam was engaged as the head contractor on a 9 town house development at Abbott Street, Sandringham (‘the site’).[1] The principal under that contract was 71 Abbott Street Pty Ltd (’71 Abbott Street’).
[1]Exhibit MA-6 to the second affidavit of Matthew Charles Allen.
Sceam put out a tender for the supply and installation of windows in or around May 2016 and BT Windows submitted a quote to Sceam in response to that tender.
The alleged debt relates to an amount claimed under the quotation submitted by BT Windows, dated 14 June 2016 (‘quote’), a written short form subcontract for BT Windows to supply and install all windows at the site in accordance with the quote dated 14 September 2016 (‘subcontract’), and a purchase order issued by Sceam to BT Windows dated 14 September 2016 confirming acceptance of the quote in the amount of $241,692.00 (‘purchase order’).[2] The subcontract also states the total subcontract price to be $241,692 inclusive of GST.
[2]The Quote, Subcontract and Purchase Order are each exhibited as JBT-1 to the first affidavit of Jonathon Bowers-Taylor sworn 20 March 2018.
Sceam relies on two affidavits of its director Matthew Charles Allen (‘Mr Allen’), affirmed 2 March 2018 and 12 April 2018. BT Windows relies on two affidavits of its solicitor, Jonathan Bowers-Taylor (‘Mr Bowers-Taylor’), sworn 20 March 2018 and 7 June 2018, and an affidavit of its director Ming He (also known as Tony) Wang (‘Mr Wang’) sworn 8 June 2018. Both parties also filed and served written submissions.
Sceam in its written submissions summarises the basis of its application as being that it has offsetting claims by reason that BT Windows’ works under the Subcontract were incomplete, defective and late. Sceam also alleges BT Windows agreed to reimburse the costs associated with the use of a crane at the site and to pay for the hiring of Sceam’s employees as additional labour on the site.[3] In Sceam’s ’21 day affidavit’, it characterises the basis of its application as being that there exists a genuine dispute in relation to the amount claimed in the demand.
[3]Sceam’s written submissions, paragraphs 4 and 5.
Legal principles
In the decision of the Court of Appeal in this State of Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq),[4] the principles applicable in applications to set aside statutory demands were succinctly summarised as follows (citations omitted):
[4][2015] VSCA 330, [47]-[51].
The terms of s 459H of the Corporations Act and the authorities make clear that, on an application to set aside a statutory demand, the applicant is required only to establish a genuine dispute or offsetting claim. The applicant is required to evidence the assertions relevant to the alleged dispute or offsetting claim only to the extent necessary for that primary task. It is not necessary for the applicant to advance a fully evidenced claim. Therefore, the task faced by an applicant is by no means at all a difficult or demanding one.
In determining such an application, it is not necessary or appropriate for a court to engage in an in-depth examination or determination of the merits of the alleged dispute. This is because an application alleging a genuine dispute or offsetting claim is akin to one for an interlocutory injunction and requires the applicant to establish that there is a ‘plausible contention requiring investigation’ of the existence of either a dispute as to the debt or an offsetting claim. It is therefore not helpful to perceive that one party is more likely than the other to succeed or that the eventual state of the account between the parties is more likely to be one result than another. Further, the determination of the ‘ultimate question’ of the existence of the debt at a substantive hearing should not be compromised.
The court is required to determine whether the dispute or offsetting claim is ‘genuine’. It has been said that the criterion of a ‘genuine’ dispute requires that the dispute be bona fide and truly exist in fact and that the grounds for alleging the existence of a dispute be real and not spurious, hypothetical, illusory or misconceived. It has also been observed that the dispute or offsetting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion. It must also have sufficient factual particularity to exclude the merely fanciful or futile. A rigorous curial approach is essential to the effective operation of the statutory scheme.
The court is not required to accept uncritically every statement in an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be, as it may not have sufficient prima facie plausibility to merit further investigation as to its truth. The court is also not required to accept uncritically a patently feeble legal argument or an assertion of facts unsupported by evidence, although this should not be read as suggesting that the applicant must formally or comprehensively evidence the basis of its dispute or off-setting claim. Except in such extreme cases, the court should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on by the applicant to set aside a statutory demand.
Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd involved a demand for payment of a debt alleged to be due under a contract for the supply of goods. The applicant relied on four matters, each of which had the potential to affect the respondent’s entitlement to be paid the entire amount of the debt. Barrett J held that all four matters were sufficiently plausible to raise a genuine dispute. He relevantly stated:
The [applicant] will fail in [the] task [of establishing a genuine dispute] only if … the contentions upon which it seeks to rely … are so devoid of substance that no further investigation is warranted. Once the [applicant] shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the [applicant], it must find that a genuine dispute exists, even where any case apparently available to be advanced against the [applicant] seems stronger.
