Sinergia Construction Project Management Pty Ltd v Clear Interiors Pty Ltd

overview 3 The defendant operates a joinery business. In March 2016 it completed works for the fit out of a store situated in the Colonnades Shopping Centre in South Australia. The store trades under the name "Wok & Dumpling". The defendant issued an invoice addressed to the plaintiff in the amount of $37,779.50. The amount specified on the invoice is the debt which now forms the subject matter of the statutory demand. 4 The plaintiff alleges that there is a genuine dispute as to whether it is liable in contract to pay the debt so as to justify the setting aside of the statutory demand: see s 459H(1)(a) of the Act. It alleges that the debt is owed by the owner of the store, Wok & Dumpling Pty Ltd (Wok & Dumpling), and that it only ever dealt with the defendant in the capacity of Wok & Dumpling's "consultant" or as an "intermediary" and not as a contracting party. 5 The genuine dispute is alleged in the originating process in the following terms (original spelling and grammar retained): 1. That the Plaintiff is a consulting firm engaged by Wok & Dumpling Pty Ltd 2. The Defendant was at all times engaged by Wok & Dumplings Pty LTD and was at no time engaged by the Plaintiff. 3. The Defendant was aware of the contractual arrangement between the Defendant and Wok & Dumplings 4. The Plaintiff has not entered into a contractual relationship with the Defendant that would enable the Defendant to invoice the Defendant. 6 The closing words of [4] are clearly intended to read "enable the defendant to invoice the plaintiff". I will proceed on that basis. 7 In order to demonstrate that there is a genuine dispute about the existence of the debt, it is sufficient that the plaintiff show an arguable basis on the facts asserted with sufficient particularity to enable the Court to determine that its claims are made in good faith and are not fanciful. The threshold is a low one. The test is akin to that which applies on an application for interlocutory relief, namely that there is a serious question to be tried: Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1993) 47 FCR 451 at 465 (Beazley J); Chase Manhattan Bank Australia Ltd v Oscty Pty Ltd (1995) 17 ACSR 128 at 135 - 136 (Lindgren J). 8 Section 459G(3)(a) requires that an application made in accordance with s 459G be supported by an affidavit filed in the Court within 21 days after the demand is served. The plaintiff relies on an affidavit sworn by Mr Desmond John Struck on 21 June 2016 comprising nine paragraphs. It reads (original spelling and grammar retained): 1. I am the Company Director of the Sinergia Constructions Project Management Pty Ltd and I am authorised to make this affidavit on behalf of the Applicant. 2. The Applicant runs a project management consulting firm. 3. The Applicant was engaged by Wok & Dumplings Pty Ltd ACN 609949359 for a construction job. 4. The Applicant engage the Respondent on behalf of the Wok & Dumplings Pty Ltd acting only as an intermediary 5. The Respondent was at all times engaged by Wok & Dumplings Pty LTD and was at no time engaged by the Applicant. 6. At all material times during negotiations contract executions the Respondent was made aware that their contractual obligation was with Wok & Dumplings and not the Applicant. 7. The Respondent raised an invoice which was addressed to the Applicant. 8. The Respondent raised a Statutory Demand which was served on my on the Applicant 31 May 2016. I refer to annexure "AB1" being a copy of the Statutory Demand 9. I am not the party responsible for the payment of the invoice and after receipt of the Statutory Demand I have advised the Respondent of this. 9 The plaintiff subsequently filed two further affidavits sworn by Mr Struck on 11 August 2016 and 5 September 2016, to which I will later refer. 10 Mr Struck is the sole director of the plaintiff company. He was granted leave to represent the plaintiff on the hearing of this application. 11 Although the plaintiff describes its role as an "intermediary," it is clear on the affidavit material that the plaintiff intends to assert that it acted at all times as agent for Wok & Dumpling which, it alleged, was the true and only contracting party.

