Wagners Concrete Pty Ltd v De Martin & Gasparini Pty Ltd
[1997] QDC 291
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- Wagners Concrete Pty Ltd v De Martin & Gasparini Pty Ltd[1997] QDC 291
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Wagners Concrete Pty Ltd v De Martin & Gasparini Pty Ltd[1997] QDC 291
Wagners Concrete Pty Ltd v De Martin & Gasparini Pty Ltd[1997] QDC 291
DISTRICT COURT | No 3239 of 1997 |
CIVIL JURISDICTION
JUDGE ROBIN QC
WAGNERS CONCRETE PTY LTD (ACN 010 551 149) | Plaintiff |
and
DE MARTIN & GASPARINI PTY LTD (ACN 00 205 372) | Defendant |
BRISBANE
DATE 07/10/97
ORDER
CATCHWORDS:
Contract - agreement by plaintiff to supply to a particular project ready mixed concrete of various descriptions at fixed prices - some deliveries admittedly defective, occasioning loss to defendant - price of those deliveries not charged or sued for - defendant not permitted to raise its loss as a set off - plaintiff regarded as claiming separate prices under separate transactions or contracts for particular orders for concrete for the project - defendant under no obligation to plaintiff to order concrete from it - plaintiff awarded summary judgment - Sale of Goods Act s 54(1).
Summary judgment - claim for price of goods (ready-mixed concrete) payable 45 days after supply and invoice in respect of each of many deliveries extending over months - defendant has counterclaim in respect of certain identified deliveries, as to which no claim was made for their price - plaintiff offers banks guarantees as security for satisfaction of the counterclaim should it succeed - plaintiff awarded summary judgment, with temporary stay of execution, stay to be lifted on provision of security.
HIS HONOUR: This is an unusual application for judgment under Rule 153. The plaintiff supplied concrete to the defendant, whose business is “placing” concrete, for a couple of projects in Toowoomba and in particular a shopping centre development known as Grand Central Project.
The plaintiff's application is that it be at liberty to sign judgment against the defendant for $173,158.92 plus interest. That represents the unpaid amount of its invoices for concrete supplied. Much larger sums have been paid already by the defendant.
The contract between the parties, to use an expression which begs the question, was one for supply and delivery to the project of readymixed concrete of six or so different specifications, for each of which the plaintiff had indicated a different price per cubic metre. The prices quoted by the plaintiff were inclusive of all charges and testing. The plaintiff, it seems to me, bound itself to supply concrete of the grades specified to the project at the prices specified without the defendant being under an obligation to take the concrete required from the plaintiff. There may have been some obligation on the defendant to the head contractor to stick with the plaintiff.
It tried to secure the defendant's loyalty, which I ought to say never seems to have been in question, by offering a “quantity rebate of $67,500” based on 29,000 cubic metres of concrete being used. That rebate was available pro rata if less than 29,000 cubic metres of concrete were used, the parties settling on a median value for the purposes of calculating a reduced quantity rebate of $94 per cubic metre. It was clear that the defendant would have to pay or “wear” the cost of any concrete used over the 29,000 cubic metres apart from variations. That volume was anticipated to be what the project required.
The plaintiff's payment terms were “45 days”, interpreted as being 45 days following supply of particular loads of concrete and the furnishing of invoices in respect of them. Concrete was supplied from about January 1996 to August 1997 is that not correct?
MR LILLEY: That's correct, Your Honour, Sorry, Your Honour, the plaintiff's claim relates from September ‘96 through to June ‘97, sorry.
HIS HONOUR: All right. The defendant concedes that, other things being equal, the plaintiff would have been entitied to expect payment 45 days after its invoices. Unfortunately, on or about 12 April 1996 the plaintiff supplied concrete to the project which it admits was substandard. A good deal of work had to be replaced. The head contractor has withheld $26,594.47 in respect of that concrete.
The plaintiff's insurer is ready, willing and able to make that sum available but only on terms suitable to it which would protect it and the plaintiff too against further claims. The consequence is that everyone is still waiting for some commercial solution. Mr Lilley, for the plaintiff, accepts that the plaintiff's application ought to be qualified by the exclusion of that amount. It is not the end of the untoward consequences of the substandard delivery.
The defendant asserts that it has incurred $28,459.47 in respect of direct labour costs, demolishing and replacing work, to which it adds $31,600 management and administration and $26,566.27 “overheads”, the last item at least being based on an identified industry standard. There are additional costs claimed by the defendant in respect of the April 12, 1996 deliveries which bring its claim to $95,000 approximately.
The claim originally made by the defendant included another $433,395 in respect of “formwork”. It is clear enough that the formwork contractor made a claim of that order. It was, in the end, settled for a considerably smaller sum and is now out of the picture. That settlement leads the plaintiff to suggest that the defendant makes high claims which ought to be scrutinised carefully.
