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- Unreported Judgment
Starzi Pty Ltd v Boss Building Maintenance (Australia) Pty Ltd QDC 168
DISTRICT COURT OF QUEENSLAND
Starzi Pty Ltd v Boss Building Maintenance (Australia) Pty Ltd & Anor  QDC 168
STARZI PTY LTD AS TRUSTEE FOR THE MOORE FAMILY TRUST
BOSS BUILDING MAINTENANCE (AUSTRALIA) PTY LTD
RADNIC PTY LTD AS TRUSTEE FOR THE DAY FAMILY TRUST
CLINTON JOHN MOORE and ANGELA MICHELLE MOORE
(1st Defendant added by counterclaim)
ROSS ALEXANDER DAY and NICOLE MAREE DAY
(2nd Defendant added by counterclaim)
District Court in Maroochydore
6th July 2016
1st July 2016
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – JUDGEMENTS AND ORDERS – where the 1st defendant does not defend part of the plaintiff’s claim in debt under a franchise agreement – where the 1st defendant counterclaims for damages as an account for profits for alleged breach of the franchise agreement – where the 1st defendant claims there is sufficient nexus for its counterclaim to be viewed as an equitable set off – whether judgement should be entered – whether order should be stayed pending the outcome of the 1st defendants counterclaim
Civil Proceedings Act 2011 s 20(5)(a)
D Galambos & Son Pty Ltd v McIntyre (1974) 5 ACTR 10, followed
J K Meredith for the applicant
M P Williams for the respondent
Griffith Parry Lawyers for the applicant
Spire Law for the respondent
- Starzi Pty Ltd is the plaintiff in a claim for payment for work done under a franchise agreement relating to the supply of building rectification and other services. The claim is brought against the first defendant franchisor, Boss Building Maintenance (Australia) Pty Ltd, and the second defendant Radnic Pty Ltd, formerly in partnership with Starzi as the franchisee. Although Radnic has been served, it has not defended the claim. Starzi applied for judgment for $89,005.86, representing that part of its claim not disputed by Boss Building in its defence.
- Boss Building conceded it has no defence to that part of the claim but opposed judgment being entered, because, it argued, its counterclaim exceeds the proposed judgment sum and raises an equitable set off to Starzi’s claim. Alternatively, if judgment is entered, Boss Building sought a stay of execution pending the determination of its counterclaim.
Should judgment be entered?
- Boss Building’s counterclaim is for either damages for breach of contract or an account for profits of a business, Coastal Building Rectification, which it claims Starzi is operating in breach of the franchise agreement. It also alleges Starzi breached the franchise agreement because of the dissolution of its partnership with Radnic, to which Boss Building did not consent.
- Before considering the set-off argument, something should be said about the interests of the second defendant, Radnic. Starzi’s claim is for a debt owed to the partnership operated by Starzi and Radnic as trade franchisee. That partnership has dissolved. It was not contested at the hearing that Boss Building and Radnic are now in a direct contractual relationship. Boss Building conceded Starzi has the right to recover partnership debts. Any accounting between Starzi and Radnic is a matter for those two entities. Radnic was served with these proceedings. It has not asserted a right to any part of the judgment sum, nor has it opposed judgment being entered. Any interest it may have in the judgment sum is not a constraint on Starzi’s application.
- Turning to the set-off argument, the counterclaim exceeds the judgment sought, whether by way of the claim damages or the claim for an account for profits.
- Correctly, in my view, counsel for Boss Building conceded its counterclaim does not raise a legal set-off. However, he argued it constituted an equitable set–off, a procedural right expressly preserved by the Civil Proceedings Act 2011.
- The parties agreed there had to be sufficient nexus between claim and counter-claim for the counter-claim to qualify as an equitable set-off. Both accepted the test as propounded by Keane JA (as he then was) that: “In order to rely upon a counterclaim as an equitable set off there must be such a nexus between the claim and cross-claim that the cross-claim can be said to impeach the plaintiff’s claim.”