PRINCIPLES 12 On an application to set aside a statutory demand, it is not this Court's role to resolve the parties' competing claims. As I have said, it is sufficient that the plaintiff demonstrate that there is a serious question to be tried. 13 However, the defendant contends that in circumstances where the outcome of a genuine dispute depends upon the construction of a commercial contract, the Court may determine the substantive question of construction on the application to set aside a statutory demand. There appears to be some support for that contention in the judgment of Black J in In the matter of Infratel Networks Pty Limited [2012] NSWSC 943 (Infratel) at [24]: Whether such a dispute exists depends upon the construction of the Infratel contract and the Court will ordinarily determine such a question in an application to set aside a statutory demand where the factual matrix for the determination is present and there has been sufficient time for the parties to make proper submissions as to the question: Delnorth Pty Ltd v State Bank of New South Wales (1995) 17 ACSR 379 at 384; Re Seduce Group Australia Pty Ltd [2011] NSWSC 290 at [27]. 14 The important qualification to that principle, as observed by Black J, is that the factual matrix relevant to the determination of the proper construction of the contract is "present", in the sense that the relevant factual matrix is not, of itself, the subject of a genuine dispute between the parties. The relevant facts are those facts that would affect the way in which the language of the document would be understood by a reasonable person: see Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, cited with approval in Maggbury Pty Limited v Hafele Australia Pty Limited (2001) 210 CLR 181 at [11] and Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22]. See also Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at [40] and International Air Transport Association v Ansett Australia Holdings Limited (2008) 234 CLR 151 at [8] and [53]. There is an important distinction to be drawn between facts falling within those principles and inadmissible parole evidence going to contradict the ordinary and objective meaning of the words of a contract: see Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347 - 353 (Mason J). 15 The appropriateness of determining a disputed point of construction in the context of an application to set aside a statutory demand was earlier considered by Barrett J in Drillsearch Energy Ltd v Carling Capital Partners Pty Ltd [2009] NSWSC 1192 (Drillsearch) at [45]. In that case, the recipient of the demand alleged a genuine dispute about the meaning of the word "acquisition" in a written agreement. His Honour said: The existence of the dispute about the correct construction of the takeover mandate agreement means that there is also a dispute about the existence of the debt that would exist if the defendant's preferred construction were correct but not if the plaintiff's preferred construction were correct. A dispute as to the existence of a debt that is the product of a dispute about construction is not removed from s 459H(1)(a) just because the issue in contention is one of construction. While it has been said that 'a short point of law or the construction of documents or agreed facts' may, unlike a disputed question of fact, be determined upon a s 459G application (see Delnorth Pty Ltd v State Bank of New South Wales (1995) 17 ACSR 379 at 384), it does not follow that the court is compelled to make such a determination. In the case of a legal argument, determination might be appropriate if it were, in the words of McLelland CJ in Eq in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, a 'patently feeble legal argument'. 16 The principles stated in Drillsearch and Infratel are not inconsistent. Where the basis for the alleged dispute is a question of law or construction that is not "patently feeble" and there are arguable alternatives as to the correct outcome, the Court ordinarily should not attempt to resolve the argument on an application made under s 459G of the Act. However, where the relevant factual matrix is present and not genuinely disputed, and the parties have had sufficient opportunity to make submissions in relation to the disputed construction of a document, it may be appropriate for the Court to determine the issue. 17 I now turn to determine whether there is a genuine dispute as to any one of the following issues: (1) whether the defendant performed works pursuant to a contract so as to give rise to a contractual right to payment; (2) whether the plaintiff is a party to the relevant contract; (3) whether the plaintiff is personally liable under the contract to pay the amount specified on the invoices forming the subject matter of the statutory demand.

