Portfolio Projects (Queensland) Pty Ltd v. Crownhill (Overseas) Investments Pty Ltd [2007] QDC 9 (14 February 2007)

Last Updated: 14 February 2007

DISTRICT COURT OF QUEENSLAND

CITATION:	Portfolio Projects (Queensland) Pty Ltd v Crownhill (Overseas) Investments Pty Ltd [2007] QDC 9
PARTIES:	PORTFOLIO PROJECTS (QUEENSLAND) PTY LTD A.C.N. 100 474 039 Plaintiff V CROWNHILL (OVERSEAS) INVESTMENTS PTY LTD A.C.N. 100 598 409 Defendant
FILE NO/S:	2881/06
DIVISION:	Civil
PROCEEDING:	Application for Summary Judgment
ORIGINATING COURT:	District Court, Brisbane
DELIVERED ON:	14 February 2007
DELIVERED AT:	Ipswich District Court
HEARING DATE:	6 February 2007
JUDGE:	Kingham DCJ
ORDER:	1. The Defendant must pay the Plaintiff the sum of $160,797.28 for unpaid project management fees and interest payable under the contract to 1 October 2006. 2. The Defendant must pay the Plaintiff restitution in the sum of $10,322. 3. The Defendant must pay interest on both sums pursuant to Section 47 of the Supreme Court Act 1995 at the rate of 10% per annum calculated from 1 October 2006 until the date of this judgment. 4. The Defendant must pay the Plaintiff’s costs of and incidental to the claim, including this application, to be assessed, if not agreed.
CATCHWORDS:	SUMMARY JUDGMENT – Where claim for project management fees and reimbursement of consultants fees plus interest – Where Defence and Counterclaim for breach of contract – Where the evidentiary onus to demonstrate its defence shifts to the Defendant – Where deficiencies in pleading the defence and no request to replead – Where lack of evidence – Where there is no real prospect of success at trial. CONTRACT – Construction – Capable of summary determination – Ordinary meaning of words. Uniform Civil Procedure Rules 1999 Cordinup Resorts Pty Ltd v Teranora Holdings Pty Ltd (1997) 143 FLR 18 – applied Deputy Commissioner of Taxation v Salcedo [2005] QCA 227 – applied.
COUNSEL:	Mr D. J. Thomae for the Plaintiff / Applicant Mr D. J. Morgan for the Defendant / Respondent
SOLICITORS:	Bain Gasteen Lawyers for the Plaintiff / Applicant J C Lawyers for the Defendant / Respondent

[1] Crownhill (Overseas) Investments Pty Ltd owned land at Slacks Creek. Portfolio Projects (Queensland) Pty Ltd provided project management services for development of the land. Pursuant to their contract, Portfolio claims unpaid project management fees and reimbursement of consultants’ fees and other expenses it paid on Crownhill’s behalf. It also seeks interest on both sums. It now seeks summary judgment on all claims.

[2] Crownhill defends the claim and counterclaims damages for breach of contract. It resists the application for summary judgment and says there are factual and legal disputes which should be determined at trial.

[3] Portfolio must satisfy the Court that:

1. Crownhill has no real prospect of successfully defending all or a part of Portfolio’s claim; and

2. there is no need for a trial of the claim or part of the claim.

If it does so, the court has the discretion to give judgment for it and to make any other order that it considers appropriate (r292 UCPR).

[4] The overarching objective of the UCPR is to facilitate the just and expeditious resolution of the real issues in civil proceedings with a minimum of expense (r5). Keeping that objective in mind, the court must apply the clear and unambiguous language of r292 in deciding applications for summary judgment (Deputy Commissioner of Taxation v Salcedo).

[5] If Crownhill establishes it has some real prospect of succeeding at a trial, the application for judgment must be refused. Whilst Portfolio retains the overall onus on its application, Crownhill bears the evidentiary onus of demonstrating its defence (Cordinup Resorts Pty Ltd v Teranora Holdings Pty Ltd).

