Wedeco v Precision One Off Engineering

[2004] NSWSC 813

CITATION:	Wedeco v Precision One Off Engineering [2004] NSWSC 813
HEARING DATE(S):	18/08/04
JUDGMENT DATE:	7 September 2004
JUDGMENT OF:	Gzell J
DECISION:	Order the defendant to deliver up to the plaintiff remaining items on tax invoice 560.
CATCHWORDS:	CONTRACTS - General Contractual Principles - Offer and Acceptance - Terms of settlement of District Court action - Agreed variation - Whether terms of variation as deposed by plaintiff or defendant - No principles involved
PARTIES :	Wedeco AVP Pty Ltd - Plaintiff Precision One Off Engineering - Defendant
FILE NUMBER(S):	SC 1482/04
COUNSEL:	Mr R Weaver - Plaintiff Mr D Wetmore - Defendant
SOLICITORS:	Comino Prassas Solicitors Mark Solomon & Associates Solicitors & Barristers

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

TUESDAY 7 SEPTEMBER 2004

1482/04 WEDECO AVP PTY LTD v PRECISION ONE OFF ENGINEERING PTY LTD

JUDGMENT

1 The defendant, Precision One Off Engineering Pty Ltd, manufactured goods for the plaintiff, Wedeco AVP Pty Ltd. The relationship between the principals of the companies broke down and Precision sued Wedeco in the District Court for outstanding moneys. Those proceedings were settled upon terms that included a payment of $100,000 by Wedeco and delivery up by Precision of items in specified invoices.

2 On 17 November 2003, Wedeco paid the $100,000 and took delivery of some items in the specified invoices. Wedeco asserts that further items were to be collected on 18 November 2003. Precision asserts that all items to which Wedeco was entitled were collected on 17 November 2003.

Wedeco’s version

3 Ross Dive, the managing director of Wedeco, said that following an inspection of the items at Precision’s premises on 17 November 2003, he told Bruce Ian McLean, the managing director of Precision, that two ultra violet stainless steel chambers and two lengths of stainless steel were missing. Mr McLean produced two UV lamps and polyethylene UV chambers which Mr Dive agreed to accept in place of the missing items. A polishing machine was incomplete. The polishing unit was missing. Mr Dive said that Mr McLean offered the other items on tax invoice 560 in substitution, to which he agreed. Mr McLean produced an acknowledgement stating:

“This is to indicate that all property of Wedeco Pty Ltd has been accounted for at our property at 2 Aspinall Place, Mulgrave as per court agreement reached by both parties.”

Mr Dive signed the acknowledgement and authorised the release to Precision of the $100,000.

4 Mr Dive had driven a land cruiser to the site and Wedeco’s employee, Brendan Dunn, had driven his station wagon with trailer. They said they loaded such goods as they could and left the premises. The only item from tax invoice 560 that was loaded was an item described as: “All Standard gauges for all Parts made for you. The Lot $5,000.”

5 Mr Dunn said he returned to Precision’s premises with a flat top truck and driver on 18 November 2003 when he was told by Mr McLean that all the items to which Wedeco was entitled had been loaded on the previous day. He and the truck driver left the site without any further goods.

6 The items that were not collected on tax invoice 560, excluding the polishing machine, were described as follows:

“Special Purpose Tooling Built for your work only which you Paid Material cost for
Press Tools. 1) 3’’ Doomed end + 2” Doomed in one Tool. Labour 35 hours	$3,500.00
2) 3” Inlet/Outlet Tool. only for 2” Inlet/Outlet cut outs. Labour 80 hours	$8,000.00
3) 3” + 2” Inlet/Outlets Die cut holes up to 1½”BSPT. With all Die sizes. Labour 160 hours	$16,000.00
4) VF3 Leg fold up Tool . Labour 10 hours	$1,000.00
5) Bulb, frame folding jig + Set up jig. Labour 12 hours	$1,200.00
6) End facing Jig Inlet/Out all materials supplied by me. Labour + Materials $3,500.00	$3,500.00
Hydraulic Inlet/Out pushing setup $20,000.00 2½” + 3” Tube	$20,000.00
Pressure Testing kit is yours. But all adaptor fittings are ours. Labour 20 hours	$2,000.00
All Drawings on Paper + on discs including designs $50,000.00	$50,000.00

Precision’s Version

7 Mr McLean said that Mr Dive, Mr Dunn and a truck driver with truck arrived at Precision’s premises on 17 November 2003. He said that after the inspection, Mr Dive indicated that four items were missing for which Mr McLean offered one 2.5 metre length of 2” 316 stainless steel tubing to which Mr Dive agreed.

