Hivari Pty Limited v Qh & M Birt Pty Ltd [1989] ACTSC 4 (1 February 1989)

SUPREME COURT OF THE ACT

HIVARI PTY LIMITED v. Q.H. & M. BIRT PTY LTD
S.C. No. 462 of 1988
Practice and Procedure - Counterclaim for Damages

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1)

CATCHWORDS

Practice and Procedure - application for summary judgment under order 15 - discrepancy between sum claimed in statement of claim and sum verified in affidavit supporting application - whether plaintiff to be given leave to enter judgment.

Counterclaim for Damages - reliance on law of equitable set-off - principles applicable.

Argento v. Cooba Developments Pty. Limited (1987) 71 ALR 253

S.R. Derham, Set-off, (Oxford) 1987 p v

D Galambos & Son Pty. Limited v. McIntyre (1974) 5 ACTR 10

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

Fong v. Cilli (1968) 11 FLR 495

Stehar Knitting Mills Pty. Ltd. v. Southern Textile Converters Pty. Ltd. (1980) 2 NSWLR 515

Phillips v. Mineral Resources Development Pty. Limited (1983) 2 Qd R 138

HEARING

CANBERRA
1:2:1989

Counsel for the Plaintiff: Mr T.M. Johnstone

Solicitor for the Plaintiff: J.S. O'Connor, Harris and Co.

Counsel for the defendant: Mr J. Millea

Solicitor for the defendant: James Millea Solicitors

ORDER

The notice of motion dated 1 November 1988 be dismissed.

DECISION

This is an application for summary judgment under order 15. The plaintiff's statement of claim endorsed on the writ of summons claims $23,556.00. There are two causes of action. The first is "for the sum of $16,754.00 being the amount due from the defendant for the hire of plant and equipment let by the plaintiff on hire to the defendant in the Australian Capital Territory at the request in the said Territory of the defendant", and the second is "for the sum of $6,802 being the amount due from the defendant to the plaintiff for work done and materials supplied by the plaintiff for the defendant in the said Territory at the request in the said Territory of the defendant".

2. Particulars of the first count allege hire of an excavator and other equipment for a specified number of hours at specified rates in the months of May, June, July and August 1987. Particulars under the second count allege the installation of a sewer at Fyshwick for $4,820, installation of a water main at Fyshwick for $1,652, supply of a truck for transfer of excavator and rock hammer from Fyshwick to Point Hutt for $120 and supply of truck for cartage of soil for $210.

3. The affidavit in support of the application by the plaintiff was sworn by Bryce Jones on 26 September 1988. The deponent states in accordance with the requirements of the Rules that the facts and circumstances are within his knowledge, that he is authorised to make the affidavit and that in his belief there is no defence to the action. However, the deponent further states in paragraph 11, "the defendant is and was at the commencement of this action justly and truly indebted to the plaintiff in the sum of $20,290 for the hire of plant and equipment and for work done and materials provided as particularised in the statement of claim and herein".

4. There is a manifest discrepancy between the sum claimed in the statement of claim and the sum verified in the affidavit in support of the application.

5. Counsel for the plaintiff sought to explain the discrepancy by acknowledging that sub-paragraphs 1(a) and 1(b), claiming $1,870 and $1,360 respectively, were inserted in error and are abandoned. It was submitted that the plaintiff should nevertheless be given leave to enter judgment for the reduced amount.

6. The first difficulty about that submission is that "the power to order summary and final judgment is one that should be exercised with great care" Argento v. Cooba Developments Pty. Limited (1987) 71 ALR 253 per Gallop J. at p 263. Where the claim verified is different from the claim made in the statement of claim, the Court should be hesitant to grant summary judgment unless there is a convincing explanation furnished on affidavit. More fundamentally, under order 15, rule 1, the plaintiff or a person who can swear positively to the facts is required to "verify the amount claimed" (if any liquidated sum is claimed). If the "amount claimed" is the amount shown on the statement of claim, as I think it probably is (rather than an amount asserted independently of the statement of claim to be owing, or an amount shown on the evidence to be owing) then the affidavit does not verify the "amount claimed".

7. The second difficulty is that, on the arithmetic, the explanation by counsel (which is not supported by anything in the affidavit) would reduce the claim by $3,230 leaving an amount claimed to be owing to the plaintiff of $20,326. Mr. Jones' affidavit swears that the amount owing is $20,290.

8. Then there is the affidavit of Quentin Hugh Birt sworn on 17 November 1988 and filed on 9 December 1988 on behalf of the defendant. It sets up a counterclaim for damages. It alleges that the plaintiff entered into a contract in March 1987 with the National Capital Development Commission for the construction of roads, drains and sewerage works, that the defendant engaged the plaintiff to carry out some of these works in the second half of 1987 and that the plaintiff either failed to carry out some of the work or carried out some of the work badly causing the defendant expense in completing or rectifying the work. The counterclaim for those items is $17,900 in all and the defendant claims to be entitled to a set-off accordingly. The defendant also makes a counterclaim for $312.95 for fuel supplied to the plaintiff and not paid for, although the affidavit hardly furnishes any positive evidence in support of the claim. The total counterclaim is alleged to be $2,102.95 more than the plaintiff's claim. In addition, Mr. Birt's affidavit deposes to a failure by the plaintiff to give credit for a payment of $2,988. That is a matter raised directly by way of defence. Lastly, the affidavit claims that the hourly rate for labour should have been charged at $28.00, which would reduce the plaintiff's claim by $1,580. If the rate for labour were the only matter raised in opposition then I would be likely to allow the plaintiff to enter summary judgment. The documentary evidence contained in invoices clearly supports the plaintiff's claim of $38.00 per hour for hiring equipment and there is no acceptable evidence to the contrary.

