Western Land Development v Boomdell Pty Ltd

[2002] NSWSC 428

CITATION:	Western Land Development v Boomdell Pty Ltd [2002] NSWSC 428
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 5805/01
HEARING DATE(S):	16/05/02
JUDGMENT DATE:	16 May 2002
PARTIES :	Western Land Development Pty Ltd v Boomdell Pty Ltd
JUDGMENT OF:	Master Macready at 1

COUNSEL :	Mr A. Fernon for plaintiff Mr S. Reuben for defendant
SOLICITORS:	Low Doherty & Stratford Astley Thompson Cox for defendant
CATCHWORDS:	Corporations Law. Application to set aside demand under the Corporations Act. Demand reduced due to a genuine dispute in respect of a small part of the amount claimed. Offsetting claims not quantified and therefore not available. No matter of principle.
DECISION:

- 1 -

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER MACREADY

THURSDAY 16 MAY 2002

5805/01 - WESTERN LAND DEVELOPMENT PTY LIMITED v BOOMDELL PTY LIMITED

JUDGMENT

1 MASTER: This is an application to set aside a demand under s 459G of the Corporations Law. A statutory demand was served by the defendant on the plaintiff and seeks an amount of $45,574.30, being an amount remaining unpaid in respect of an invoice for services rendered by the defendant to the plaintiff. The demand is dated 6 November 2001.

2 The plaintiff was a company connected with a development of certain land at Glendenning near Blacktown, and the defendant was a contractor who provided the water and sewerage reticulation for the purposes of the subdivision.

3 The initial affidavit suggested that there was no written contract, and it also raises defects in the work that was done. The further evidence shows that the plaintiff company sent a fax to the defendant asking for the quote for the particular job. That fax provides two detailed quotations from the defendant, one for the water reticulation and one for the sewerage reticulation. The work then went ahead and there is no dispute that the defendant did the actual work of laying the appropriate pipes in trenches and other necessary work.

4 In due course an invoice was issued by the defendant on 23 September 1999 and that was for the amount of the two quotations plus an additional amount of $1,800 which was to raise the access chamber over an existing sewer.

5 In respect of that matter it is said that there is a genuine dispute as to the amount of that “extra” if I may call it that.

6 A summation which I find quite appropriate as to a genuine dispute is that given by McClelland CJ in EQ in Eyota v Hanave Pty Limited (1994) 12 ACLC 669. At page 671 his Honour made the following comments in respect of the expression “Genuine dispute”.

“It is, however, necessary to consider the meaning of the expression ‘genuine dispute’ where it occurs in s 459H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the ‘serious question to be tried’ criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the Court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit ‘however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be’ not having ‘sufficient prima facie plausibility to merit further investigation as to (its) truth’ (cf Eng Mee Yong v Letchumanan (1980) AC 331 at 341), or ‘a patently feeble legal argument, or an assertion of facts unsupported by evidence’ (cf South Australia v Wall (1980) 24 SASR 189 at 194).
But it does mean that, except in such an extreme case, a Court required to determine whether there is a genuine dispute should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute. In Mibor Investments (at ACLC 1066; ACSR 366-7) Hayne J said, after referring to the state of the law prior to the enactment of Division 3 of Part 5.4 of the Corporations Law, and to the terms of Division 3:
‘These matters, taken in combination, suggest that at least in most cases, it is not expected that the Court will embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute. All that the legislation requires is that the Court conclude that there is a dispute and that it is a genuine dispute.’

In Re Morris Catering (Australia) Pty Limited (1993) 11 ACLC 919 at 922; (1993) 11 ACSR 601 at 605 Thomas J said:

‘There is little doubt that Division 3 ... prescribes a formula that requires the Court to assess the position between the parties, and preserve demands where it can be seen that there is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the Court will examine the merits or settle the dispute. The specified limits of the Court’s examination are the ascertainment of whether there is a “genuine dispute” and whether there is a “genuine claim”.

It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of 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 another.

The essential task is relatively simple – to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of a offsetting claim (not the likely result of it).’

I respectfully agree with those statements.”

7 Clearly the work having proceeded after the quotation was asked for, at least the price of the contract as originally commenced was fixed at the amount claimed. So far as the $1,800 for the extras is concerned, there is evidence from Mr Kelly of the conversations he had with Mr Sheridan of the defendant. According to Mr Kelly he said in the conversation to Mr Sheridan that he had a quote for $800 from someone else and Mr Sheridan said he would do the job for $800. Of course, I cannot determine whether that occurred and the conversation is denied. That would be a matter that would have to be ultimately determined in some proceedings to recover the amount. What it does illustrate is there is clearly a dispute to the extent of $1,000 in respect of the price.

8 On the evidence before me there does not seem to be any doubt that there was a purported carrying out of the work by the defendant. In due course the job was inspected and finally an appropriate certificate was issued. Even the plaintiff’s evidence is that the defendant did the work in purported compliance with the arrangement there was between them. The gravamen, however, of the plaintiff’s complaint is that the work was not done properly.

9 In his affidavit on 28 February 2002 Mr Kelly expanded on his original bald assertions in the affidavit filed in support of the application originally. He gave evidence in paragraph 14 that after some rain on an inspection of 5 January 2000 he observed that a section of the trenches, about 30 metres of them, had subsided by about two feet. The council inspector said that was not sufficient. He gave evidence of trying to contact Mr Sheridan who, according to Mr Kelly, refused to come and deal with it. According to Mr Kelly, he had to excavate the 30 metres of trenches, dry out the material, re-compact the earth and revegetate the land.

10 Some time later, about a month later, the remaining 260 metres of trench had sunk apparently between 300 millimetres and 600 millimetres. Once again he gave evidence of asking the defendant to come and fix the work. He then says he did the work himself, and also did the work of 305 metres of water main trenches.

11 The evidence given by Mr Kelly really, in my view, indicates that the plaintiff may have a claim for damages for breach of contract against the defendant. That claim for damages for breach of contract can only in the context of this matter, be seen as an offsetting claim. If it is to be dealt with as an offsetting claim under s 459H, the Court has an obligation to calculate the substantiated amount with the demand, and this involves the Court determining the amount of the offsetting claim. The reason why it has to determine the amount is, it has to deduct this from the actual amount claimed in the demand.

12 There has been no evidence given by the plaintiff of the damages which were suffered by the breach of contract. For instance, there is no estimate of what might have been the cost to the plaintiff of doing the extra work, and thus the Court is not in a position to determine that there is an offsetting claim which can be taken into account.

13 The other matter that was put was that there could be a genuine dispute in the sense that there was a total failure of consideration. In this case I do not think there is any possibility of that. The contract provided for both the supply of the appropriate pipes, the laying of them, and all other work associated with this project.

14 The request for the quotation made it clear that the quote was to be for the supply of materials and all work to complete the project. As it happened trenches had to be dug up and repacked. That is not the totality of what was done in the contract between the parties.

15 In the circumstances I am satisfied there is no possibility of any claim for a total failure of consideration. Accordingly, I am satisfied that there is a genuine dispute as to the amount of $1,000. Accordingly, I reduce the amount of the demand to $44,574.30 with effect from 21 days after service of the demand. Subject to any submissions, in my view the plaintiff has effectively failed in the application. I order the plaintiff to pay the defendant’s costs of the application. The exhibits may be returned.

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Last Modified: 05/28/2002