EPOCA Constructions Pty Ltd, Re [1999] QSC 355

o o o o -;) 74A·3 - State Reporting TRANSCRIPT OF PROCEEDINGS Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director. State Reporting Bureau . SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION MACKENZIE J No 59820 of 1999 .• ~CCCl ..J ///~/~'~D_~~/7+/~(~=/~2~(~_ REVISED COPIES ISSUE. State Reporting Bureau IN THE MATTER OF THE CORPORATIONS LAW IN THE MATTER OF EPOCA CONSTRUCTIONS PTY LTD BRISBANE .. DATE 30/11/99 JUDGMENT 1 -- 1 of 7 -- 301199 mar (Mackenzie J) HIS HONOUR: In this matter I make the following orders: "I. The amount of the demand be varied to the sum of $149,424.65; the applicant to pay two-thirds of the respondent's costs of and incidental to the application to be assessed. I publish my reasons. 10 30 o 50 JUDGMENT 2 60 -- 2 of 7 -- ~7 44-3 CITATION: PARTIES: SUPREME COURT OF QUEENSLAND In the Matter of the Corporations Law and In the Matter of EPOCA Constructions Pty Ltd IN THE MATTER OF THE CORPORATIONS LAW and IN THE MATTER OF EPOCA CONSTRUCTIONS PTY LTD ACN 007121 360 FILE NO/S: No S9820 of 1999 DIVISION: Trial Division DELIVERED ON: 30 November 1999 DELIVERED AT: Brisbane HEARING DATE 8 November 1999 JUDGES: Mackenzie J ORDER: 1. The amount of the demand be varied to the sum of $149,424.65. 2. The applicant pay two thirds ofthe respondent's costs of and incidental to the application to be assessed. CATCHWORDS: CONTRACTS - BUILDING ENGINEERING AND RELATED CONTRACTS - the ambit of "building work" definition - delays in commencing work - moneys owing under the contract s 52 Trade Practices Act s 42 Queensland Building Services Authority Act COUNSEL: Mr A Duffy for the applicant Mr M Martin for the respondent SOLICITORS: Ebswort4 & Ebsworth for the applicant Hunt & Hunt for the respondent [1] MACKENZIE J: This is an application to set aside a statutory demand. The amount demanded is $177,860 but it is conceded that the amount owing is less than that since a sum in one category is not claimable. It is also conceded that there are some components which are genuinely in dispute. The effect of these concessions would reduce the demand, so far as the respondent is concerned, to $164,425. [2] The applicant contends that a number of other specific items should be reduced and there is an offsetting claim arising under s 52 of the Trade Practices Act. The allegation is that there was deceptive or misleading conduct on behalf of the -- 3 of 7 -- 2 [3] At the threshold the applicant submits that because it is admitted that the respondent does not hold an appropriate contractor's licence under the Queensland Building Services Authority Act the right of recovery is limited by s 42 of that Act. The respondent claims that it was not subject to the Act because the work done by it was excluded from the definition of "building work" by regulation 3A which excludes certain work from the ambit of the definition of "building work" in s 4 of the Act. Relevantly, "building work" means the erection or construction of a building or any site work (including the construction of retaining structures) related to the erection or construction of a building. The term "building" includes any fixed structure. One of the categories excluded by regulation 3A(1) (1) is "the construction ... of a bridge . .. ." The claim arose from a contract under which the respondent erected piles for part of the Brisbane City Council's bikeway project. There is evidence that each of the 18 piles were erected in the water of the Brisbane River, and were intended to support headstock and girders for a bikeway bridge. On the basis of that evidence, I am satisfied the respondent is not restricted to claiming in an amount limited by s 42. C [4] The basic facts are that the applicant engaged the respondent to do piling works in connection with the bikeway. The applicant's project manager,. Mr Raineri requested the respondent to make the drilling equipment available no later than 9 C February 1999. This occurred but there was a delay in installing it on a barge and transporting the barge from the wharf to the site due to conditions in the Brisbane River at that time. There was also a delay caused by the need for repairs when a shoreline broke after the barge arrived at the site. [5] . One area of resistance to the demand is based on this delay. Mr Raineri, who has given an affidavit on behalf of the respondent, says that because of the nature of the agreement the costs of those delays were the responsibility of the applicant since it was its responsibility to transport the drilling equipment from the wharf to the piling site. Mr Boam, managing director of the respondent, also asserts this. [6] According to Mr Raineri and Mr Boam, the respondent was engaged on a hire basis. c The documentation relating to the transaction consists of a quotation dated 18 January 1999 and an order form from the applicant dated 19 January 1999. The quote offers to supply equipment listed in the quotation for $2,000 per day, requests C an establishment fee of $27,600 and sets out hourly rates for crew hire. The establishment fee was to include "4 man crew to rig up drilling rig on barge and set in position on river". That description is important in deciding whether there is a genuine dispute as to whether some amounts claimed fall within the scope of the fixed establishment fee, or whether they fall outside it and are additional costs to be borne by the applicant. Mr Maggiolo, managing