9. The law relating to set-off is somewhat complex. According to S.R. Derham, Set-off, (Oxford) 1987 p.v., it has never proved attractive to academic writers. The decision of Woodward J. in this Court in D Galambos & Son Pty. Limited v. McIntyre (1974) 5 ACTR 10 is to be contrasted with the statements made by Dixon J., as he then was, in McDonnell & East Limited v. McGregor [1936] HCA 28; (1936) 56 CLR 50 at p 60, Blackburn J. in the Supreme Court of the Northern Territory in Fong v. Cilli (1968) 11 FLR 495, Smithers J. in this Court in Haughbro v. Reiher (unreported, 31 July 1970) and the New South Wales Court of Appeal in Stehar Knitting Mills Pty. Ltd. v. Southern Textile Converters Pty. Ltd. (1980) 2 NSWLR 515. The last of these decisions discusses the effect on the law of set-off of the repeal in New South Wales of the Imperial Statutes of Set-off, 2 Geo 11c 22 (1729) and 8 Geo 11c 24 (1735). By contrast, the Statutes of Set-off have been preserved in the Australian Capital Territory by s.5 and sub-s.10(2) of the Imperial Acts Application Ordinance 1986 and Schedule 2 to that Ordinance. That matter was not raised in argument before me, and whatever may be the effect of the retention of the Statutes of Set-off by the Imperial Acts Application Ordinance 1986, I do not propose to consider it for the purposes of the present case. As I understand it, the defendant does not rely on a set-off at law (which is in the nature of a calling into account of mutual debts and which falls within the Statutes of Set-off) but an equitable set-off (which is a right to rely upon as counterclaim as if it were a defence and which falls outside the Statutes of Set-off).

10. The law for the Territory on the subject of equitable set-off is that stated by Woodward J. in D Galambos & Son Pty. Limited v. McIntyre which was approved by the Full Court of the Federal Court in Argento. The principles laid down by his Honour at pp 25-26 are as follows (excluding citation of authority):
(i) Failure in part to perform a contract, or

defective performance of a contract requiring
work to be done again or directly
reducing the value of work done or goods
supplied, may be raised as a defence to an
action for money due under that contract.
(ii) Claims for money due under a contract and
for damages for breach of the same contract
(arising, for example, from delay) may be
set-off against each other where the equity
of the case requires that it should be so.
This will depend upon how closely the res-
pective claims are related, particularly as
to time and subject-matter. The general
conduct of the respective parties will, as
always, be relevant to the granting of such
equitable relief.
(iii) Even where one of the claims is not in
termsbased upon the contract, but it flows
out ofand is directly connected with it, a
court may be prepared to recognize an
equitableset-off.
(iv) The above statements of principle cannot be
regarded as having universal application.
They do clearly apply to contracts for work
and labour, but special considerations are
relevant in other areas such as bills of
exchange, landlord and tenant and carriage
of goods.

11. Counsel for the plaintiff submits that the affidavit of Mr. Birt does no more than make allegations of breaches of contract or contracts which are not the contract upon which the plaintiff sues and which do not have any relevant connection with the plaintiff's claims. Hence, so it is submitted, the defendant may not, or should not be permitted to rely upon an equitable set-off. At this stage, however, I am unable to see how either the plaintiff or the defendant frames its case on the precise question of what it was that constituted the contract or contracts in respect of which each of them makes its claim against the other. It is trite to say that a contract is constituted by offer and acceptance. Whether in this the respective contracts were express or implied or in writing or oral or partly one and partly the other are matters which are not explained at this stage. The material before me simply discloses that the claims made on behalf of the defendant appear to be connected whether directly or indirectly with the claims made by the plaintiff arising out of the business relationship between the parties whereby the plaintiff carried out excavation work and the like and hired associated plant and equipment to the defendant. In due course then the Court might be prepared to recognize an equitable set-off in the defendant and that is, in my view, sufficient reason to allow the defendant to be given the usual opportunity to present its case after pleadings and evidence. It is sufficient that the defendant show a real case to be investigated either in fact or in law. In Phillips v. Mineral Resources Development Pty. Limited (1983) 2 QdR 138, a decision of the Full Court of the Supreme Court of Queensland in which the facts were not very far removed from the present case, Kelly J. said at p 146:

"It was not necessary for the Master to determine
whether these matters, if established, would
entitle the defendant to set-off rather than to
set them up by way of counterclaim and it was
sufficient if there was a real case to be
investigated as to whether these amounts could be
set-off against the plaintiff's claim."

12. The defendant has, in my view, established such a case. The notice of motion is dismissed. Unless the parties wish to be heard I propose to order that costs be costs in the cause.