At the hearing before me it was not necessary to get into the detail of the $95,000 claimed which contains a number of features suggesting it might be whittled back somewhat such as rounded-out figures for distances travelled, hours worked and the like. There was a good deal of weekend work at higher hourly rates. I am not making these comments to cast doubt on the defendant's claims. I am merely making the point that at some point they may come under scrutiny and justifiably.
The defendant raises other matters against the plaintiff which would overtop its claim if made out. For example, there is a claim to an additional “quantity rebate” of $5,685. For what it's worth, I record my agreement with Mr Lilley's submission that the plain meaning of parties' contractual documents is that $67,500 was the full extent of quantity rebate agreed on.
The defendant also claims $4,285 “performance back-charges”. That relates to various items identified in Exhibit U to Mr Van Eden's affidavit. It covers various complaints regarding the delivery of concrete to the project with consequences such as the defendant's pump being blocked and labour having to be supplied by it to clean up concrete spilt or discharged in the wrong place. There are also elements of delay included here.
Another similar claim concerns the plaintiff's alleged failure to supply adequate resources to coordinate concrete trucks on site during concrete pours, consistently with a requirement imposed by the defendant as one of its “standard conditions” set out in its letter of 11 January 1996. Exhibit E to that affidavit. According to that document which came 30 days after the defendant's purchase order, 36 days after its letter indicating the supply would be based on its standard supply agreement; the plaintiff's obligations included one to “coordinate concrete trucks on site during concrete pours, ensure no delays are experienced as a result of insufficient plant capacity/resources”. Mr Van Eden says he has “arrived at” a figure of $5,560 in respect of the defendant's loss in this regard.
Further claims raised by the defendant are $10,000 in respect of the costs of Mr Macchion, who now normally works as a manager for the defendant constructing facilities for the Olympic Games in Sydney - $10,000 is claimed in respect of Mr Macchion's being brought to Queensland in an attempt to resolve matters. $60,000 is said to be an appropriate estimate of “loss” attributable to slump tests which the plaintiff ought to have made in respect to concrete supplied by it. The evidence shows that the plaintiff did make a large number of tests. I am unsure whether the deficiency asserted was a failure to test or a failure to report on tests. If it's the latter, the obligation said to have been borne by the plaintiff, let alone any deficiency in its performance, seems to me to be extremely shadowy.
Another head of claim raised by the defendant in paragraphs 45 and thereabouts in Mr Macchion's affidavit is a sum “exceeding $25,000” for rectification work “occasioned by slump failure”.
It's the defendant's obligation in an application such as this to “condescend upon particulars” and show definite facts which, if proved, would entitle it to some relief against the plaintiff's claim either in the form of reduction (perhaps to 5 nothing) of the judgment amount or in the form of a stay or some other relief.
Much of what the defendant puts up relates to things which could happen. It's understandable that the defendant feels exposed given that the head contractor holds a performance guarantee which it controls to a value of $105,000 and that the head contractor is yet to pay a considerably larger sum to the defendant in respect of variations. The head contractor seems to hold the whip hand.
An interesting question which arises is whether the plaintiff ought to have to wait for its judgment until the defendant's position vis-a-vis the head contractor is clarified. That might never happen. There is a defects liability period of 12 months available to the head contractor, the operation of which is deferred at least to an extent each time further rectification work is done. Against a background of the plaintiff being prima facie entitled to payment after 45 days, I can see no basis on which the plaintiff is required to wait until events which are not its concern such as expiry of a defects liability period or perhaps litigation should be completed.
These questions assume importance because Mr Clothier puts up the defendant's claims not only as counterclaims but by way of a set-off. It's quite clear that a set-off is available as a defence to claims that the plaintiff might have for the price of goods supplied by it. Reference has been made to the statutory set-off provided by section 54(1) of the Sale of Goods Act and explained by the High Court in Healing v. Inglis 121 Commonwealth Law Reports 585 at 593 and 601.
It becomes important to identify the particulars of the contract or “price” which is in issue. My own view is that in the present circumstances, notwithstanding the overriding “contract” for supply at fixed prices to the project, there arose a series of separate transactions or “contracts”, as the defendant required deliveries of concrete of particular descriptions in particular quantities for purposes of the project. It seems to be common ground that the plaintiff make no claim in this action for the price of the deliveries of 12 April 1996. I am unable to accept that claims such as the performance back-charges, or the claim for failure to coordinate vehicles on site, and problems with the slump test possibly not having been done, amount to set-offs under section 54(1) or under the general law. It is my opinion the plaintiff ought not to have to wait until the defendant's position is clarified.