director of the applicant claims that $9,030 falls into that category. [7] Whether Mr Raineri's statement concerning responsibility for the delay is an opinion or purports to state the effect of an agreement between the parties is not clear on the evidence. The resolution of responsibility for the costs depends on establishing what was agreed to be comprised in the establishment costs. If that term has a technical meaning known in the construction trade it has not been made explicit on the evidence before me. The meaning of the words in the quotation, viewed alone, is not free from ambiguity. In my view there is a genuine dispute as to responsibility for the amount of$9,030 and it will be deducted. -- 4 of 7 -- 3 [8] Two amounts are fully conceded by the respondent. One is a claim that the use of incorrect rates has led to a dispute concerning $12,795. It is also conceded that there is a genuine dispute about $640 relating to a public holiday. Both of those sums will therefore be deducted. [9] Sums totalling $4,350.35 for crane hire are disputed by the applicant. It is conceded by the respondent that $225 is the responsibility of the respondent but it asserts that the remainder is the responsibility of the applicant. Mr Raineri, supported by Mr Boam, deposes that under the contract it was the applicant's responsibility to pay for crane hire costs incurred in loading and unloading the respondent's drilling equipment from the barge. There is a suggestion also that some ofthe applicant's equipment was loaded on it. What it was and how much is obscure. The applicant alleges that the whole of the costs form part of the establishment fee. In view of the possible ambiguity of the limited words used in the quotation the whole sum should be treated as being genuinely in dispute. [I 0] There is a dispute over accommodation costs paid in respect of the establishment crew and for Mr Boam and Mr Jannaway, another employee of the respondent. The applicant claims that the respondent was responsible for this accommodation or at least that no agreement was reached that the applicant would pay those amounts. According to Mr Raineri, the applicant had agreed to pay the accommodation costs of the drilling crew. Mr Boam deposes that the applicant was obliged under the agreement to pay accommodation costs for the drilling crew. That is not clear from the words of the quotation. In my view, those accommodation costs should be treated as genuinely in dispute. [II] With regard to accommodation for Mr Boam and Mr Jannaway, they travelled to Brisbane to oversee the commencement of the agreement. Mr Raineri deposes that the accommodation costs of the two men were paid by the applicant. Mr Boam deposes that Mr Raineri told him that he should charge the applicant for those costs. There is nothing to suggest that Mr Raineri lacked authority to make such an arrangement. Accordingly, there is no genuine dispute about those costs. The result is that the sum of $980 for the workmen's accommodation will be treated as being genuinely in dispute. [12] There are three claims based on the allegation that work was not done on particular days. It is conceded that no drilling works were carried out on 1 March, 12 May and 13 May. However, there is no evidence that men were not hired on those days and, to the contrary, the evidence suggests they were. There is no basis for deducting the $1,920 under this heading. There is an allegation that on another day the rig was stood down. There is no evidence as to what that means and more particularly who was responsible for the rig not working. Since the evidence of Mr Boam is that the workers were made available, there is no basis for deducting that sum. The third matter in this category is that on one day the drilling rig was being repaired. According to Mr Boam the rig was repaired on that day and the drilling crew worked to repair it. His position is that the drilling equipment and drilling crew were hired for the day and that the applicant was charged in accordance with the agreement. In my view, this sum of $640 should be treated as being in dispute since the agreement is not explicit as to who was intended to bear the cost of time lost by the rig being inoperable. -- 5 of 7 -- 4 [13] There is also a claim that $840 should be deducted because no hours were recorded by the applicant as being worked on a particular day. The respondent's records show that the crew was hired on the day in question, 10 August 1999. In the face of that evidence it is not established that the fact that no hours had been recorded by the applicant raises a genuine dispute as to whether the hours were worked. [14] The major offset claimed is based on an allegation that Mr Boam made misleading and deceptive statements about the time it would take to erect the piles. According to Mr Maggiolo, in early January 1999 he had discussions with Mr Boam in Brisbane regarding the supply to the rig and operations crew. During the course of the discussions Mr Boam told him that the respondent owned a particular type of drilling rig with which it would drill the bore holes required under the contract within two days per bore hole. Mr Maggiolo deposes that in the evening of the same day in early January 1999, Mr Boam repeated this representation. He says that as he was conscious of the time requirements of the contract he relied upon the representations made by Mr Boam in entering into the contract with the respondent. He