In the matter of Libdy Developments Pty Ltd

By originating process filed on 5 April 2023, the plaintiff, Libdy Developments Pty Ltd (ACN 137 499 300) trading as Civil Transport (Civil Transport), applies for an order under s 459H of the Corporations Act 2001 (Cth) setting aside a statutory demand issued by the defendant, ResourceCo Material Solutions Pty Ltd (ACN 608 316 687) (ResourceCo), on 14 March 2023 in respect of a debt of $454,645.39. The debt is described in the schedule to the demand as the balance outstanding in relation to specified unpaid invoices issued by ResourceCo to Civil Transport during the period from 21 September 2022 to 14 January 2023.

ResourceCo’s business includes the supply of haulage and transportation services. It arranges for trucks to be dispatched to construction sites, and then transports excavated soil and other material from those sites to tips for disposal.

Civil Transport is in the business of providing demolition, excavation, and haulage services.

ResourceCo’s invoices referred to in the statutory demand were issued for services that ResourceCo provided to Civil Transport in respect of a site at Collaroy and a site at Kogarah.

Civil Transport seeks an order setting aside the statutory demand under s 459H on two grounds.

First, Civil Transport submits that there is a genuine dispute about the amount of the debt claimed in the statutory demand because there is a dispute about the rates payable to ResourceCo for its services provided at the Collaroy and Kogarah sites. Mr Kevin Libdy, the general manager of Civil Transport, has given evidence that, if ResourceCo had charged for its services in accordance with the rates that Mr Libdy says were agreed, the total amount payable in respect of the invoices referred to in the statutory demand would be $379,263.56, and not the amount of $454,645.39 set out in the demand.

Second, Civil Transport submits that it has an offsetting claim against ResourceCo for damages for alleged breaches of the contract pursuant to which ResourceCo provided haulage services to Civil Transport removing and disposing of material from the Kogarah site.

ResourceCo accepts that Civil Transport has established a genuine dispute in relation to the amount of the debt that is the subject of the statutory demand, and that the demand should be varied pursuant to s 459H(4) of the Corporations Act by reducing the amount to $379,263.56. However, ResourceCo denies that Civil Transport has a genuine offsetting claim.

Section 459H(5) defines the term “offsetting claim” as a genuine claim that the company has against the respondent (being the creditor who issued the statutory demand) by way of counterclaim, set-off, or cross-demand, even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates.

In Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd, Bell P (as the Chief Justice then was) addressed what is required in order to demonstrate the existence of a genuine offsetting claim: [1]

Bell P had earlier observed that: [2]

White JA and Sackville AJA agreed with Bell P. [3]

At the hearing on 6 June 2023, Civil Transport relied on an affidavit of Mr Libdy sworn 5 April 2023. Mr Libdy is the General Manager of Civil Transport. As will be seen below, Mr Libdy’s evidence included his account of certain conversations with Ms Mirna Zailaa, who is the director of Civil Transport and who is also married to Mr Libdy. Ms Zailaa did not give evidence.

ResourceCo relied on affidavits sworn on 3 May 2023 by its Chief Executive Officer, Mr Steven Harrison, its Chief Financial Officer, Mr Paul Wallin, its Accounts Receivable Manager, Ms Brenda Chambers, and its Business Development Manager, Mr Abdel Tahseldar.

In reply, Civil Transport read a further affidavit sworn by Mr Libdy on 17 May 2023.

The evidence relevant to the alleged offsetting claim may be summarised as follows.

Landmark Group Construction Australia Pty Ltd (Landmark) was the principal contractor on the Kogarah site.

On 9 May 2022, Landmark entered into a subcontract with Civil Tec Group Pty Ltd (Civil Tec) for excavation, piling, anchoring, shotcrete, and trimming works at the Kogarah site (the Landmark subcontract). Civil Tec provides excavation and earth work services to the construction industry.

Pursuant to clause 34.7 of the Landmark subcontract, Civil Tec was liable to Landmark for liquidated damages of $5,000.00 per day in the event that the works under subcontract did not reach practical completion by the specified date for completion.

