Harrisa v Puksand
[2002] NSWSC 360
•26 April 2002
CITATION: Harrisa v Puksand [2002] NSWSC 360 CURRENT JURISDICTION: Equity Division FILE NUMBER(S): SC 5543/01 HEARING DATE(S): 24/04/2002 JUDGMENT DATE: 26 April 2002 PARTIES :
Harissa Pty Ltd v Gray Puksand Pty LtdJUDGMENT OF: Master Macready at 1
COUNSEL : Mr J.E. Armfield for plaintiff
Mr J.T. Johnson for defendantSOLICITORS: Ashlars Lawyers for plaintiff
Middletons Lawyers for defendantCATCHWORDS: Corporations Law. Application to set aside a statutory demand under s 459 of the Corporations Act. Demand set aside. No matter of principle. DECISION: Paragraph 18
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
MASTER MACREADY
FRIDAY 26 APRIL 2002
NO 005543/01 – HARISSA PTY LIMITED v GRAY PUKSAND PTY LTD
JUDGMENT:
1 MASTER: This is an application to set aside a statutory demand dated 31 October 2001 claiming a sum of $29,906.25 for architectural services provided by the defendant to the plaintiff. The amount is due for work done on a consolidated site development project and a Kia and used car site which have been constructed by the defendant for us in its business. They included use of a temporary and then a final Volvo showroom.
2 It is in respect of the architectural fees for the final Volvo showroom that a dispute and offsetting claim arises. That involved charges for architectural services amounting to $34,765.13, all of which have been paid by the plaintiff.
3 The plaintiff seeks to raise an offsetting claim for this amount or alternatively a genuine dispute if there is a running account between the parties. The genesis of the dispute lies in the relationship between the defendant architects and Volvo Australia. They apparently were nominated as one of the Volvo approved architects.
4 In a discussion on 20 February 2001 between Mr Azzi, of the plaintiff, and Mr Raadik of the defendant, the following occurred:
“I said to Aldo Raadik words to the effect:
‘Do you mean to say that I have just paid for full architectural documentation in relation to the new showroom? We have just moved into the temporary showroom, we have barely started and here you are charging me for documentation I didn’t authorise. I didn’t realise it at the time I paid. I should not have paid for that. Who gave you the authority to go ahead with it? Who requested it?’
He said:
‘Volvo requested it’.
I said:
‘I know you do work for them, but who are they to get you to do work on a new showroom that I have not decided upon yet? I have to blend in my Honda and Volvo showroom within their guidelines and I want things done that Volvo might not even think of. What if I want to change something that will have an effect on everything else? How does it come to be that Volvo tells you want to do in relation to my premises and I end up paying? I am paying your bill for what Volvo instructs you to do not me’.
He said”
‘That’s what Volvo wants’.
‘These can’t be the final plans. I didn’t expect all of these plants to be finalised within two or three weeks of us moving into the temporary showroom. There is no distinction between the work you are doing for Volvo and the work you are doing for us.’”I said:
5 This evidence was not disputed. That conversation resulted in a letter of 22 February 2001 from the architects to the plaintiff that described a number of projects and the fee basis and any outstanding fees. Importantly, it showed that the Volvo showroom was awaiting completion of the main project and that all fees had been paid. Other sites such as the Kia site were proceeding as was the main project. Clearly, the letter, so far as it followed the conversation, is not a response to what was being put to the architect company.
6 The matter appeared to have drifted on until 8 October when there was a letter of demand from the managing partner of the architects on 8 October. Karen Williams, from the plaintiffs, apparently called and wanted some information and this led to the provision of the letter of 9 October which merely detailed what were the outstanding invoices leading up to the claim for $29,906.25. There then followed a letter from Mr Azzi writing under a business name under which the plaintiff company traded dated 17 October; that was addressed to Mr Gray and was as follows:
‘Mr Peter Gray
8 Spring St
Sydney NSW 2000.
17 October 2001.
Dear Sir,
Let me apologise for our belated reply to your letters of 8 and 9 October 2001.
We are attempting to resolve this matter as soon as possible and request your patience for a further period.
Would you be good enough to break up the outstanding amount of $29,906.25 describing fees owed for work done on the existing temporary site and fees owed for work done in relation to approaches to Council and other work to do with the future development?
Another matter of concern to us has arisen in relation to our dealings with Volvo Australia. This relates to input by representatives of Volvo Australia providing you with input and direction so far as the existing premises and future development is concerned. Would you itemise the input of Volvo Australia in these regard. We would, of course, be happy to pay for your research and work in this regard and will forward your cheque on an anticipated quote basis.
Yours faithfully.
Manager Director’.Antonio Azzi
7 This certainly raises the question of the fact that the work was future work and what work was done at the request of Volvo. The last sentence is clearly some concession and is a matter for me to consider.
8 That was followed by a response from the plaintiff on 17 October which, once again, certainly did not address the questions about the payments for the final Volvo showroom; all it showed was the work paid.
9 Importantly, there was then a letter from or on behalf of the plaintiff company from Mr Robert Somosi said to be their Customer Relations Manager and that was in the following form:
‘Debt Owing to Gray Puksand Pty Limited.
