LCM Operations Pty Ltd v Rabah Enterprises Pty Ltd [2023] NSWSC 590

Supreme Court New South Wales

Medium Neutral Citation: LCM Operations Pty Ltd v Rabah Enterprises Pty Ltd [2023] NSWSC 590 Hearing dates: 7, 8 March 2023, last submissions 6 April 2023 Date of orders: 2 June 2023 Decision date: 02 June 2023 Jurisdiction: Equity - Commercial List Before: Rees J Decision: Judgment for plaintiff. Catchwords: CONTRACTS — brothers undertake property development through two companies — defendant company owns land and provides funds — related company is project manager — oral agreement — project manager charges $14.8M fee for construction including cost of build — fee recorded in "financial records" of both companies — defendant claims tax deduction but does not pay fee — project manager does not remit GST on fee — project manager wound up by ATO — brothers' explanation of arrangement logically uninviting — post-contractual conduct — claim in debt successful. SET-OFF — whether right to set-off loans made by defendant — contractual right of set-off — principles at [182]-[184] — whether right of set-off inferred from conduct — oral agreement — post-contractual conduct — no contractual right of set-off. RESTITUTION — Quantum meruit — principles at [208]-[210] — defendant freely accepted benefit of project manager's services — reasonable person would have realised project manager would expect to be paid — unjust for defendant to retain benefit without making restitution. Legislation Cited: A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act) ss 7-1, 9-5, 9-10(2), 29-5(1), 29-10 Corporations Act 2001 (Cth) ss 286, 553C, 1305 Income Tax Assessment Act 1997 (Cth) s 6-5(4) Cases Cited: Advanced Holdings Pty Limited as Trustee for The Demian Trust v Commissioner of Taxation [2021] FCAFC 135; (2021) 113 ATR 508 Angelopoulos v Sabatino (1995) 65 SASR 1 Apand Pty Limited v The Kettle Chip Co (1994) 52 FCR 474 Australian Securities and Investments Commission v Rich (2009) 75 ACSR 1; [2009] NSWSC 1229 Australian Securities and Investments Commission v Rich [2005] NSWSC 417; (2005) 191 FLR 385 Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 British Eagle International Airlines Ltd v Compagnie Nationale Air France (1975) 1 WLR 758 Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445; [2011] VSC 184 Commercial Factors Ltd v Maxwell Printing Ltd [1994] 1 NZLR 724 Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 246 CLR 498 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 Federal Commissioner of Taxation v Cassiniti [2018] FCAF 212; (2018) 266 FCR 385 Ghazal v Government Insurance Office of New South Wales (1992) 29 NSWLR 336 Gibson Motorsport Merchandise Pty Limited v Forbes [2005] FCA 749 Gould & Birbeck & Bacon v Mount Oxide Mines [1916] HCA 81; (1916) 22 CLR 490 Gye v McIntyre [1991] HCA 60; (1991) 171 CLR 609 Hastie Group Ltd (In Liq) v Multiplex Constructions Pty Ltd (formerly Brookfield Multiplex Constructions Pty Ltd) (No 3) [2022] FCA 1280 Hegarty v Keogh (No 2) [2023] SASCA 30 In the matter of Pulse Interactive Pty Limited (in liquidation) (2019) 134 ACSR 461; [2019] NSWSC 22 In the matter of Shot One Pty Ltd (in liquidation) [2017] VSC 741 Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 JR Consulting & Drafting Pty Ltd v Cummings (2016) 239 ALR 625 Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd (No 3) [2014] WASC 162 Leotta v Public Transport Commission of New South Wales (1976) 9 ALR 437 Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377; [2008] VSCA 93 Lym International Pty Limited v Marcolongo (2011) 15 BPR 29,465; [2011] NSWCA 303 Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; [2019] HCA 32 National Australia Bank Ltd v Idoport Pty Ltd [2007] NSWSC 1349 Opal Maritime Agencies Pty Ltd v The Proceeds of Sale of the Vessel MV "Skulptor Konenkov" (2000) 98 FCR 519; [2000] FCA 507 Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 Payne v Parker [1976] 1 NSWLR 191 Queensland Phosphate Pty Limited v Korda and Shepard (as joint and several liquidators of Legend International Holdings Inc (in liq)) [2017] VSCA 269 Ronchi v Portland Smelter Services Ltd [2005] VSCA 83 Sino-Resource Imp & Exp Co Ltd v Oakland Investment Group Ltd [2018] QSC 98 Southern Textile Converters Pty Ltd v Stehar Knitting Mills Pty Ltd [1979] 1 NSWLR 692 United Dominions Corp Limited v Brian Pty Limited [1985] HCA 49; (1985) 157 CLR 1 Vasco Investment Managers Ltde v Morgan Stanley Australia Ltd [2014] VSC 455 Whitton v Regis Towers Real Estate Pty Ltd (2007) 161 FCR 20; [2007] FCAFC 125 Young v Queensland Trustees Ltd [1956] HCA 1; (1956) 99 CLR 560 Texts Cited: S R Derham The Law of Set-Off (4th edition, 2010) N C Seddon and R A Bigwood, Law of Contract (11th edition, 2017) Category: Principal judgment Parties: LCM Operations Pty Ltd (Plaintiff) Rabah Enterprises Pty Ltd (Defendant) Representation: Counsel: Mr LE Edwards / Mr J Nixon (Plaintiff) Mr DP Robinson SC / Mr MA Collins (Defendant)