Mr Libdy is a director of Civil Tec, in addition to being the General Manager of Civil Transport. In his affidavit sworn on 5 April 2023, Mr Libdy gave evidence that he made arrangements on behalf of Civil Tec to engage Civil Transport to remove spoil from the Kogarah site. Mr Libdy deposed that:

Mr Libdy has also given evidence that he was the person who arranged on behalf of Civil Transport for trucks to attend the Kogarah site to remove and dispose of “site spoil”, and that he made enquiries for that purpose with various subcontractors for haulage and tip services. In his affidavit sworn on 5 April 2023, Mr Libdy deposed that he had a conversation to the following effect with Mr Tahseldar on or about 4 August 2022 about Civil Transport’s requirements for the Kogarah site:

According to Mr Tahseldar’s evidence, neither he nor Mr Libdy mentioned a number of trucks per day in their conversation on 4 August 2022. Rather, Mr Tahseldar simply offered to provide a quotation for the Kogarah site and asked about the type of material to be removed from the site. Mr Libdy told him that it was clay and sandstone.

On 5 August 2022, Mr Tahseldar sent a quotation to Mr Libdy by email for haulage and disposal of sandstone at the rate of $620.00 per load and clay at the rate of $14.00 per tonne. The quotation stated that “quote acceptance is subject to ResourceCo T&Cs”.

It was common ground at the hearing before me that the “ResourceCo T&Cs” referred to in ResourceCo’s quotation are terms and conditions that Civil Transport and ResourceCo had agreed would apply to each contract for disposal of material in April 2019, when ResourceCo had agreed to provide services to Civil Transport on credit.

Clauses 3 and 4 of the terms and conditions relevantly provided:

Clause 20 of the terms and conditions applied to sites from which ResourceCo collected material, or to which it delivered material, for Civil Transport. Clause 20 relevantly provided:

Clause 23 of the terms and conditions relevantly provided:

Neither the quotation, nor ResourceCo’s terms and conditions referred to in the quotation, specified a number of trucks to be provided by ResourceCo for removal and disposal of clay and sandstone from the Kogarah site.

According to the evidence of both Mr Libdy and Mr Tahseldar, they had further conversations between 5 August and 13 August 2022 concerning the rates. Those conversations resulted in some changes to the rates. It is not relevant to address their evidence concerning the substance of the changes discussed or agreed.

According to Mr Tahseldar’s evidence, there was a very high demand for haulage and transportation services during the period from mid-late 2022, and it was very difficult to keep up with demand for trucks for transportation services to the construction sector during that time.

According to Mr Libdy’s evidence, ResourceCo began providing services to Civil Transport at the Kogarah site on 15 August 2022, and Mr Tahseldar “organised for the trucks to be dispatched to the Kogarah Site … as required”.

Mr Libdy and Mr Tahseldar have each given evidence of various communications they had about changes to ResourceCo’s rates for the Kogarah site from time to time. Mr Libdy has also given evidence about a discussion that he says he had with Mr Tahseldar about ResourceCo charging on a per-load basis in circumstances where Mr Libdy maintained that he had seen ResourceCo trucks leaving the Kogarah site carrying less than full loads of material. As ResourceCo accepts that there is a genuine dispute about the applicable rates, it is not necessary to refer to the details of those discussions. [4] The invoices that ResourceCo issued to Civil Transport in respect of the Kogarah site record various different rates that were charged at different times.

Mr Tahseldar has given evidence that, during August, September, and November 2022, “there was always pressure on to provide a higher number of trucks from Kevin to Kogarah”. Mr Tahseldar has deposed that he had a conversation with Mr Libdy in about mid-August 2022 to the following effect:

In his affidavit sworn on 17 May 2023, Mr Libdy gave a different version of his conversation with Mr Tahseldar in mid-August 2022, which Mr Libdy says occurred “after sending him numerous text messages about the Plaintiff’s requirements for additional trucks”. According to Mr Libdy’s evidence, the conversation was to the following effect:

Civil Transport has not adduced any evidence of the “numerous text messages” that Mr Libdy refers to having sent to Mr Tahseldar prior to mid-August 2022. It is difficult to reconcile this evidence with the fact that ResourceCo did not begin providing services to the Kogarah site until 15 August 2022.

Mr Tahseldar has given evidence that he and Mr Libdy had a further conversation to the following effect on or about 23 August 2022:

Mr Libdy gave the following different account of that conversation in his affidavit sworn on 17 May 2023:

On 6 September 2022, Landmark issued “Notice of Delay #NOD-4” to Civil Tec in relation to the Kogarah Site. I infer that Landmark had issued three notices of delay to Civil Tec prior to this date. The notice described the problem in the following terms:

As referred to above, ResourceCo had commenced providing transport and waste disposal services to Civil Transport at the Kogarah site on 15 August 2022, only 21 days prior to Landmark’s issue of Notice of Delay #NOD-4 stating the project was 29 days behind after taking into account extensions of time.