In Citation Resources Ltd v IBT Holdings Pty Ltd,[5] McKerracher J summarised the principles concerning a genuine dispute as follows:
[5][2016] FCA 1265, [17].
In short then:
(a)For there to be a genuine dispute, there must be a ‘plausible contention requiring investigation’. It raises the same sort of considerations as the ‘serious question to be tried’ criterion applicable to interlocutory injunctions.
(b)The company will fail in that task only if it is found upon the hearing of its s 459G application that the contentions upon which it seeks to rely in mounting its challenge are so devoid of substance that no further investigation is warranted. Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow.
(c) The Court is not called on to determine the merits of, or to resolve, the dispute.
(d)The threshold is not high or demanding; however the claim must have some merit and be genuine. That requirement has been described variously as the claim must be ‘real and not spurious’, the claim must have ‘a real chance of success’, there must be ‘a serious question to be tried’.
(e)The Court does not engage in any form of balancing exercise between the strengths of competing contentions.
(f)The essential task is relatively simple — to identify the genuine level of a claim (not the likely result of it).
(g) A mere assertion of an oral agreement will not necessarily suffice.
In Powerhouse Australasia Pty Ltd v Viarc Pty Ltd,[6] Dodds‑Streeton J considered the approach and standard to be applied when dealing with applications of this type:
While it is not a very exacting standard, on the other hand mere, assertion of a dispute or off-setting claim, mere bluster or advancing grounds which are illusory or spurious or insufficiently particularised will not suffice. The Court must not enter into the merits of the dispute, but it is not crossing the line in relation to its legitimate role in these applications to consider evidence which ‘bears on whether or not the asserted dispute or off-setting claim is genuine’. Indeed, that is its necessary function.[7]
[emphasis added]
[6][2006] VSC 508.
[7]Ibid [48].
Sceam’s affidavit evidence in support of the application
In his affidavit affirmed 2 March 2018, (‘Mr Allen’ s first affidavit’) Mr Allen states that he is the director of Sceam and that he believes Sceam is not indebted to BT Windows for the debt and the amounts claimed to comprise it for reasons which he summarises as follows:
a) BT Windows did not complete the works the subject of the debt;
b)of the works that were carried out by BT Windows, the works were defective;
c)costs of crane works were borne by Sceam, which BT Windows is liable to reimburse; and
d)BT Windows owes Sceam liquidated damages of 50 days, being a total sum of $50,000.00.
Mr Allen states that he has been advised by Mr Fredricks that between December 2016 and April 2017, Mr Fredricks had attempted to notify BT Windows of the dispute and issues on site by calling Mr Tony Wang from BT Windows (‘Mr Wang’) twice a day for a period of approximately six months and that on each occasion Mr Wang told Mr Fredricks he was not available to speak and to telephone the office of BT Windows. Mr Allen also states that he is advised by Mr Fredricks that he attempted to get Mr Wang to attend the site to complete the works but that Mr Wang would not respond or attend to the works.
Mr Allen further contends that Sceam has a counterclaim for damages and liquidated damages against BT Windows based on the expenses that Sceam has incurred listed in paragraph 10 of Mr Allen’s first affidavit and which appear to total $123,486.75.
Mr Allen also exhibits to his first affidavit five extension of time notifications concerning the development, dated 30 October 2016, 30 November 2016, 30 December 2016, 30 January 2017 and 28 February 2017. Each notification cites the reason for the extension as being:
[t]he design flaws have continually caused issues on site … [w]e are having issues with Balconies, drains, box gutters, parapets, splade walls, front doors, roofs for all dwellings, ceiling heights, windows, air-conditioning.[8]
[8]Exhibit MA-3 to Mr Allen’s first affidavit.
Mr Allen states that BT Windows has not deducted the $40,000.00 from the amount said to be owed pursuant to the statutory demand, which Sceam paid to BT Windows on or about 20 February 2017. He states that the total sum of the monies claimed does not accurately reflect the invoices issued and monies paid to date.