The plaintiff has taken a realistic approach to its situation and offered to supply a guarantee by a banker to the satisfaction of the Court as a security to the defendant for any claims it might have. Mr Lilley has said that the amount of that bank guarantee, which I would assume would be one controlled by the Court rather than by the defendant, might be raised from the $140,000 suggested in his client's material to $150,000 or even $160,000, and that it represents an arrangement over and above the $26,594.47 mentioned above. If it matters, Mr Lilley explained the $140,000 as covering the claims made by the defendant in Mr Van Eden's letter of 9 April 1997, exhibit G to his affidavit, less the very large formwork component now out of the picture, and other items such as the performance back-charges. The value of having in its hands the price of the concrete supplied by it makes it attractive to the plaintiff to make this unusual offer.
Mr Lilley was unable to draw my attention to any other case in which a Judge had been persuaded to grant summary judgment on such a basis. I am able see the attraction of it. The sum is not adequate to cover the full claims of the defendant. Those are escalating in a rather alarming way. Ninety-five thousand dollars remaining of exhibit G has been doubled, thanks to the addition of claims sworn to by Mr Macchion. Those claims in particular are for the most part speculative and not established or even asserted with the degree of particularity which I think is requisite in defence of an application like this. I am not persuaded that the defendant has shown any claim to a set-off in the sense of something arising out of any particular one of the discrete claims which go to make up the plaintiff's claim.
The matter has been conducted in such a way that there was no descent into the detail which might have linked some part of the “performance back-charges” to any particular invoice amount included in the charge. The figures are such that I would think that aspect de minimis, in any event. The defendant is in the position of asserting a counterclaim, more or less credible in different aspects; the $26,594.47 seems clear, it also seems likely that some part of the $95,000 remaining balance of exhibit G will be established, and other items may be as well. Traditionally the Courts have approached such a situation on the basis that the defendant shouldn't have to pay the plaintiff until its own claims are worked out. I suppose underlying that is a concern of the Court that money paid to the plaintiff may be lost forever. The present case is very different from that. It is not suggested that either side is impecunious. The banker's guarantee arrangement suggested by Mr Lilley would cover the bulk of the defendant's claims, although not all of what seemed to me somewhat overblown claims in total. The defendant shows that it is out of pocket by reason of matters that might be sheeted home to the plaintiff, only to a limited extent. In my opinion arguments could be made both ways in respect to items such as the “overheads” and management and administration expenses.
The result is that the application is successful, but not to the extent that the $26,594.47 is included. The judgment which the plaintiff will be granted liberty to enter will be stayed until the provision by the plaintiff, in a form satisfactory to the Court such that it will remain in control of it, of a banker's guarantee by way of security for the defendant's counterclaim in the sum of $150,000. This is a case in which liberty to apply should be granted to both parties. In particular it ought to be granted to the plaintiff so that the stay and security arrangements may be reviewed if the defendant fails to pursue its counterclaim assiduously.
...
HIS HONOUR: Interest is allowed at the rate or rates set out in the practice direction in respect of the payments making up the judgment sum, calculated from the date 45 days after the plaintiff's invoice. Execution on the judgment is stayed until provision by the plaintiff of a banker's guarantee in the sum of $150,000 to the satisfaction of the Court to be available as a security for the satisfaction of any judgment the defendant may obtain on its counterclaim in respect only of the claims described in paras 44, 45, and 52 to 64 inclusive of the affidavit of J J Van Eden filed on 3 October 1997. Liberty to apply and in particular to the plaintiff to apply for variation or release of the order for stay or security should the defendant not pursue its counterclaim assiduously.
...
HIS HONOUR: Nothing has to be done to preserve your right to claim the $26,594.47. I suppose if you think there is need you can come back under the liberty to apply. I am not asked to make any directions or anything to say that that issue goes ahead?
MR LILLEY: In view of the fact that we are not getting judgment for that sum, I suspect we can proceed on that issue.
HIS HONOUR: Perhaps I have got to say then, as to the balance of the plaintiff's claim, liberty to defend.
MR LILLEY: Yes, Your Honour.
HIS HONOUR: I will order that the defendant pay the plaintiff's costs of the action including the costs of today to be taxed, reserving to the Judge who determines the counterclaim the question whether the plaintiff ought to be ordered to pay any of the defendant's costs of the action to date or this application. Does that cover it all?
MR LILLEY: I believe so, Your Honour.
HIS HONOUR: I probably ought to note that I am aware of Mr Van Eden's assertion that Mr Wagner dissuaded him from getting the defendant's counterclaim organised and presented at an earlier date. I can't see any good reason why that ought to have stopped the defendant from getting ready at an earlier time, particularly as the plaintiff's prima facie right was to be paid 45 days after its invoices.