the contract 18 On the material before me, there is no genuine dispute as to the following facts. 19 Mr Struck was at all relevant times a director of the plaintiff company. 20 Between 22 December 2015 and 4 April 2016, Mr Struck was also a director of Wok & Dumpling. 21 Mr Daniel Muir was, at 23 February 2016, an employee of the defendant company. 22 As at 3 February 2016, Mr Muir was the director of a company named Required Projects Pty Ltd (Required Projects). 23 On or around 3 February 2016, Mr Muir, on behalf of Required Projects, sent to the plaintiff a document titled "Quotation". That document: (1) names the plaintiff company as "CLIENT"; (2) is marked to the attention of Mr Struck and to no other person; (3) states as its subject "WOK+DUMPLING COLONNADES - Joinery"; (4) states "we have pleasure in submitting our quotation for the supply, delivery and installation of joinery/metal works for the above mentioned project in accordance with drawings, schedules, and specifications provided"; (5) gives a quotation for joinery works in the amount of $46,073.00, excluding GST; (6) refers to a document titled "SNG - Subcontractor TCs - short contract.pdf"; (7) states "The above mentioned client whom has signed and agreed to the terms and conditions is responsible for full payment of the account". 24 On 22 February 2016, Required Projects submitted a quotation for additional works in connection with another store referred to as COCOLAT Colonnades. 25 On 23 February 2016, the plaintiff sent to the defendant a document titled "Letter of Award". That document: (1) has, at its footer, the business name of the plaintiff company; (2) bears at the top of the page the business name and logo of the plaintiff company, together with a stylised logo containing the words "WOK+Dumpling"; (3) is expressed to relate to a project described as "Project: W+D-002 Wok & Dumpling Colonnades"; (4) commences with the words: "We are pleased to inform you that your final tender offer issued via email dated 22.02.2016 for $33,200.00 (excluding GST) for the Joinery package has been accepted, and we confirm our intentions to enter into a Trade Contract Agreement with Clear Interiors for the Joinery Works as documented and tendered" (emphasis added); (5) states that "The agreed form of Contract is the: Sub-Contractor Terms & Conditions provided at tender."; (6) concludes "We look forward to a mutually rewarding relationship with your Company on this project and request that you sign below and return a copy to us promptly."; (7) makes express provision, at its base, for the application of three signatures (excluding witnesses): one above the business name of the plaintiff company, one above the words "Wok & Dumpling" and one above the words "Sub-Contractor". Mr Muir executed the Letter of Award as "Sub-Contractor". The letter is not executed by any person on behalf of the plaintiff or Wok & Dumpling. 26 Mr Struck acknowledged in the course of submissions that the "tender offer" to which the Letter of Award refers is the same quotation given by Required Projects on 3 February 2016. No explanation is given by either party as to why the price stated in the quotation differs from that stated in the Letter of Award or why the date of the defendant's tender offer (namely 3 February 2016) differs from the date ascribed to the offer in the Letter of Award (namely 22 February 2016). The plaintiff alleges no genuine dispute in connection with those discrepancies. 27 Mr Struck did, however, explain that he understood that Required Projects had changed its name to Clear Interiors, being the name of the defendant company. It is not in dispute that Required Projects is in fact a different legal entity to the defendant company. Again, the plaintiff did not seek to found any genuine dispute on the circumstance that the offer referred to in the Letter of Award was given by Required Projects and not by the defendant. For reasons that will become clear, the formation of a binding contract ultimately does not turn upon that issue. 28 The Court also has before it a document titled "SUB-CONTRACT TERMS & CONDITIONS" (the Terms and Conditions). Both parties acknowledged that it is the document which constitutes the "Sub-contractor Terms & Conditions provided at tender" referred to in the Letter of Award. It is not disputed that the Terms and Conditions governed the terms upon which the works were to be undertaken by the defendant. The Terms and Conditions: (1) do not specify the contracted price for the performance of the works; (2) were prepared by and proffered by the plaintiff company; (3) make no reference to Wok & Dumpling or the existence of any other party or third party affected by the Terms and Conditions; (4) expressly and repeatedly refer throughout to the plaintiff by name; (5) are expressed in terms conferring substantive rights and other benefits on the plaintiff including (without being exhaustive): (a) the right to make good any property damage caused by the defendant and to deduct the make-good expenses from money owing to the defendant; (b) the right to agree alternative amounts for liquidated damages other than those specified in the document; (c) the right to agree variations to the agreement in writing; (d) the right to agree an alternative defects liability period to that specified in the document; (e) the right to carry out works on behalf of the defendant in the event that the defendant fails to carry out works in accordance with the agreed program of works, and the right to charge the defendant for doing so; (f) the right to terminate the agreement in the event of a defined default and to carry out works on behalf of the defendant in that event, coupled with an express disclaimer that "Such action shall not prejudice the right of [the plaintiff] to recover from [the defendant] damages for any breaches". 