In his affidavit of 12 April 2018, (‘Mr Allen’s second affidavit), Mr Allen sets out the approximate cost he says Sceam ‘has or will’ incur to complete and remedy BT Windows’ work that is the subject of the demand. What follows is a summary of such alleged claims:
Item of workApproximate date issue is said to have arisen
Cost
ReasonSupply of power actuators to Window 410, 509 and 609 and scaffolding Unknown Estimated total cost of approximately $1,984 BT Windows had not supplied power actuators Supply and install W115 and W116 windows frames July 2017 Approximately $3,352 BT Windows did not supply and install Commissioning windows and glass doors Unknown Total cost $3,036 BT Windows failed to commission all glass windows and doors on Site Installation of door furniture Unknown $1,000 Door handles in dwellings 4&5 faulty Caulking September 2017 Total cost of $5,060 Two windows were never supplied or installed and BT Windows performed defective or incomplete caulking on windows and doors Crane Works Unknown Total cost of $12,560.75 Glass panels were too heavy to be manually carried up to the first and second floors of the building Defective Caulking September 2017 $92 per hour x 22 hours + approximately $200 for materials BT Windows performed defective caulking on three bi-fold doors located in three separate dwellings on the Site Non-compliant window frames February 2017 approximately $10,000 (as the Principal reduced Sceam’s claim for windows under the Head Contract) BT Windows did not supply suitable track for the installation of curved windows in six of the dwellings Commissioning of door furniture & patching of missing section of frame September 2017 $92 per hour x 6 hours for dwelling 4
$370 for dwelling 2BT Windows installed in dwelling 4 a defective door handle on the bi-fold doors facing out into the courtyard and in dwelling 2 there was a missing section of window frame Reinstatement of carpet August 2017 Approximately $4,140 Carpet in dwellings 4,5,6 water damaged due to leaking window frames Reinstatement of timber floors August 2017 Approximately $6,072 Timber floors in dwellings 7,8 and 9 water damaged due to leaking window frames Rectification of damaged plasterboard, installation and assembly of scaffolding August 2017 Approximately $9,660 Plasterboard in dwellings 4,5,6,7,8 and 9 damaged due to leaking window frames Painting and scaffolding of rectified plasterboard
Unknown Approximately $12,420 Rectified plasterboard required re-painting and reassembling of scaffolding Additional Labour on site May 2017 Approximately $5,888 BT Windows requested assistance in carrying glass panels on site Liquidated Damages
In addition to the claims raised above, Mr Allen states that, under the Subcontract, BT Windows agreed to complete the scope of works as per a ‘written schedule’ provided to BT Windows as part of the tender process. He states that under the schedule, the final date for BT Windows to supply the windows was 4 November 2016. He exhibits to his second affidavit a copy of what is apparently the schedule to which he refers, and which records the completion date for the windows as above.[9]
[9]Exhibit MA- 7 to Mr Allen’s second affidavit. Note that in his second affidavit, Mr Allen states that the schedule to which he refers is exhibited at MA-6, apparently in error.
Mr Allen deposes that BT Windows did not attend the Site as required by the Subcontract from mid-November 2016 through to early March 2017 and that in or around March 2017, BT Windows attended the Site and installed approximately six to seven windows. He states that BT Windows did not attend the Site in April 2017 and that, in May 2017, BT Windows returned to the Site and installed approximately 90% of the works under the Subcontract. Mr Allen states that BT Windows did not attend the site in June 2017 and that, save for the incomplete works summarised in paragraph 10 of his first affidavit of Mr Allen’s first affidavit, BT Windows completed the works under the Subcontract by the end of July 2017.
Mr Allen states that BT Windows were not on site for approximately five months between November 2016 and July 2017. Mr Allen states that he is informed by Mr Fredricks and believes that during this time Mr Fredricks telephoned Mr Wang and sent text messages requesting that BT Windows return to the Site. Mr Allen exhibits to his affidavit a series of text messages sent by Mr Fredricks to Mr Wang.[10]
[10]Exhibit MA-8 to Mr Allen’s second affidavit.
Mr Allen states that BT Windows’ failure to attend the Site led to extensive delays under the Head Contract. Mr Allen deposes that, under the Subcontract, BT Windows were required to complete the works by 4 November 2016 but that the works were not completed until the end of July 2017 and he deposes that BT Windows completed the works under the Subcontract approximately eight months late.
Mr Allen states that BT Windows’ delay led to a corresponding delay in Sceam’s ability to reach practical completion under the Head Contract. On 15 March 2018, the principal under the Head Contract wrote a letter advising Sceam that it owed $358,000 under the Head Contract on account of liquidated damages for delay.[11] Mr Allen deposes that this amount is currently being utilised by the principal as an amount to set-off monies owing to Sceam under the Subcontract and that the amount the principal is using is $358,000.00.
[11]See Exhibit MA-9 to Mr Allen’s second affidavit. Note that in his second affidavit, Mr Allen states that the letter to which he refers is exhibited at Exhibit MA-8, apparently in error.