[6] Counsel for Crownhill conceded that, as currently pleaded, there is no defence to the restitutionary claim. Crownhill has not admitted Portfolio made the payments on its behalf. Unless granted leave to replead, Crownhill cannot call any evidence in relation to those payments (r165(2)). Crownhill has not instructed its counsel to seek leave to amend. There is no evidence that suggests, let alone establishes, that Crownhill has a potential defence open to it.

[7] Counsel for Crownhill contended that, nevertheless, the restitutionary claim should go to trial because it is connected with the claim for unpaid project management fees. Although the payments arose in the context of their contractual relationship, the basis for the restitutionary claim is quite distinct from the claim in contract. It does not depend on the interpretation or application of the contract and rests purely on Crownhill’s liability to make restitution to Portfolio for payments made for its benefit and on its behalf. Further, Crownhill has not sought to set off its counterclaim against Portfolio’s claim for restitution.

[8] There is no real prospect of Crownhill successfully defending the claim in restitution and there is no need for a trial of that claim. There is no reason not to exercise the court’s discretion to grant Portfolio’s application in respect of that claim.

[9] Turning to the project management fees, Crownhill does not dispute that the fees claimed have not been paid, but pleads:

1. the parties varied the contract by oral agreement;

2. Portfolio breached the contract; and

3. a "secondary project management fee" has not been negotiated.

[10] William Lambert, a director of Portfolio, deposed that:

1. he was not a party to a conversation in which Crownhill alleged the contract was varied;

2. Portfolio performed all aspects of the project management work and its other obligations under the contract; and

3. there was no attempt to negotiate a secondary project management fee.

[11] The only material filed by Crownhill, which had a month’s notice of this application, is an affidavit by its solicitor. He deposed the defence and counterclaim and the further and better particulars reflect his instructions from a director of Crownhill who had informed him, and he believed, that the instructions were true and correct.

[12] Crownhill’s counsel conceded there were a number of deficiencies in the pleadings. This was evident from Portfolio’s Reply which should have sounded a tocsin for Crownhill. The matters raised at the hearing in relation to the pleadings were all raised by the Reply filed in late December last. Counsel did not seek leave to replead because, he said, he had no instructions to do so. In the absence of any other material from Crownhill, it is the pleadings alone that will determine whether it has any real, rather than fanciful, prospects of successfully defending the claim for unpaid fees.

[13] There are no real prospects that Crownhill will succeed in its defence that the fees are not payable because of the alleged variation by oral agreement. The variation is denied by a director of Portfolio and Crownhill has filed no evidence in relation to it. The substance of the pleadings is that, on a date unknown, but "within a close proximity after execution" the contract was varied so that payments would not be made until the development project funding was available. Importantly, the variation pleaded is as to the time for payment not the obligation to pay.

[14] The defence does not allege the precondition to payment has not been met. Rather, in paragraph 4 of the counterclaim and the particulars to it, Crownhill disclosed that it had two loan facilities which were clearly related to the costs of development. The first was with the Bank of Queensland which required construction work to commence no later than June 2005. The second, a refinancing that Crownhill alleges was necessary because of Portfolio’s breaches of contract, was with Cymbus Finance Australia Limited. Crownhill’s own pleadings assert the only pleaded precondition for payment was met. Even if Crownhill could be said to have a real prospect of establishing the contract was so varied, the pleadings do not establish a defence based on the contested variation.

[15] The defence that Portfolio breached the contract also has no real prospects of success. The breaches alleged in paragraph 4 of the Defence are not set up as a basis for denying liability to pay the project management fee. They are repeated and further particularised in paragraph 3 of the counterclaim for damages. Crownhill has not sought to set off the damages against Portfolio’s claim. It has not pleaded the alleged breaches disentitle Portfolio to payment of the project management fee. Whilst there was an oblique reference in the Defence that Portfolio failed to give consideration, this is not clearly pleaded. The alleged breaches are denied. Crownhill has led no evidence to establish the factual basis for the defence.

