Phillips Contracting v Yensong [2008] NSWSC 769

New South Wales Supreme Court

CITATION : Phillips Contracting v Yensong [2008] NSWSC 769

HEARING DATE(S) : 12, 13 and 14/05/08

JUDGMENT DATE : 29 July 2008

JURISDICTION : Equity

JUDGMENT OF : White J

DECISION : Counsel for the defendant to bring in short minutes of order in accordance with reasons.

CATCHWORDS : TRADE AND COMMERCE – misleading and deceptive conduct – no reliance on representations where true position known prior to contract – no question of principle

LEGISLATION CITED : Trade Practices Act 1974 (Cth)

CATEGORY : Principal judgment

Phillips Contracting Pty Ltd & 1 Or PARTIES : v Yensong Pty Ltd

FILE NUMBER(S) : SC 6250/05

COUNSEL : Plaintiffs: R I Bellamy Defendant: J Stevenson SC and V Whittaker

SOLICITORS : Plaintiffs: Thomson Playford Defendant: Gillis Delaney

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WHITE J

Tuesday, 29 July 2008

6250/05 Phillips Contracting Pty Ltd & 1 Or v Yensong Pty Ltd JUDGMENT 1 HIS HONOUR: On 5 August 2005, the plaintiff entered into a contract to buy an electrical contracting business known as Ampcon Electrical from the defendant. The plaintiff claims that it was induced to enter into the contract by the defendant's misleading and deceptive conduct. It has not rescinded the contract. It seeks an order under s 87 of the Trade Practices Act 1974 (Cth) for variation of the purchase price and claims damages. The purchase price was $536,649 allocated as to $250,000 to goodwill and $286,649 to plant, fittings and chattels. 2 The plaintiff company was part of a group of companies controlled by a Mr Daniel Phillips. That group of companies provided engineering services for maintenance of mines. Prior to 5 August 2005 the defendant carried on an electrical contracting business to coal mines in the Hunter Valley. The defendant's business was a good fit for the businesses conducted by the group of companies known as the Phillips Group. 3 The plaintiff has not made any payments for goodwill. It seeks an order under s 87 of the Trade Practices Act to vary the purchase price to $286,649, that is, by removing any price for goodwill. It claims that neither the goodwill nor the plant and equipment was worth what it paid. It also seeks damages. The defendant cross-claims for the balance of the purchase price. 4 The misrepresentations alleged by the plaintiff are of three kinds. First, it complains of statements made in a document (described in the proceedings as the portfolio document). This document was used by the defendant to interest the plaintiff in the purchase. Secondly, it complains of statements made by Mr Bryan Gay, the managing director of the defendant, at a meeting on 21 July 2005 at Muswellbrook. These statements concerned income from particular contracts and the defendant's income in the year to 30 June 2005. Thirdly, it complains of statements made in writing on 3 August 2005 concerning wage and certain other expenses in performing a contract known as the Bulga Coal contract and projected future gross profit from that contract. 5 Ultimately, there is very little dispute as to the representations made by the defendant about which the plaintiff complains. In some respects the defendant accepts that misleading representations were made. However, it contends that prior to entering into the contract the plaintiff learned the true facts and did not rely on any representation which was not true. 6 The contract contains a term that: " 3 Non Reliance The purchasers [sic] acknowledge that they have in entering this agreement not relied upon any statement representation warranty or condition made or given by the vendor or anyone on behalf of the vendor in respect of the subject matter of this agreement other than those that are expressly herein contained. "