Schedule Item 12 of the Subcontract specifies liquidated damages of ‘$0 per calendar week’.[12] Mr Allen asserts that, whilst this is so, pursuant to condition 3 BT Windows granted an indemnity to Sceam in the following terms:[13]
Except as required by law the Contractor will not deduct from the Subcontract Price. or from any Progress Payments any amounts in the nature of taxes duties or similar imposts for which the Subcontractor is or may be responsible. The Subcontractor hereby fully indemnifies the Contractor against any and all costs and expenses that the Contractor may incur and against any and all damages and losses that the Contractor may suffer caused by, arising from, or with respect to any failure or refusal by the Subcontractor to fully comply with its relevant obligations.
[12]See Exhibit JBT-1 to Mr Bowers-Taylor’s first affidavit.
[13]See Exhibit JBT-1 to Mr Bowers-Taylor’s first affidavit.
Mr Allen contends that, on this basis, Sceam is entitled to an indemnity from BT Windows for its role in contributing to the delay of practical completion under the Head Contract.
Contact with BT Windows
Mr Allen deposes that it is the company policy of Sceam that all subcontractors who do not attend at site by 7.30am received a telephone call from the foreman, in this case Mr Fredricks. He states that Mr Fredricks telephoned Mr Wang twice a day for approximately six months as outlined in paragraph 12 above.[14]
[14]Paragraph 8 to Mr Allen’s first affidavit.
Mr Allen deposes that, in or around May 2017, he telephoned Tony Wang on three occasions to discuss incomplete and defective works and when BT Windows would be returning to Site, and that those calls were unanswered. Mr Allen does not exhibit to his affidavit any phone records to support this deposition. Mr Allen deposes further that he is informed by Mr Fredricks that in or about May 2017, Mr Fredricks received a telephone call from Tony Wang in which the incomplete and defective works were discussed and that it was agreed that BT Windows would return to the Site in June 2017.
Correspondence between the parties’ solicitors
In relation to correspondence between the parties’ solicitors following Sceam’s receipt of the demand, Mr Allen deposes that Sceam’s solicitors sent a letter dated 20 February 2018 to BT Windows’ solicitors asserting that the demand is void due to there being a defect in the demand, the debt was not owed by Sceam and there being a genuine dispute in respect of the alleged debt.[15]
[15]Exhibit MA-4 to Mr Allen’s first affidavit.
In response to Sceam’s solicitors letter dated 20 February 2018, BT Windows’ solicitors sent an email that day stating:
[c]ould you send us anything in writing?
We’ ve got numerous emails from your client promising payment with no complaints or dispute.[16]
[16]Exhibit MA-5 to Mr Allen’s First affidavit.
Sceam’s solicitors responded by email sent on 21 February 2018, stating, inter alia:
[a]s stated in our correspondence, our client has instructed that the complaints were raised with the site foreman by telephone call.
The fact that there was no complaint sent in writing does not detract the existence of a genuine dispute.[17]
[17]Exhibit MA-5 to Mr Allen’s First affidavit.
Mr Jonathon Bowers-Taylor sent an email in response to the above email stating:
Who is the site foreman? Obviously not our client.
This purported dispute looks like nonsense.
Your client should pay up in accordance with its written promises. [18]
[18]Exhibit MA-5 to Mr Allen’s First affidavit.
At the same time as Sceam was allegedly incurring the cost of rectification works and additional labour as set out at paragraph 16 above and the liquidated damages referred to above, Mr Allen was corresponding with Mr and Mrs Wang via email and text message apologising for Sceam’s delay in payment and promising that payment would be forthcoming. At no stage in any of the email or text message correspondence did Mr Allen raise any of the claims outlined at paragraph 16 above, despite the fact that Mr Allen deposes that he was in daily contact with Mr Fredricks regarding the works performed pursuant to the subcontract[19] and that Mr Allen purportedly gave instructions to conduct rectification works.[20]
[19]Paragraph [15] of Mr Allen’s second affidavit.
[20]Paragraphs [30], [33], [38], [51], [58], [60], [62], [65], [72] of Mr Allen’s second affidavit.
The email and text message correspondence exhibited to Mr Bower-Taylor’s affidavit indicates that from at least December 2016 to December 2017 Mr Allen was representing to BT Windows that Sceam would make payment of outstanding amounts owed and Mr Allen did not raise any offsetting claim at that time.
On 23 December 2016, around the same time as Mr Fredricks was allegedly contacting Mr Wang twice a day to notify Mr Wang of the disputes and issues on site, Mr Allen emailed Jenny Wang, BT Windows’ Finance Accountant (‘Mrs Wang’), stating:
Hi Jenny
See below proof of part payment as discussed with Ben regarding Tax Invoice #SJ009037
On 10 February 2017, Mrs Wang emailed Mr Allen stating:
Ben and Matthew,
Just let you know we could not do more works until you sorted it out (sic) the outstanding payment for $85,660.0..