[16] The defence based on the failure to negotiate a secondary project management fee does not need to go to trial. Counsel for Crownhill argued that it should do. There is arguably some ambiguity about the relevant clause, due to a handwritten amendment to it. However, it is not so difficult a point that it can not be determined in a summary way. Counsel for Crownhill did not contend the clause should be interpreted in the context of parole evidence as to the parties’ intentions and no such evidence is before the court. It is a matter of construction only. Having in mind the objective of providing a just and expeditious resolution of the real issues in these proceedings, it is appropriate to deal with it now.

[17] Crownhill’s defence rests on the interpretation of clause 6(4) of the contract which provides:

"(4) The Client and the Project Management Team agree that payment of the Project Management Fee shall cease when the Project has finished, which shall be deemed to be when the last stage of the Project has been registered and all construction works have been completed. The Client and the Project Management Team further agree that if the Project has not been finished within 12 months of the Date of this Agreement, then the Client and the Project Management Team will negotiate in good faith a Secondary Project Management Fee, which fee will be payable from the expiry of the three years until the finish of the Project."
(emphasis added)

[18] Crownhill contends this clause should be read to mean that, if no secondary fee is negotiated no fee at all is payable. That interpretation is not supported by the ordinary meaning of the words used.

[19] The ordinary meaning of the second sentence of that clause is that, if the project extends beyond 12 months, a secondary project management fee will be negotiated in good faith, such fee to be payable from 3 years after the agreement until it concludes. The typed contract was amended by handwritten notation. Originally it provided that the renegotiation was to take place if the project did not finish within 3 years. It may well have been intended that the second reference to 3 years should also have been changed to 12 months. There is no evidence before me on that issue and it is not appropriate to speculate. In any case the second sentence is not material to Portfolio’s claim as it goes to the amount of the fee payable under the contract not to the obligation to pay the fee.

[20] The obligation to pay is dealt with by the first sentence which clearly states when payment of the fee will cease: that is when the project has finished. The parties agreed that the project would be deemed to be finished when specified circumstances occurred. Crownhill has not alleged that they occurred within the period for which fees have been claimed. No other contractual basis for not paying the fee has been asserted.

[21] To interpret the clause as Crownhill contends requires a significant qualification to Crownhill’s obligation to pay Portfolio. This does not arise by necessary implication from reading the clause in the context of the contract as a whole. To the contrary, doing so reinforces the ordinary meaning. Clause 6(1) requires the project management fee to be paid progressively in accordance with the progress of the project. Clause 6(2) provides the fee will be paid in monthly instalments of $5,000, the due date being 7 days from the end of the month. Clause 6(3) provides interest is payable at 10% from the due date until paid. None of those clauses support the construction contended for. Crownhill has no real prospects of successfully maintaining its interpretation of clause 6(4).

[22] Finally, as pleaded, the fate of the defences to the interest claims follows that of the defences to the substantive claims. No other basis for resisting the interest claims was pleaded. Crownhill has not claimed the interest is wrongly calculated or applies an inappropriate percentage. As there are no real prospects of defending the substantive claims, Portfolio is also entitled to interest on them.

[23] Summary judgment does not affect Crownhill’s counterclaim. It stands alone and Crownhill is free to maintain those proceedings. There is no reason not to exercise the court’s discretion to enter judgment for the claim in full.

[24] My orders are:

1. The Defendant must pay the Plaintiff the sum of $160,797.28 for unpaid project management fees and interest payable under the contract to 1 October 2006.

2. The Defendant must pay the Plaintiff restitution in the sum of $10,322.

3. The Defendant must pay interest on both sums pursuant to Section 47 of the Supreme Court Act 1995 at the rate of 10% per annum calculated from 1 October 2006 until the date of this judgment.

4. The Defendant must pay the Plaintiff’s costs of and incidental to the claim, including this application, to be assessed, if not agreed.