Welink Group Pty Ltd v GJ PD Pty Ltd - [2021] WASC 188

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   WELINK GROUP PTY LTD -v- GJ PD PTY LTD [2021] WASC 188
CORAM:   MASTER SANDERSON
HEARD:   3 MAY 2021
DELIVERED          :   3 MAY 2021
PUBLISHED           :   11 JUNE 2021
FILE NO/S:   CIV 1865 of 2020
BETWEEN:   WELINK GROUP PTY LTD
First Plaintiff

WELINK CONSTRUCTION PTY LTD
Second Plaintiff

AND

GJ PD PTY LTD
First Defendant

THE REGISTRAR OF TITLES
Second Defendant

Catchwords:

Practice and procedure - Application to strike out statement of claim - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category: B

Representation:

Counsel:

First Plaintiff	:	Mr C M Slater
Second Plaintiff	:	Mr C M Slater
First Defendant	:	Mr T J Porter
Second Defendant	:	In person

Solicitors:

First Plaintiff	:	Torrens Legal
Second Plaintiff	:	Torrens Legal
First Defendant	:	Lavan
Second Defendant	:	In person

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

National Australia Bank Ltd v Rowe [2018] WASC 330

MASTER SANDERSON:

This was a pleading summons. The defendants sought to strike out the plaintiffs' statement of claim. After hearing the argument I dismissed the application. I indicated I would publish reasons for my decision. These are those reasons.
Before going to the specific issues raised by the defendants, I should make two general comments. First, it is apparent the statement of claim is not without flaws. The claim itself revolves around a real estate development in Crawley. What seems to have happened is that the plaintiffs as builders and the defendants as developers entered into negotiations which led to the plaintiffs being awarded a contract to construct townhouses on property owned by the defendants. As is often the case in these matters, the parties entered into the negotiations and reached a contractual agreement, without giving any real thought as to precisely what their contractual relationship was. It was then left to the lawyers to sort out the confusion. Clearly there must have been a contract. The question was what the terms of that contract were. Prior to the drafting of the pleading, with respect, the drafter of the statement of claim does not appear to have settled on precisely what the terms of the contract were and how they came to be incorporated in the contract. That has led to confusion.
Second, it is to be noted that the plaintiffs' claim is (at least so far as actions in the Court are concerned) modest. Damages would amount to no more than $500,000. The reason the action is in this Court is because there is an issue as to whether the plaintiffs have a right to lodge caveats over certain property owned by the defendants. Soon after the action was commenced the plaintiffs issued a chamber summons seeking a freezing order in relation to the defendants' assets and an order extending the operation of certain caveats. To forestall interlocutory proceedings the parties entered into consent orders extending the operation of two caveats. There also appears to have been agreement that all issues between the parties should be resolved in this Court.
During the course of his submissions, counsel for the defendants referred to the decision of Vaughan J (as his Honour then was) in National Australia Bank Ltd v Rowe [2018] WASC 330. Counsel referred to this decision in support of a proposition that failures in a pleading should not be countenanced on the basis of case management principles. By extension, counsel submitted that the fact that the amount involved in the claim was modest did not excuse a defective pleading.
As a statement of principle, that is correct. But, as will become apparent from these reasons, the main issue between the parties here are the terms of their contractual relationship. The plaintiffs have put their version - albeit in a somewhat jumbled fashion. The defendants either agree with the plaintiffs' version of the contract or have their own version. If it is the latter ‑ and it is implicit from the approach of the defendants in this matter that that is the case - then it is in everyone's interest to have the defendants' version of the facts set out in the defence. Once that is done, the differences between the parties will crystalise and the matter can be settled or it can proceed to trial. There is little to be gained in a practical sense in allowing endless pleading disputes to run up costs and delay the resolution of the dispute.
Returning then to the amended statement of claim. After identifying the parties, the plaintiffs plead that on or about 3 May 2016, Mr Zhao, on behalf of the first plaintiff, and Mr Wenbiao, on behalf of the first defendant, agreed by signing a letter of engagement that the first defendant would appoint the first plaintiff as its agent to acquire a property in The Avenue, Crawley (Crawley Property). This agreement, according to the pleading, was embodied in the letter of engagement. It appears to have been an agreement separate and apart from other agreements entered into between the parties.