Mr Tahseldar has given evidence that he had a conversation with Mr Libdy to the following effect on or about 8 September 2022:

Mr Tahseldar has given evidence that he had a further conversation with Mr Libdy to the following effect on 16 September 2022:

Mr Tahseldar has given evidence that he had a further conversation with Mr Libdy to the following effect on 19 September 2022:

Mr Libdy does not dispute Mr Tahseldar’s account of those conversations on 8, 16, and 19 September 2022.

Ms Chambers has given evidence that she became involved in following up on Civil Transport to pay ResourceCo’s outstanding invoices from about early October 2022.

On 11 October 2022, Ms Chambers sent an email to admin@civiltransport.com.au advising that ResourceCo’s August 2022 invoices were overdue and asking when payment would be made.

Mr Tahseldar has given evidence to the effect that Civil Transport paid the August 2022 invoices during the last week of October 2022.

On 1 November 2022, Ms Chambers sent an email to admin@civiltransport.com.au advising that the September 2022 invoices were due for payment, and that Civil Transport’s account with ResourceCo had exceeded its credit limit. The email requested that Civil Transport advise when payment would be made.

In his affidavit sworn on 5 April 2023, Mr Libdy gave evidence that he and Mr Tahseldar had a conversation to the following effect about the Kogarah site on or about 1 November 2022:

Mr Libdy and Mr Tahseldar exchanged text messages on 2 November 2022 in which Mr Libdy requested ten trucks for the Kogarah site on 3 November 2022. Mr Tahseldar replied “Nope” but indicated that he could provide 10-wheelers to remove and dispose of the clay. In this exchange of messages, Mr Libdy complained that “We are in series [sic-serious] trouble on both sites” and asked Mr Tahseldar to call him because “I’m stressing hard”.

On the morning of 4 November 2022, Mr Libdy sent a message to Mr Tahseldar stating: “Send trucks to Collaroy are they going to Mosman”. This was followed immediately by a further message from Mr Libdy stating: “We just be told LD’s will apply they came and saw only 2 ten wheelers??????” It is not clear whether the second message relates to the Kogarah site.

On 8 November 2022, Mr Libdy sent a message to Mr Tahseldar stating “Not enough trucks at Kogarah getting smashed by client”. Mr Tahseldar replied: “Sorted”.

On 8 November 2022, Ms Chambers sent a further follow up email concerning payment of ResourceCo’s September invoices. On this occasion, Ms Chambers sent the email to admin@civiltransport.com.au and to Mr Libdy’s Civil Tec email address. The email stated:

Ms Jessica Dendal, an Office Administrator for Civil Tec who appears to have communicated with Ms Chambers on behalf of Civil Transport, replied to Ms Chambers by email later that day, stating:

Ms Chambers replied:

Ms Dendal replied on the morning of 9 November 2022:

On the afternoon of 9 November 2022, Ms Chambers sent a further email reiterating that Civil Transport’s account was now over its limit and requesting advice about the timing of payment for four specific invoices that ResourceCo had issued to Civil Transport during the period 7 to 21 September 2022. On the morning of 10 November 2022, Ms Dendal replied that she was “just getting advised and will return response soonest”. Ms Dendal sent a further email to Ms Chambers later that morning stating that the four specific invoices would be paid “next week in full”, adding that “this has been confirmed”. However, it appears from an email that Ms Chambers sent to Mr Libdy on 15 November 2022 that payment of those four specific invoices was delayed. Ms Chambers’ email refers to a telephone call in which Mr Libdy had advised her that those invoices (totalling $72,885.06) would be paid at the same time as the next month’s payment (totalling $44,510.40).

On 29 November 2022, Ms Chambers sent a further email to Mr Libdy, stating:

On 1 December 2022, Ms Chambers sent an email to Mr Libdy and Ms Dendal advising that ResourceCo had placed Civil Transport’s account on stop credit, as no payment had been received.

Mr Tahseldar and Mr Libdy had a telephone conversation on or about 2 December 2022 concerning ResourceCo’s outstanding invoices.

According to Mr Tahseldar’s evidence, the conversation was to the following effect:

Mr Libdy gave the following different account of the conversation in his affidavit sworn on 17 May 2023:

Mr Libdy and Mr Wallin had a telephone conversation on or about 6 December 2022.

