Temcove Pty Ltd v R and C Drainage Solutions Pty Ltd
[2012] QDC 301
•17 April 2012
DISTRICT COURT OF QUEENSLAND
CITATION:
Temcove Pty Ltd v R & C Drainage Solutions Pty Ltd & Anor [2012] QDC 301
PARTIES:
TEMCOVE PTY LTD ACN 010 855 77
(Plaintiff)AND
R & C DRAINAGE SOLUTIONS PTY LTD ACN 118 897 840
(First defendant)AND
RAYMOND ANGRAVE MUSGROVE AND ZENAIDA MUSGROVE
(Second defendant)FILE NO/S:
BD948/09
DIVISION:
Civil
PROCEEDING:
Trial
ORIGINATING COURT:
District Court, Brisbane
DELIVERED ON:
17 April 2012
DELIVERED AT:
Brisbane
HEARING DATE:
19 and 20 March 2012
JUDGE:
Reid DCJ
ORDER:
(1) The first defendant be liable to the plaintiff in the sum of $25,586 inclusive of GST and interest.
(2) The first and second defendants be jointly liable to the plaintiff for the further sum of $77,189 inclusive of GST and interest.
(3) There be judgment for the plaintiff against the first defendant in the sum of $109,681 and against the second defendant in the sum of $77,189.
(4) The first defendant be entitled to indemnity from the second defendant with respect to any sum in excess of $95,844.42, which it may pay to the plaintiff.
(5) The defendants pay the plaintiff’s costs of and incidental to the action to be agreed or, failing agreement, to be assessed.
(6) The parties have liberty to apply upon the giving of five days’ notice in writing to the other, which notice is sufficiently given if written notice is provided to the parties’ current solicitors or to any other solicitors who may be duly appointed to act on their behalf.
(7) There be no order as to the costs of proceedings between the defendants.
CATCHWORDS:
Contract variation – Money owing – Joint liability – Claims between defendants – Liability to indemnify – Subcontractors
COUNSEL:
P. White for the Plaintiff
D. Topp for the First Defendant
SOLICITORS:
A. Burrows of ABA Lawyers for the Plaintiff
M. Guest of Macfie Curlewis Spiro Lawyers for the First Defendant
C.I. Newport of Burns Law for the Second Defendant
This claim
In this matter the plaintiff seeks $84,095 inclusive of GST from the first defendant and/or the second defendant. In the alternative it seeks $22,650 plus GST from the first defendant and $53,800 plus GST from the second defendant. It also seeks interest on the said sums at 10% per annum.
Both defendants deny liability, although neither denies the plaintiff’s entitlement to damages from one or the other of the defendants.
Background
The plaintiff is a company operated by Lyle Johnson, an experienced driller and contractor. On 20 November 2008 it contracted with the second defendant to perform work using a directional drill. Backcutters to widen the drill hole to allow pipes to be winched into position were then to be utilised and clearing of the boreholes was also required. Mr Johnson said he provided an oral quotation to Mr Collier on behalf of the second defendant in respect of each of those items of work. I accept that he did so, in circumstances where his evidence about this was not challenged in cross‑examination.
Pursuant to that contract, the plaintiff company commenced work on the site on 2 December 2008. Mr Johnson and two employees, Sean Kenny and one called Steve and known as “Kiwi”, worked there, although it seems that Mr Kenny may more regularly have been on the site than Kiwi. A dispute arose involving the evidence of Mr Collier and a Mr Meredith, who worked for the first defendant, about the extent Mr Johnson was on the site. I accept Mr Johnson’s evidence that he would was there on a daily basis.
In addition to the directional drill, which is a large piece of equipment about five metres in length, and associated drilling equipment, the plaintiff utilised a large truck which pumped drilling fluid, which I gather is largely water, into the drill hole. Mr Johnson said, and I accept, that the truck had the name of the plaintiff company clearly displayed on signage on both doors. This was thought by the parties at the trial to be of some importance because of assertions made in evidence on behalf of the first defendant that its employees did not realise until very late in the piece that the plaintiff company was a subcontractor of the first defendant. Mr Wylie on behalf of the first defendant said that he believed Mr Kenny and Mr Johnson were employees of the second defendant. Be that as it may, it does not seem to me that anything turns on this issue. Insofar as it does, I accept the evidence of Mr Johnson that as a result of discussions between he and Mr Wylie and Mr Meredith, and because of the clearly marked truck, Mr Johnson would, soon after the commencement of the plaintiff company’s working on the site on 2 December, have become aware that the use of the directional drill was through a subcontractor to the second defendant.
