York Cove Fisheries Pty Ltd v Van Den Bosch & Co Pty Ltd

[1991] TASSC 135

Serial No B21/1991
List "B"

COURT:                 SUPREME COURT OF TASMANIA

CITATION:            York Cove Fisheries Pty Ltd v Van Den Bosch & Co Pty Ltd [1991] TASSC 135; B21/1991

PARTIES:  YORK COVE FISHERIES PTY LTD
  v
  VAN DEN BOSCH & CO PTY LTD

FILE NO/S:  LDR 480/1990
DELIVERED ON:  17 May 1991
JUDGMENT OF:  Cox J

Judgment Number:  B21/1991
Number of paragraphs:  6

Serial No B21/1991
List "B"
File No LDR 480/1991

YORK COVE FISHERIES PTY LTD
v VAN DEN BOSCH & CO PTY LTD

REASONS FOR JUDGMENT  COX J

17 May 1991

1. This is an appeal against a decision of the Master whereby, pursuant to an application under O15, he ordered that judgment be entered for the plaintiff/respondent for the full amount of its claim. That claim was for a balance of $50,281.77 (plus interest) in respect of work and labour done and materials supplied as a refrigeration engineer.

1. By its Statement of Claim the respondent pleaded that pursuant to an agreement made between it and the appellant on or about the 19 February 1990, the respondent was requested to undertake certain works at the appellant's premises at Georgetown at a certain cost and that from time to time the works were varied by agreement to incorporate the provision of extra work and materials at additional cost. The pleadings assert that the respondent carried out the works but the appellant paid part only of its account and refused to pay the balance. By its defence, the appellant admitted the whole of the allegations in the Statement of Claim but claimed that it was entitled to an equitable set–off of $191,000 due to it for the negligent performance (amounting to breach of contract) of certain work the subject of what was described as a variation of the original agreement. The particulars of breach given were that on 29 May 1990 (that is 4 months after the original contract was entered into) a water coolant pipe connected to the appellant's freezer compressor was damaged and broken. It is not suggested that this was anything other than a fortuitous event which occurred while an employee of the respondent happened to be present at the appellant's premises, presumably undertaking other work contracted for. Thereupon the respondent's agent was requested to and agreed to repair it and restore the compressor and freezer to operating condition. The appellant alleges that in breach of implied terms of workman–like repair, the respondent negligently effected repairs and caused serious loss and damage to the appellant. An affidavit by the appellant's agent verified these assertions on the hearing of the O15 summons. An affidavit from the respondent's agent received at that hearing asserted that the work alleged to have been negligently done formed a very small part of the respondent's claim against the appellant and that the total charge therefor was $3,390.

1. The Master took the view that as there was an admission of the respondent's claim and no sufficient nexus between the claim and the counter–claim to constitute an equitable set–off, the respondent was entitled to judgment for the whole amount of the claim.

1. The principles upon which equitable set–offs may be relied upon by way of defence to a claim and the cases from which he deduced them, are reviewed in the decision of Crawford J. in Zeekap (No 47) Pty Ltd v Anitam Pty Ltd & Anor Serial No 26/1989((1959-1995) 14 Tas R206). I think it is clear that before a set–off by way of counter–claim for unliquidated damages might be relied upon as a defence, the basis of the set–off had to be essentially bound up with and impeach the title of the plaintiff. The defendant had to establish that he possessed some equitable right to be protected from the plaintiff's claim. Such a claim had to be more than a countervailing claim arising out of the same contract as that upon which the plaintiff was bringing suit. As Spry on Equitable Remedies 2 Edn at D 170–171 says:

"What generally must be established is such a relationship between the respective claims of the parties that the claim of the defendant has been brought about by, or has been contributed to by, or is otherwise so bound up with, the rights which are relied upon by the plaintiff that it would be unconscionable that he should proceed without allowing a set–off."

1. In the present case the appellant's counter–claim arises out of what is said to be a variation of the contract upon which the respondents sued. But it is not clear from the affidavits what the nature and extent of the original contract was or that the so–called variation was anything other than a fresh contract entered into fortuitously and independently of that contract when a particular piece of equipment malfunctioned and the respondent was asked and agreed to repair it. Leave should be given to the appellant to defend that part of the claim which seeks payment of the cost of the work in question, ie $3,390, for quite apart from questions of equitable set–off, the basis for a defence of improper workmanship justifying non–payment thereof is established. Were other parts of the claim so closely allied to that work as for example, that they too had been executed as part of the same contract, a stronger claim for equitable set–off in relation to them may have been established (Cf D Galambos & Son Pty Ltd v McIntrye (1974–5) 5 ACTR 10) but in the present case the work contracted to be done in respect of the water coolant plant is not shown to have been in any real way related to the remaining work the subject of the respondent's claim and no basis has been shown why it would be unconscionable for the plaintiff/respondent to recover in respect of matters under the original contract which are not the subject of complaint, without allowing a set–off in respect of damage said to have been suffered under what would appear to be essentially a different and unrelated contract. It was for the appellant on the proceedings under O15 to provide evidence of the existence of facts which would establish the necessary nexus and it has not done so.

1. I would dismiss the appeal in substance. But although this was not argued, I am satisfied that a proper basis for defending the claim as to $3,390 was made out and the appeal should be allowed to that extent. The entry of judgment must be amended accordingly and leave granted to defend as to the claim for $3,390.