Elcorp Constructions Pty Limited v Lymorb Pty Limited [1999] NSWSC 434

New South Wales Supreme Court CITATION : Elcorp Constructions Pty Limited v Lymorb Pty Limited [1999] NSWSC 434 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 4906/98 HEARING DATE(S) : 7 May 1999 JUDGMENT DATE : 7 May 1999

PARTIES : Elcorp Constructions Pty Limtied (P) Lymorb Pty Limited (D) JUDGMENT OF :

COUNSEL : Mr. P. Strasser (P) Mr. M. Aldridge (D) SOLICITORS : KNPW (P) Kaufmann Peters (D) CATCHWORDS : DECISION :

SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER McLAUGHLIN

Friday, 7 May 1999

4906/98 ELCORP CONSTRUCTIONS PTY LIMITED -v- LYMORE PTY LIMITED JUDGMENT

1 MASTER: By summons filed on 4 December 1998 the plaintiff Elcorp Constructions Pty Ltd seeks an order that the statutory demand dated 19 November 1998, served upon it by the defendant, Lymore Pty Ltd, be set aside pursuant to section 459 G of the Corporations Law. 2 That statutory demand seeks payment by the plaintiff to the defendant of the amount of $20,250. That amount is described in the schedule to the demand as follows: "Amount due by Elcorp Construction Pty Ltd on accounts relative to construction and building work from 22 May 1998 to 25 June 1998". 3 The plaintiff is a builder. The plaintiff was involved in construction of a block of home units at Spencer Street Rose Bay in 1998. The plaintiff required building work in relation to formwork and concreting to be performed on the construction site. The plaintiff negotiated with the defendant, with a view to the defendant performing as a subcontractor to the plaintiff that formwork and concreting work. 4 The only affidavit evidence placed before the Court is that of John Paul Elcham, a director for the plaintiff company. He sets forth details of various conversations which he had with a Mr Neville Hewitt the engineer in the employ of the defendant, who was apparently responsible for the defendant's work in relation to the proposed arrangement between the plaintiff and the defendant. 5 It is unnecessary for me to set forth in detail the evidence in that affidavit concerning the various conversations between Mr Elcham and Mr Hewitt and subsequently between Mr Elcham and Mr Raymond Bamausa, the managing director of the defendant. 6 Suffice it to say, however, that the defendant company performed work in relation to the footings at the construction site, but did not perform the concreting work which was also the subject of the discussions. 7 The amount which is claimed in the statutory demand, $20,250, appears to relate only to formwork. I would herein interpolate that neither party has placed in evidence the accounts upon which the demand is based, but the plaintiff does not dispute that those accounts relate to formwork. 8 There is no suggestion that the plaintiff disputes that the work to which those accounts relate was performed; neither does the plaintiff suggest that the amounts claimed in those accounts are excessive for that work. 9 The plaintiff, however, seek to have the statutory demand set aside upon the ground set forth in subsection (1) of section 459 H, in that the plaintiff, so it submits, has an offsetting claim. 10 The defendant points to the fact that the conversations which are set forth in Mr Elcham's affidavit between both himself and Mr Hewitt and himself and Mr Bamausa clearly contemplate that there would eventually be a written agreement between the parties concerning the amount to be paid by the plaintiff to the defendant for the proposed building work to be performed by the defendant and that, in the absence of any such written agreement, no binding agreement came into existence between the parties. 11 The defendant, in that regard, relies upon the classic decision of the High Court of Australia in Masters v Cameron (1954) 91 CLR 353, in particular the joint judgment of Dixon CJ and McTiernan and Kitto JJ at 360 to 362. 12 The defendant further submits that the work which the defendant performed in relation to footings was quite separate work from that which was envisaged might eventually be performed if a binding contract came into existence between the parties in relation to concreting. 13 Therefore, so it is submitted by the defendant, there can be no offsetting claim of the nature asserted by the plaintiff, since that offsetting claim relates to work which was not done by the defendant but work which, so the defendant submits, it was not in any way obligated to perform since there was no binding agreement between the parties in that regard. 14 The plaintiff, however, submits that what was contemplated by the parties was that there should be a contract in respect to the entire work, both formwork and concreting. Further, that, whilst there was no concluded agreement concerning the final price --- indeed there was an original quotation, and there was a revised quotation --- the parties (who were $20,000 apart in respect of the revised quotation) agreed that the defendant should commence work, in the hope apparently that the parties would be able to reach agreement on a price somewhere between the amount of the revised quotation and the highest amount which the plaintiff was prepared to pay before the work was completed. 15 In proceedings of the nature of that presently before the Court, it is not appropriate for me to attempt to resolve the question of whether the plaintiff will ultimately succeed in its assertion of an offsetting claim. It is necessary only that I should be satisfied that the plaintiff has a genuine offsetting claim, one which is not doomed to failure. It certainly appears from the evidence in Mr Elcham's affidavit that it can genuinely be argued on the part of the plaintiff that there was an agreement between the parties that the defendant would perform the entirety of the work, even though at the time when the defendant started to perform part of that (work the formwork) there was no agreement as to the price for the entirety of the work. 16 I do not express any view as to whether the plaintiff will ultimately succeed in establishing an offsetting claim based upon such an agreement as to the entirety of the work. But it is certainly a claim which I consider the plaintiff is entitled to have litigated before an appropriate tribunal. 17 I consider, therefore, that the plaintiff does have an offsetting claim. The amount of the offsetting claim is certainly considerably in excess of the amount set forth in the statutory demand. It is appropriate, therefore, that in those circumstances I should order that the demand be set aside, which I propose so to do. 18 I make the following orders: (1). I order that the statutory demand dated 19 November 1998 served by the defendant upon the plaintiff be set aside. (2). I order that the defendant pay the costs of plaintiff. The exhibits, other than exhibit A, may be returned. **********