Carwyn Constructions P/L v J & WL Consulting Services & Ors [2009] QCA 225

SUPREME COURT OF QUEENSLAND CITATION: Carwyn Constructions P/L v J & WL Consulting Services & Ors [2009] QCA 225 PARTIES: CARWYN CONSTRUCTIONS PTY LTD ACN 126 481 589 (applicant/respondent) v J & WL CONSULTING SERVICES (first respondent/first appellant) JOHN AND WENDY LABAJ (second respondents/second appellants) FILE NO/S: Appeal No 1191 of 2009 SC No 10291 of 2008 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 7 August 2009 DELIVERED AT: Brisbane HEARING DATE: 31 July 2009 JUDGES: Keane and Holmes JJA and Philippides J Separate reasons for judgment of each member of the Court, each concurring as to the orders made ORDERS: 1. Appeal dismissed 2. Appellants to pay the respondent's costs to be assessed on the standard basis CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL - PRACTICE AND PROCEDURE – QUEENSLAND – WHEN APPEAL LIES – GENERALLY – where notice of appeal raises no issue of substance – where appellants seek leave to amend notice of appeal to add further grounds of appeal – whether leave to amend should be granted Corporations Act 2001 (Cth), s 459G, s 459H, s 459J COUNSEL: S Fajardo for the appellants D J Topp for the respondent SOLICITORS: No appearance for the appellants Groom & Lavers for the respondent -- 1 of 7 -- 2 [1] KEANE JA: On 22 September 2008 the first appellant served a statutory demand upon the respondent for $67,826.18 alleged to be due under the terms of a consultancy agreement ("the agreement") between the first appellant and the respondent. The terms of the agreement [2] The agreement provided relevantly as follows: "… the Company agrees to retain Consultancy and Consultancy agrees to be retained by the Company under the terms and conditions set forth below. 1. Retention The Company hereby retains Consultancy to perform consulting services related to the business of the Company, solely as directed by the Director of the Company, Mr Mark Murray and the Consultancy hereby accepts such retention. Nothing herein shall require the Company to utilize or implement Consultancy's services in any specific situation. Subject to the terms set forth below, Consultancy shall furnish to the Company advice and recommendations with respect to such aspects of the business and affairs of the Company, as the Company shall, from time to time, reasonably request upon reasonable notice. Consultancy shall deliver services at Consultancy's place of business, the Company's place of business, or at various other sites as required and mutually and reasonably agreeable to the Company and the Consultancy. 2. Compensation As compensation for the services described in Clause 1 above, and subject to the provisions of Clause 9 below, the Company agrees to pay Consultancy a retainer fee (the 'Retainer Fee') of $120,000.00 (One Hundred and Twenty Thousand Dollars) per each twelve months of services rendered during the Term (as defined in Clause 9, below) of this Agreement. The retainer fee shall be payed in 46 weekly instalments of $2,608.70 per instalments. In addition to its [sic] this compensation, the Company will reimburse Consultancy for any and all expenses incurred by Consultancy, subject to the Company's prior approval, in the performance of its duties hereunder and, Consultancy shall account for such expenses to the Company. Such reimbursement shall cumulate and be paid on a monthly basis. During the Term, Company shall pay Consultancy all Retainer Fees Instalments due at the end of each pay-period week for which said Retainer Fee is due. Consultancy shall invoice the Company on or about the first business day of every pay-period week during the Term. … -- 2 of 7 -- 3 8. Term and Termination This Agreement shall commence on the Effective Date and is for an initial term of twelve months (the 'Term'). Clause 5, 6, 7, 9, 10, and 11 shall survive the expiration or termination of this Agreement under all circumstances. Upon the expiration or termination of this Agreement, a. each party shall return the other's Confidential Information in its possession or control, b. all amounts not disputed in good faith that are owed by each party to the other party under this Agreement which accrued before such termination or expiration will be immediately due and payable and c. Consultancy shall deliver to Company all deliverables completed and accepted up to the date of termination and Company shall have all right, title and interest thereto. If the Company i. terminates the Agreement prior to the expiration of the Term, or ii. the Consultancy dies or becomes disabled (as determined by Employee's physician), prior to the expiration of the Term of the Agreement, then the Company may terminate this Agreement upon payment to the Employee or his estate in a lump sum all sums remaining due for the balance of the Term of the Agreement. …" [3] The reference in cl 2 to cl 9 of the agreement appears to be a mistake. Clause 9 is concerned only with issues as to the giving of notices by one party to the other. It would seem that the reference to cl 9 should