LCR Mining Group Pty Ltd v Ocean Tyres Pty Ltd
[2011] QCA 105
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- Notable Unreported Decision
- Appeal Determined (QCA)
- LCR Mining Group Pty Ltd v Ocean Tyres Pty Ltd[2011] QCA 105
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LCR Mining Group Pty Ltd v Ocean Tyres Pty Ltd[2011] QCA 105
LCR Mining Group Pty Ltd v Ocean Tyres Pty Ltd[2011] QCA 105
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | |
Court of Appeal | |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | |
DELIVERED ON: | 20 May 2011 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 25 February 2011 |
JUDGES: | White JA, Margaret Wilson AJA, Ann Lyons J Separate reasons for judgment of each member of the Court, each concurring as to the orders made |
ORDER: | Appeal dismissed with costs. |
CATCHWORDS: | PROCEDURE – INFERIOR COURTS – QUEENSLAND – DISTRICT COURTS - CIVIL JURISDICTION – PRACTICE – PROCEDURE BEFORE TRIAL – OTHER MATTERS – where the appellants brought an action against the respondent for the recovery of a debt – where the respondent adduced insufficient evidence to demonstrate a defence – where the primary judge gave a summary judgment order under r 292 Uniform Civil Procedure Rules 1999 (Qld) – whether the primary judge erred in concluding that there was no real prospect of successfully defending the claim PROCEDURE – MISCELLANEOUS PROCEDURAL MATTERS – CROSS-CLAIMS: SET-OFF AND COUNTERCLAIM – SET-OFF – PRACTICE AND PLEADING – where the defence did not expressly plead a set-off but claimed that a cross-claim was sufficient – whether the respondent’s counter-claim could be characterised as a set-off under r 173 Uniform Civil Procedure Rules 1999 (Qld) so as to operate as a defence to the appellant’s claim Civil Procedure Act 2005 (NSW) Federal Court of Australia Act 1976 (Cth), s 31A Imperial Acts Application Act 1984 (Qld), s 7 Uniform Civil Procedure Rules 1999 (Qld), r173, r 292 Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41, cited Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256; [2006] HCA 27, cited Bernstrom v National Australia Bank Ltd [2003] 1 Qd R 469; [2002] QCA 231, cited Bolton Properties Pty Ltd v JK Investments (Australia) Pty Ltd [2009] 2 Qd R 202; [2009] QCA 135, cited Coldham-Fussell & Ors v Commissioner of Taxation [2011] QCA 45, cited Deputy-Commissioner of Taxation v Salcedo [2005] 2 Qd R 232; [2005] QCA 227, cited Dietrich v The Queen (1992) 177 CLR 292; [1992] HCA 57, cited Dubois v Ong & Anor [2004] QCA 185, cited Forsyth v Gibbs [2009] 1 Qd R 403; [2008] QCA 103, cited Gray v Morris [2004] 2 Qd R 118; [2004] QCA 5, cited Herbst v Mayes Ex Parte Mayes [1903] QWN 29, cited Hunt v Knabe (No 2) (1992) 8 WAR 96, cited Indrisie v General Credits Ltd [1985] VR 251; [1985] CivRp 20, cited J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 61 FLR 108; [1982] FCA 78, cited James v Commonwealth Bank of Australia (1992) 37 FCR 445; [1992] FCA 420, cited Jessup v Lawyers Private Mortgages Pty Ltd [2006] QSC 3, cited Jessup v Lawyers Private Mortgages Ltd & Ors [2006] QCA 432, cited Knockholt Proprietary Limited v Graff [1975] Qd R 88, cited Kostka v Addison [1986] 1 Qd R 416, cited Moscow-Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109, cited Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd [2010] QCA 119, cited Phillips v Mineral Resources Development Pty Ltd [1983] 2 Qd R 138, cited Queensland Pork P/L v Lott [2003] QCA 271, cited Queensland Truss and Frame Pty Ltd v Grenadier Constructions No 2 Pty Ltd [1992] 2 Qd R 428, cited Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq) [2003] 1 Qd R 259; [2002] QCA 224, cited Spencer v The Commonwealth (2010) 241 CLR 118; (2010) 269 ALR 233; [2010] HCA 28, considered Stehar Knitting Mills Pty Ltd v Southern Textile Converters Pty Ltd [1980] 2 NSWLR 514, cited Stumore v Campbell & Co [1892] 1 QB 314, cited Swain v Hillman [2001] 1 All ER 91, considered Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1; [2001] UKHL 16, cited Walker v Secretary, Department of Social Security (1995) 56 FCR 354; [1995] FCA 1136, cited Wallingford v Mutual Society (1880) 5 App Cas 685, cited |
COUNSEL: | G A Thompson SC, with R J Clutterbuck, for the appellant M P Amerena for the respondent |
SOLICITORS: | MDRN Solicitors for the appellant Tony Goodwin & Company Solicitors for the respondent |
[1] WHITE JA: On 7 September 2010 summary judgment was given in the District Court at Gladstone for the respondent, Ocean Tyres Pty Ltd (“Ocean Tyres”), pursuant to r 292 of the Uniform Civil Procedure Rules against the appellant, LCR Mining Group Pty Ltd (“LCR Mining”) in the sum of $74,052 and interest with respect to the supply of tyres and associated products.