It is then alleged that the same two men acting in the same capacities entered into what is defined as the 'Investment Agreement'. That agreement was wholly in writing and the terms of the agreement are pleaded in par 4 of the amended statement of claim.
By par 5 it is alleged that on the same day, the same two men agreed 'an information memorandum'. There is no attempt to connect these three agreements - if in fact the information memorandum was an agreement.
By par 6 it is pleaded that on or about 31 March 2017, the second plaintiff and the first defendant agreed the second plaintiff would construct five town houses on the Crawley Property. This is defined as the 'the Construction Agreement'. It is said to be wholly in writing and incorporates, by reference, the terms of the Master Builders Association of WA Residential Buildings Works Conditions 2016 edition. Paragraph 7 pleads certain terms and conditions of the construction agreement.
By par 8 it is pleaded that on or about 26 July 2017, St. George Bank (in its capacity as the first defendant's bank), the first defendant and the second plaintiff agreed on certain terms affecting the Construction Agreement and entered into 'the Tripartite Agreement'. That agreement was in writing. Paragraph 9 pleads certain terms of the Tripartite Agreement. Paragraph 9(e) is of particular relevance. That reads as follows:
(e) The parties to the Tripartite Agreement agreed that the Construction Agreement was amended and clarified from the date of the Construction Agreement and not withstanding any provision in the Construction Agreement to the contrary. In particular the clauses of the Construction Agreement that charged the Property with the due payment to the Second Plaintiff and the specific authorisation granted to the Second Plaintiff to lodge a caveat in clause 33 'are deleted': cl 22.5.
Paragraph 10 of the amended statement of claim pleads that, between May 2016 and October 2019, the plaintiff managed the project, was paid certain amounts by the defendant and was owed certain amounts by the defendant. Paragraphs 11 through to 14 plead matters to do with practical completion and the issue of certificates of title for the five dwellings constructed on the land. Paragraphs 15 to 17 detail demands made by the first plaintiff and the second plaintiff against the first defendant for certain sums of money. The claim was not paid. Paragraphs 18 and 19 deal with the caveat issue. Paragraph 18 says the caveats were lodged pursuant to the Construction Agreement and the Tripartite Agreement. No reference is made to particular paragraphs of either Agreement. The prayer for relief, apart from seeking an order that the caveats be maintained, claims damages of just under $500,000.
Attached to the amended statement of claim are Schedules A and B. Schedule A is said to be 'particulars of amounts owing under the investment agreement'. The schedule then lists, inter alia, a number of dates, 'details of invoice', an amount claimed and an amount paid. By way of example entry number 5 has a date of 1 October 2016. The details of the invoice are: 'MCarbone design Crawley design progress payment'. The amount of the claim is said to be $11,000.00 and there has been no indication that the amount has been paid. In contrast, the second entry has a date of 24 May 2016 and the details of the invoice are said to be 'Project Management Stage 1' and shows the amount claimed as $124,252.70 and an amount paid the same as the amount claimed. At the foot of the schedule there is and an amount claimed for $682,834.41 and amount paid of $423,932. The difference is $258,932.40. That is the amount claimed in the prayer for relief.
Schedule B is said to be 'particulars of amount owing under the Construction Agreement'. The format is roughly the same as Schedule A. At the foot of the document it is said that $3,538,257.40 was claimed and an amount of $3,308,662.50 has been paid. The difference is $229,594.90. That is the amount the second plaintiff claims against the first defendant.
The first defendant's complaints are succinctly summarised in counsel's written submissions. Relevantly they are as follows:
20. First, it is not possible to determine, from Schedule A, what invoiced amounts are in issue. Welink Group identifies amounts paid that are not allocated to any particular invoice (see the payments made on 23 and 29 November 2016). There is no way of knowing, for any particular invoice, whether it is alleged to be paid, part paid, or unpaid.
21. Second, it is not possible to determine, for any particular invoice identified in Schedule A, the contractual basis on which it was issued. Some may be for management fees where a relevant milestone was allegedly reached. Some may be for amounts claimed by way of indemnification in connection with the provision of services or for dealings with third parties. But those matters are not pleaded.
22. Third, as to the alleged management fee, at paragraph 10(a) of the ASOC, Welink Group pleads that it is owed the management fee calculated as 9% of the construction cost which by 3 October 2019 was $3,538,257.40. This amounts to a total claim of $318,443.16. If the amount is payable in three stages (each being 3% of the construction cost), this amounts to a claim for three payments of $106,147.72 each. There is no claim for an amount of $318,443, or three claims of $106,147 each.