Mr Wallin has given evidence that their conversation was to the following effect:

In his affidavit sworn on 17 May 2023, Mr Libdy gave a different account of the conversation:

On 6 December 2022, Ms Chambers sent an email to Mr Libdy and Ms Dendal following up on the account, including an amount of $74,720.29 said to be overdue, and requesting advice about when payment would be made. Ms Dendal replied on 9 December 2022, questioning one of the rates that had been applied in the calculation of the charges, and Ms Chambers responded indicating that the rate was correct.

ResourceCo ceased providing haulage and disposal services to Civil Transport at the Kogarah site on 13 December 2022.

During the period from 15 December 2022, and 19 January 2022, there were emails between Ms Chambers, Mr Libdy, and Ms Dendal, in which Ms Chambers repeatedly sought information about when Civil Transport would pay outstanding invoices and Ms Dendal repeatedly promised an “update”.

Mr Wallin has given evidence that he had a further conversation with Mr Libdy on 19 December 2022, during which Mr Wallin asked whether ResourceCo’s account would be settled in full that day and Mr Libdy replied that it would be “paid in full” by 22 December 2022. In his affidavit in reply sworn on 17 May 2023, Mr Libdy deposed that he could not recall the details of the conversation, but denied that he told Mr Wallin that the account would be paid in full.

On 23 December 2022, Landmark issued “Notice of Delay #NOD-22” to Civil Tec in relation to delays said to have occurred on 22 and 23 December 2022 “due to no resources to carry out the works on any part of the site”.

On 23 December 2022, Mr Robert Kokanovic, General Manager – Construction for Landmark sent an email to Mr Libdy at his Civil Tec email address stating:

On 5 January 2023, Landmark issued “Notice of Delay #NOD-23” to Civil Tec in relation to delays said to have occurred on 3, 4, and 5 January 2023 due to “[n]o machinery working on any works with in Victoria Street side of site. Civil Tec unable to provide resources to carryout works”.

On 5 January 2023, Landmark also issued “Notice of Delay #NOD-24” to Civil Tec in relation to delays said to have occurred on 3 and 4 January 2023 due to “insufficient recourse to Regent Street side of works to continue with Bulk excavation or Bench along SW1, bulk excavation of Bench along SW3, trimming of walls SW3 down to Basement B3 to fore fill Civil Tec detail programme as issued 2022”.

On 7 January 2023, Landmark issued “Notice of Delay #NOD-25” to Civil Tec in relation to delays said to have occurred on 6 January 2023 due to “no excavation, no trimming, no work at all, due to not enough recourses on site to operate machinery to areas”.

On 13 January 2023, Mr Libdy sent Mr Wallin a text message, which stated that “payment WILL be made at the end of month and balance at end of February”. Mr Wallin replied, expressing disappointment that “you haven’t honoured our agreement. You committed to paying the balance in full the week commencing 19/12/2022. You have paid nil without any communication to me.” Mr Wallin requested that Mr Libdy submit a payment plan proposal for his consideration.

On 16 January 2023, Ms Chambers sent a text message to Mr Libdy, stating:

Mr Libdy did not reply to Ms Chambers’ message until 10 February 2023.

On 30 January 2023, Mr Wallin sent Mr Libdy a text message requesting confirmation of “the payment amount we will receive from you tomorrow as discussed.” There is no evidence of any response to that message from Mr Libdy. I assume that Mr Wallin’s message was referring to Mr Libdy’s earlier statement that “payment WILL be made at the end of month and balance at end of February”. Mr Libdy has not given any evidence in relation to that message which he sent to Mr Wallin on 13 January 2023.

There was a further telephone conversation between Mr Wallin and Mr Libdy on 31 January 2023.

Mr Wallin has given evidence that their conversation was to the following effect:

In his affidavit sworn on 17 May 2023, Mr Libdy gave a different account of the conversation:

On 31 January 2023, Mr Kokanovic sent an email to Mr Libdy at his Civil Tec email address stating (emphasis in original):

In his affidavit sworn on 5 April 2023, Mr Libdy deposed that he showed the email to Ms Zailaa and had a conversation with her to the following effect: [5]

Ms Zailaa did not give evidence.

On 1 February 2023, Landmark issued a show cause notice to Civil Tec under the Landmark Subcontract. The notice stated:

The annexures referred to in the show cause notice were not tendered in evidence in these proceedings.

