Interco Pty Ltd v Schiavello Systems [2006] NSWSC 58 | Case summary

2637/05 - INTERCO PTY LTD v SCHIAVELLO SYSTEMS (NSW) PTY LTD JUDGMENT 1 HIS HONOUR: This is an application under s 459G of the Corporations Act 2001 ( Cth) to set aside a statutory demand. The case was originally listed before an Associate Justice whose list became too heavy, on the basis it would take one day plus. It has, as happens with most of these cases, taken about an hour to hear. 2 The defendant was a subcontractor to either the plaintiff or a related company of the plaintiff, Interco Contracting Pty Limited. The defendant carried out the work between, it would seem, about 3 November and 13 December 2004. It sent an invoice to the plaintiff on 21 December 2004 and again on 2 February 2005. There is a further document of 24 February, which is headed Letter of Demand. 3 On 8 February or shortly before 8 February Ms Jackson, the Accounts Manager of this part of the defendant's business, says she had a conversation with a person in the employment of the Interco Group, whose name is Kasia. She says she asked Kasia, "When are you going to pay us for the job?". Kasia said, "We can't pay you until we have received a signed copy of the sub-contract". Ms Jackson said, "I will see if we have got a copy of the document on the file. I have not seen it". She said that she checked the file, could not find any document such as Kasia had referred to and rang Kasia back and said, "I can't find any contract. Can you please send me a copy?" and she says that a copy of the sub-contract agreement arrived in early February 2005 and she signed it and sent it back, but she was not paid. 4 The sub-contract was one in the name of Interco Contracting Pty Limited. It was a printed form containing many conditions covering some 13 pages. No evidence was called from Kasia. No evidence was provided as to whether Ms Jackson, as an Accounts Manager, had any authority on behalf of the defendant to sign any contract, particularly one containing very detailed provisions as to the performance of the sub-contract. 5 Ms Raper, who appeared for the plaintiff, drew my attention to clause 39(v) of the sub-contract, which says: "If the Subcontractor fails to sign and return a copy of this Subcontract Agreement to Interco within 7 days of the date of issue of the Subcontract Agreement to the Subcontractor by Interco, unless the Subcontractor has commenced work or placing orders for the Works, in which case the Subcontractor shall be deemed to have executed the Subcontract Agreement, then Interco may forthwith appoint others to undertake the Works, and any undertaking by Interco to the Subcontractor with regard to the Works shall be deemed to be void, and the Subcontractor shall not be entitled to any recompense, damages and the like whatsoever as a consequence." 6 Such a subclause would appear to be completely invalid in view of cases such as the ancient case of Felthouse v Bindley (1862) 13 CB (NS) 869; 142 ER 1037, but it certainly cannot have any relevance in a case where there is absolutely no evidence as to when, if at all, the defendant ever received a copy of the proposed sub-contract document. No-one on behalf of the plaintiff ever gave any evidence as to sending a copy and Ms Jackson says she did not have a copy and had to ask for one to be sent to her from Kasia in February. The work had been finished about two months earlier. 7 Ms Raper says that it is very significant that when one looks through the negotiations for the contract there is flavour in the e-mails that there will be the signing of a formal agreement and that the form of this will be as sent by the plaintiff's group. I agree the evidence does show that that was the flavour, but there is no material to show that the draft form of agreement was ever sent. The work was commenced in early November. It was finished in mid-December and that must have been done pursuant to a contract. The contract was an actual contract or, alternatively, at the very least a provisional contract which was going to be replaced by a more formal contract in due course. However, if one is going to have a provisional contract which is to be replaced later by a final contract one has to have the final contract signed before the work is finished. It is complete nonsense to do the work first and then enter into a contract which contains detailed provisions as to extension of time, liquidated damages and obligations about the way in which the work is done when the work is completely finished. Ordinarily a back-dated contract can only operate by some sort of process of estoppel which process cannot apply to contracts for performance of work. 8 Accordingly, even though Ms Jackson sent back the sub-contract in its 13 pages and even assuming - and I should not assume this because if there was proper evidence of it, it could have been placed before me - that she had authority to do so, that could not affect what was the contract between the parties at the time when the work was done. 9 I should mention one further point and that is that Interco Contracting Pty Limited went into administration and then into liquidation starting in about May 2005. The defendant was sent some papers in connection with that liquidation and its director, Mr Martin, signed a document called Informal Proof of Debt Form, claiming the money against Interco Contracting Pty Limited. He withdrew that Informal Proof of Debt Form yesterday, and he says that it was done because of confusion in his mind. That is a factor to be taken into account but it does not seem to me that it is critical. That is because one has got to look at the contract between the parties at the time the work was done. 10 The negotiations took place between Mr Swindon, on behalf of the defendant, and a person called Nic or a Mr Keeping on behalf of Interco. We know that Mr Keeping is an officer of Interco Contracting, but we do not know what other roles he has within the Interco Group. Most of the correspondence is dealt with informally by short memorandum addressed merely to "Interco" or by e-mail. The words, Interco Pty Limited, appear on various e-mails from Mr Keeping, who described himself as Project Manager, such as annexure E to Mr Swindon's affidavit and annexure F. 11 The letterhead of the Interco Group contains a list of the various companies in the group at the bottom of the letterhead, including both the leading company, Interco Pty Limited and Interco Contracting Pty Limited. The material in the relevant period contains nothing that I can see that would identify the contracting party as Interco Contracting Pty Limited. The only time it seems to me that that company comes into the equation is in February after the invoices were sent. The invoices were sent to Interco Pty Limited and that would suggest that Ms Jackson and the records had that as being the company for whom the work was being done. 12 Where there are groups of companies and especially in cases where the groups of companies have a list of all the companies on their letterhead, if it is intended that one particular company in the group is to be the contracting party other than the one to whom the documents tend to name, then that must be done clearly and fully whilst the contract is being negotiated and before it commences. 13 There is other material in the plaintiff's affidavits to show that, internally, it generated cheques in favour of the defendant (though it never actually sent out any cheques) and other documents with the name Interco Contracting Pty Limited. However there is on the other hand, the document which is annexure A to Mr Gough's affidavit, the project initiation request, addressed to "Interco Pty Limited, Attention: Graham Keeping". It seems to me that there is no sufficient material which would show that any entity other than the plaintiff was the entity for which the defendant did this work. 14 Ms Raper referred me to cases which say that the limit of the court's examination in this sort of matter is to ascertain as to whether there is a genuine dispute and that I should not go into details. She put that as long as there is more than a mere claim of a genuine dispute and there is some material to back it up, then I should set aside the statutory demand. That may be the situation where there are questions of fact and questions need to be decided by the ultimate tribunal, either the District Court or this court, but in the instant case all of the material before the court, when properly analysed, shows as a matter of legal analysis of the facts most favourable to the alleged debtor that the proper debtor is the plaintiff. 15 Accordingly, I dismiss the present application with costs but I extend the time for compliance with the statutory demand until 22 February 2006. 16 The exhibit can be retained.

Interco Pty Ltd v Schiavello Systems

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