The contract with the plaintiff was arranged on behalf of the second defendant by Mr Collier. He was present on site throughout the time the plaintiff worked there, up to 20 January 2009. Mr Meredith, the site manager of the first defendant, was also on site throughout that time. Mr Wylie, who was a director of the first defendant, was there about once per week in December 2008, but was there more or less continually throughout most of January 2009.
Work progressed up until 20 January 2009. On that day there was a dispute between Mr Wylie and Mr Collier. It is not clear what this was about. Mr Wylie says it concerned the fact that a drill hole of insufficient size had been drilled, so that it was not possible to winch the pipes through the hole. Mr Collier said that it was because the second defendant had not been paid the amount of outstanding invoices by the first defendant. Ultimately, the cause of the dispute does not particularly matter. It may be there was some truth in both assertions, although I note that no accounts from the second defendant to the first defendant prior to that date were put into evidence, and there were no letters or emails chasing money then, as might have been expected, put into evidence.
The result of the discussion was that Mr Collier left the site shortly before midnight on the night of 20 January 2009, and at about the end of work for that day. He did not return to work at the site thereafter. Although Mr Wylie said he did not understand Mr Collier to be permanently walking off the job, I reject his evidence in that regard. I find that Mr Collier resolved on that day to abandon work on the site.
Mr Johnson said that Mr Collier told him, at a time Mr Wylie was standing nearby, that “He [Wylie] can stick his job up his arse. I don’t care what you do or what happens to the job.”
Although Mr Johnson said he was not sure if Mr Wylie heard this conversation, I infer that on 20 January Mr Wylie knew that Mr Collier was leaving the site and not returning. It is likely, because of his proximity, that he did hear the conversation. Furthermore, Mr Johnson says that shortly thereafter and on the night of the 20th, he spoke to Mr Wylie and said, “We” [the plaintiff] would have to also go “as we worked for [the second defendant].” Mr Johnson says that in response Mr Wylie asked him to stay and to complete the job. In my view, that request, which I find Mr Wylie made, is only consistent with a view that Mr Wylie had that Mr Collier had permanently left the site. Mr Johnson said that Mr Wylie said to him, and I accept, that he should send “the invoices for the whole job to him and that he would pay the plaintiff for the whole job.”
In giving evidence, Mr Wylie said on that night that he was keen to have the plaintiff complete the job and wanted him to stay to do it. Mr Meredith said the work was essential.
That evidence of the agreement with Mr Johnson is, in my view, inconsistent with Mr Wylie’s assertion that he did not realise Mr Collier was effectively abandoning the job.
I accept Mr Johnson’s evidence about the events of 20 January and accept that Mr Wylie:
(i) asked him to stay to complete the job;
(ii) told him to send invoices for the whole of the job to the first defendant; and
(iii) told him that the first defendant would pay the plaintiff for the whole of the job.
In so finding, I indicate that I found Mr Johnson to be an honest and straightforward witness with a reasonably good recollection of the events. By comparison, Mr Wylie was vague and uncertain, and in respect of the events of 20 January I found his evidence unreliable in comparison to Mr Johnson. I shall return to this matter later, for it is relevant to subsequent events.
In reliance on the arrangement Mr Johnson had made with Mr Wylie, the plaintiff continued to work at the site until 24 January 2009. Over the period from 21 to 24 January the plaintiff performed a significant amount of work with the backcutter, which it seems is relatively expensive. I shall refer to this later when dealing with invoices to cover the period up to and including 20 January 2009, and for the period thereafter.
I interpose here that the work was performed at night, and when witnesses speak of events of a particular day, or an invoice refers to work done on a particular day, it refers to the work performed on the night commencing on that date; for example, references to work of 16 January 2009 might refer to work done both on the night of 16 January and the early morning of 17 January.
The work to be performed by the plaintiff was completed on 24 January 2009, not long after Mr Collier had left.