[2] LCR Mining appeals those orders on the grounds that the primary judge erred in his approach to r 292 and failed to provide sufficient reasons for his decision. The appeal concerns the sufficiency of the evidence which LCR Mining adduced in response to the summary judgment application and whether the counter-claim, which remained on foot after the summary judgment order, could be characterised as a set-off so as to operate as a “defence” to the claim.
The claim and supporting evidence
[3] Ocean Tyres carried on business, including in Gladstone, selling tyres and associated products. LCR Mining worked the Foxleigh mine at Middlemount operating a large fleet of trucks which consumed a considerable quantity of tyres and other products. Ocean Tyres supplied tyres to LCR Mining utilising a particular system. The business relationship had commenced in April 2007. Throughout the period to December 2009 LCR Mining would submit by email to Ocean Tyres a request for particular tyre products required by it in the immediate future. On receipt of that request, which was not treated as a formal purchase order but as a pre-purchase order, Ocean Tyres assembled the products described and placed them in a shipping container owned by Ocean Tyres. LCR Mining would arrange for an independent carrying contractor to collect the shipping container from Ocean Tyres and deliver it to LCR Mining at the Foxleigh mine. LCR Mining was not invoiced for the contents of the shipping container when it arrived. LCR Mining would remove from the shipping container the tyres and other products when it was about to fit them on the trucks. It would then raise a purchase order nominating those tyres and other products, send it to Ocean Tyres which would, in turn, raise a tax invoice which it would send to LCR Mining. The particulars would be checked against the corresponding purchase order. It would then be signed off and payment made by electronic funds transfer.
[4] The purchase orders were sent and invoiced on a monthly basis. During the twelve month period July 2008 to June 2009, for example, the value of products supplied was $524,280 plus GST. In the six month period July 2009 to December 2009 the value of tyre products supplied was $337,464 plus GST.
[5] These proceedings concern tax invoices sent in November and December 2009 which were not paid. On 15 September 2009 Mr Brad Greenhalgh, the then project manager at the Foxleigh mine, requested Ocean Tyres by email to provide a 40 foot shipping container containing identified stock. Mr Greenhalgh who, by the time of these proceedings was working for another mining company, swore an affidavit for Ocean Tyres. He had worked as project manager for LCR Mining from the commencement of the relationship with Ocean Tyres. Mr Derek Treichel was, at the relevant time, branch manager at Gladstone for Ocean Tyres and the recipient of the purchase orders. In the week commencing 15 September 2009 Mr Greenhalgh telephoned Mr Treichel requesting additional stock to be loaded into the container identifying other tyres and the numbers of each.
[6] Between 15 September and 26 September 2009 Ocean Tyres filled the 40 foot container with the items requested. Ocean Tyres prepared a pro forma invoice which listed every item supplied in the shipping container.[1] This document was emailed to LCR Mining on 24 September 2009 prior to LCR Mining making arrangements for the collection of the shipping container. It was received by LCR Mining through Mr Greenhalgh. He checked the list with the pre-purchase order which he had sent and satisfied himself that the list was complete and corresponded with LCR Mining’s order. The container was delivered by M & P Services (Queensland) Pty Ltd to the Foxleigh mine on 26 September 2009. Mr Treichel exhibited the delivery docket from M & P Services.
[7] On 8 October 2009 LCR Mining emailed to Ocean Tyres a purchase order number 018162 for a quantity of tyre products which had been in the shipping container in September 2009. Tax invoice number 118800 was raised by Ocean Tyres for $43,934.75 in respect of those items dated 30 October 2009. It was sent by ordinary post to LCR Mining on 30 day terms. On 15 December 2009 LCR Mining paid that tax invoice in full and notified Ocean Tyres by remittance advice.