8 With respect to the polishing machine, Mr McLean said he offered the standard gauges and parts referred to in tax invoice 560 which Mr Dive accepted. The acknowledgement was then signed and the moneys released. Mr McLean said the items were then loaded onto the truck and onto Mr Dunn’s trailer by Mr Dunn, the truck driver and Allan Thrift, an employee of Precision. There was no room for a water tank and stand. Those items remain at Precision’s premises. He said that no one came to the premises the next day.

9 Mr Thrift also said that Mr Dive, Mr Dunn and a truck driver with truck arrived at the premises on 17 November 2003. He saw Mr McLean load the standard gauges into Mr Dunn’s trailer. He said he assisted in loading the materials onto the truck and trailer.

Resolution

10 The case is fraught with difficulty because of the diametrically opposed versions of two people on each side.

11 Mr McLean would not allow any items to be loaded until the $100,000 had been credited to Precision’s solicitor’s trust account. Before that happened, he insisted that Mr Dive sign the acknowledgement. It was put to Mr Dive that the signing of the acknowledgement meant that the settlement had been performed. Mr Dive denied this assertion. He said he signed the document as an acknowledgment that an agreement had been reached as to all the property that was required to be handed over to Wedeco and that on the following day, after Mr Dunn had loaded the balance of the items, he would sign the receipt on the form.

12 Below the acknowledgment that Mr Dive signed, the following appeared:

“… : … Funds transferred, loading of transports begins .
Received .
This is to indicate that all property of Wedeco Pty Ltd has been removed from our property at 2 Aspinall Place, Mulgrave. All goods received in full satisfaction of the orders.
……………………… Signature…………………….”
Name (Please print)


This portion of the document was not signed.

13 The document supports Wedeco’s case. Mr McLean clearly had two steps in mind: first, an acknowledgment of the property to be removed; secondly, an acknowledgment of receipt consequent upon the loading of the property onto vehicles for removal. If, as he said, all items were removed from the premises on 17 November 2003, one would have expected him to have required Mr Dunn to sign the receipt. He did not.

14 There was nothing in writing establishing the substitutions for the polishing machine. It was put to Mr Dive that if he did not trust Mr McLean, surely he would have insisted on the variation being documented. Mr Dive denied that he mistrusted Mr McLean. He said he was satisfied that they had reached an agreement as to variations and he trusted Mr McLean to carry out the varied agreement.

15 The water tank and stand remain at Precision’s site. Mr Dive was taxed on why he had not removed these objects. He said there was a dispute as to the remaining items Wedeco was to collect and he was awaiting resolution of that issue.

16 Mr Dunn’s evidence accorded with Mr Dive’s. He said that items in invoices other than tax invoice 560 remained at the premises on 17 November 2003 and were loaded on a single axle flat bed truck on 18 November 2003. There was not enough room for the water tank and stand. The only goods on tax invoice 560 taken on 17 November 2003 were the standard gauges. He said Mr McLean refused to allow any other items on that invoice to be taken away on 18 November 2003.

17 Wedeco’s solicitors had written to Precision’s solicitors in October 2003 requesting Precision to make its forklift available for loading the items onto a truck. It was submitted that this was consistent with Precision’s case that there was only one occasion upon which representatives of Wedeco visited the site and that was with a flat top truck.