Despite having performed the work and despite the fact that there was no complaint about the quality of the work or the charges that the plaintiff has made, the plaintiff has nevertheless been paid nothing by either defendant. It cannot be disputed that the plaintiff is entitled to the sum of $84,095, as it claims in invoices to which I shall shortly refer, by one or both of the defendants.
It is in that circumstance extraordinary that this matter has had to proceed to trial for the plaintiff to recover the $84,095 inclusive of GST that it is owed. The cost of the litigation will undoubtedly be significant and I am amazed that a more practical approach to resolution of the mater has not been arrived at. This is not of course a criticism of the plaintiff or its legal advisers. It is clear that it is entitled to the sum charged, together with interest and costs. The question which must be determined is which defendant is liable; or indeed, whether both may be liable for some or all of the contracted sum.
On 26 January 2009 the second defendant sent a facsimile to the first defendant. It dealt with a number of matters, but in respect of this job said:
“I will inform R & C Drainage of our agreed rate of $2,000 per day on day rate and will let them know you will be invoicing them direct. Rob Wylie’s phone number is 07 3393 5212, mob 0498 888 033, email [email protected].”
In my view, the second defendant’s providing those contact details for Mr Wylie and the indication that he would inform the first defendant of the agreed daily rate, and that the plaintiff would be invoicing them direct, is consistent with the agreement which had been reached between the plaintiff and the first defendant, and indicated the second defendant’s then agreement to that approach. In my view, the conduct of Mr Collier in writing that email was consistent with an understanding that the plaintiff was then to deal directly with the first defendant.
It does not, however, entirely resolve the question of whether that dealing was with respect to work performed after 20 January 2009 or for the whole of the plaintiff’s work on site from 2 December 2008.
I add that the reference to the daily rate of $2,000 covered only part of the agreed rates between the plaintiff and the second defendant. I accept the evidence of Mr Johnson that in addition to the quoted price of $2,000 per day for exploratory works the second defendant had agreed to pay $200 per metre for use of the 450 mm backcutter, $250 per metre for use of the 600 mm backcutter, and $150 per metre to clean out 450 mm holes. I reject Mr Collier’s assertions to the contrary.
I accept the evidence of Mr Johnson that in a phone call of 20 November 2008 Mr Collier had accepted these prices given to him by Mr Johnson earlier that day in a meeting at the plaintiff’s Caboolture office. I find that it was also agreed on that day that the plaintiff would invoice the second defendant for works performed pursuant to the contract on completion of the work.
On Mr Johnson’s understanding as a result of the conversation of 20 January 2009 and the email of 26 January 2009 that the first defendant was to pay the plaintiff directly for all of the work the plaintiff had performed, it sent to the first defendant an invoice of 4 February 2009 in the sum of $84,095 inclusive of GST (Exhibit 2). I accept that the sum claimed in the said invoice was calculated in accordance with the agreed rates I have earlier referred to. Attached to that invoice was a worksheet setting out details of the account. It appears from that invoice that up to and including 20 January the plaintiff had performed work pursuant to its contract with the second defendant in the sum of $59,180 (being $53,800 plus GST) and that on 22 and 24 January 2009 it did work to the value of $24,915, being $22,650 plus GST. This work involved the use of the backcutting machines.
The second defendant had, as I have found, left the site on 20 January 2009. Thereafter, any work performed was done under the agreement between Mr Johnson of the plaintiff and Mr Wylie of the first defendant, formed hurriedly late on 20 January 2009, and immediately after Mr Collier abandoned the site and when Mr Wylie, according to his own evidence and that of Mr Meredith and Mr Johnson, was very keen to keep Mr Johnson working on the job. Accordingly, it seems to me that the first defendant alone is responsible for that sum of $24,915.
A question remains about the balance of the $59,180. In my view the arrangement reached, hurriedly, on 20 January does not discharge the second defendant from its liability to the plaintiff. Rather, the effect of the arrangement was that both the first defendant and the second defendant became jointly liable for this sum. The question of how that liability is to be discharged depends on subsequent arrangements between the defendants. In the circumstances, I therefore find that the plaintiff is entitled to recover the whole of the sum of $84,095, together with interest at 10% per annum from the first defendant. Interest from the date of the invoice, namely 4 February 2009 to date, 13 April 2012, would amount to $23.03 per day. Over the period of 1,135 days, this amounts to some $26,139. I find therefore that the defendant is liable to the plaintiff for $110,234 inclusive of GST and interest.