says that the principal reason the respondent was engaged was because of the representations by Mr Boam that the company could drill the required bore holes at a rate of two days per hole. The occasions when these representations were made are not further particularised than stated. [15] Mr Raineri deposes that Mr Maggiolo got him to enquire about hiring drilling operators. After Mr Raineri got quotations and made further enquiries, Mr Boam came to Brisbane and met with Mr Maggiolo, Mr Raineri and Mr Morassi, works superintendent for the applicant, at Bretts Wharf Restaurant in January 1999. Mr Raineri says that at the meeting Mr Boam made it clear that the respondent would only agree to perform the piling works if the drilling equipment and crew were engaged on a hire basis. He was not interested in a fixed term or fixed price contract. Mr Raineri said that Mr Boam made no representations about how long it would take to perform the drilling works at that meeting, and spoke generally about the method of drilling piles but did not make any statements as to how long it would take to drill each pile. Mr Raineri deposes that before the applicant engaged the respondent he prepared a project schedule for the applicant. He estimated the time it would take to perform drilling works on the basis that it would take approximately four days to drill each pile. Mr Maggiolo and he discussed that there may be problems· with the drilling works due to the hardness of the rock. They discussed seeking assistance from another construction firm with particular equipment in that event. [16] On or about 18 January 1999 the quotation setting out the costs of hiring the drilling equipment and the drilling crew was sent by Mr Boam. Mr Raineri arranged for a purchase order to be prepared and showed the quotation and the purchase order to Mr Maggiolo, who signed it. [17] Mr Raineri's evidence concerning the discussion about problems if the rock proved to be harder than expected was not refuted in any of the material before me. It is convenient to mention at this point that 13 of the 18 piles were drilled in less than two days each. The rock encountered when drilling the remaining piles was of a different nature to the rock encountered with the others and was extremely difficult to drill and remove. The rock varied from bore log samples that Mr Boam and Mr Raineri had examined at the Brisbane City Council prior to the contract being c c c c -- 6 of 7 -- 5 two days each. The rock encountered when drilling the remaining piles was of a different nature to the rock encountered with the others and was extremely difficult to drill and remove. The rock varied from bore log samples that Mr Boam and Mr Raineri had examined at the Brisbane City Council prior to the contract being entered into. The samples at the Council had not been taken from the exact pile locations. Drilling of the five difficult holes took between 10 and 20 days. [IS] According to Mr Boam, prior to 9 February 1999 he had only one meeting with Mr Maggiolo. The meeting occurred at Bretts Wharf Restaurant and he agrees the people present were those mentioned previously. He deposes that he did not make any of the representations referred to by Mr Maggiolo and did not make any representations about how long it would take to core and drill the piles. He said there was no agreement or discussion about how long it would take to perform the drilling works. [19] The offsetting claim relied on had been calculated at $887,000. This is.on the basis of 100 days delay at $8,870 per day, comprising liquidated damages payable to the Council for delay, additional barge hire and other additional time related costs. [20] One of the difficulties about this claim is that on the evidence before me it is not established that, even assuming all else in the applicant's favour, it will suffer any loss let alone a loss of the magnitude claimed. There is unrefuted evidence from Mr Raineri that the applicant has claimed relief under the terms of the contract with the Brisbane City Council of at least $600,000 and perhaps about $1,000,000. [21] There is uncertainty whether loss will occur. It is not established what it will be, if there is one. Further, notwithstanding Mr Maggiolo's allegation of reliance on the representations, there is unrefuted evidence of a discussion subsequent to the representations being made in which Mr Maggiolo and Mr Raineri discussed the risk of encountering hard rock and means of dealing with the problem. [22] I am conscious of the principle that it is not appropriate to decide genuine issues of fact on an application of this kind. However, in all of the circumstances I am not satisfied that any offsetting claim has been established in respect of the alleged deceptive or misleading conduct. [23] It remains to calculate the sum to which the demand should be reduced pursuant to s 459H of the Corporations Law. On the basis of the above, the demand should be reduced to $149,424.65. [24] With regard to costs, the respondent has been successful in resisting the application to set the demand aside, but not wholly successful in maintaining the full amount of the demand. In the circumstances, the applicant should pay two thirds of the respondent's costs. [25] I order as follows: 1. The amount of the demand be varied to the sum of$149,424.65. 2. The applicant pay two thirds of the respondent's costs of and incidental to the application to be assessed. -- 7 of 7 --