18 The response from the solicitors for Precision was that nothing was to be loaded onto a truck until a stocktake was conducted, Wedeco was satisfied and then signed an acknowledgment that it was receiving all the goods in full satisfaction of the court orders following which Mr Dive was to telephone Wedeco’s solicitors and instruct them to telegraphically transfer the funds to Precision’s solicitor’s trust account.

19 A deal of time was spent on 17 November 2003 checking off the items of equipment to be taken from the site. It is understandable that Mr Dive would not wish to incur the expense of a truck and driver standing idle while that and the other steps dictated by Precision’s solicitors were carried out.

20 In his affidavit, Mr Dunn said that on 18 November 2003 he had the following conversation with Mr McLean:

“BD: Where are the rest of the things like the pressing tools and flaring tools?
BM You got everything yesterday when I gave you the box with the standard gauges.
BD: That was not the agreement as I understood it. I have to give Ross a call and let him know.
BM: That was the agreement. Ross misunderstood what was going on.”

21 Mr McLean answered this allegation in his affidavit. He said:

“I do not know and cannot admit what understanding Brendan Dunn had of the Agreement that was reached between Ross Dive and me. Brendan Dunn was not present throughout the time that Ross Dive and I were having our discussions.
I admit that I said “that was the agreement”.
I deny that I said “Ross misunderstood what was going on.”

22 That response is consistent with Wedeco’s case. There was no suggestion that there was a request for the other items in tax invoice 560 on 17 November 2003. The only occasion for a conversation with respect to those items with Mr Dunn was on 18 November 2003.

23 In examination in chief, Mr McLean said that Mr Dunn returned to Precision’s premises on 19 November 2003. No such suggestion was made in his affidavit nor was it not put to Mr Dunn. Mr McLean then said that on 17 November 2003 an arrangement was made on behalf of Wedeco for a truck driver to pick up the water tank and stand on 18 November 2003. The truck driver did not turn up. This was the first mention of such suggestions. Again, they were not put to Wedeco’s witnesses.

24 In the cross examination of Mr McLean the following exchange took place:

“Q: Can I suggest to you that on the 18th, fairly early in the morning, Mr Dunn returned in his four wheel drive with a truck driver, driving a six metre truck?
A: No he did not.
Q: Can I put to you that they proceeded to load some of the items set out in the settlement agreement reached at Parramatta in October?
A: When?
Q: On the 18th, the morning, the Tuesday?
A: No truck driver came on the morning of the 18th. Brendan was there by himself, by himself, sir, not with a truck to pick up anything.
Q: I thought you told us no one was there on the 18th? Are you saying Mr Dunn was there?
A: I have made a mistake. It was the 19th Brendan came, not the 18th. I am getting confused with the dates. Brendan was there on the 19th, not the 18th, the 17th was the first day they came.
Q: How good is your recollection of these events?
A: My recollection, it is perfect. I will tell you because I know.
Q: You say there is no room for error in your memory as to who turned up on which day?
A: No room at all.”

25 Mr McLean conceded that his recollection was inaccurate when he viewed an email sent by him to his solicitor on Tuesday 18 November 2003 in the following terms:

“When Ross suggested he would swap the polishing machine for what I understood to be all Standard gauges for all parts made for him on invoice number 560, I then got all of the standard gauges from my factory in front of Ross & Brendan and put them into their trailer and in particular showed Brendan what was in the box. That is what I understood the deal to be, Ross signed a receipt for all of his goods and soon after left. The first I knew there was a problem, it was the next day when Brendan came back to pick up the rest of their gear that is when he asked for what seemed like everything else on invoice 560. I use these tools they belong to me. I would not agree to that at all.”

26 The email is consistent with Precision’s version that the substitution for the polishing machine was limited to standard gauges. It is also consistent with Wedeco’s case in two respects. First, it is an acknowledgment, contrary to the other evidence of Mr McLean, that all the goods were not taken from the site on 17 November 2003. Mr Dunn returned on 18 November 2003 to collect other items that had not been taken on the previous day. Secondly, it accords with Wedeco’s assertion that Mr Dunn returned on 18 November 2003 with the flat top truck and is inconsistent with the other evidence of Mr McLean that the truck was there only once on 17 November 2003 and with the evidence of Mr Thrift to the same effect.