be to cl 8. The decision below [4] On 7 January 2009 the learned primary judge set aside the statutory demand given by the appellants pursuant to s 459G of the Corporations Act 2001 (Cth) ("the Act"). His Honour was satisfied there was a genuine dispute as to the existence or amount of the debt for the purposes of s 459H(1)(a) of the Act. An officer of the respondent deposed to circumstances which, if true, would establish that the respondent was entitled to terminate the agreement by reason of the appellants' misconduct. The appellants disputed the truth of the evidence relied upon by the respondent. [5] The learned primary judge said: "Under the consultancy agreement, the respondent consultant was obliged to provide (largely undefined) consultancy services. Inevitably, the service would be associated with building work: for that was the nature of the applicant's business. The allegations of misconduct, which are said to be so serious as to be repudiatory, concern the performance of unlawful plumbing work by Mr Labaj - unlawful because it was unlicensed - and unlicensed -- 3 of 7 -- 4 work in connection with gas fittings; Driving a vehicle owned by the applicant, while having consumed alcohol, whether intoxicated or not, in circumstances where he had been directed not to drink at all while driving a company vehicle; [and incurring] expense in connection with the ordering of a shed without permission, contrary to an express provision of the contract by which it was [acknowledged] that the respondent had 'No authority to bind the company to any obligation or agreement'. The allegedly repudiatory conduct is sworn to. Fairly arguably, the conduct justified the discharge of the consultancy agreement for repudiatory breach. In these circumstances, a genuine dispute has been established with respect to the basis upon which the termination took effect. This means that there is a genuine dispute with respect to the essential contention that the respondent must advance - that the claim is one for debt under clause [8c] of the consultancy agreement. It follows that there is a genuine dispute with respect to the debt alleged which requires the notice of statutory demand to be set aside. This conclusion makes it unnecessary to consider other grounds upon which the applicant seeks to have the notice of statutory demand set aside, including that even though the relationship between the parties is a contract for services and not for service, the consultant was inevitably driven to sue for damages rather than debt when the applicant claimed to determine the contract for cause. There must therefore be an order setting aside the Notice of Statutory Demand." The ground of appeal [6] The only ground of appeal stated in the appellants' notice of appeal is that the learned primary judge erred in failing to interpret s 459H(1) of the Act as requiring the respondent to establish, both a genuine dispute about the existence or amount of the debt, and that substantial injustice would be caused if the demand is not set aside. The appellants argue that this additional requirement arises because s 459H(6) provides that s 459H is subject to s 459J(1), and that his Honour did not address this additional requirement. This argument involves an untenable construction of s 459H(1): it should be rejected. [7] Sections 459H and 459J are in the following terms: "459H Determination of application where there is a dispute or offsetting claim (1) This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following: (a) that there is a genuine dispute between the company and the respondent about the -- 4 of 7 -- 5 existence or amount of a debt to which the demand relates; (b) that the company has an offsetting claim. (2) The Court must calculate the substantiated amount of the demand in accordance with the formula: Admitted total − Offsetting total where: admitted total means: (a) the admitted amount of the debt; or (b) the total of the respective admitted amounts of the debts; as the case requires, to which the demand relates. offsetting total means: (a) if the Court is satisfied that the company has only one offsetting claim—the amount of that claim; or (b) if the Court is satisfied that the company has 2 or more offsetting claims—the total of the amounts of those claims; or (c) otherwise—a nil amount. (3) If the substantiated amount is less than the statutory minimum, the Court must, by order, set aside the demand. (4) If the substantiated amount is at least as great as the statutory minimum, the Court may make an order: (a) varying the demand as specified in the order; and (b) declaring the demand to have had effect, as so varied, as from when the demand was served on the company. (5) In this section: admitted amount, in relation to a debt, means: (a) if the Court is satisfied that there is a genuine dispute between the company and the respondent about the existence of the debt—a nil amount; or (b) if the Court is satisfied that there is a genuine dispute between the company and the respondent about the amount of the debt—so much of that amount as the Court