[8] LCR Mining forwarded purchase order number 018566 dated 2 November 2009 by email to Ocean Tyres for 90 Marshal tyres, “which were delivered in the shipping container”.[2] Ocean Tyres invoiced LCR Mining by tax invoice number 118872 dated 2 November 2009 for that stock for $49,005 and forwarded it by ordinary post, again, on 30 day terms.
[9] No payment was received within the terms of trade and an emailed request dated 8 January 2010 was made as to when payment might be received. LCR Mining’s account administrator responded that it would be paid in the next pay run.
[10] On 1 December 2009 LCR Mining sent purchase order number 019022 by email to Ocean Tyres for further tyre products which had been delivered in the container plus a request for 32 Titan wheels which Ocean Tyres could not supply as they had run out of stock. Ocean Tyres invoiced LCR Mining by tax invoice number 119928 dated 10 December 2009 for the tyres taken from the container for $25,047 and sent it by ordinary post. LCR Mining failed to pay on that invoice. Mr Greenhalgh deposed that all the items listed in the tax invoices were ordered and received in good condition. Neither he nor Mr Treichel received any complaints about the shipment of tyres supplied in September 2009. On its return to Gladstone the shipping container was inspected by Mr Darren Findlay, the administration manager for Ocean Tyres. He found the container empty.
[11] Mr Treichel deposed to a series of emails between Ocean Tyres and LCR Mining between 8 January and 2 March 2010 in which payment was sought unsuccessfully for the October and November 2009 invoices.
[12] Ocean Tyres filed its claim and statement of claim in the Gladstone registry of the District Court on 25 May 2010 claiming $74,052 on account of goods delivered together with interest.
[13] LCR Mining filed its notice of intention to defend and defence on 5 July 2010. The essence of its resistance to the claim was that it did not receive the goods as alleged.
[14] Ocean Tyres filed its application for summary judgment on 20 August 2010 which stated that the application would be heard on 6 September.[3] The application was supported by affidavits from Mr Greenhalgh, Mr Treichel and Mr Findlay. At the time of swearing their affidavits the only defence offered by LCR Mining was that that it had not received the goods as alleged.
[15] On 3 September LCR Mining filed an amended defence and counter-claim.
Defence and counter-claim and supporting evidence
[16] In resistance to the summary judgment application LCR Mining filed an affidavit by Mr Colin Partington sworn on 1 September 2010. Mr Partington is the chief executive officer of LCR Mining. It is the sufficiency of his evidence to support the allegations in the amended pleading which was challenged below. First, however, the amended defence must be considered. There are a number of criticisms which may be made of it but it is unnecessary to identify inconsistencies and weaknesses for the purposes of the appeal. The relevant paragraphs are 6, 7 and 10. Paragraph 6 alleges (omitting the words deleted from the original pleading):
“With respect to the contents of paragraph 9 [purchase order 18566 of 2 November 2009] of the Statement of Claim, the defendant admits the purchase order but does not admit the truth of the allegation that the defendant had taken tyres from the said container in the number asserted. The defendant is conducting [enquiries] to determine the truth or falsity of the entire allegation. The defendant requires further and better particulars of this allegation before it is able to properly plead to same.”[4]
Paragraph 7 alleges:
“With respect to the contents of paragraph 10 of the Statement of Claim [invoice 118872 of 2 November 2009 for 90 Marshal tyres], the defendant admits that the plaintiff invoiced the defendant, but denies liability to pay the plaintiff, as the defendant did not receive all of the goods.”[5]
Paragraph 10 alleges:
“With [respect] to the contents of paragraph 13 [invoice 119928 of 10 December 2009 for $25,047] of the Statement of Claim, the defendant admits receipt of the Tax Invoice referred to therein, and says that the defendant has failed to make payment to the plaintiff as the defendant did not receive all the tyres as alleged therein.”[6]
In para11 LCR Mining contends that it has failed to pay for the tyres because it has not received “all” of the tyres.