On 2 February 2023, Landmark issued “Notice of Delay #NOD-30” to Civil Tec in relation to delays said to have occurred on 31 January and 1 February 2023 due to “[n]o shotcrete preparation to SW1, SW2 & SW3, No excavation of subgrade and No benching to SW1, SW2 & SW3”.

On 3 February 2023, Mr Wallin sent a text message to Mr Libdy requesting confirmation that Civil Transport would be “paying $50k today as per our conversation”. Mr Libdy did not reply for several days.

On 6 February 2023, Landmark issued a payment schedule in response to a payment claim made by Civil Tec on 25 January 2023. The payment schedule allowed $157,800.00 in respect of work for which Civil Tec had claimed $400,722.00, and deducted from this allowance liquidated damages for 105 days of delay at the rate of $5,000.00 per day, with the result that nothing was payable in respect of the claim.

On 7 February 2023, Mr Libdy replied to Mr Wallin’s message of 3 February 2023,: “Not ignoring I will call back later today”. Mr Wallin responded: “Yes please, talk soon.” Mr Libdy did not call.

On 8 February 2023, Mr Muhammed Ahmed, a Project Engineer for Civil Tec, sent an email to Landmark representatives responding to the show cause notice. Mr Ahmed’s email, which was copied to Mr Libdy’s Civil Tec email address, stated:

The term “WUS” is defined in the Landmark Subcontract as meaning work under subcontract.

On 10 February 2023, Mr Libdy replied to the text message sent by Ms Chambers on 16 January 2023, stating:

On 10 February 2023, Landmark gave notice to Civil Tec terminating the Landmark Subcontract. The notice included Landmark’s reply to Civil Tec’s response to the show cause notice, refuting the various statements made by Civil Tec about the causes of the delay to the Kogarah project. Landmark’s reply included:

At this stage, Mr Libdy still owed Mr Wallin the call that he had promised on Tuesday, 7 February 2023. Mr Wallin sent Mr Libdy a further text message on Friday, 10 February 2023 stating:

Mr Wallin has given evidence that he had a telephone conversation with Mr Libdy on or about Monday, 13 February 2023 to the following effect:

Mr Libdy disputes Mr Wallin’s account of their conversation on 13 February 2023. In his affidavit sworn on 17 May 2023, Mr Libdy deposed that the conversation was to the following effect:

On 17 February 2023, ResourceCo wrote to Civil Transport stating (emphasis in original):

Mr Wallin has given evidence that he had a further telephone conversation with Mr Libdy on or about Monday, 20 February 2023 to the following effect:

Mr Libdy has given evidence in his affidavit sworn on 17 May 2023 that he could not recall the details of this conversation, but he denied telling Mr Wallin that he would “pay ResourceCo in full”. Mr Libdy deposed that:

Mr Harrison has given evidence that he had a conversation with Mr Libdy to the following effect on 21 February 2023:

In his affidavit sworn on 17 May 2023, Mr Libdy gave the following different account of that conversation:

There was a further telephone conversation between Mr Wallin and Mr Libdy on 28 February 2023.

According to Mr Wallin’s evidence, that conversation was to the following effect:

Mr Libdy gave a different account of the conversation in his affidavit sworn on 17 May 2023. According to Mr Libdy, the conversation on or about 28 February 2023 was to the following effect:

Mr Wallin has given evidence that ResourceCo did not receive the payment of $10,000.00. Nor did ResourceCo receive any repayment proposal from Mr Libdy.

On 3 March 2023, Ms Dendal sent an email from a Civil Transport email address to Mr Wallin. The email, which was copied to Mr Libdy at his Civil Transport email address, stated:

Mr Wallin replied to Ms Dendal by email later that same day, stating:

On 6 March 2023, Ms Chambers of ResourceCo sent an email to Mr Libdy and Ms Dendal following up on Mr Wallin’s email of 3 March 2023, and stating:

On 7 March 2023, Ms Dendal sent an email from a Civil Transport email address to Ms Chambers. Ms Dendal referred to ResourceCo’s invoice that had been issued to Civil Transport in the amount of $454,645.00, which had been due for payment in December 2022. Ms Dendal stated that she had been “asked to reach out on behalf of Civil Transport”, and continued:

ResourceCo issued the statutory demand on 14 March 2023.