In response to that email on same date, Mr Allen responded stating:
Hi Jenny and Tony
We understand your position, our progress claims have been short on this site. The QS is pretty tough on us here. We only have enough funds to give you part payment at the moment. We are still waiting on the claim to be received for January claim they usually clear between the 15th and 20th of each month if we stick to a payment plan of an agreeable amount each month of $25,000 would this suffice?
Once we get to lock up the claims should have a lot more fat in them..
On 20 February 2017, Mr Allen emailed Mr Wang with evidence of payment and stated:
Hi Tony
See proof of part payment as discussed and looking forward to labour back on site tomorrow
On 22 March 2017, in response to an email from Mrs Wang sent on 21 March 2017 pressing for an update on payment of the outstanding amount of $45,660, Mr Allen stated:
Hi Jenny
We will try and give you some of the outstanding funds in the next couple of weeks.
Appreciate your patience
Sorry for the inconvenience
On 12 May 2017, Mrs Wang emailed Mr Allen stating:
Matthew,
As advised, please arrange some payment for us..
On same date, Mr Allen responded stating:
Hi Jenny,
Thanks for the invoices
We are trying to resolve this for you as a matter of urgency
On 21 September 2017, Mrs Wang emailed Mr Allen requesting he advise when BT Windows could expect some payments from Sceam and Mr Allen responded on 22 September 2017 stating:
Hi Jenny
I don’t know what to say but we do not have it as yet.
We are trying our best.
At the time of sending the above email on 22 September 2017, Sceam had already performed items of work as outlined in paragraph 16 above which Sceam now says give rise to an offsetting claim, however these claims were not raised by Mr Allen in any of the email correspondence produced by BT Windows and Sceam have not produced any email correspondence to show otherwise.
The only text messages which are relied upon by Sceam, referred to above in paragraph 19 and exhibited to Mr Allen’s second affidavit indicate that Mr Fredricks telephoned Mr Wang on 30 June 2016, 28 November 2016, 16 January 2017, 13 February 2017, 3 March 2017 and that Mr Wang responded each time stating ‘sorry, can’t talk right now’. The only text message that indicates that Mr Fredricks may have requested that BT Windows return to the site is a text message sent on Monday 28 November at 8.08am stating ‘Where are your boys’. This must be put in the context of B T Windows’ demands for payment which were not being complied with. It seems clear that B T Windows was not attending the site for that reason and this is evidenced by the exchange of emails set out at paragraphs 31 and 33 above.
B.T. Windows’ affidavit evidence in opposition of the application
In his affidavit sworn 20 March 2018 (Mr Bowers-Taylor’s first affidavit), Mr Bowers-Taylor states he is the legal practitioner and director/principal of JBT Lawyers, the solicitors for BT Windows.
Mr Bowers-Taylor responds to the purported grounds for disputing the debt set out in Mr Allen’s first affidavit at paragraph 10.
Mr Bowers-Taylor notes that the Quote, Subcontract, and Purchase Order between the parties relating to the subcontract are omitted from Mr Allen’s affidavit and exhibits a copy of each to his affidavit.[21]
[21]Exhibit JBT-1 to Mr Bowers-Taylor’s first affidavit.
Alleged incomplete/defective works
Mr Bowers-Taylor exhibits to his affidavit the emails between Sceam and BT Windows as follows:
(a) an email chain containing emails between Jenny Wang, the Finance Accountant for BT Windows, and Mr Allen, for the period 24 April 2017 to 20 June 2017;
(b) an email chain containing emails between Ms Wang and Mr Allen for the period 26 July 2017 to 9 August 2017;
(c) an email chain containing emails between Ms Wang and Mr Allen for the period 4 to 22 September 2017; and
(d) an email chain containing emails between Ms Wang and Mr Allen for the period 18 October 2017 to 10 November 2017.
He observes that these emails contain no allegations of defective or incomplete works and states that in summary they are, first, statements Sceam could not afford to pay the debt and, secondly, promises to pay when it could.
In response to Mr Allen’s statements set out in paragraph 12 above, that between the periods December 2016 to April 2017, Mr Fredricks attempted to notify BT Windows of issues on site by calling Mr Wang twice a day for approximately six months, to which Mr Wang replied advising he would not talk and to contact the office, Mr Bowers-Taylor deposes that BT Windows was never notified of any defective or incomplete works. He observes that clause J of the subcontract requires notice of any alleged defects and contends that it is inexplicable in the context of a construction contract and subcontract that there is nothing in writing concerning alleged incomplete or defective works, but rather, a series of written promises to pay if and when Sceam was able to do so.
Caulking
In response to the caulking expenses incurred by Sceam in the amounts of $5,000 and $2,000, as set out in paragraph 10 of Mr Allen’s first affidavit, Mr Bowers-Taylor observes there is an express exclusion in the Quote relating to caulking between walls to doors and windows.[22]
Crane
[22]In the eighth bullet point under the heading “Following are excluded on quote”: see Exhibit JBT-1 to Mr Bowers-Taylor’s affidavit.