23.More fundamentally, a claim for a management fee would need to plead the relevant 'construction cost' that existed and by reference to which the management fee was calculated. It would need to plead, in accordance with the term pleaded at paragraph 4(c) of the ASOC, that a relevant 'milestone' had been achieved. Welink Group has not anywhere pleaded these material facts.
24.Fourth, as to the alleged indemnity, Welink Group must plead material facts capable of establishing, for each amount claimed that it had incurred a liability, the liability was reasonably incurred, and the liability arose out of, or in connection with, 'the provision of services' or 'dealing with third parties'. Welink Group does not plead these matters.
25.Fifth (and relatedly), the manner in which Welink Group has described all of the invoices in Schedule A is vague. Descriptions like 'City of Perth', 'Water' and 'Synergy' do nothing to properly identify Welink Group's case.
…
29.At prayer for relief D of the ASOC, Welink Construction claims the amount of $229,594.90, as an amount due and payable. At prayer for relief E, Welink Construction claims, further or alternatively to D, 'damages pursuant to the Construction Agreement'.
30.At paragraph 6 of the ASOC, the plaintiffs plead the existence of the Construction Agreement. At paragraph 7, the plaintiffs plead various terms of that agreement, most of which have no apparent connection to any claim. Relevantly, at paragraph 7(b), the plaintiffs allege that it was an express term of the Construction Agreement that GJ PD would pay Welink Construction a Contract Sum of $3,393,500 'as adjusted in accordance with the Construction Agreement'.
31. At paragraph 10(b) of the ASOC, Welink Construction alleges that (i) it built the Project on the Property in accordance with the Construction Agreement, (ii) it rendered and was owed invoices in accordance with the Construction Agreement and the Tripartite Agreement, (iii) it received payment of some of the invoices it rendered, and (iv) 'as particularised on the dates, in relation to the details and for the amounts set out in the schedule marked B'.
32.The schedule marked 'B' is titled 'Particulars of Amounts Owing Under the Construction Agreement'. It is apparent on the face of the schedule that most of the amounts identified are alleged to have been paid. The total amount claimed is the sum of three invoices:
(a) Invoice 103 dated 11 September 2018 in the amount of $253;
(b)Invoice 1602-16 dated 31 July 2019 in the amount of $144,504.40.
(c) Invoice 1602-17 dated 3 October 2019 in the amount of $84,837.50.
33.At paragraph 16 of the ASOC is it alleged that the solicitors for Welink Construction demanded payment of $229,341.90 (a different amount to what is now claimed).
34. At paragraph 17 of the ASOC it is alleged that GJ PD breached the Construction Agreement by failing to pay the amount demanded. This allegation of breach is rolled up with an allegation that the Investment Agreement was breached.
It is clear from these submissions that the first defendant is alleging that the plaintiffs have not adequately pleaded the terms of the contractual relationship between parties. This is the point I alluded to above. But the pleading does disclose in broad terms what the plaintiffs say the terms of the contract are. If the first defendant intends to allege that the plaintiffs are wrong and there are other terms and conditions, or no terms in relation to certain matters were agreed, then that is something that can be put in the defence. I accept approaching the matter in this way really requires the defendant to set out its version of the contract rather than allowing the first defendant to simply deny parts of the statement of claim and offer some alternatives. But in the context of this case that is a better way to crystallise the issues between the parties rather than requiring another version of the statement of claim, which, in all likelihood, would be subject to further criticism.
The one feature of the statement of claim which is glaringly defective is the plea as to the plaintiffs' rights to lodge a caveat. The only time that is mentioned in the pleading is to say that in the Tripartite Agreement, the plaintiffs' rights were removed. As it stands, the plaintiffs could not possibly rely on their pleading to support the caveat being maintained. Although the first defendant complained about the plea in relation to the caveat, at the moment, they had no need to be concerned. After delivering short reasons for dismissing the first defendant's application, I pointed out to counsel for the plaintiffs' this obvious defect in the pleadings. Whether or not it is corrected is a matter for the plaintiffs. But at the moment, the striking out of part of the statement of claim would not be in the interest of the first defendant.
On publication of these reasons, the parties should agree a minute of orders or provide short submissions as to the matters upon which they cannot agree.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AH
Secretary
11 JUNE 2021