Mr Wallin has given evidence that Mr Libdy telephoned him shortly after the statutory demand was served and they had a conversation to the following effect:

Mr Libdy gave a different account of the conversation in his affidavit sworn on 17 May 2023. According to Mr Libdy, the conversation on was to the following effect:

On 4 April 2023, Mr Libdy sent Mr Wallin a text message stating:

Mr Wallin replied:

In his affidavit sworn on 5 April 2023, Mr Libdy deposed:

Whilst Mr Tahseldar has given evidence that “there was always pressure” from Mr Libdy during August, September, and November 2022 “to provide a higher number of trucks” to the Kogarah site, he has deposed that:

Mr Libdy replied to this aspect of Mr Tahseldar’s evidence in his 17 May 2023 affidavit by reiterating that he had contacted Mr Tahseldar on many occasions by text message and by telephone call requesting additional trucks, and that Mr Tahseldar had not complied with his requests.

Mr Wallin has given evidence that Mr Libdy did not say anything to him prior to the commencement of these proceedings suggesting that ResourceCo had in any way caused the dispute between Civil Tec and Landmark.

Ms Chambers has given evidence that, in all of her dealings with Civil Transport following up payment of ResourceCo’s invoices, neither Mr Libdy nor any representative of Civil Transport stated or suggested that ResourceCo had caused delays to the Kogarah project. The emails and text messages referred to above do not record any such statement or suggestion. [6] Mr Libdy’s response to Ms Chambers’ evidence in his affidavit sworn on 17 May 2023 is that he was of the view that Ms Chambers and ResourceCo’s accounts team “should not be contacted in relation to anything else other than statements, invoices and rate disputes, or similar matters relating to payments. I therefore did not make ongoing contact with her in relation to the provision of trucks as Mr Tahseldar was the account manager and main contact.”

I have considered all of the parties’ written and oral submissions.

The offsetting claim on which Civil Transport relies in its application to set aside the statutory demand is a claim for damages for alleged breach by ResourceCo of an alleged contractual obligation to supply Civil Transport with a minimum of between eight and ten trucks per day for the removal and disposal of soil excavated from the Kogarah site.

Civil Transport claims to have suffered loss as a result of that alleged breach on the basis that:

In order to determine whether that is a genuine offsetting claim in the sense explained at [10] above, it is necessary to consider in the first instance whether Civil Transport has a plausible contention that its contract with ResourceCo included a term requiring ResourceCo to provide a minimum of between eight and ten trucks to collect and dispose of site spoil from the Kogarah site each day.

Counsel for Civil Transport failed to articulate with clarity what Civil Transport contends the contractual arrangements were, describing them as “a little bit confusing and complicated”. Counsel ultimately submitted that, during the conversation between Mr Libdy and Mr Tahseldar on 4 August 2022, Mr Libdy’s statement that “I will also need 8 to 10 truck and trailers per day” was an offer to engage ResourceCo on terms that it would provide a minimum of eight to ten trucks per day, which Mr Tahseldar accepted on behalf of ResourceCo by stating “Yes, no problem we can do that for you”. It was submitted that the parties entered into a contract at that time, irrespective of the fact that the rates were yet to be the subject of a quotation. It was submitted that the quotation was “separate” and “fits side by side with the agreement that was reached on 4 August 2022 in relation to the number of trucks”.

Senior counsel for ResourceCo submitted that Civil Transport and ResourceCo entered into a written agreement on the terms of ResourceCo’s terms and conditions when ResourceCo issued the quotation on 5 August 2022, and that the written agreement superseded all previous discussions, including any conversation about the number of trucks. Senior counsel accepted that the contract may have been later varied by discussions between the parties concerning rates. However, it was submitted that the written contract had overridden the parties’ prior discussions on 4 and 5 August 2022, referring to Equuscorp Pty Ltd v HGT Investments Pty Ltd. [7] That submission failed to grapple with the reality that there was no evidence of any written acceptance by Civil Transport of ResourceCo’s quotation for the provision of services incorporating its terms and conditions. It appears from the evidence presently before the Court that Civil Transport’s acceptance of the quotation was communicated by one or more subsequent conversations between Mr Libdy and Mr Tahseldar, or by Civil Transport accepting ResourceCo’s services by permitting its trucks to attend at the Kogarah site and by paying ResourceCo’s invoices, or by the combined effect of those conversations and that conduct.

