Arol Pty Ltd v Cook's Construction Pty Ltd

[2000] VSC 22

SUPREME COURT OF VICTORIA
PRACTICE COURT	Do not Send for Reporting
Not Restricted

No. 8032 of 1999

AROL PTY. LTD.	Plaintiff
v.
COOK'S CONSTRUCTION PTY. LTD.	Defendant

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JUDGE:	BEACH, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	24 JANUARY 2000
DATE OF JUDGMENT:	24 JANUARY 2000
CASE MAY BE CITED AS:	AROL PTY. LTD. v. COOK'S CONSTRUCTION PTY. LTD.
MEDIUM NEUTRAL CITATION:	[2000] VSC 22

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CATCHWORDS:      Statutory demand – Genuine dispute as to indebtedness – Statutory demand set aside.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr. J. Mattin	Best Hooper
For the Defendant	Mr. M. Galvin	Macpherson & Kelley

HIS HONOUR:

1. This is the return of a notice of motion filed in the court by the applicant, Arol Pty Ltd, whereby the applicant seeks an order that the statutory demand served on it by the respondent, Cook's Construction Pty Ltd, and dated 1 December 1999 be set aside on the ground that there is a genuine dispute between the parties as to the debt claimed in the demand.

1. The applicant carries on business as a metal processor processing scrap metals for companies such as Smorgon Steel and Sims Metal so that the metal can be reduced to an appropriate size to enable it to be melted down for scrap metal and recycling.  The applicant has been engaged in that business since 1985.

1. The respondent is a company which hires out equipment used for the purpose of sorting and cutting scrap metal down to size.  Two items of equipment so used are what is described as a grab plant which is a machine similar to an excavator, but instead of having a bucket at the end of it, has a mechanical arm.  Apparently the grab sorts out the metal into appropriate heaps before it is then cut up.  The second machine used in the cutting process is a mechanical shear.  When the respondent hires out the equipment, it always provides its own operator for the mechanical shear, but leaves it to the person hiring the grab plant to provide its own operator.

1. The case for the applicant is that it has had dealings with the respondent whereby it has hired machines from the respondent for a period of approximately ten years.  The applicant's director, Augustines Constantines Kok, has sworn that in June 1999 he rang the respondent and spoke to its plant and operations manager, Darryl John Hogan.  At that time the applicant had secured a contract with Smorgon Steel to cut up all scrap metal which Smorgon Steel was buying from the Yallourn power station, which at that time was being demolished.  As I said, Kok telephoned the respondent and spoke to Hogan with a view to hiring both a grab and shear.  He has sworn that he discussed the nature of the extent of the work with Hogan and obtained from Hogan an assurance that the shear would be able to produce the same tonnage of cut-up steel per day as a similar shear had produced for the applicant on previous occasions.  His evidence in that regard is that such a shear can process between 50 to 70 tonnes of raw material per day based on an 8 hour working day.  The respondent duly provided the applicant with a grab, a shear and a shear operator.  The operator's name was Strawbridge.

1. Between 19 June 1999 and 20 July 1999 Strawbridge only processed approximately 400 tonnes of steel.  Having regard to the sum the applicant was to receive from Smorgon for processing the steel and the sum it was to pay the respondent for the shear, that produced a loss to the applicant over that period of time of approximately $18,000.  Had Strawbridge been able to produce steel at the rate of somewhere between 50 to 70 tonnes per day, he should have produced not 400 tonnes but between 1250 tonnes and 1750 tonnes.  Kok alleges that he complained to Hogan about the performance of Strawbridge and on 20 July Strawbridge was replaced by another employee of the respondent named Biggerton.  Again, according to Kok, once Biggerton commenced to use the shear, production went up to between 50 and 70 tonnes of processed metal per day.  That had the practical effect of increasing total production to a little less than double the amount previously produced by Strawbridge.  The figures are set out in para.18 of Kok's affidavit sworn 23 December 1999:

"The respondent through Darryl Hogan finally agreed to replace Strawbridge with another one of their employees, Shane Biggerton, whom I have previously seen work at the Smorgon's plant in Laverton.  Biggerton who commenced work on 20 July 1999 acknowledges production immediately increased up to the level of 50 to 70 tonnes of processed metal per day than I had anticipated.  For example, in the seventeen day period from 29 June 1999 to 17 July 1999 whilst Strawbridge operated the shear, combined production between the shear and the six oxy-cutters was 1,634.14 tonnes.  For the 17 days from 19 July 1999 to 5 August 1999 while Biggerton operated the shear, combined production was 2,643 tones; the same six oxy-cutters were working on-site during the second period and hours of operation remained constant so that the production of processed metal from oxy-cutting was constant and the improved production was attributable to the competency of the shear operator." 

1. Again, according to Kok, Biggerton continued to work up to and including 10 September 1999 when he then advised Kok that he was leaving as his wife had had a baby.  After speaking with Hogan, a replacement operator was organized to commence on 11 September.  However, Kok has sworn that the operator who arrived had never previously operated a shear plant and was sent home after four hours' work.  The respondent did not then find a further replacement operator, but "took the unilateral decision to remove the shear plant from the applicant's yard without warning".   As a consequence, it was necessary for the applicant to obtain a further shear from Sydney and in respect of which it has incurred transport costs of $14,000.  The applicant alleges that losses it has incurred first by the incompetency of the original shear operator and other matters all of which are spelled out in para.26 of Kok's affidavit amount to some $57,125.38.  The respondent invoiced the applicant in respect of an amount of $104,193.03 with respect to the hire of the plant and equipment.  Of that amount the applicant paid to the respondent the sum of $43,600 leaving a balance owing of $61,391.93 which is the subject of the statutory demand.  As I indicated a moment ago, it is the applicant's claim that it has a counter-claim or set-off in the amount of $57,125.38 and that the sum which it should only be obliged to pay to the respondent at this time is a sum of $4,266.55.  It is on that basis that it seeks to set aside the statutory notice.

1. Much of what Kok has sworn in his affidavit is contradicted by Hogan in his affidavit sworn 20 January 2000.  For example, he contends that no assurance was given by him to Kok concerning the amount of processed material which would be produced by the shear each day.  Indeed, he maintains that the respondent has never previously had any dealings with the applicant in respect of the leasing of the type of equipment in question.  He also maintains in his affidavit that the productivity of the shear may vary dramatically according to the quantities of the raw material being processed.  The height of the raw material, the lower the rate of processing, so that it can be as low as 20 tonnes of material in an 8 hour day as in fact was the sort of production achieved by the first shear operator, Strawbridge.

1. It is of course not possible for me to make any determination in the matter.  Such factual disputes can only be resolved upon a full trial of any proceeding between the parties.  To entitle the applicant to the relief it seeks, I must be satisfied that there is a genuine dispute between the parties concerning the amount of the debt.  As Mr Justice Thomas said in re Morris Catering Australia Pty Ltd 117 Australian Company and Security Reports 601:  

"Beyond forming a perception of the genuineness (or the lack of it) the court has no function.  It is not helpful to perceive that one party is more likely than the other to succeed or that the eventual state of the account between the parties is more likely to be one result than the other." 

Or, as Mr Justice Hayne said in Mibor Investments Pty Ltd v. Commonwealth Bank of Australia [1994] 2 V.R. 290:

"It is not expected that the court will embark upon any extended enquiry in order to determine whether there is a genuine dispute between the parties as it certainly will not attempt to weigh the merits of that dispute.  All the legislation requires is that the court conclude that there is a dispute and that it is a genuine dispute."

1. In my opinion, there is clearly a dispute between these parties in relation to the matter.  Again, in my opinion, the dispute is a genuine dispute.

1. Accordingly, I order that the statutory notice dated 1 December 1999 served by the respondent upon the applicant be set aside. 

(Discussion ensued re costs.)

1. In my opinion, having succeeded with its application, the applicant is entitled to the costs of the application, and I so order.

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