In response to the crane lift, traffic management, permits and labour expenses incurred by Sceam in the amount of $11,758.75, as set out above, Mr Bowers-Taylor observes there is an exclusion in the Quote relating to access.[23] Mr Bowers-Taylor asserts that it is common sense that access means cranage, scissor lifts and anything else to provide a glazing/glassing subcontractor access to install the windows and doors and that glazing subcontractors do not provide cranes or scissor lifts or anything concerning access. He states further that the builder (i.e., Sceam) has its own cranes, that glazing subcontractors do not bring their own separate cranes to a site, and that he has never come across a subcontract in which a glazing subcontractor provides its own cranes. He reiterates that access is an express inclusion and observes that there is no term of the Quote, Purchase Order or Subcontract that obliges BT Windows to provide cranes at its cost.
[23]This exclusion is also under the first bullet point under the heading “Following are excluded on quote”: see Exhibit JBT-1 to Mr Bowers-Taylor’s first affidavit.
Liquidated damages
In response to the expense relating to the five extensions of time totalling $50,000, as referred to in Mr Allen’s first affidavit at paragraph 10, Mr Bowers-Taylor observes that item 12 of the Subcontract stipulates a liquidated damages rate of $0. Further, Mr Bowers-Taylor states that the extension of time claims are against the owner for defects in the design and have nothing to do with the alleged delays caused by BT Windows.
Alleged defect in statutory demand
On 2 March 2018, Mr Bowers-Taylor sent an email to the Sceam’s solicitors enclosing a spreadsheet setting out the invoice amounts and the payments made by Sceam, and stating that the amount outstanding equals the amount of the statutory demand, being $146,352.00.[24]
[24]Exhibit JBT-3 to Mr Bowers-Taylor’s first affidavit.
On 2 March 2018, Sceam’s solicitors responded to Mr Bowers-Taylor alleging defects in the demand due to the Schedule to the demand not recording a $40,000 payment made by Sceam, and omitting reference to a payment made in relation to one of the invoices, namely SJ009037.[25] Later that day, Mr Bowers-Taylor responded by email stating:
[25]Exhibit JBT-4 to Mr Bowers-Taylor’s first affidavit.
A $25,000 payment was made on 23 December 2017 and the balance of that invoice, $30,000.00, from the $40,000 payment received on 20 February 2018 was applied to invoice SJ009037.
That left a balance of $10,000 from the $40,000 to apply to other invoices and is why it is not included in the statutory demand
…
We are instructed the defect allegations are spurious. It beggars belief that nothing was ever put in writing regarding alleged defects which allegedly incurred actual costs in relation to a 7 townhouse project where windows were installed by mid-2017, and it is now February 2018, in circumstances of there being a series of written promises by your client to pay various sums … [a] statutory demand will only be set aside on the basis there is a genuine dispute. While we are aware this is a low hurdle, we do not consider your client can meet it.[26]
Mr Bowers-Taylor states that the accounting exercise is simple, that the total amounts involved and paid are accurately recorded and that there is no question regarding the Quote amount, the amount of the Purchase Order, or the Subcontract amount.
[26]Exhibit JBT-4 to Mr Bowers-Taylor’s first affidavit.
In his affidavit sworn 7 June 2018 (‘Mr Bowers-Taylor’s second affidavit’), Mr Bowers-Taylor exhibits an email sent to him by Mr Wang on 1 June 2018. The email encloses screenshots of several text messages between Mr Wang and Mr Allen sent between January and December in 2017, by which Mr Wang demands payment of outstanding invoices and to which Mr Allen continually responds that Sceam cannot pay at that time.[27] Mr Bowers-Taylor exhibits a further email from Mr Wang enclosing a bundle of scanned emails between BT Windows and Sceam, sent between January and May 2017, by which BT Windows demands payments of outstanding invoices that Sceam indicates it is not in a position to pay.[28] The more significant text messages are as follows:
[27]Exhibit JBT-5 to Mr Bowers-Taylor’s first affidavit.
[28]Exhibit JBT-6 to Mr Bowers-Taylor’s first affidavit.
On 11 January 2017 Mr Allen stated:
Hi Tony
I am in New South Wales and my reception is limited. I just tried calling you back. Our claim was short falled from the QS hence the part payment…we will get these funds to you as soon as we can.
On 30 May 2017 Mr Allen texted Mr Wang stating ‘I am busy at the moment. Please text me’. Mr Wang replied stating:
Hi mate, you have to sort out the payment issues. You can’t just tell us someone is not in the position for payment. We need the clear answer then we know how (sic) to do next.