- Boss Building argued there was sufficient nexus because the parties to both claim and counter-claim are the same and because the issues in dispute arise out of the parties’ contractual and other obligations pursuant to their trade franchise relationship. Further, the debt did not crystallise, in the sense of becoming due, until after the first act of breach alleged against Starzi.
- I am not satisfied those features of the counterclaim provide sufficient nexus to impeach Starzi’s claim. Although the amounts constituting the proposed judgment debt did not fall due until after the date of the first act of breach relied upon by Boss Building; the work was performed before that date. Boss Building accepted that the work has been done. It pleads no issue about the quality or value of the work performed. Boss Building has not pleaded any other basis for resisting payment of a debt it conceded is now payable. Further, Starzi’s claim does not involve any question of interpretation of the franchise agreement itself.
- The counter-claim arises from work allegedly performed under a business name Coastal Building Rectification. Starzi has not yet filed its pleading in response to the counterclaim (which was filed only a fortnight or so before the hearing). It is expected, however, that Starzi will contest the allegation that it operates the business as well as the allegations it breached the franchise agreement.
- I am not satisfied Boss Building’s counter-claim is so closely related to Starzi’s claim to make it positively unjust for Starzi to recover the debt, without set-off. On the facts as pleaded and on the evidence currently before the court, I do not consider there is ground for equitable intervention.
- There is no other basis for resisting judgment in the sum sought. The Amended Defence and Counter-claim raises no defence to the claim in that sum and there is no need for a trial of that part of the claim. Accordingly, judgment will be entered pursuant to Uniform Civil Procedure Rules 1999 r292, in the sum of $89,005.86.
Should execution of the judgment be stayed pending trial
- At the hearing, Boss Building submitted I should order a stay of execution if I entered judgment for any amount. Ordinarily, a judgment debtor is entitled to the fruits of the judgment unless there are special or exceptional circumstances. The applicant bears the onus of persuading the court it should make such an order.
- Boss Building argued Starzi had no capacity to meet the counterclaim if it ultimately succeeds. However, there is no evidence before me about the financial circumstances of either Starzi or Boss Building. I could not conclude Starzi’s financial status warrants a stay.
- Nor could I conclude that a stay is warranted because of Starzi’s conduct in these proceedings. Starzi has prosecuted its claim diligently. Proceedings commenced in September 2015. The counterclaim was not filed until 14 June, three days before the first date listed for hearing this application. It is also noteworthy that Boss Building has resisted repeated attempts to secure proper disclosure and, until it filed its Amended Defence and Counterclaim, it was at risk of judgment for failure to comply with orders for disclosure. Its conduct does not favour the court exercising discretion in its favour.
- In the circumstances, Boss Building has not discharged its onus of establishing special or exceptional circumstances warranting a stay of execution of the judgment.
- At the hearing I indicated that I would make an order for costs and give the parties an opportunity to apply for a different order. Subject to any submissions I might receive, I see no reason not to award Starzi its costs of the applications as originally filed and as amended following the filing of the Amended Defence and Counterclaim. If either party contends for a different costs order, they have 7 days to make a request through my associate for a further oral or written hearing on the question of costs only.
- Accordingly, I make the following orders:
- Boss Building Maintenance (Australia) Pty Ltd must pay the plaintiff the sum of $89,005.86.
- Unless otherwise ordered, Boss Building Maintenance (Australia) Pty Ltd must pay the plaintiff its costs of the application filed on 31 May 2016 and the amended application filed on 20 June 2016, assessed on the standard basis, if not agreed.
- Published Case Name:
Starzi Pty Ltd v Boss Building Maintenance (Australia) Pty Ltd & Anor
- Shortened Case Name:
Starzi Pty Ltd v Boss Building Maintenance (Australia) Pty Ltd
 QDC 168
06 Jul 2016