[17] By its counter-claim, LCR Mining alleges that although Mr Greenhalgh was authorised to purchase tyres and to authorise payment of invoices in respect of those tyres he:
“5.…authorised and made or caused those payments to be made in the belief that the amounts were properly payable to the plaintiff, but ignorant that the payments made did not reflect the agreement between the plaintiff and the defendant and were made:
(a)in the mistaken belief that the invoices submitted for payment by the plaintiff to the defendant for tyres were for tyres actually delivered;
(b)by Mr Greenhalgh in the belief that the amounts stated in the invoices were due and payable to the plaintiff in circumstances where the amounts or some of the amounts stated on the invoices and remittance advices were not in fact due and payable to the plaintiff.”[7]
The particulars pleaded to support that allegation (which ought to have been pleaded as allegations of fact) are that between “27 December 2009 to [sic] 13 December 2009”[8] Ocean Tyres was the sole supplier of tyres to LCR Mining; that Ocean Tyres invoiced LCR Mining for 871 tyres but delivered only 721 tyres and was overpaid to the extent of the difference between the cost of the tyres paid for and the tyres delivered. This is pleaded to constitute overpayment of $80,961.50 including GST.
[18] LCR Mining contends that Ocean Tyres has been unjustly enriched so that it would be unconscionable for it to keep the overpayment and, in para 9 contends:
“In the premises, the defendant is entitled to recover those overpayments as money had and received by the plaintiff to the defendant’s use. Alternatively, the defendant is entitled to set off so much of the plaintiff’s claim as represents a cause of action based upon the overpayment.”[9]
The pleader has also included an allegation of misleading and deceptive conduct pursuant to the Trade Practices Act because of the misleading invoices which it paid in error. It is unnecessary to consider that pleading further.
[19] LCR Mining seeks relief by the taking of accounts and inquiries and the payment to it of all monies found due.
[20] Mr Partington’s affidavit is quite brief. He deposed to overall knowledge and control of the company’s operations including at the Foxleigh mine site at Middlemount. He deposed that he was “aware” that between 14 February 2006[10] and 10 December 2009 LCR Mining obtained tyre supplies from Ocean Tyres for the trucking fleet at the Foxleigh mine. He continued:
“5.At the time of Mr Greenhalgh’s resignation [in January 2010], and well prior to any Court proceedings being issued by the Plaintiff, I became aware of various anomalies with invoices from Ocean Tyres Pty Ltd (“Ocean Tyres”) and accounts paid by the company in favour of Ocean Tyres. From about late October 2009, I had discussed these concerns with the company’s Internal Accounts Auditor, Mr Colin Drovandi, whom I instructed to investigate the apparent anomalies.
6.With my authorisation, Mr Drovandi proceeded to engage external auditors Deloitte Touche Tohmatsu, after Mr Drovandi had undertaken his own preliminary investigations.
7.Although no reference is made to it in Mr Greenhalgh’s affidavit sworn 13 July 2010, the company in fact maintained a Tyre Container Register which recorded the company’s usage of tyres supplied by Ocean Tyres. That Register was maintained by the company’s employee Mr Heath Secker, at the Foxleigh Mine site. Mr Secker at all material times held the position of Maintenance Supervisor at the site.
8.The internal audit process undertaken by Mr Drovandi, and the investigations undertaken by Deloitte Touche Tohmatsu, have revealed that Ocean Tyres have invoiced the company an excess of 150 tyres over the number of tyres supplied. The average cost of tyres per unit is $490.68, and the overcharging by Ocean Tyres for the period from 28 February 2009 to 10 December 2009 amounts to $73,601.37, excluding GST.”[11]
The judgment below
[21] The primary judge gave his decision ex tempore on 7 September. He set out the system which operated between the parties for the purchase and supply of tyres over some two and a half years; he noted the history of payments from April 2007 to December 2009 as deposed to by Mr Treichel and Mr Greenhalgh. He noted the contents of Mr Partington’s affidavit and observed that evidence could be received as coming from sources other than the maker of the affidavit, but that r 295 stipulated how that was to occur:
“(2)An affidavit may contain statements of information and belief if the person making the affidavit states the sources of the information and the reasons for the belief.
(3) A party to an application under this part who intends to rely on a document must –
(a)exhibit the document to an affidavit; or
(b)identify in an affidavit the provisions relied on to the extent the party is able to identify them.
…”
His Honour noted that no documents were exhibited to Mr Partington’s affidavit.
[22] His Honour set out the provisions of r 292:
“(1)A plaintiff may, at any time after a defendant files a notice of intention to defend, apply to the court under this part for judgment against the defendant.
(2) If the court is satisfied that –
(a)the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and
(b)there is no need for a trial of the claim or the part of the claim;
the court may give judgment for the plaintiff against the defendant for all or the part of the plaintiff’s claim and may make any other order the court considers appropriate.”