On 24 June 2017 Mr Allen texted Mr Wang stating ‘I will call you tomorrow Tony...And yes I got your calls yesterday…’. On 29 November 2017 Mr Wang texted Mr Allen stating ‘Morning Matt, any update. Can you please give me a call’. Mr Allen replied stating ‘we have a meeting at 11am this morning about momey (sic) we are owed. Once meeting is finished I will let yo (sic) know’. On same date Mr Wang responded stating ‘from this project or other?’ Mr Allen replied stating ‘no from others mate. This client pays always has’.
On 30 November 2017 Mr Wang texted Mr Allen stating ‘Any update mate. I need true answer’. In response, Mr Allen stated on 1 December ‘Tony we were meant to receive $300K today we are not receiving because they have not received the money as yet. That’s the truth.’ Mr Wang responded on same date stating ‘when will you pay us’. On 4 December 2017 Mr Wang again texted Mr Allen ‘when will you pay us’ and ‘any update Matthew’. On 5 December 2017 Mr Wang texted Mr Allen again sating ‘Morning Matthew, any update of (sic) outstanding payments?’. Mr Allen responded on same date stating ‘not as yet Tony’. The following day Mr Wang texted Mr Allen stating ‘discussed with my partner Bob regarding the money you owe us. We will take legal action if nothing happens by 11th. Dec. 2017. (Monday next week). We had given you plenty time to sort out the payment issue’. Mr Allen responded on same date stating ‘Hi Tony we understand your position we would rather not go down this path’. Mr Wang responded on same date stating ‘this is last option, if you and Ben don’t come up with solutions.’ Mr Allen responded on same date stating ‘ok’. On 11 December 2017 Mr Wang texted Mr Allen ‘Matthew, you have to come up with payment solutions by COB today as we discussed last week. Regards Tony Wang’.
On 13 December 2017 Mr Allen responded ‘We are still waiting on the funds Tony’. On 6 April 2018 Mr Allen texted Mr Wang stating ‘How did you go Tony’. Mr Wang responded ‘he is discussing with your lawyer now’. On 9 April 2018 Mr Allen texted Mr Wang ‘Tony, I have just spoken to my lawyer we are waiting to receive a letter from your lawyer saying it[29] has been withdrawn so I can transfer the $20K. We need it by 10.00am please’. Later the same day Mr Wang texted Mr Allen stating ‘do we have a result Tony’ to which Mr Wang replied stating ‘Are you going to pay the legal cost?’. Mr Allen responded ‘no Tony that’s not a part of the deal just happy to give you the $20K get it withdrawn we will then sit down and then work it out.’ Mr Wang responded ‘20K just cover the legal cost now’. Mr Allen responded ‘It’s only going to get worst (sic) if we do not stop it. I told you on Thursday 20k’.
[29]It seems the reference to ‘it’ is a reference to the statutory demand.
Mr Bowers-Taylor again says that there is no term of the Quote, Purchase Order or Subcontract that obliges BT Windows to provide cranes at its cost and refers to an email sent to Sceam by BT Windows stating, inter alia, ‘the access seems (sic) need organize by you … I will double confirm the glass delivery date to let you organize crane.’[30]
[30]Exhibit JBT-6 to Mr Bowers-Taylor’s second affidavit.
On 6 June 2018, Mr Wang sent a further email to Mr Bowers-Taylor enclosing screenshots of text messages between Mr Wang and Paul Anthony Pafumi (‘Mr Pafumi’),[31] a director of the principal, 71 Abbott Street Pty Ltd.[32] It seems clear that the principal began dealing directly with BT Windows in order that the project could be progressed because BT Windows was declining to deliver materials as it was not being paid. Some extracts of those texts are as follows.
[31]The text messages record the exchange as being with a ‘Paul Samdrinham’ as Mr Wang saved Mr Pafumi’s name as ‘Paul Samdrinham’ for ease of identification (see Exhibit JBT-9 to Mr Bowers-Taylor’s affidavit).
[32]Exhibit JBT-8 to Mr Bowers-Taylor’s second affidavit.
On 3 July 2017, Mr Pafumi texted Mr Wang stating:
Hi Tony
Received the invoice so thnx and payment will be this afternoon or tomorrow morning. Please confirm delivery Wed or Thur directly with Sheldon on site.
Regards
Paul
On 4 July 2017, Mr Pafumi texted Mr Wang stating:
Hi Tony
Just wanted to check do we have the glass planned for the small window that is remaining in dwelling 3..?
On same date at 2.37pm Mr Pafumi sent a further text to Mr Wang stating:
Tony,
Given we are paying for the large window delivery ie $10K is it OK that we pay on the day of delivery ie as soon as it arrives on site?