In my opinion, both parties’ submissions about the manner in which the contract was formed and its terms ignore the substance of the evidence that they have adduced. That evidence points strongly to the contract between Civil Transport and ResourceCo having been one that was partly in writing, partly oral, and partly to be inferred from conduct, and raises a plausible contention that the conversations between Mr Libdy and Mr Tahseldar on 4 and 5 August 2022 formed part of that contract. The conduct of the parties after the contract was entered into will be relevant to determining the terms of the contract, and any variations of the contract, should it become necessary to determine those matters in subsequent proceedings. [8] However, for present purposes the relevant question is whether there is a plausible contention that the terms of the contract included an obligation for ResourceCo to provide a minimum of eight to ten trucks and trailers per day for the Kogarah site, as Civil Transport contends.

Mr Libdy’s evidence concerning his conversation with Mr Tahseldar on 4 August 2022, referred to at [21] above, is the only evidence in support of Civil Transport’s contention that the contract included a term requiring ResourceCo to provide a minimum of eight to ten trucks and trailers per day for the Kogarah site. In my opinion, that evidence does not disclose a plausible contention that the contract included such a term. On Mr Libdy’s own evidence, the words that he used—“I will also need 8 to 10 truck and trailers per day”—did not stipulate that the number of trucks was the minimum number to be provided, rather than an estimate of the range that Civil Transport was likely to require on any given day. Mr Libdy’s instruction to Mr Tahseldar to contact the Kogarah site manager to “coordinate the trucks with him for the required days” confirms the fluidity of Civil Transport’s requirements at the site, both as to the days on which trucks would or would not be required, and as to the number of trucks required each day and the arrangements for their arrival at, and movements on, the site.

The evidence that Mr Libdy repeatedly requested or pressured ResourceCo to provide more trucks for the Kogarah site does not cast Mr Libdy’s evidence of the conversation on 4 August 2022 in a different light. [9] The evidence of those requests or pressure merely indicates that ResourceCo did not supply the number of trucks that Mr Libdy sought on various days during August, September, and November 2022. Subject to two qualifications, that evidence is irrelevant to Civil Transport’s contention that ResourceCo had a contractual obligation to supply between eight and ten trucks and trailers per day. The qualifications are that Mr Libdy’s account of his conversation with Mr Tahseldar in mid-August 2022 includes Mr Libdy asserting to Mr Tahseldar that ResourceCo was “changing” the terms of the agreement by declining to provide 15 or 16 trucks, and Mr Libdy’s account of his conversation with Mr Tahseldar on 23 August 2022 includes Mr Libdy asserting that Mr Tahseldar had said that ResourceCo would provide a minimum of ten trucks. [10] The inconsistency of those assertions with one another, and the inconsistency of both assertions with Mr Libdy’s evidence of his conversation with Mr Tahseldar on 4 August 2022, is a further reason why Civil Transport has failed to establish a plausible contention that the terms of its contract with ResourceCo included an obligation for ResourceCo to provide a minimum of eight to ten trucks and trailers per day for the Kogarah site.

Civil Transport’s offsetting claim is not genuine in the sense explained at [10] above. There is no plausible contention as to the existence of the contractual obligation said to have been breached by ResourceCo. The notion that Mr Libdy’s estimate of eight to ten trucks and trailers per day stipulated the minimum number of trucks that ResourceCo was contractually obliged to provide is a spurious contention that Civil Transport has manufactured in response to the pressure of the statutory demand as part of its attempt to construct its alleged offsetting claim.

There is a further reason why I would have held that Civil Transport does not have a genuine offsetting claim, even if I had been persuaded that its contentions concerning ResourceCo’s breaches of the alleged minimum trucks obligation were plausible. That is because Civil Transport’s contentions that those alleged breaches caused the delays in respect of which Landmark has claimed liquidated damages against Civil Tec are supported only by bare assertions made in Mr Libdy’s first affidavit sworn on 5 April 2023, [11] and further bare assertions that he claims to have made in conversations with ResourceCo representatives. Those assertions are irreconcilably inconsistent with contemporaneous documents.

The relevant contemporaneous documents fall broadly into two categories.