The second defendant is also jointly liable to the plaintiff for a lesser principal sum of $59,180 (being $84,095 less the $24,915 for work done after 20 January 2009). Interest thereon at 10% per annum amounts to $16.21 per day, and I would calculate interest over the 1,135 days at $18,398. The second defendant is therefore jointly liable to the plaintiff for $77,578 inclusive of GST and interest.
It is of course the case that the plaintiff is not entitled to recover, in all, any sum in excess of $110,234. Of that sum, the second defendant is liable jointly with the first defendant for $77,578.
Proceedings between defendants
Following completion of the job on 24 January 2009, discussions continued between the parties. Initially, I find it was the intention of Mr Wylie to pay the plaintiff the money owed to him directly and to adjust the amount the second defendant was to receive from the first defendant. As can be seen from Exhibit 1, to which I have already referred, Mr Collier initially agreed with this approach. I accept the evidence of Mr Wylie that Mr Collier subsequently told Mr Wylie not to do so and persuaded Mr Wylie to instead arrange for payment to the second defendant on the understanding, false though it may have been, that the second defendant would pay the plaintiff.
The plaintiff quickly realised he would have to pursue his right to payment and engaged solicitors. In reliance on the conversations between Mr Johnson and Mr Wylie of 20 January 2009 those solicitors initially sought payment from the first defendant, consistent with the invoice the plaintiff had delivered of 4 February 2009, being Exhibit 2. On 24 February 2009, the plaintiff’s solicitors wrote to the first defendant (Exhibit 3). In that letter, the solicitors said, inter alia:
“We understand from speaking to a director of our client’s company, Mr Lyle Johnstone, you yourselves do not have any particular difficulty with the quantum of the invoice nor the works performed but are concerned at making a direct payment to our client. We understand that Mr Collier may have asked you to direct our client’s payment to him in which circumstances our client believes it will not be paid.”
The letter then sets out difficulties the plaintiff had in locating and dealing with Mr Collier.
A further solicitor’s letter of 13 March 2009 was also sent to the first defendant (Exhibit 4). It said in part:
“We are instructed by a director of our client company, Mr L Johnson, that he spoke to yourself directly regarding the matter and there was an indication given to our client’s representative by yourselves that the debt due to our client would not be paid unless proceedings were filed.”
The letter then continued by asking the first defendant to reconsider the position because of the significant costs that would be associated with litigating the matter in a court.
In mid‑2008, the first defendant had contracted with Christopher Constructions Pty Ltd to perform work on the site. Subsequently, the first defendant subcontracted some of that work to the second defendant, which in turn engaged the plaintiff.
On 10 February 2009, the second defendant had delivered an invoice No. 0510 to the first defendant (Exhibit 6). The invoice was for some $256,784.18. He included work which Mr Johnson identified had been performed by the plaintiff. He marked Exhibit 6 to show what work the plaintiff had done. It covered all but the first three items on p 1 of the invoice and all but the first and last three items on p 2. In all, the charge for work the plaintiff had performed amounted to some $216,653.19 and, importantly, included work performed between 20 and 24 January 2009, after the second defendant had abandoned the work at the site.
Mr Wylie dismissed the claim in the invoice as unrealistic. I accept that it did not accord with what the first defendant had agreed the second defendant was to have charged. As a result, a meeting was arranged between Christopher Constructions Pty Ltd, represented by Mr Fallon, the first defendant, represented by Mr Wylie, and the second defendant, represented by Mr Collier. The meeting took place on 16 February 2009. At the meeting it was resolved that the amount the second defendant was entitled to charge the first defendant (on the assumption, which I find to be false, that it was entitled to bill the first defendant for all work performed by the plaintiff, including the second defendant’s mark-up on that work) was some $172,876. In addition, the further sum of $5,203.99 was agreed to be owing from the first defendant to the second defendant with respect to other jobs the second defendant had done for the first defendant. The agreed total of $178,079.99 was then made the subject of an invoice of that same date, 16 February 2009, from the second defendant to the plaintiff. That invoice was Exhibit 11 before me.