His Honour made extensive reference to the reasons for judgment of Williams JA in Deputy Commissioner of Taxation v Salcedo on the approach to be taken to r 292.[12] His Honour concluded, uncontroversially, on the authority of Queensland Pork Pty Ltd v Lott[13] that once an applicant for summary judgment has made out a prima facie case the evidentiary onus shifts to a respondent.
[23] The primary judge made the following findings on the evidence:
“(a)The evidence adduced by the applicant including in particular the affidavit of the respondent’s former project manager, Mr Greenhalgh, the person directly responsible for placing the orders and signing off on the delivery and receipt of the goods, overwhelmingly establishes a prima facie case entitling the applicant to judgment and it is then for the respondent to satisfy the Court why judgment should not be granted and that the Court should not be satisfied that the respondent has no real prospect of defending the claim.
(b)I find that the respondent has failed to do that for the reason that the only evidence it has put before the Court to attempt to respond to the applicant’s comprehensive material and submissions, is that of Mr Partington, who raises for the first time on 3 September 2010 at least three months after the applicant’s claim is filed, and nine to 10 months after the invoices for the goods delivered were rendered by the applicant that the goods were not in fact delivered.
There is no independent evidence adduced in support of this bald assertion in the face of unchallenged evidence by the witness Greenhalgh, the person directly responsible for their delivery, that all goods ordered were delivered.
(c)The evidence of the applicant’s witnesses, Messrs Treichel, Greenhalgh and Findlay is largely unchallenged.”[14]
His Honour pronounced judgment on the claim and added that the counterclaim was a separate matter and he did not propose to make any orders about it.
Discussion
[24] LCR Mining contended on the appeal that the period between 28 February and 24 September 2009 was not addressed in Ocean Tyres’ affidavit, focussing merely upon the period the subject of the invoices. That is not accurate so far as Mr Treichel is concerned. He has deposed to the whole course of dealing between the parties and in his paras 9 and 10 to the periods from July 2008 to June 2009 by reference to the total value of tyre products supplied and in the six month period July 2009 to December 2009, again mentioning the total value of the tyre products supplied. In respect of each period Mr Treichel deposed that LCR had sent purchase orders on a monthly basis to Ocean Tyres who had invoiced LCR Mining for each of the monthly purchase orders. During those periods Mr Greenhalgh was the project manager who placed each of the orders and organised for payment.
[25] Mr Amerena for Ocean Tyres contended that the primary judge was correct to conclude that insufficient evidence was adduced in Mr Partington’s affidavit to demonstrate a real prospect of successfully defending all or part of the claim. Mr Partington, while making reference to the “Tyre Container Register” makes no evidentiary use of that fact. It might have been expected that Mr Heath Secker, who allegedly maintained the register, would have sworn an affidavit exhibiting the register and comparing the entries to the invoices received from Ocean Tyres, or something along those lines. Mr Amerena submitted that para 8 of Mr Partington’s affidavit was merely his opinion about the content of the auditor’s report. Although Mr Partington does not swear to his belief in what must, inferentially, be a written report by the external investigators, r 295(3) required some further detail of substance rather than a conclusion.
[26] LCR Mining does not now[15] contend that Spencer v The Commonwealth[16] has effected any change to the approach which should be taken to a summary judgment application brought under r 292. The key expressions in r 292 are “no real prospect of successfully defending” a claim and “there is no need for a trial of the claim”. Other expressions have been proffered in cases in an attempt to describe the task of the court in language which is thought to be of more assistance. There is now a considerable jurisprudence on this question in this State.[17]
[27] In Deputy Commissioner of Taxation v Salcedo[18] the President described the rule as “clear and unambiguous language”.[19] Justice Williams quoted with approval observations of Lord Woolf MR in Swain v Hillman[20] considering the English Rule 24.2 upon which rule 292 was based:
“The words ‘no real prospect of succeeding’ do not need any amplification, they speak for themselves. The word ‘real’ distinguishes fanciful prospects of success or … they direct the court to the need to see whether there is a ‘realistic’ as opposed to a ‘fanciful’ prospect of success.”
That approach was approved by the House of Lords in Three Rivers District Council v Bank of England (No 3)[21] where Lord Hobhouse observed:[22]
“[t]he criterion which the judge has to apply under Part 24 is not one of probability; it is absence of reality.”
