Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Summary judgment - Counterclaim - Need for equitable set­off - Sufficiency of evidence

Bridge Pump Co Pty Ltd v Myles Southwest Fuel Supplies Pty Ltd (Unreported, WASCA, Library No 970636, 22 October 1997)

McDonnell & East Ltd v McGregor [1936] HCA 28; (1936) 56 CLR 50

Melbourne Glass Pty Ltd v Coby Constructions Pty Ltd (1997) 14 BCL 409

1 REASONS OF THE COURT: This appeal was heard on 3 February 2012. Following the hearing, the court dismissed the appeal and indicated that reasons would follow shortly. These are the reasons of the court.

2 The appellant hired, from the respondent, transportable accommodation units of the kind used in remote mining sites. The appellant, in effect, on-hired the units to a mining company. The appellant failed to pay the respondent the requisite hire charges. The respondent terminated the hire of the units to the appellant, and sued to recover the unpaid hire charges as a liquidated sum.

3 The primary judge ordered summary judgment against the appellant in respect of the outstanding hire charges. The appellant appealed the order for summary judgment against it. It admitted the debt due to the respondent, and that the contract between the respondent and the appellant was duly terminated. There was also no challenge to the finding that the contract provided, in effect, that upon its termination the appellant was required, at its own expense, immediately to deliver up the units to, or as directed by, the respondent. It was also accepted by the parties that once the appellant had no right to possession of the units, the mining company could not resist any claim for their return by the respondent as owner. The appellant nevertheless contended, in effect, that the judge erred in failing to find that the appellant had a claim for unliquidated damages against the respondent for alleged interference with its contract with the mining company. The interference alleged was that the respondent had left the units on site with the mining company and had charged the mining company for their hire.

4 There was no dispute as to the relevant principles to be applied on summary judgment. In general terms, a defendant does not have to establish a defence on the balance of probabilities, but must at least show cause why there is an arguable defence: Bridge Pump Co Pty Ltd v Myles Southwest Fuel Supplies Pty Ltd (Unreported, WASCA, Library No 970636, 22 October 1997, 13).

5 There were many unsatisfactory aspects of the appellant's case, but, in essence, this appeal failed for two reasons.

6 First, a counterclaim merely amounting to a cross-action does not provide a defence to a plaintiff's claim: McDonnell & East Ltd v McGregor [1936] HCA 28; (1936) 56 CLR 50, 57 - 58. There was no contention in the grounds of appeal or the appellant's written submissions suggesting that the primary judge should have found that the appellant's alleged claim for unliquidated damages constituted an equitable set-off by way of defence to the respondent's claim in debt.

7 Secondly, even if there had been a ground of appeal contending that the judge erred in failing to find that the alleged tortious claim constituted an equitable set-off, there was no adequate evidence of the likely quantum of the appellant's claim. In seeking to resist an application for summary judgment based on an equitable set-off, the defendant must not only establish that it has an arguable claim on breach, but must also put before the court sufficient evidence to enable the court to make some assessment of the likely quantum of the defendant's claim. A defendant will not, in seeking to resist a summary judgment application, establish an arguable defence of set-off if the evidence in support of the quantum of its claim is so vague, uncertain and lacking in substance, that the court is unable to make any informed assessment of its likely quantum and whether the quantum is likely to reach or exceed the level of the plaintiff's claim in debt: Melbourne Glass Pty Ltd v Coby Constructions Pty Ltd (1997) 14 BCL 409, 418 - 419. The appellant's affidavit evidence before the judge was that the appellant had lost revenue from the respondent supplying the units directly to the mining company after the respondent had terminated its contract with the appellant. However, the claim for revenue, without deducting expenses, gave no indication of the likely quantum of the appellant's loss. A somewhat desultory attempt was made by counsel for the appellant, at the hearing of the appeal, to work out what the appellant's loss may have been. It transpired that whatever the figure might be, it would probably be nowhere near the level where it could be thought to impeach the whole of the respondent's claim in debt. In any event, it was apparent that counsel had no real confidence in his calculations, and that they could not be used to justify the orders sought by the appellant in the appeal.

8 These conclusions made it unnecessary to address the appellant's contentions that the judge erred in finding that the appellant did not have an arguable claim for tortious interference with contractual relations, and in finding that the appellant could not, in any event, have procured replacement accommodation units. Nevertheless, that last-mentioned contention also lacked merit. Whilst the appellant gave evidence of a conversation in which it told the mining company that it could replace the units, that is not evidence of the fact of its capacity to find replacement units. The appellant had, it appears, belatedly applied to the judge to adduce evidence of the fact, but the application was refused and there was no application for leave to appeal from that interlocutory decision of the primary judge.