27 In his affidavit, Mr McLean said he told Mr Dive that he was prepared to substitute other things for the polishing machine. He said he had purchased the motor and used it in the polishing machine. In cross examination he said the polishing machine was worthless to Precision. When this conflict was pointed out to him, Mr McLean said he used the polishing motor but not the polishing machine. The motor was separate to the machine. It came off the machine as a separate piece.

28 Having said that the polishing machine was incomplete and it would take 40 hours to reassemble it, Mr McLean denied that Mr Dive had complained to him on 17 November 2003 that the machine was incomplete. Mr McLean said it was complete except for the motor and was there to be taken.

29 Mr Thrift said the truck was there on 17 November 2003. He said it must have been at least six metres long because no lengths were overhanging it. But he later said he did not participate in loading the truck, he did not see any items loaded onto the truck and he did not see it depart. He said he did not see any six metre long items on the truck.

30 It was submitted that the logic of the situation favoured Precision’s case. Wedeco was asserting that Mr McLean was prepared to swap the polishing machine said to be worth about $25,000 for other items on tax invoice 560 said to be worth approximately $110,000. It was submitted that that was unlikely. And, because Mr McLean valued the polishing machine at $10,000 as second hand material, it was submitted his version of a swap for $5,000 worth of standard gauges was the more likely.

31 But the argument works both ways. The polishing machine was not seen by Mr Dive as second hand material. It had a value to Wedeco. Mr Dunn said the values attributed to the items in tax invoice 560 were reasonably accurate. Applying the same logic, Precision’s case suffers the same problem. Why would Mr Dive agree to give up a $25,000 machine for $5,000 worth of standard gauges? The conflict is not resolved by the application of logic.

32 I formed an unfavourable view of Mr McLean. He authorised acceptance of the terms of settlement. They required Precision to deliver up to Wedeco a polishing machine valued at $20,000 in the terms of settlement. Yet he said he did not intend to do so. He intended to return a polishing machine without a motor. What Precision offered to Wedeco in answer to the undertaking in the terms of settlement was a polishing machine frame and dismantled electrical items in boxes. The motor was not offered. The polishing machine was inoperative without it. 40 hours of work were required to reassemble the machine. What was offered did not, in my view, answer the description of a polishing machine. Mr McLean maintained that he had purchased the motor for the polishing machine and that is why it was excluded from delivery. In that case it was incumbent upon him to have the terms of settlement specify the exclusion. He did not. This evidence did not reflect well on Mr McLean’s credit.

33 Nor did his shifting position in cross examination impress me. These features coupled with the inconsistencies in his evidence and, to a lesser extent, in the evidence of Mr Thrift lead me to prefer the evidence of Mr Dive and Mr Dunn.

34 Wedeco’s summons sought an order that Precision provide Wedeco, forthwith, with the polishing machine and an order that Precision pay interest at Supreme Court rates on the settlement sum of a $100,000 from 17 November 2003 to the date of compliance with the order for delivery of the polishing machine.

35 The problem with that prayer for relief was that there was a variation to the terms of settlement in the cases put by both parties. The difference was as to the terms of the variation. Once the contract was varied, the original contract ceased to have effect and it was no longer Precision’s liability to deliver a polishing machine. In those circumstances, I allowed an amendment to the summons to seek an order that Precision forthwith provide to Wedeco the items in tax invoice 560 except the polishing machine and the standard gauges. I am prepared to make such an order.

36 I am not prepared to order Precision to pay interest on $100,000 from the date of its payment on 17 November 2003 to the date of compliance with the order for delivery of the other items in tax invoice 560. The $100,000 was paid not only for the items substituted for the polishing machine, but also for items on other invoices specified in the terms of settlement. With the exception of the tank and stand, those items were delivered up to Wedeco. Precision does not dispute that Wedeco is entitled to take delivery of the tank and stand.

37 I direct the parties to bring in short minutes of orders reflecting these reasons. I will hear the parties on costs.

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Last Modified: 09/09/2004