Mass Holdings Pty Limited v EPS Constructions Pty Limited [2015] NSWSC 217

Supreme Court New South Wales

Medium Neutral Citation: Mass Holdings Pty Limited v EPS Constructions Pty Limited [2015] NSWSC 217 Hearing dates: 9-13 February 2015 Date of orders: 13 March 2015 Decision date: 13 March 2015 Jurisdiction: Equity Division Before: Darke J Decision: Plaintiff entitled to recover amount from first defendant in accordance with agreement found. Catchwords: CONTRACT – formation – whether concluded agreement reached between building company and business ventures Category: Principal judgment Parties: Mass Holdings Pty Limited (plaintiff/ first cross-defendant)

EPS Constructions Pty Limited (first defendant/ first cross-claimant) Naames Pty Limited (second defendant/ third cross-claimant) Sarahton Pty Ltd (third defendant) Emade Semaan (fourth defendant/ second cross-claimant) Semcorp (Aust) Pty Limited (fifth defendant/ third cross-defendant) Elie Kaltoum (sixth defendant/ fourth cross-defendant)

Charles Massih (second cross-defendant) Representation: Counsel: D J Fagan SC, P Bolster (plaintiff/ first and second cross-defendants) B Katekar (first to fourth defendants/ cross-claimants)

Solicitors: Rankin Ellison Lawyers (plaintiff/ first and second cross-defendants) Henry Davis York (first to fourth defendants/ cross-claimants) File Number(s): 2011/356937 Publication restriction: Nil

Judgment

Introduction 1. This case concerns a business venture involving the purchase and development of certain land in Albert Street, Werrington. The venture, which ultimately proved to be profitable, was undertaken by the plaintiff, Mass Holdings Pty Ltd ("Mass"), Naames Pty Ltd ("Naames"), Semcorp (Aust) Pty Ltd ("Semcorp") and Mr Elie Kaltoum, who is a real estate agent. The venture has on occasions been referred to as a partnership. However, as the case was conducted, nothing turns upon whether the venture was indeed a partnership or a joint venture. 2. Mass, for whom Mr D J Fagan of Senior Counsel and Mr P Bolster of Counsel appeared, is a company associated with Mr Charles Massih. Mr Massih is an accountant. Naames is a company associated with Mr Emade Semaan. Emade Semaan is a builder and property developer. Semcorp is a company associated with Mr Karim Semaan. Karim Semaan is a real estate agent. Emade and Karim Semaan are brothers. 3. Emade Semaan is also associated with the first defendant, EPS Constructions Pty Ltd ("EPS"). EPS eventually carried out the construction of units on the Albert Street land. Mr Katekar of Counsel appeared for EPS, Naames and Emade Semaan. He also appeared for another company associated with Emade Semaan, Sarahton Pty Ltd. 4. The land was purchased in two stages. Contracts were exchanged in November 2006 in relation to the land at 34-36 Albert Street. Contracts were exchanged in relation to the land at 38 Albert Street in February 2009. The total consideration was $1,580,000. Title was taken in the proportions one third to Mass, one third to Naames, one sixth to Semcorp and one sixth to Mr Kaltoum. 5. In about April 2009, the venturers submitted a tender to Housing NSW for the sale and development of the land. The submitted tender, after undergoing revision in certain respects, ultimately found favour with Housing NSW. 6. On 2 October 2009, the venturers entered into a contract with Housing NSW for the sale of the land for $1,744,792 (including GST). The sale included a term to the effect that following the obtaining of a satisfactory development consent and the approval by Housing NSW of plans and specifications, the vendor or a party procured by the vendor and acceptable to Housing NSW would enter into a building contract with Housing NSW for the construction of 46 units on the land. 7. Mass seeks final relief against EPS alone. Mass alleges that prior to entry into the contract for sale, an oral agreement had been reached between EPS and the venturers to the effect that EPS would be retained by the venturers to carry out the required building work and would account to the venturers on the basis that it would charge the venturers the fixed sum of $8,096,000 (including GST) for the carrying out of the building work. 8. On 6 May 2010 the contract for the sale of land was completed, and EPS entered into the building contract with Housing NSW to construct the 46 units on the land for a price of $11,928,728.90 (including GST). 9. During the course of the development, EPS made certain payments to the venturers out of the progress payments it received from Housing NSW. However, Mass claims that, based upon the agreement said to have been reached between EPS and the venturers, EPS is liable to pay it a further amount of $677,434.67. 10. EPS denies that an agreement was reached as alleged by Mass. EPS alleges that there was instead an agreement whereby it would receive, out of the progress payments made by Housing NSW, all of its reasonable construction and associated costs, with any surplus to be distributed to the venturers once the final construction costs were known. On that basis, it is put that after taking into account certain payments made to the venturers, the venturers have been significantly overpaid and are liable to repay the overpayment. 11. EPS contends in the alternative that there may have been no agreement at all between it and the venturers. EPS says that, if that is so, the amounts it paid to the venturers were made by mistake and they should accordingly repay the amounts so received. 12. The central question in the case is what agreements (if any) were reached between EPS and the venturers concerning the payment of EPS for work done, and the calculation of the venturers' profit. The resolution of that question ultimately depends upon an assessment of the various versions of the events and discussions that took place in the period leading up to entry into the contract for the sale of the land to Housing NSW. However, before dealing with the evidence given by the venturers about such events and discussions, I set out below a narrative of the key events in relation to the development of the land, essentially derived from the documents which were adduced in evidence.