29 The Terms and Conditions contain no express words limiting the capacity in which the plaintiff was to act in exercising rights of the kind to which I have referred. There is no express reference in the document or in the Letter of Award to the existence of any third party or any agency relationship existing between the plaintiff and any other person. 30 Before continuing, it is convenient at this juncture to set out the terms of cl 1(iii) and cl 8 of the Terms and Conditions: SUB-CONTRACT TERMS & CONDITIONS 1. The following is agreed to by the parties (iii) The conditions detailed herein (which shall only be varied, modified or rescinded by written agreement executed by Sinergia Construction Project Management contain the whole of the terms and conditions applicable to this agreement and the sub-contractors quotation, tender, acceptance, or confirmation shall not apply to this agreement. Commencement on site by the sub-contractor is deemed as full and final acceptance of all terms and conditions contained herewith. … 8. Payments (i) Payment shall be made to the sub-contractor as follows: Thirty (30) day Account: Progress Claims or invoices will be paid by the end of the following calendar month provided accurately documented originals (facsimiles not accepted) of invoices for completed works are received by Sinergia Construction Project Management no later than the 21st day of the month. Should invoices not be received by the stipulated date payments will be made at the end of the following month. All invoices/progress claims must be forwarded to - sngcpm@outlook.com (ii) Variations: Payments for variations shall be made in accordance with the above terms in 8(i), provided that in all cases the variation has had prior approval in writing by Sinergia Construction Project Management. 31 Clause 1(iii) is in the nature of an entire agreement clause. In light of that clause I do not place any weight for present purposes on the statement in the Required Projects quotation to the effect that the plaintiff was to be liable to pay the defendant for the performance of the joinery works. The documents evidencing the terms of the contract are the Letter of Award and the Terms and Conditions. 32 Against the background of those documentary materials, Mr Struck submitted that the plaintiff was not privy to any contract with the defendant because no person on behalf of the plaintiff had executed the Letter of Award. That is, in my opinion, a patently feeble assertion. There is no evidence before the Court to support any inference that the plaintiff did not intend to be legally bound unless it formally executed a written document: see Masters v Cameron (1954) 91 CLR 353. Such an inference would be inconsistent in any event with the express terms of cl 1(iii) of the Terms and Conditions, which state that the defendant itself would be deemed to have agreed to the terms embodied in that document upon the commencement of works on site. The assertion is also inconsistent with the plaintiff's own express words in the Letter of Award confirming its "intention to enter into" a contract. In my opinion, there can be no argument that the parties to the contract became legally bound upon the defendant executing the Letter of Award on 23 February 2016 or, if not at that time, at the date upon which works commenced at the site. Either way, there can be no genuine dispute that there is a binding contract in existence. 33 Moreover, there is, in my opinion, nothing in the affidavit material that would evidence the existence of a genuine dispute that there was in existence a contract to which the plaintiff itself was a party. The plaintiff's status as a contracting party cannot seriously be disputed, especially having regard to the express words of the Terms and Conditions, the clear intention on the face of the Letter of Award that there was more than one entity intending to contract with the defendant (one of which was the plaintiff), the reference at all times to the defendant being a "sub-contractor", the quotation referred to in the Letter of Award having been directed only to the plaintiff and to no other entity, and the express conferral of rights personally upon the plaintiff in respect of which the contract clearly contemplates the plaintiff itself may sue. All of those factors render inarguable the plaintiff's assertion that it was merely a "consultant" or "intermediary" and not a contracting party at all.