is satisfied is not the subject of such a dispute; or (c) otherwise—the amount of the debt. -- 5 of 7 -- 6 offsetting claim means a genuine claim that the company has against the respondent by way of counterclaim, set-off or cross-demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates). respondent means the person who served the demand on the company. (6) This section has effect subject to section 459J. 459J Setting aside demand on other grounds (1) On an application under section 459G, the Court may by order set aside the demand if it is satisfied that: (a) because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or (b) there is some other reason why the demand should be set aside. (2) Except as provided in subsection (1), the Court must not set aside a statutory demand merely because of a defect." [8] Section 459H allows the court, on an application under s 459G, to set aside a statutory demand if the court is satisfied that there is a genuine dispute about the evidence of the debt. Section 459J(1) empowers the court, on an application under s 459G, to set aside the notice of demand if it is satisfied that because of a defect in the demand, substantial injustice will be caused unless the demand is set aside, or there is some other reason why the demand should be set aside. It can be seen that s 459J furnishes a ground additional to that in s 459H for setting aside a demand: s 459J does not purport to add an additional element to the ground for setting aside a demand stated in s 459H. [9] At the hearing of the appeal, it was argued in oral submissions that the learned primary judge did not advert in his reasons to the point that the power to set aside the demand arose under s 459H(3). But it is indisputable that his Honour's determination that there was a genuine dispute as to the existence of the debt meant that the "admitted amount" for the purpose of calculating the "substantiated amount of the demand" for the purposes of s 459H(3) was a "nil amount". Leave to amend the notice of appeal? [10] The appellants also seek to agitate other arguments which were not raised by their notice of appeal. In order to allow these arguments to be advanced, amendments to the notice of appeal would be necessary. In my respectful opinion, this Court should not exercise its discretion to allow the notice of appeal to be amended. [11] It must be said immediately that the practice of the Court is readily to allow amendments to a notice of appeal, at least where no prejudice will enure to the respondent and where the grounds sought to be added are fairly arguable. -- 6 of 7 -- 7 [12] In this case, however, there is an additional consideration, namely, that considerations of the efficient administration of justice suggest that the parties should be left to resolve the merits of the claim which has been found to be subject to a genuine dispute at a trial in the lower courts. Neither the proceedings below nor the proceedings in this Court afford an appropriate vehicle for the determination of the dispute as to the existence of the debt. On the appellants' behalf, it was argued that the respondent's complaints against the appellants are entirely without substance and, indeed, were not raised in good faith by the respondent. It was said that this Court should make findings of fact to that effect. These submissions reflect a failure to appreciate that the task of the primary judge was not to seek to resolve issues of credibility between the parties. Nor is it the function of this Court to undertake that task. [13] There are other considerations which militate against allowing the notice of appeal to be amended. Importantly, insofar as the appellants seek now to argue that the learned primary judge should have held that the application to set aside the statutory demand was made out of time, the Court should not favour an invitation to entertain arguments which were not agitated below. The learned primary judge was not invited to decide this point. That circumstance detracts from the appellants' claim on this Court's discretion to grant an extension of time so that the point might now be argued for the first time on appeal. This Court's role in the administration of justice is to correct errors, and in this case it cannot be said that the learned primary judge erred in failing to uphold an argument that was never put to him. [14] In my respectful opinion, in the circumstances of this case, there is no sufficient reason to allow the notice of appeal to be amended. Conclusion and orders [15] The only issue raised by the notice of appeal is without substance. There is no good reason to allow the notice of appeal to be amended to raise other grounds. [16] The appeal should be dismissed. [17] The appellants should pay the respondent's costs to be assessed on the standard basis. [18] HOLMES JA: I agree with the reasons of Keane JA and with the orders his Honour proposes. [19] PHILIPPIDES J: I have had the advantage of reading the reasons for judgment of Keane JA. I agree with the reasons of his Honour and with the proposed orders. -- 7 of 7 --