As per our previous conversations regarding outstanding monies to Gray Puksand Pty Limited we would request as per correspondence to Peter Gray on 17 October that a summary be given to us on the following:
. Itemise the input of Volvo Car Australia.
. What was requested by Volvo Car Australia.
. Works completed on behalf of Volvo Car Australia.
Should you require any further information please do not hesitate to contact me.’Please find attached correspondence that was directed to Mr Peter Gray.
10 This fairly clearly raises the matter the subject of the conversation, namely what was requested by Volvo Car and works done on behalf of Volvo Car. The only response to this was the issue of demand on 31 October 2001.
11 It seems to me fairly clear that in the conversation in February Mr Azzi denied liability for the work done up until that time on the final showroom. The only authorisation was as the defendant admitted from Volvo Australia.
12 In the absence of any other evidence of the contractual relationship between the three parties, it is hard to avoid the conclusion that the defendant did not authorise the work on the final showroom. Indeed, the practical matters referred to by Mr Azzi in the conversations confirm that this is more likely to be correct.
13 The court’s task in assessing the offsetting claim has been dealt with in a number of cases: for instance, in Edge Technology Pty Ltd v Lite-On Technology Corp (200) 18 ACLC 576 where Santow had the following to say:
I adopt the approach of the Full Federal Court in Spencer Constructions Pty Limited v G & M Aldridge Pty Limited (1997) 15 ACLC 1,001 at 1,001, (1997) 76 FCR 452 at 464; that a genuine dispute requires that ‘the dispute be bona fide and truly exist in fact’ and that the ‘grounds for alleging the existence of a dispute are real and not spurious, hypothetical, illusory or misconceived’. The same applies to the counter-claim or set off. One asks: Is it bona fide, is it real and not spurious?”“It is here again true, as it was in Goldspar Australia Pty Ltd v. KWA Design Group Pty Ltd (1999) 12 ACLC 456) that it is ‘is not my task in the present proceedings to seek to resolve the competing claims of the plaintiff and the defendant’: per Austin J at 462. Rather, it is to ‘resolve whether, for the purposes of s 459 (H)(1)(a), there is genuine dispute between the Plaintiff and the Defendant about the existence or amount of the debt to which the defendant’s statutory demand relates ‘Austen J at 462’. Or alternatively, whether there is a genuine counter claim, set off or cross demand against the defendant and if so, in what amount. In particular, how should it be quantified; at a nominal $1 or at a large figure and if the latter, how is the quantification to be arrived at? The latter question essentially asks whether the counter claim or set off is fictitious merely colourable; Jesseron Holdings Pty ltd v Middle East Trading Consultants Pty Limited (No 2) (1994) 12 ACLC 490; 13 ACSR 787. In that context, to come up with a plausible contention to (sic) requiring further investigation which, if later established, would preclude there being an offsetting claim. That would not establish that the counter claim or set off was fictitious, or merely colourable. In that sense, the counter claim or set off is not the reciprocal of the statutory demand debt. Rather it is a means of offsetting the statutory demand debt with a genuine counter-claim or set off.
14 He later went on to say:
- “For the demand to be set aside on the basis of the demand debt being genuinely disputed, it must be established by the plaintiff that the dispute concerning its existence is bona fide and not spurious, hypothetical, illusory or misconceived; Spencer’s case (supra). In other words, there must a plausible contention requiring further investigation which genuinely puts in dispute the debt which grounds the statutory demand. But the merits are not now to be determined beyond the preliminary testing as to whether there is a serious question to be tried. The alternative basis for the demand to be set aside or reduced by reason of an offsetting claim involves, as I have said, a different test. The question is not whether there is a genuine dispute in the above sense against the offsetting claim. The question is rather whether the ‘offsetting claim’ can be shown to be ‘not frivolous or vexatious’; Chadwick Industries (Sought Coast) Pty Ltd v Condensing Vaporises Pty Ltd (1994) 13 ACSR 37. That places a heavier onus on the party seeking to maintain its statutory demand, than if it merely had to establish the reciprocal of a genuine dispute against the offsetting claim”.
15 Thus the question is whether the offsetting claim can be shown to be not “frivolous or vexatious”. It seems to me the conversations make it plain that such monies as were paid were paid under a mistake and if that be so it is at least arguable they may have been paid pursuant to a mistaken of fact and they are recoverable.
16 In those circumstances the demand should be set aside.
17 So far as costs are concerned, the letter of 17 October was fairly elliptical in its terms. The affidavit of 20 February 2002 was the first real information as to the basis of the dispute. Therefore, in my view costs should only accrue after 1 March 2002. (See Lindel Constructions Pty Ltd v Basic Brothers Plastering Pty Ltd 19 ACSR 690).
18 The orders I make are as follows:
(Submissions as to costs from Mr Armfield)1. The statutory demand dated 31 October 2001 served be the defendant on the plaintiff be set aside.
2. Order the defendant to pay the plaintiff's costs on and from 1 March 2002.
19 HIS HONOUR: I have heard further submissions in respect of costs and it is suggested that the terms of the conversation were notice to the defendant. The fact of the matter is that the plaintiff did not point out the terms of that conversation or make it plain in any correspondence prior to service of the affidavit the complete basis for which it was ultimately successful in the proceedings. Accordingly, I do not propose to vary the order.
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