Beralt Pty Ltd v Japaul Pty Ltd [2000] QSC 89

SUPREME COURT OF QUEENSLAND CITATION: Beralt P/L v Japaul P/L [2000] QSC 089 PARTIES: BERALT PTY LTD ACN 060064 020 (applicant) v JAPAUL PTY LTD ACN 077 823 459 (respondent) FILE NO: S7339 of 1999 DIVISION: Trial DELIVERED ON: 18 April 2000 DELIVERED AT: Brisbane HEARING DATE: 30 September 1999 JUDGE: Muir J CATCHWORDS: CORPORATIONS LAW – APPLICATION TO SET ASIDE STATUTORY DEMAND – CONSEQUENCES OF SERVICE OF DEMANDS IN DIFFERENT STATES – SERVICE REQUIREMENTS - WAIVER – CORPORATIONS LAW S 459G COUNSEL: Mr Hackett for the applicant Mr Barlow for the respondent SOLICITORS: Colwell Wright for the applicant Russell and Company for the respondent [1] The applicant served a statutory demand on the respondent on 26 July 1999. It demanded payment of $34,444. In excess of $21,000 of that sum was claimed for painting services “pursuant to the external contract dated 25 February 1999”. The claim was divided into three progress claims dated 29 January 1999, 26 February 1999 and 17 March 1999 respectively. The balance was claimed under a heading “painting services provided pursuant to the internal contract dated 25 February 1999”. Two progress claims dated 26 February 1999 and 17 March 1999 were referred to under that heading. [2] The matter first came before me in Supreme Court Chambers on 30 September 1999. The respondent sought to have the application dismissed as being made out of time. Various technical points were put forward in support of that submission. As the legal representative of the applicant did not appear to be in a position to deal fully with the points raised, I adjourned the matter and gave the parties the opportunity of making further submissions in writing. That was done. On 11 November 1999 I decided the preliminary point against the respondent. It is now necessary for the application to be decided on its merits. -- 1 of 3 -- 2 [3] It is submitted on behalf of the respondent that – (a) there is no genuine dispute; and (b) the affidavit filed within time made no mention of an offsetting claim and did not attempt to quantify one. Consequently, as no such claim was raised within the time permitted by s 459G it was not open for the applicant to raise one; (c) alternatively, if the application were to be granted it should be granted only on condition that the applicant pay the amount of the respondent’s claim into court. [4] The applicant submits that the claims which form the basis of the statutory demand are ill-founded as both of the relevant contracts are lump sum contracts. It further submits that there is evidence that the subject works are incomplete and defective. In respect of the allegation that the works are incomplete it points to an alleged admission contained in a letter from the respondent. [5] The contract for the external painting dated 25 February 1999 is specified to be a “lump sum” contract for a contract price of $25,920. Clause 4, however, provides – “(a) Progress Payments shall be made (as provided in the Schedule) by the Principal or by the Construction Manager on behalf of the Principal.” A schedule provides for a commencement date of 20 January 1999 and a completion date of 19 February 1999. It also provides for progress payments to be made monthly on the basis of claims “by 30th day of each month” and “payment within approx 25 days”. The contract for internal painting for a “lump sum” price of $15,300 is similarly worded. [6] Although there is an element of ambiguity in the contracts arising from the lump sum description, it is plain enough that they make provision for monthly progress payments. The specific provisions of the contract spelling out the way in which progress claims may be made must be taken to override the more general reference to the contract as being one for a “lump sum”. Accordingly, this contention of the applicant fails. [7] In my view the applicant has not demonstrated existence of a genuine dispute. The affidavit filed in support of the application made a complaint that the exterior paint works were defective “… in that not enough coats of paint have been applied to the surfaces and the finish does not look even”. The deponent does not state any contractual basis for the claim of insufficiency of coats. The deponent also asserts that the painting has not been completed but does not state the extent to which the work is incomplete, let alone the cost of remedying any deficiency. [8] The affidavit received some modest support from Mr Ell, Project Manager and, possibly, from a painter who did alleged remedial work, Joshua Ford. Indeed, Mr Ford and Mr Ell, in speaking of alleged defects are probably merely describing uncompleted work. The applicant’s affidavit material generally is very short on specifics and much of the applicant’s complaints concern ill-founded allegations based on the erroneous premise that the respondent was not entitled to make progress claims. -- 2 of 3 -- 3 [9] The material discloses that when the progress claims were made no objection was taken to them by or on behalf of the applicant. Rather, the applicant intimated that it was experiencing liquidity difficulties but that payment would be forthcoming in due course. Included in the respondent’s material is an affidavit by the person who was the applicant’s construction manager at relevant times. He deposes to the adequacy of the respondent’s workmanship and to having approved the respondent’s progress claims. [10] The applicant was thus in breach of contract in failing to pay the progress claims. The respondent, however, did not terminate the contract in reliance on the applicant’s breach, as it was entitled to do. When requested to continue with the work it sought to impose conditions (including provision of a bank guarantee) as a prerequisite to its further performance. There was no lawful justification for this course of conduct. However there is no evidence that the applicant, before having the alleged outstanding work done, took steps to make time of the essence or otherwise to make the site available to the respondent to permit it to perform its obligations. There is evidence, in an affidavit sworn on behalf of the applicant, that the plaster work was inadequate and needed re-doing. The material before me suggests a mutual abandonment of the contract. Both parties manifested an intention not to perform their respective obligations. In the case of the respondent it would only perform further if the applicant met its unsustainable demand for a bank guarantee. In the case of the respondent, it wanted further work done but would not pay for work already done as it was obliged to do. It made it impossible for the respondent to perform by having the work completed. Abandonment of the contracts, of course, would not relieve the applicant of its obligation to pay the respondent for progress claims duly made. [11] Another difficulty faced by the applicant is that its initial affidavit supporting the application was inadequate to support its contention of a claim or cross-claim. It made no attempt at any quantification of the alleged claim or cross-claim. Nor did it show any cross-claim equal to or greater in amount than the amount claimed by the respondent. One was left to speculate as to the nature and extent of any claim for damages or cross-claim. There was thus no affidavit which met the requirements of s459G(3) of the Corporations Law. Even the material subsequently filed in support of the application does not reveal a cross-claim which is capable of quantification. [12] Accordingly, I order that the application be dismissed. I will hear submissions as to costs. -- 3 of 3 --