On same date, Mr Wang responded stating:
I have to say not. As promised many many times.
Mr Pafumi replied ‘will pay today’ and Mr Wang responded ‘thnx for understanding’.
On 4 July 2017 the principal paid $11,000 to BT Windows on behalf of Sceam for BT Windows to complete the last remaining panels in July 2017. On 4 July 2018, Mr Pafumi sent Mr Wang an email enclosing a remittance slip for payment of this invoice (being invoice number SJ009579).[33]
[33]Exhibit JBT-12 to Mr Bowers-Taylor’s second affidavit.
On 6 July 2017 Mr Pafumi texted Mr Wang stating:
Hi Tony
I believe the windows have not been delivered as I thought it was Wed or Thur….will they arrive tomorrow please?
Thanks Paul
On same date, Mr Wang replied to Mr Pafumi’s text stating ‘yes’ and Mr Pafumi responded on same date stating ‘Thanks heaps Tony’.
On 11 July 2017 Mr Pafumi texted Mr Wang as follows:
Hi Tony
The glass looks good on the stairs. Do you know the status of the window on dwelling 3 that is missing as we need this completed in the next week or so?
Further, on 21 November 2017, Mr Pafumi sent Mr Wang an email stating:
Hi Tony,
Hope this finds you well.
As you are aware we are nearing completion on the 71 Abbott St project, we’re undertaking a reconciliation on amounts paid and amounts outstanding. From our conversations as this project unfolded, it is our impression that you may not have received full payment from Sceam Construction Pty Ltd.
If this is the case, can you please advise us of what amounts remain outstanding to you from Sceam on our project and when the invoices fell due?
Could you please send this reply back to myself.
On 22 November 2017 Mr Pafumi texted Mr Wang stating:
Tony
I asked you to send the outstanding invoices to me only and you copied in Matt from Sceam….!!!! this was not good….please don’t respond to that email again and send to me only
On same date, Mr Pafumi sent a further text to Mr Wang at 2.30pm stating:
Tony I don’t work for Sceam….I am the developer
On 22 November 2017, Mrs Wang responded to Mr Pafumi’s email of 21 November 2017, forwarding the outstanding invoices payable by Sceam to BT Windows.[34] It seems to me inconceivable that if the principal under the head contract had any issue with that part of the works at the Site performed by BT Windows that it would have made any payment to BT Windows or undertake a reconciliation of amounts outstanding to BT Windows as the evidence reveals. The texts extracted above between BT Windows and the Principal make it clear that those parties had no grievances save that Sceam was only prepared to deliver materials if payment was made beforehand. The reaction to BT Windows copying in Sceam to the email attaching the invoices to the principal confirms that Sceam and the principal were in dispute and such disputes did not involve BT Windows as the principal was still prepared to deal with it.
[34]Exhibit JBT-11 to Mr Bowers-Taylor’s second affidavit.
In his affidavit, Ming He (aka Tony) Wang (‘Mr Wang’) states he is a director of BT Windows. Referring to Mr Bowers-Taylor’s affidavits and exhibits, Mr Wang states that where Mr Bowers-Taylor has deposed to matters and referred to and exhibited documents on the basis of information from himself, that he confirms those matters to be true and correct and the documents referred to and exhibited to be true copies. Mr Wang further deposes that to the extent he is able, he verifies Mr Bowers-Taylor’s affidavits.
Conclusion
Based on the foregoing analysis, despite the volume of evidence put up by Sceam in support of its alleged disputes and claims, I consider that the position being contended by Sceam to be spurious, not bona fide and is not consistent with the communications taking place between the parties and the principal at the time of the subject transactions.
There is no explanation as to why Sceam, throughout the timeline of the project at the site, rather than make formal complaint about the matters now the subject of its alleged disputes and claims when such disputes and claims were allegedly arising, instead proffered excuses as to why payment had not been made. Sceam’s site foreman, Shelden Fredricks (‘Mr Fredricks’) is said by Mr Allen to have telephoned BT Windows ‘twice a day for six months’ (i.e. over 300 times) and made complaints about the disputes and issues on site but Mr Fredricks has not filed an affidavit in the proceeding.
The evidence of the email and text communications between the parties shows rather that BT Windows was pressing for payment. Such requests were met with excuses and promises by Sceam. In my view, the absence of any evidence of any complaint made in contemporaneous communications by Sceam, and Sceam’s failure to address BT Windows’ evidence in respect of Sceam’s promises to pay in particular has led me to the conclusion that the position put up by Sceam, which bears the onus of establishing it has genuine disputes and claims, is not genuine, is implausible and ought not to be accepted.
The application should be dismissed.
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