AGENCY ISSUES 34 It remains to be determined whether there is admissible evidence of genuinely disputed facts that might affect the way in which the language in the document would be understood by a reasonable person, or whether there is otherwise a genuine dispute as to whether the plaintiff is liable to pay the sum specified in the statutory demand. Two issues arise. First, whether it is at least arguable that the plaintiff contracted only in the capacity as agent for a principal (in this case Wok & Dumpling) and, secondly, if it did so contract, whether there is a genuine dispute as to whether the plaintiff is nonetheless personally liable to pay the agreed sum. That, in my opinion, is the effect of the very broad assertion made in [4] and [6] of Mr Struck's affidavit sworn on 21 June 2016, extracted at [8] of these reasons. 35 Mr Struck's broad assertions in that affidavit were repeated in his second affidavit of 11 August 2016 in the following terms (original spelling and grammar retained): 10. The Plaintiff have at all materials times made it clear that the Plaintiff is merely an agent and any Invoices rendered for services would be forwarded to the responsible client to be discharged by the client directly. .. 20. The Defendant was at all times engaged by Wok & Dumplings Pty Ltd and was at no time engaged by the Plaintiff. 21. At all material times during negotiations and contact executions the Defendant was made aware that their contractual obligation was with Wok & Dumplings and not with the Plaintiff. … 23. The Plaintiff is not the party responsible for the payment of the Invoice. 36 The defendant submitted that these broad assertions lacked the necessary precision so as to enable the Court to conclude that the plaintiff's dispute as to the identity of the true debtor is "genuine". I accept that submission. The claim that certain things were "made clear" to the defendant is a claim so lacking in specificity it cannot be safely relied upon. The same considerations apply to the phrase "at all times ... the defendant was made aware". The assertion at [20] of the affidavit does nothing more than to state the nature of the dispute raised by the plaintiff but not the factual grounds for it. Notwithstanding those deficiencies, it is necessary to have regard to the whole of the evidence so as to ascertain whether the broad allegations and conclusions are otherwise reasonably capable of being supported. 37 The imprecision in the allegations was not cured by a third affidavit sworn by Mr Struck on 5 September 2016, after he had read the affidavit material sworn by representatives of the defendant. The defendant's affidavits contained denials that it had been "made clear" or that they had been "made aware" that the plaintiff would not be personally liable to pay the defendant for its work. In response to those denials, Mr Struck, in turn, deposed bare denials of the defendant's evidence. He then stated at [13]: … I further say that in various correspondences between the Defendant's employee Daniel Muir and the Plaintiff, the Plaintiff always made it clear that money related matters, including quotes and payments of Invoices were determined by the Plaintiff's clients and not the plaintiff. 38 There is no evidence in the plaintiff's affidavit material of any specific oral conversation between any representative of the plaintiff and any representative of the defendant to the effect asserted in that paragraph. 39 When asked by the Court to identify the "various correspondence" to which Mr Struck referred, Mr Struck relied upon email correspondence post-dating the formation of the contract in issue and that did not otherwise have the effect contended for. The document is an email exchange of 24 February 2016 relating to the defendant's work in respect of another contract, being the works at the COCOLAT store to which I referred at [24] of these reasons. That email evidences nothing more than a direction given by the owner of the COCOLAT store that the defendant deal directly with the owner in connection with the payment of invoices issued to the plaintiff. That correspondence does not "make it clear that money related matters, including quotes and payments of invoices were determined by the Plaintiff's clients and not the plaintiff". At most, the correspondence might establish that the owner of the COCOLAT store was jointly liable to pay the defendant or was otherwise liable to indemnify the plaintiff in respect of its obligations to the defendant. It is notable that the only documentary evidence of a clear pre-contractual representation as to the plaintiff's liability to pay is the defendant's tender offer in which the defendant clearly states an intention that the plaintiff be so liable. The plaintiff can point to no evidence in support of the assertion at [21] of Mr Struck's affidavit of 11 August 2016. The documentary evidence is inconsistent with the assertion. 