Swansea Landholdings Pty Ltd v Doepel Marsh Architects Pty Ltd - [2009] WASC 258

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: SWANSEA LANDHOLDINGS PTY LTD -v- DOEPEL MARSH ARCHITECTS PTY LTD [2009] WASC 258

CORAM: MASTER SANDERSON

HEARD: 10 AUGUST 2009

DELIVERED : 10 AUGUST 2009

PUBLISHED : 11 SEPTEMBER 2009

FILE NO/S: COR 90 of 2009

BETWEEN: SWANSEA LANDHOLDINGS PTY LTD (ACN 126 211 087)
Plaintiff
AND
DOEPEL MARSH ARCHITECTS PTY LTD (ACN 074 282 358)
Defendant

FILE NO/S :COR 91 of 2009

BETWEEN :DESKSTAR PTY LTD (ACN 096 936 766)
Plaintiff
AND
DOEPEL MARSH ARCHITECTS PTY LTD (ACN 074 282 358)
Defendant

FILE NO/S :COR 92 of 2009

BETWEEN :WARRIGAL DEVELOPMENTS PTY LTD (ACN 083 378 965)
Plaintiff
AND
DOEPEL MARSH ARCHITECTS PTY LTD (ACN 074 282 358)
Defendant

FILE NO/S :COR 93 of 2009

BETWEEN :CALMBAY INVESTMENTS PTY LTD (ACN 077 190 722)
Plaintiff
AND
DOEPEL MARSH ARCHITECTS PTY LTD (ACN 074 282 358)
Defendant

FILE NO/S :COR 94 of 2009

BETWEEN :CORIO INVESTMENTS PTY LTD (ACN 108 421 987)
Plaintiff
AND
DOEPEL MARSH ARCHITECTS PTY LTD (ACN 074 282 358)
Defendant

Catchwords:

Corporations law - Costs on setting aside statutory demand - Turns on own facts

Legislation:

Nil

Result:

Defendants to pay plaintiffs' costs of the applications

Category: B

Representation:

COR 90 of 2009

Counsel:

Plaintiff: Mr D B Shaw
Defendant: Mr P A Dewar

Solicitors:

Plaintiff: DLA Phillips Fox
Defendant: Summers Legal

COR 91 of 2009

Counsel:

Plaintiff: Mr D B Shaw
Defendant: Mr P A Dewar

Solicitors:

Plaintiff: DLA Phillips Fox
Defendant: Summers Legal

COR 92 of 2009

Counsel:

Plaintiff: Mr D B Shaw
Defendant: Mr P A Dewar

Solicitors:

Plaintiff: DLA Phillips Fox
Defendant: Summers Legal

COR 93 of 2009

Counsel:

Plaintiff: Mr D B Shaw
Defendant: Mr P A Dewar

Solicitors:

Plaintiff: DLA Phillips Fox
Defendant: Summers Legal

COR 94 of 2009

Counsel:

Plaintiff: Mr D B Shaw
Defendant: Mr P A Dewar

Solicitors:

Plaintiff: DLA Phillips Fox
Defendant: Summers Legal

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

Nil

MASTER SANDERSON: On 15 May 2009 the plaintiffs in each application applied to set aside statutory demands served by the defendant. When the matter came on for hearing on 28 May 2009 the defendant consented to the demands being set aside. The remaining question was as to costs. The plaintiffs sought to have the defendant pay their costs. The defendant sought either to have each plaintiff pay its costs or for there to be no order as to costs. On 10 August 2009 I heard argument on the costs question. I ordered that the defendant pay the plaintiff's costs in each application. I indicated that I would publish short reasons for making those orders. These are those reasons.
What follows is taken from the evidence filed in COR 90 of 2009.
In support of its application to set aside the statutory demands, the plaintiff relied upon an affidavit of Dale Howard Deeks sworn 14 May 2009. Mr Deeks is a director of the plaintiff and a registered builder. Mr Deeks says he is the project manager of a development on a property in the suburb of Martin which, for the purposes of his affidavit, he defines as 'the Property'. As is clear from its name, the defendant is a firm of architects. At all relevant times they were represented in discussions with Mr Deeks by Kimbal Wayne Doepel. It would appear that from time to time, over a period of 20 years, Mr Deeks and Mr Doepel have cooperated in various developments.
Shortly after purchasing the Property Mr Deeks had a meeting with Mr Doepel. Discussions took place during the course of which Mr Deeks asked Mr Doepel for assistance in attempting to obtain a development approval from the local council. Consequent upon this discussion, on 23 May 2007 and 28 November 2007 Mr Doepel provided draft sketch plans for the Property.
On 21 February 2008 Mr Deeks received an email from one Janine Marsh of the defendant. That email, which appears as annexure DHD4 to Mr Deeks' affidavit, refers to the development and proposes a fee. Mr Deeks says upon receipt of the letter he telephoned Mr Doepel saying that the proposed fee was too high. It would appear no agreement was reached as to what an appropriate fee might be but it is clear that Mr Deeks still regarded Mr Doepel and the defendant as involved with the development of the Property.
On 5 March 2008 Mr Doepel provided Mr Deeks with a copy of architectural plans for the Property which went into greater detail than the previous plans provided. On 30 April 2008 Mr Deeks and Mr Doepel met at the defendant's office. According to Mr Deeks, development of the Property was again discussed. Mr Deeks said that, among other things, the defendant's fees were mentioned. He says no agreement was reached in relation to these fees.
On 26 May 2008 a further meeting took place between Mr Deeks and Mr Doepel at the defendant's offices. At this meeting Mr Doepel showed Mr Deeks a copy of the most recent architectural plans for the Property. There was apparently no discussion as to the fees. However, on 27 May 2008 the defendant rendered certain invoices in respect of fees for preparing the architectural designs.
Mr Deeks says that between 27 May 2008 and 16 June 2008 he was overseas. On 20 June 2008 he again met with Mr Doepel at the defendant's offices. In par 27 of his affidavit, Mr Deeks sets out some of this discussion. Part of what is said to be a quote from the conversation between Mr Deeks and Mr Doepel relates to Mr Doepel's need for funds to settle a share purchase. Presumably this information is included to in some way suggest that the motivation for issuing the invoices which form the subject of the demand was Mr Doepel's need for funds rather than any legitimate claim for payment for work done by the defendant. If that is the purpose of the evidence it can be put to one side as irrelevant.
Mr Deeks says that sometime after 20 June 2008 he received calls from Janine Marsh requesting payment of the invoices. On or about 4 July 2008 the plaintiff paid the defendant $200,000 in part satisfaction of the defendant's claims.
On 4 July 2008 the plaintiff received from the defendant further invoices dated 1 July 2008. These invoices appear as annexure DHD8 to Mr Deeks' affidavit. The invoices make it plain that the accounts were based upon a fee structure initially proposed by Mr Doepel when Mr Deeks first asked for the defendant's assistance. It is to be remembered that at that time Mr Deeks says that he advised Mr Doepel that such a fee structure was not acceptable. It would appear the defendant has proceeded on the basis that the fee structure initially proposed was agreed between the parties.
A further meeting took place on 17 September 2008 between Mr Doepel and Mr Deeks. Mr Deeks says at that meeting he indicated that no further payment would be made by the plaintiff to the defendant. Mr Deeks says he told Mr Doepel that the work undertaken by the defendant was of limited value and, in any event, the structure of the fees had not been agreed. From that time on the defendant has undertaken no further work on the Property. The plaintiff claimed there was a genuine dispute as to the debt the subject of the demand.
It will be seen from the above that central to the plaintiff's case is the alleged failure of the plaintiff and the defendant to agree on a fee structure for the work undertaken by the defendant. It can be accepted for the purposes of this application that the plaintiff accepts the defendant was entitled to some payment for the work that it did. That necessarily follows from the fact that the plaintiff paid the defendant $200,000. But the thrust of Mr Deeks' evidence is that there was no firm agreement as to the basis of the defendant's remuneration.
In opposition to the plaintiff's application the defendant filed a number of lengthy affidavits. In particular, the defendant filed an affidavit of Mr Doepel sworn 29 June 2009. Without going to that affidavit in detail, it is sufficient if I note that, between pars 111 and 115, Mr Doepel takes issue with Mr Deeks as to whether or not the fee structure was agreed. Mr Doepel denies the conversation outlined by Mr Deeks ever took place. He goes on to say he would not have allowed the defendant to undertake work in relation to the Property without the fee structure being agreed. In other words, Mr Doepel joins issue with Mr Deeks on the question which underpins the plaintiff's application.
Clearly those advising the defendant on sober reflection realised there was a genuine dispute on this key issue. Wisely they decided not to proceed to a full hearing. But it was submitted that, for a number of reasons, costs of the application should not follow the event.
The first submission put on behalf of the defendant was that the affidavit of Mr Deeks lacked credibility and ought be given no weight. With respect, it is logically inconsistent to concede the demand ought be set aside and to say that Mr Deeks' affidavit should be given no weight. In my view, Mr Deeks' affidavit sets out the plaintiff's position with admirable clarity. That is not to say that in the end the dispute may not be resolved in the defendant's favour. But for the purposes of setting aside a statutory demand there can be no doubt that Mr Deeks' affidavit discharges the plaintiff's evidentiary obligations.
The second submission put on behalf of the defendant is that until the affidavit of Mr Deeks was received, the defendant had no idea that the plaintiff disputed the debt. That being so, the issue of a statutory demand was both reasonable and proper. The defendant says in the circumstances it was reasonable to assume that the plaintiff may have been in financial difficulty and the use of the statutory demand procedure was not an abuse of process. It must be acknowledged that the defendant's submissions on this point carry a certain weight. However, the position is not clear cut. There was for instance no written contract which clearly showed the fees the defendant was to charge the plaintiff so there could be no dispute as to quantum. That in itself should have raised the question as to whether the statutory demand procedure was appropriate. Further, the correspondence makes it plain the defendant foreshadowed a dispute as to the fees. By way of example, appearing as annexure KWD29 to Mr Doepel's affidavit is a letter of 4 September 2008 directed to the defendant dealing in the main with fees. The defendant provided a response on 11 September 2008. That letter is annexure KWD30 to Mr Doepel's affidavit. Reading that correspondence, it is plain there was always going to be a dispute about the defendant's fees.
A party who decides to use the statutory demand procedure takes a risk. The greater the likelihood of a dispute as to fees the greater the risk. Here the risk should have been apparent; but the risk was taken. That being so, and the demand having been set aside, the consequence is that the defendant is liable for the plaintiff's costs.
It was for these reasons that I made the costs order.