Despite the agreement, which I have found Mr Wylie on behalf of the first defendant made with the plaintiff to pay all of its invoices directly if it finished the job, which it subsequently did, the first defendant agreed with the second defendant, and without consultation with the plaintiff or with Mr Johnson, to pay the second defendant as per the invoice.
It had earlier been anticipated by Mr Wylie that Mr Collier would agree to the second defendant paying the plaintiff directly. He said in evidence before me that he was surprised Mr Collier did not agree to the proposal for the plaintiff to be paid directly. Mr Collier did so, I infer, because he wished the money to be paid to the second defendant because of a fear that it might otherwise not be paid the margin on the job it had performed for the first defendant, or because he wanted the whole of the money to be paid to the second defendant so that it could have the use of it without paying the plaintiff. Which of these possibilities motivated Mr Collier is unknown to me.
In any case, it was at that meeting of 16 February agreed between Christopher Constructions Pty Ltd and the defendants that the second defendant was entitled to payment from the first defendant in the sum of $178,079.99 in accordance with a subsequent invoice, being Exhibit 11. As I have said, the sum included the amount of $5,203.99 with respect to another job the second defendant had done for the first defendant. It was also agreed that an invoice in that sum should be delivered, and this resulted in the production and delivery of Exhibit 11 dated 16 February 2009, which was the day of the meeting.
It is clear that this invoice and an earlier one from the second defendant, being Exhibit 6, included all work done by the plaintiff, including the work up to 24 January and after 20 January, which I have found the plaintiff was not entitled to recover from the second defendant.
At that meeting of 16 February, it was also agreed that Christopher Constructions Pty Ltd would pay to the second defendant directly the sum of $104,860. That sum was the amount of the final payment due by Christopher Constructions Pty Ltd to the first defendant after payment of a sum of $175,494 to the first defendant on that same day (see Exhibit 16). The motivation behind the agreement to pay the first defendant directly appears to have been a belief by Mr Fallon, a manager of Christopher Constructions Pty Ltd, that such an arrangement would be most likely to result in payment of the plaintiff’s account, for it required Mr Collier to enter into a deed of release and a statutory declaration certifying, inter alia, that all subcontractors had been paid. The statutory declaration forms part of Exhibit 5 before me, but I have not been provided with a copy of the deed of release. In any case, the completion of such documents was a normal part of the administration of building contracts and was an indication, that I am sure Mr Collier would have been aware of, that the job was then complete. Despite Mr Fallon’s best intentions, Mr Collier, it seems to me, falsely signed the statutory declaration and did not ensure that the plaintiff had been paid.
The evidence of Mr Wylie, Mr Meredith and Mr Collier, together with the notations to Exhibit 5 and the content of Exhibit 16, all cause me to conclude that a sum of $104,860 was paid directly by Christopher Constructions Pty Ltd to the second defendant in partial discharge of the invoice for $178,079.99, being Exhibit 11 before me. The balance of $73,479.99 ($178,079.99 less $104,860) is still owing by the first defendant to the second defendant.
It seems from the evidence of Mr Wylie that he asserts the first defendant is entitled to have offset:
(i) $19,000 against the cost of pipe casings provided by the first defendant to the second defendant; and
(ii) $11,000 against the second defendant’s use of the plaintiff’s credit accounts with respect to other jobs.
Such matters were not, however, the subject of any pleading before me, and were substantially denied by Mr Collier, although he did admit the second defendant had a number of pipe casings of the first defendant and did buy some goods on the first defendant’s account but said the goods were refunded and credited to the first defendant’s account. I find the evidence of Mr Collier to be unreliable, but do not think I am, having regard to the pleadings and the evidence, able to make any conclusions about that issue.
In evidence before me, Mr Wylie said he understood that there was some $42,000 still owing, but having regard to the matters I have referred to, I find the correct calculation may be $73,479.99.
In proceedings between the first defendant and the second defendant, the first defendant seeks indemnity from the second defendant for any sum the first defendant may be required to pay to the plaintiff. I have already found that the plaintiff was entitled to recover from the first defendant the sum of $109,681 inclusive of GST and interest. In signing the statutory declaration that I have referred to, Mr Collier was in my opinion quite deceitful. He knew the plaintiff had not then been paid, yet indicated that all subcontractors had been paid. Before me, his solicitor argued that he was entitled to execute the document because the plaintiff, after 20 January 2009 and because of the agreement between the plaintiff and the first defendant, was no longer a subcontractor of the second defendant.