[28] This court has endorsed the approach in Swain v Hillman on a number of occasions, for example, in Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq.)[23], Bernstrom v National Australia Bank Limited[24] and Gray v Morris[25]. But, as Chesterman J, as his Honour then was, noted in Jessup v Lawyers Private Mortgages Pty Ltd:[26]
“The difficulty with the approach taken in Salcedo is that it begs the question of what is meant by the words ‘no real prospect of success’… [and] while eschewing the need to put a gloss upon the wording of the rule in order to arrive at their ‘plain and unambiguous meaning’ two of the judgments felt obliged to explain that a real prospect of success was to be understood as being different from a fanciful prospect of success.”
Nothing contrary to those views was expressed by this court in dismissing the appeal, Keane JA with whom MacKenzie and Jones JJ agreed, merely observing that his Honour had concluded that there was “no arguable case.”[27] Justices Hayne, Crennan, Kiefel and Bell in Spencer v The Commonwealth[28] deprecated any attempt to use synonyms when discussing the Federal Court summary judgment provisions:
“No paraphrase of the expression can be adopted as a sufficient explanation of its operation, let alone definition of its content… The judicial creation of a lexicon of words or phrases intended to capture the operation of a particular statutory phrase… is to be avoided.”[29]
[29] In Spencer, the High Court considered the operation of s 31A of the Federal Court of Australia Act 1976 (Cth). That provision is differently worded to rule 292 and permits summary judgment if the court is satisfied that the opposite party “has no reasonable prospect of successfully defending the proceeding”.[30] By s 31A(3) a defence “need not be hopeless” or “bound to fail” for it to have no reasonable prospect of success. Justices Hayne, Crennan, Kiefel and Bell noted the important difference in the expression in the English rule, “no real prospect” (as in rule 292) and “no reasonable prospect” in s 31A. “The two phrases”, their Honours said, “convey very different meanings”.[31] Furthermore, the negative admonition in subsection (3), (not present in rule 292 or the English rule), operated to give further meaning to “reasonable”. For that reason the further elucidation in Spencer of s 31A will not particularly assist in identifying the approach to r 292. However, their Honours’ acceptance “that the power to dismiss an action summarily is not to be exercised lightly”[32] is applicable to any phrase which broadly has as its purpose the test for summary dismissal of a claim or defence. Their Honours referred to Agar v Hyde[33] and the statement by Gaudron, McHugh, Gummow and Hayne JJ:[34]
“Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.”
That statement was endorsed by Gleeson CJ, Gummow, Hayne and Crennan JJ in Batistatos v Roads and Traffic Authority (NSW)[35] and by French CJ and Gummow J in Spencer.[36]
[30] Rule 292 is expressed in clear and plain language. What those phrases mean is best understood, in the time honoured way, on a case by case basis, informed by judgment about the relevant legal principles and is expressed, albeit in a different context, in Dietrich v The Queen[37] as
“… the staple processes of legal reasoning, namely, induction and deduction from earlier decisions and settled rules and practices.”
The Queensland decisions mentioned above[38] note that r 292 must be applied in the context of the overriding purpose of the UCPR to “facilitate the just and expeditious resolution” of the matter in dispute.[39]
[31] Mr Partington has deposed, in general terms, that on investigation there is a discrepancy over the period of the relationship with Ocean Tyres between what has been delivered and what has been invoiced and paid for. Against the very detailed evidence of Ocean Tyres, particularly the initial check list of what was put into the container being provided to LCR Mining and Mr Greenhalgh’s endorsement, both of that list and the monthly purchase orders and subsequent invoices, LCR Mining has offered no evidence. What Mr Partington deposes is little more than “mere assertion”[40] and he has not condescended upon particulars.[41] There is no attempt to relate the alleged deficiencies in the delivery of 150 tyres to the two invoices of November and December nor to any other delivery. There is nothing, in other words, to demonstrate, prima facie, that the tyre products claimed for were not delivered, as sworn by Ocean Tyres. That, it might be thought, would be essential, because another explanation, plainly open, is that the tyres and other invoiced products were removed inappropriately after delivery.
[32] The primary judge was not in error in concluding that there was no real prospect of successfully defending the claim with respect to the November and December invoices and there was no need for a trial.
Set-off
[33] Mr G A Thompson SC for LCR Mining submitted that the primary judge ought to have allowed the counterclaim to stand as a defence to the claim. Rule 173 of the Uniform Civil Procedure Rules provides:
“(1)A defendant may rely on set-off (whether or not of an ascertained amount) as a defence to all or part of a claim made by the plaintiff whether or not it is also included as a counterclaim.
(2)If the amount of a set-off is more than the amount of the claim against which it is set off, then, regardless of whether the set-off is pleaded as a counterclaim -
(a)the set-off may be treated as a counterclaim; and
(b)the court may give judgment for the amount of the difference or grant the defendant other relief to which the court considers the defendant is entitled.
