S.O.S Plumbing Service (Qld) Pty Ltd v 28 Careel Developments Pty Ltd
[2016] QMC 6
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- S.O.S Plumbing Service (Qld) Pty Ltd v 28 Careel Developments Pty Ltd[2016] QMC 6
- Add to List
S.O.S Plumbing Service (Qld) Pty Ltd v 28 Careel Developments Pty Ltd[2016] QMC 6
S.O.S Plumbing Service (Qld) Pty Ltd v 28 Careel Developments Pty Ltd[2016] QMC 6
MAGISTRATES COURTS OF QUEENSLAND
CITATION: | S.O.S Plumbing Service (Qld) Pty Ltd –v- 28 Careel Developments Pty Ltd & Anor [2016] QMC 6 |
PARTIES: | S.O.S PLUMBING SERVICE (QLD) PTY LTD (Plaintiff) V 28 CAREEL DEVELOPMENTS PTY LTD (First Defendant) MAINZ DEVELOPMENTS PTY LTD (Second Defendant) |
FILE NO/S: | BM9171/2014 |
DIVISION: | Magistrates Courts |
PROCEEDING: | Civil Application |
DELIVERED ON: | 8 March 2016 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 19 February 2016 |
A/MAGISTRATE: | R Carmody |
ORDER: |
|
CATCHWORDS: | PRACTICE – Application to set aside regular judgement
SUBCONTRACTORS CHARGE
LEGISLATION Uniform Civil Procedure Rules 1999 – Rule 290 Evidence Act 1977 – s 92 Business Record Subcontractors’ Charges Act 1974 – ss 5, 10 and 11. |
COUNSEL: | Mr Nelson instructed by Alexander Law for the Respondent/Plaintiff |
SOLICITORS: | Mr Du Plessis, AG Edwards Legal and Compliance for the Applicant/First defendant |
Background
- [1]The first defendant applies to set aside judgment by default entered 5 February 2015. There is no dispute that judgment was regularly entered.
- [2]The plaintiff claimed $130,577.96 plus interest for breach of contract by the second defendant and also as against the first defendant as a sub contractor’s charge pursuant to s 10 Subcontractors ‘Charges Act 1974 (the Act).
- [3]During the period 10 June 2014 and 25 August 2014 the first defendant, which owned property at 28 Careel Close Helensvale, engaged the second defendant to do development works.
- [4]
- [5]The second defendant then engaged the plaintiff to do earthworks.
- [6]The plaintiff rendered invoices to the second defendants that were not paid.[3]
- [7]The first defendant says it was never provided with any subcontractors invoices from the second defendant or its sole director Craig Maindonald who was solely responsible for the project.[4]
- [8]On 29 October 2014 the plaintiff served a Form 1 Notice of Claim of Charge upon the first defendant at its registered office at Unit 2, 2 Gateway Court, Coomera requiring it to either pay the amount of the claim or to hold sufficient funds on its behalf.
- [9]On the same day, a Form 2 Notice to Contractor of Charge Being Given was served on the second defendant at its registered office at Unit 1, 28 Veggalas Cresent, Biggera Waters.
- [10]Also on that day the first and second defendants met and signed a Progress Claim Schedule purporting to show that a $1.1m progress claim up to base stage had been fully paid by the first defendant to the second defendant.[5]
- [11]The first defendant says that the Form 1 never came to its attention but even if it had there was nothing it could have done to assist the plaintiff since it held no money that could have been retained.[6]
- [12]The claim and statement of claim were sent by the plaintiff’s solicitors on 28 November 2014 to the registered office but, according to the first defendant, were never on- forwarded to it.[7] By that date the second defendant had abandoned the project. On 5 December 2014 an administrator of the second defendant was formally appointed. [8]
- [13]The court has a discretion to set aside a regularly obtained judgment.[9] It must consider whether the defendant has a satisfactory explanation for its failure to appear, any delay in making the application, the defendant’s conduct and good faith and whether there is a prima facie case on the merits.[10] Of these it is the last of these considerations that is the most cogent.
Has the first defendant given a satisfactory explanation for its failure to defend?
- [14]An affidavit to set aside judgment must demonstrate a “very compelling reason” for failure to appear.[11] A bald statement by the first defendant that “(T)he claims and statements of claims were served on the same address occupied by the second defendant but was (sic) never forwarded to the first defendant or its investors”[12] is, on its own, without other evidence to support adequate protocols and practices put in place by the first defendant for dealing with incoming mail, not a sufficient or satisfactory explanation for failure to appear.