There might have been some force in such a submission if the second defendant had not sought and recovered, at least in part, payment of the work done by the plaintiff in its invoice of 16 February 2009 for $178,079.99. In fact, as I have found, that invoice however covers work that the plaintiff performed, even work up to 24 January and after the second defendant left the site on 20 January 2009. I reject any suggestion that the sum did not include this further work performed by the plaintiff, or that it related only to the second defendant’s margin on the work, although an earlier invoice for some $276,000 had, as I have said, been delivered (Exhibit 6), and the final sum agreed was much reduced. I accept the evidence of Mr Wylie that the invoice, being Exhibit 6, was not in conformity with any agreement between the first defendant and the second defendant, and was false and fanciful. While I was not impressed by Mr Wylie’s vagueness, I generally did not think him dishonest, a position to be contrasted with Mr Collier, whose testimony I reject. I thought him dishonest in much of his dealings with the parties and generally reject the evidence he gave.
The result therefore is that the first defendant should be entitled to recover indemnity from the second defendant for any sum in excess of $73,479.99, and interest thereon (amounting to $20.13 per day), which it might pay to the plaintiff. The interest I have calculated at 10% per annum for 1,135 days amounts to $22,847. In the event that the first defendant pays the plaintiff a total judgment debt of $110,234, it would therefore be entitled to recover $13,907 from the second defendant ($110,234 less $96,326.99, comprising $73,479.99 plus $22,847 interest).
The second defendant had brought no claim for similar recovery from the first defendant. If it paid the whole of its judgment debt to the plaintiff of some $77,578, it would of course be entitled to indemnity from the first defendant for that sum, since the first defendant is liable to pay $96,326.99, including interest.
In the circumstances, I will give each defendant leave to apply to me for any consequential orders upon giving five days’ notice in writing to the other party, which notice is sufficiently given if written notice is provided to the parties’ current solicitors, or to any further solicitors notified to be acting. I make that order in order to ensure the parties do not attempt to evade service of such a nature by withdrawing solicitors’ instructions.
The orders I therefore make are:
(1) The first defendant be liable to the plaintiff in the sum of $26,139 inclusive of GST and interest.
(2) The first and second defendants be jointly liable to the plaintiff for the further sum of $77,578 inclusive of GST and interest.
(3) There be judgment for the plaintiff against the first defendant in the sum of $110,234 and against the second defendant in the sum of $77,578.
(4) The first defendant be entitled to indemnity from the second defendant with respect of any sum in excess of $96,326.99, which it may pay to the plaintiff.
(5) The defendants pay the plaintiff’s costs of and incidental to the action to be agreed or, failing agreement, to be assessed.
(6) The parties have liberty to apply upon the giving of five days’ notice in writing to the other, which notice is sufficiently given if written notice is provided to the parties’ current solicitors or to any other solicitors who may be duly appointed to act on their behalf.
With respect to costs of the proceedings between the defendants, the matter is not uncomplicated. It is clear the plaintiff is entitled to recover costs of and incidental to the action against both defendants. The first defendant has recovered at least a partial but small indemnity from the second defendant. In the event that the second defendant satisfies the whole of the plaintiff’s judgment, it too would be entitled to recover monies from the first defendant. Throughout the proceedings the first defendant has retained a sum in excess of $70,000. In evidence Mr Wylie agreed the first defendant was still holding a sum (said to be $42,000) with respect to this job. That admission of Mr Wylie’s that he retained that sum is not apparent on the pleadings. In the circumstances, I find that it would be just that there be no order as to the costs of proceedings between the defendants.
I should add that in my view this matter should have been readily resolved, and the fact that it was not does no credit on either defendant. In circumstances where no party has raised any objection in any way to the plaintiff’s performance of the work, yet neither the first defendant nor the second defendant have made appropriate endeavours to ensure the plaintiff was paid, litigation, expensive as it is, was inevitable. In my view, each defendant is significantly to blame for the fact that this matter has only been able to be resolved as a result of an order of the court.
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