(3) Despite subrules (1) and (2) –
(a)if the court considers a set-off can not be conveniently dealt with in a proceeding, the court may set aside a defence or counterclaim in the proceeding by way of set-off and may order that the set-off be dealt with in a separate proceeding; or
(b)if the court considers a set-off should not be allowed, the court may set aside a defence or counterclaim by way of set-off.”
[34] The amended defence does not expressly plead a set-off but Mr Thompson submitted that the fact of a cross-claim is sufficient. This aspect of the application was not argued below and was not a separate ground of appeal. A claim that not all the tyres invoiced were received, as discussed, is not a promising defence without more. It is only in the counter-claim that a set-off is raised as a cross-claim in the context of an audit of the whole of the commercial relationship giving rise to a general deficiency claim. To establish a right to an equitable set-off – a true defence – the transactions must be mutual and the equity has to be such as to “impeach” the claimant’s title to demand payment.[42] The amended defence and counter-claim does not attempt to relate the claim to payment of the November and December invoices to a failure to deliver those products. It is part of the general deficiency claim. As the invoices demonstrate, different tyre products are differently priced, so that a general claim that 150 tyres were not delivered over the whole period of the relationship comprising distinct contractual arrangements for each order cannot, readily, on this pleading, be regarded as giving rise to an equitable set-off.
[35] Set-off at law enabled the “setting-off” of mutual debts.[43] In effect, cross-claims could be determined in the same proceedings. This advantageous arrangement was brought about by the Imperial Statutes of Set-off in 1729 and 1735. [44] Prior thereto, set-off was unknown at common law although, as McPherson J, as his Honour then was, discussed in Kostka v Addison[45] the common law courts as well as Chancery would set-off separate judgments and permit execution only on the balance.
[36] In Queensland the Statutes of Set-off were incorporated into the law of the colony[46] and continued after Statehood.[47] However, the Imperial Acts Application Act 1984 (Qld) had the effect of repealing the Statutes of Set-off. By s 7:
“Subject to this Act, the application in and for Queensland of all Imperial enactments (commencing with the Statute of Merton, 20 Henry 3 A.D. 1235-6) in force in England at the time of the passing of the Imperial Act 9 George 4 Chapter 83, is terminated.”
In New South Wales, which similarly repealed the Imperial Statutes of Set-off, it has been thought necessary to provide an express statutory basis for set-off.[48] Since there has been some controversy about the scope for set-off under the Rules of Court[49] it has been proposed that any doubt should be removed by restoring a clear statutory base for set-off in Queensland. The proposed Civil Proceedings Bill 2010[50] has not yet been enacted. It is unnecessary to enter into the debate for the resolution of this appeal. Although a precise sum is pleaded in the counterclaim it may not, in fact, be for a liquidated sum. But in any event, I did not understand Mr Thompson to argue that r 173 accorded a substantive right to a party to a set-off[51] but rather that LCR Mining ought to have been able to have the claim and counterclaim heard together and a single judgment entered. In many cases, it would be appropriate to do that. Here, however, the claim raised by LCR Mining is quite deficient inasmuch as Ocean Tyres is not informed of the case against it except in the broadest of assertions and relatively late. If it is to be progressed it will be in a trial of considerable factual complexity. It cannot be concluded that the primary judge erred in granting summary judgment of the claim and leaving the counter-claim to be pursued by LCR Mining when it is in a position to plead its case properly.
[37] The reasons are expressed adequately to expose the process by which the primary judge reached his decision.
[38] I would dismiss the appeal with costs.
[39] MARGARET WILSON AJA: The appeal should be dismissed with costs, for the reasons given by White JA.
[40] ANN LYONS J: I agree that the appeal should be dismissed with costs for the reasons given by White JA.
Footnotes
[1] Para 13.2 of the affidavit of Derek Shane Treichel; AR 48.
[2] Para 13.5 of the affidavit of Derek Shane Treichel; AR 49.
[3] It was heard on 7 September.
[4] AR 102.
[5] AR 102.
[6] AR 103.
[7] AR 104.
[8] AR 104.
[9] AR 105.
[10] Compare Mr Treichel who deposed to the start of the business relationship in April 2007, AR 47.
[11] AR 84-85.
[12] [2005] 2 Qd R 232; [2005] QCA 227.
[13] [2003] QCA 271 at [41].
[14] AR 132-133.