40 Mr Struck's submissions proceeded on the mistaken assumption that if COCOLAT (and, by extension, Wok & Dumpling) was liable to pay the defendant, then it would necessarily follow that the plaintiff could not be liable. As explained by the Full Court in Australian Trade Commission v Goodman Fielder Industries Ltd (1992) 36 FCR 517 (Goodman Fielder) at 521: In Teheran-Europe Co Ltd v ST Belton (Tractors) Ltd [1968] 2 QB 53 at 59 - 60 Donaldson J said that an agent can conclude a contract on behalf of his principal in one of three ways: (a) By creating privity of contract between the third party and his principal without himself becoming a party to the contract. (b) By creating privity of contract between the third party and his principal, whilst also himself becoming a party to the contract. (c) By creating privity of contract between himself and the third party, but no such privity between the third party and his principal. 41 The principles are conveniently summarised in GE Dal Pont's Law of Agency, 3rd edition at [19.30]. In the context of contrasting the respective legal positions of agents for disclosed or undisclosed principals, the learned author states: The existence of an undisclosed principal does not serve to absolve the agent from personal liability on the contract, in that 'to allow evidence to be given that the party who appears on the face of the instrument to be personally a contracting party, is not such, would be to allow parol evidence to contradict the written agreement; which cannot be done'. It can only serve the purpose of showing that other persons are entitled or liable as well. For the same reason, an agent who contracts in writing in his or her own name does not cease personally to be contractually bound because it is proved that the other party knew when the contract was being made that he or she was acting as agent. The same is the outcome where the agent, whilst acting as such for others, is also acting as principal. (emphasis added) 42 Upon a review of all of the material relied upon by the plaintiff in support of its generalised assertions, I am satisfied that there does exist a genuine dispute as to whether or not there was in existence an agency agreement between the plaintiff company and Wok & Dumpling, although the terms of any such agency agreement are not before the Court. I am also satisfied that there exists a genuine dispute as to whether or not it was the past practice of the plaintiff to forward invoices for payment to its "clients" for payment. 43 Even if the disputes on those discreet issues were to be resolved in the plaintiff's favour, that would not yield an answer to the question presently falling for determination before me, namely, whether the plaintiff nonetheless was legally bound to pay the sum under the contract, whether because it contracted as principal, or because it contracted as agent in circumstances rendering it personally liable to pay the defendant in any event. 44 In my opinion, the factual allegations made by the plaintiff are not capable of bringing the plaintiff within the first of the three scenarios described by the Full Court in Goodman Fielder. Proof that the circumstances fell within the second of those scenarios would not absolve the plaintiff of liability. 45 Further, there are no facts asserted that are capable of raising a genuine dispute giving rise to any species of estoppel in connection with any "past practices" and no attempt was made by Mr Struck to address the elements of any such shielding claim. 46 In all of the circumstances I have described, including the terms of the contractual documents proffered by the plaintiff, in order for the plaintiff to avoid assuming the contractual obligation to pay the defendant, it was necessary for the plaintiff to expressly and unequivocally disclaim any such liability prior to the formation of the contract (insofar as that could be done having regard to the entire contract clause) or within the express terms of the contract itself. Mr Struck's broad and unsubstantiated assertions of having expressly disclaimed the plaintiff's liability to pay in my opinion amount to a bare assertion of the non-existence of the debt that is not sufficiently supported by the plaintiff's evidence so as satisfy the Court that there is a serious issue to be tried. 47 Insofar as the determination of any part of the dispute between the parties turns on the proper construction of the Letter of Award and the terms of the contract, I have considered it appropriate to determine those issues, there being no genuine dispute about the surrounding facts that fall within the relevant and admissible factual matrix.

conclusion 48 The plaintiff may well have a right to be indemnified by Wok & Dumpling, but it is not necessary to decide that issue. It is enough that the defendant has established that it has a present right in contract to sue the plaintiff personally for the sum specified in the statutory demand and that there is no genuine dispute as to the existence and enforceability of that contractual right against the plaintiff. 49 For all of the above reasons, I ordered that the application be dismissed. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Charlesworth.