Omiros Pty Ltd v PM Developments Pty Ltd [2007] FCA 1501

JUDGE: HEEREY J

DATE: 24 Septmber 2007

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 This is a claim by an architect for fees in connection with the construction of an apartment building in Burleigh Heads, Queensland. The second respondent, Ms Mimi Macpherson, and the third respondent, Mr Andrew Papadopoulos, are sued on a guarantee, the principal client being the first respondent, PM Developments Pty Ltd, which is now in liquidation. 2 Ultimately the case turns on a document said to be a guarantee. The guarantee is contained in a letter from PM Developments to Mr Omiros Emmanouilides, a director of the applicant, Omiros Pty Ltd, signed by the second and third respondents and dated 25 March 2003. The letter states: The company and its directors guarantee the payment of your next claim within 14 days, provided the proper and necessary documentation is delivered to the office of the Project Manager by the end of today, as promised by you in your discussion with Ms Mimi Macpherson and Mr Campbell Leonard. 3 In answer to that, the respondents said, first, that they signed as directors and not personally and the document was not intended as a personal guarantee. That argument has no substance whatsoever. The expression "the company and its directors guarantee" necessarily means that the directors personally guarantee as well. If it were simply the directors signing on behalf of the company there would be no point in the letter stating that the directors guaranteed. In any event, right from the very start it was made clear that this project was one in which payment was to be made before plans were supplied and that the payments were to be guaranteed by the second and third respondents personally: see particularly the letters of 10 July and 24 September 2002. 4 Secondly, the respondents say that the "proper and necessary documentation" was not delivered. This contention needs to be considered in the context of discussions between the parties and in particular, the conversation between Mr Emmanouilides and Ms Macpherson on 21 March 2003. Mr Emmanouilides, who is obviously a meticulous note taker if I may say so (a valuable facility for an architect) noted the conversation as follows: She said, "Omiros what's going on – why wont you give us the drawings". I responded, "I am not certain what Andrew has told you or what he has not told you, but the issue is that we have been promised payments since July last year and we have been given only small amounts here and there. Last week, Andrew had arranged for me to bring the drawings up, and he was to pay us the balance and he did not even bother to turn up for the meeting". I continued, "This is not the first time this has happened and every time he does this, it costs me $1000 in airfares and cars, etc. I have better things to do with my time than play hide and seek with Andrew. I don't want to deal with him any more." She said, "Omiros, you have my word this time and I am not Andrew." "That's fine, Mimi, but I would want it in writing." She said, "That's fine." I responded, "when will you pay us?" She said, "At the latest in two week's time." I said, "Okay. I will forward the drawings once the agreement is signed." She said, "Can you please do it right away?" I said, "I will have it out on Monday." I continued, "Mimi, the drawings I will be sending is what the builder requires, which is the construction drawings for [the] basement and the architectural set so he can complete his pricing. But the full construction set will only be ready after all other consultants provide the final drawings and ensure that our drawings have all their requirements in it." She said, "What does this mean? Aren't your drawings finished?" I said, "They are and have been for some time now but not all consultants finished theirs. So once they are finished there needs to be cross-checking. But for what the builder needs the drawings are complete." She said, "Fine, just keep the builder happy and working," and I said, "Within two weeks, when your payment is received, all the coordination will be completed," and she agreed. We finished [the] conversation. 5 Ms Macpherson disputed the substance of the conversation. Nevertheless, I am quite satisfied that the note sets out an accurate record of the conversation and explains the context in which the documentation referred to in the guarantee of 25 March 2003 is to be understood. 6 The evidence shows that the applicant provided drawings (Exhibit D) to the project manager within a day or so of the guarantee being given. 7 The respondents called Mr Brian William Norris as a witness. He was the consulting structural engineer on the project. He said that the plans he received were "basic". He nominated a number of items which they did not cover, such as external fittings, balustrades, external works, pool details and pool equipment house. However, there seems to be real doubt as to the drawings which Mr Norris in fact saw. He did not take the opportunity of identifying from the plans (Exhibit D) the defects of which he spoke. 8 Other evidence which suggests that the applicant's version is correct are the applicant's drawings (Exhibit E) which were subsequently obtained by Mr Emmanouilides from the builder. These were prepared at an earlier stage than the March plans but were the ones in fact used by the builders for the subsequent construction of the building. This supports the applicant's case that it provided proper and necessary documentation. 9 It is true that in cross-examination by Ms Macpherson, Mr Emmanoulidies said that the drawings were not the proper and necessary documentation but that needs to be considered in the context of what he said as to the need for cross checking with consultants. 10 There was some suggestion by the respondents that the applicant was not licensed to undertake architectural work in Queensland but there was no evidence or statutory provision cited to support that argument. 11 At a stage when this case was in the Federal Magistrates Court, the first respondent, PM Developments, filed a cross-claim for some $2 million against the architect and it was for that reason that the matter was transferred to this court. Subsequently, as mentioned, the first respondent went into liquidation. Mr Papadopoulos urged that the claim on the guarantee against Ms Macpherson and himself be postponed until the cross claim is resolved. I declined to do that. Whether or not the cross-claim proceeds is a matter for the liquidator. There is no reason why the applicant should be kept out of its money for work which it performed. 12 The judgment of this court is that the applicant's claim must succeed. The applicant is entitled to the amount claimed together with penalty interest of $35,740.44. That is a total of $116,540.44. The court orders that the second and third respondents pay the applicant's costs, including reserved costs. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.