[15] See Supplementary Outline of Argument on behalf of the appellant dated 25 February 2011.
[16] (2010) 241 CLR 118; [2010] HCA 28.
[17] For example, Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq.) [2003] 1 Qd R 259; Gray v Morris [2004] 2 Qd R 118; Commissioner of Taxation v Salcedo [2005] 2 Qd R 232; Bolton Properties Pty Ltd v JK Investments (Australia) Pty Ltd [2009] 2 Qd R 202; and Coldham-Fussell & Ors v Commissioner of Taxation [2011] QCA 45.
[18] [2005] 2 Qd R 232; [2005] QCA 227.
[19] At [2]. See also Williams JA at [11] – [17] and Atkinson J at [47].
[20] [2001] 1 All ER 91 at 92.
[21] [2003] 2 AC 1.
[22] At [158]; 282.
[23] [2003] 1 Qd R 259.
[24] [2003] 1 Qd R 469.
[25] [2004] 2 Qd R 118 at 133.
[26] [2006] QSC 003 at [18].
[27] [2006] QCA 432 at [13].
[28] (2010) 269 ALR 233; [2010] HCA 28.
[29] At [58].
[30] The proceedings for summary judgment in Spencer were brought by the Commonwealth as defendant but no different approach is required for a plaintiff seeking summary judgment from a defendant under the Federal Court rules.
[31] At [51]; 248.
[32] At [60]; 251.
[33] (2000) 201 CLR 552; [2000] HCA 41.
[34] At [57].
[35] (2006) 226 CLR 256, at [46]; [2006] HCA 27.
[36] At [24]. It was quoted by Muir JA, with whom Holmes and Chesterman JJA agreed, in Neumann Contractors Pty Ltd v Traspunt No 5 Pty Ltd [2010] QCA 119 at [81].
[37] (1992) 177 CLR 292 per Deane J at 329.
[38] At [28].
[39] Uniform Civil Procedure Rules 1999 (Qld), r 5.
[40] Queensland Truss and Frame Pty Ltd v Grenadier Constructions No. 2 Pty Ltd [1992] 2 Qd R 428 per Thomas J, as his Honour then was, at 432.
[41] Dubois v Chee-Teong Ong [2004] QCA 185 referring to Wallingford v Mutual Society (1880) 5 App Cas 685 at 704; Moscow-Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109 and Hunt v Knabe (No. 2) (1992) 8 WAR 96 at 102, 103.
[42] J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 61 FLR 108 at 127; Indrisie v General Credits Ltd [1985] VR 251 at 254; James v Commonwealth Bank of Australia (1992) 37 FCR 445 at 457-462; Walker v Secretary, Department of Social Security (1995) 56 FCR 354 at 375.
[43] For a comprehensive discussion see Dr R Derham, Set-Off, 2nd ed (Clarendon Press, Oxford) 1996 and “Recent Issues in Relation to Set-Off” in (1994) 68 ALJR 331.
[44] (1729) 2 Geo 2 c 22 s 13, (1735) 8 Geo 2 c 24 s 5.
[45] [1986] 1 Qd R 416 at 420.
[46] Herbst v Mayes Ex Parte Mayes (1903) QWN 29 per Real J.
[47] Phillips v Mineral Resources Development Pty. Ltd. [1983] 2 Qd R 138 per Kelly J at 147, Connolly J at 148, Macrossan J agreeing.
[48] Civil Procedure Act 2005 (NSW).
[49] Stehar Knitting Mills Pty Ltd v Southern Textile Converters Pty Ltd [1980] 2 NSWLR 514 per Hutley and Glass JJA; Stumore v Campbell & Co [1892] 1 QB 314 at 316 per Lord Esher MR; Walker v Secretary, Department of Social Security (1995) 56 FCR 354 at 374; Derham op cit.
[50] Clause 20 concerns set-off.
[51] Forsyth v Gibbs [2008] QCA 103 per Keane JA with whom the President and Fraser JA agreed, at n. 1. In Knockholt Proprietary Limited v Graf [1975] Qd R 88 WB Campbell J, as his Honour then was, accepted, inferentially, that it is to the substantive law and not the procedural rules that a court must turn in deciding when there may be a set-off, at 90. It might be suggested that r 173 was enacted in the UCPR after the repeal of the statutes of set-off and thus restored, implicitly, any substantive rights. Dr Derham has trenchantly and, with respect, persuasively, criticised that path of reasoning by the Court of Appeal in New South Wales in Stehar in (1994) 68 ALJR 331 at 338-344.