- [15]It is also noted that the second defendant’s registered office is different to the first defendants and the address where the proceedings were served. Furthermore in all, there are three formal notices and proceedings which the first defendant says it did not receive – the Form 1, the Claim and Statement of Claim and the Statutory Demand for Payment.
Was there delay in making the application?
- [16]The first defendant states that it only became aware of the judgment on 7 November 2015 when a financier (not identified) notified it that a creditor’s check showed there was an outstanding judgment. [13]
- [17]On 17 November 2015 the first defendant’s solicitor contacted the plaintiff’s solicitors and the current application was filed on 21 January 2016. I accept there was no unreasonable delay in making the application.
The good faith of the first defendant
- [18]The first defendant is taking concrete steps to protect its legal rights. There is nothing to suggest bad faith on its part.
Will the plaintiff suffer any irreparable prejudice?
- [19]The plaintiff obtained judgment by default on 5 February 2015. Its solicitors issued a Creditor’s Statutory Demand for Payment of Debt pursuant to Corporations Act 2001 (459E(2)(e)) sent to the first defendant at its registered office on 2 April 2015. The plaintiff is obviously prejudiced to the extent that the judgment debt remains outstanding but there is no other evidence which supports a conclusion of irreparable prejudice.
Is there a defence amounting to a triable issue?
- [20]The first defendant submits that it has a good defence on the merits: at the time when the Form 1 Notice of Claim of Charge was served on 29 October, it held no money “payable under the contract to the subcontractor’s contractor or to a superior contractor” to which the charge could attach. It argues that it was thus impossible for it to “retain” any amount, or to pay any amount into court, since it had already paid the second defendant.[14] Accordingly there was, on its argument, no possibility of complying with the Act.
- [21]The first defendant also submits that it was never provided with any subcontractors’ invoices by the second defendant related to the works perform for the project. It says that the second defendant engaged subcontractors directly without the involvement of the first defendant.[15]
Subcontractors’ Charges Act 1974
- [22]The Act’s express purpose is to make better provision for securing the payment of money payable to subcontractors and for other purposes. It relevantly provides:
5. Charges in favour of subcontractors
- (1)If an employer contracts with a contractor for the performance of work upon or in respect of land or a building, or other structure or permanent improvement upon land or a chattel, every subcontractor of the contractor is entitled to—
- (a)a charge on the money payable to the contractor or a superior contractor under the contractor’s, or superior contractor’s, contract or subcontract; and
- (b)subject to subsection (4), a charge on any security for the contractor’s, or superior contractor’s, contract or subcontract.
- (2)The charge of a subcontractor secures payment in accordance with the subcontract of all money that is payable or is to become payable to the subcontractor for work done by the subcontractor under the subcontract.
- (4)The charge on a security to which a subcontractor is entitled under subsection (1)(b) secures a payment mentioned in subsection (2)—
- (a)only if the payment cannot be satisfied by the charge mentioned in subsection (1)(a); and
- (b)to the extent of the security’s maximum possible value for securing performance of the contractor’s, or superior contractor’s, contract or subcontract, other than to the extent that the security is required to be used for securing, wholly or partly, the performance of the contract or subcontract.
10. Notice of claim of charge
- (1)A subcontractor who intends to claim a charge on money payable under the contract to the subcontractor’s contractor or to a superior contractor—
- (a)must give notice to the employer or superior contractor by whom the money is payable, specifying the amount and particulars of the claim certified as prescribed by a qualified person and stating that the subcontractor requires the employer or superior contractor, as the case may be, to take the necessary steps to see that it is paid or secured to the subcontractor; and
- (aa)if a person other than the employer or superior contractor holds a security for the contract—must give notice in the approved form of having made the claim to the person holding the security; and
- (b)must give notice of having made the claim to the contractor to whom the money is payable.
- (1A)The claim is in respect of—
- (a)money payable to the subcontractor at the date of the notice; and
- (b)money to become payable to the subcontractor after the date of the notice for work done by the subcontractor prior to that date.
11 Consequences of notice of claim of charge
- (1)If a notice of claim of charge is given pursuant to section 10, the person to whom it is given must retain, until the court in which the claim is heard directs to whom and in what manner the same is to be paid, a sufficient part of the money that is or is to become payable by the person under the contract to satisfy the claim.
- (2)A person who fails to retain the amount that the person is required to retain is personally liable to pay to the subcontractor the amount of the claim not exceeding the amount that the person is required by this section to retain.
contractor as regards an employer, means a person who contracts directly with the employer to perform work and, as regards a subcontractor, means a person with whom the subcontractor contracts to perform work.
employer means a person who contracts with another person for the performance of work by that other person, or at whose request or on whose credit or behalf, with the person’s privity and consent, work is done, and includes all persons claiming under the person whose rights are acquired after the work is commenced, and in relation to a subcontractor includes the contractor or other subcontractor with and under whom the person has contracted, but a mortgagee who advances money to an employer is not deemed to be an employer by reason thereof.
- [23]Accordingly, every subcontractor (such as the plaintiff) is entitled to a charge on the money payable to the contractor under the contract and a charge on any security. The charge secures payment of all money payable to the subcontractor for work done.
- [24]A contractor is required to give notice stating that it requires the employer or superior contractor, to take the necessary steps to see that it is paid or secured to the subcontractor.
- [25]In the event of a notice of claim of charge being given the recipient must retain sufficient part of the money that is or is to become payable under the contract. Anyone who fails to retain the required amount becomes personally liable to pay the subcontractor.
The first defendant’s evidence and argument
- [26]Whether the first defendant held any” money payable” to the second defendant under their contract for the purposes of s 5(1)(a) is a question of fact to be proved as a probability on credible and admissible evidence in the event a trial is warranted.
- [27]The only evidence put on by the first defendant to prove the key fact is business records asserting that the first defendant had made six progress payments totalling $1,400,000 to the second defendant between 29 April 2014 and 17 October 2014 for base stage works.
- [28]The plaintiff objects to the admissibility of Exhibit C on the ground that it is documentary hearsay.
- [29]Even assuming it to be a business record under s 92 Evidence Act 1977, on an application to set aside a regularly entered judgment by default, it is insufficient evidence of the first defendant’s claim that no money was payable to the second defendant as at 29 October for the following reasons:
- (a)Ms Li does not swear to the truth of its contents and nor does she produce any source documents such as bank statements or receipts;
- (b)Tellingly, Ms Li does not swear that progress claim 7 which, according to Exhibit C is payable for base stage work, had been paid before 29 October;
- (c)Oddly, the due date of each tax invoice is the same as the date of issue;
- (d)Ms Li does not address whether the first defendant held any security from the second defendant chargeable by the plaintiff under s 5(1)(b).
- [30]It is one thing to say that no money was payable but quite another to give substance to it. However the first defendant has not put on any credible evidence supporting its denial of personal liability other than Exhibit C which, even if admissible, falls well short of the standard required especially when it would have been easy to prove the truth of its contents via bank statements showing direct debit or transfers or receipts from the second defendant. Without verification or explanation Exhibit C is not a trustworthy document.
- [31]Accordingly I do not accept that Ms Li has really sworn to or demonstrated that there was no money payable to the second defendant it could retain to secure to the plaintiff’s claim
- [32]Moreover the consequence of failing to retain progress payments due but not made to the second defendant is the personal liability of the first defendant for the plaintiff’s unpaid debt under s 11.
Conclusion
- [33]For these reasons I am not convinced that the first defendant has a genuine defence with realistic prospects of success at a full hearing. It has not adduced sufficient evidence to discharge the onus of establishing a genuine triable issue or persuaded me to favourably exercise the discretion to set aside the regularly entered judgment.
- [34]The first defendant’s explanation for its failure to defend is also weak and unsatisfactory.
- [35]Finally, the first defendant has not exhibited a proposed defence to Ms Li’s affidavit.
Orders
- [36]Application dismissed.
- [37]The first defendant pay the plaintiff’s costs of the application on the relevant Magistrates Court scale.
Footnotes
[1] Affidavit of M Li 21/1/16 at [6]
[2] First defendant’s submissions at [2]
[3] Affidavit of M Spragg 2/2/16 at {5] & [6]
[4] Affidavid of M Li [8]
[5] Affidavit of M Li [9]
[6] Affidavit of M Li [11]
[7] Affidavit of M Li [13]
[8] Affidavit of M Li [14] & [16]
[9] Rule 290 Uniform Civil Procedure Rules 1999
[10] National Mutual Life Association of Australasia Ltd v Oasis Development Pty Ltd [1983] 2 Qd R 441 at 449, Yankee Doodles Pty Ltd [1999] QSC 134 at [13]
[11] Yankee Doodles at 13]
[12] Submissions at [9]
[13] Affidavit of M Li at [3]
[14] Submissions [20]
[15]Affidavit of M Li [8] Submissions [4]