The first category comprises the notices of delay issued by Landmark to Civil Tec under the Landmark Subcontract, [12] email correspondence passing between Landmark and Civil Tec concerning delays to the work on the Kogarah site, [13] the show cause notice issued by Landmark to Civil Tec, [14] Civil Tec’s response to that show cause notice [15] and Landmark’s reply to Civil Tec’s response. [16] The causes of delay identified in those notices and in that correspondence do not appear on the face of the documents to be related to the rate at which site spoil was removed from the Kogarah site. For example, Landmark has attributed delays to Civil Tec’s failure to provide the resources necessary to operate the machinery for excavation and trimming work on site, plant and equipment damage and breakdowns, and defective work undertaken by Civil Tec, including piles which were found to have inadequate structural integrity. Civil Transport adduced no evidence whatsoever of any direct or indirect connection between the number of trucks provided by ResourceCo from time to time for the removal of material from the Kogarah site on the one hand, and delays caused by some or all of the kinds of factors referred to in the notices and correspondence on the other hand. Moreover, the selected notices of delay issued by Landmark that Civil Transport tendered in evidence either relate to delays that must have occurred substantially before ResourceCo started providing services to the Kogarah site, [17] or delays that Landmark attributes to problems that occurred after ResourceCo ceased providing services on 13 December 2022. [18]

Mr Libdy’s assertions, viewed in the context of the first category of contemporaneous documents referred to above, do not raise a plausible argument requiring further investigation of an alleged connection between the delays that underpin Landmark’s liquidated damages claim against Civil Tec on the one hand, and the number of trucks that ResourceCo provided to remove site spoil from the Kogarah site on the other hand. A plausible argument that such a connection exists is fundamental to Civil Transport’s contentions that it has a genuine offsetting claim against ResourceCo for damages in the order of $525,000.00 for alleged breach of contract.

The second category of contemporaneous documents referred to at [131] above is the contemporaneous correspondence between ResourceCo and Civil Transport concerning Civil Transport’s failure to pay ResourceCo’s invoices. Subject to one possible exception, those emails and text messages contain no hint of any suggestion that ResourceCo has caused loss to Civil Transport, or even put Civil Transport at risk of loss, by failing to supply a greater number of trucks to the Kogarah site. The possible exception concerns the messages that Mr Libdy sent to Mr Tahseldar during the period from 2 to 8 November 2022, in which Mr Libdy complained that he was “stressing hard” because “we” were in “serious trouble”, and Mr Libdy conveyed to Mr Tahseldar that “We just be told LD’s will apply they came and saw only 2 ten wheelers???” and complained that he was “getting smashed by client”. [19] Understood in the context of the first category of contemporaneous documents referred to above, these short messages do not raise a plausible contention that there is some connection between the number of trucks being supplied by ResourceCo to the Kogarah site and the delay that subsequently became the subject of Landmark’s liquidated damages claim against Civil Tec. I reject the submission to the contrary made on behalf of Civil Transport. As explained above, the work on the Kogarah site had suffered from delay—with the resulting prospect of liquidated damages being applied under the Landmark Subcontract—since before ResourceCo started providing services to the site. Mr Libdy’s campaign for more trucks deployed his assertions implicit in these messages—that ResourceCo had caused or contributed to the prospect of liquidated damages, or the “serious trouble”, or “getting smashed”. However, those assertions are irreconcilably inconsistent with the absence of any similar complaint in any of the communications that Mr Libdy and his staff sent to ResourceCo seeking to explain or excuse Civil Transport’s failure to pay ResourceCo’s invoices. I refer in particular to the communications set out at [106]-[109] and [113] above, all of which occurred at least one month after Landmark had made its liquidated damages claim against Civil Tec on 6 February 2023 and several weeks after Landmark had terminated the Landmark Subcontract on 10 February 2023. Mr Libdy’s evidence referred to at [119] above does not explain this inconsistency. The notion that Civil Transport would have been seeking to borrow money in order to pay invoices issued by ResourceCo, if Civil Transport had any basis for a genuine claim that ResourceCo had caused Civil Tec to incur liquidated damages to Landmark which Civil Tec may seek to pass on to Civil Transport, only needs to be stated to be rejected.

The observations and conclusions at [130]-[134] above apply with equal force to Civil Transport’s contention that ResourceCo’s trucks were not fully loaded at the Kogarah site, and that this caused delay to the works under the Landmark Subcontract which in turn caused Landmark to claim liquidated damages against Civil Tec.

Counsel for Civil Transport sought to overcome the absence of any evidence of a plausible contention of some causal nexus between ResourceCo’s alleged breaches of contract and the liquidated damages claimed by Landmark, by submitting that the liquidated damages have been “certified”, and that:

I reject that submission for the following reasons.

First, there is no evidence that liquidated damages have been “certified”, or, as counsel for Civil Transport later put it, “certified upstream”.

Second, for the reasons I have already explained above, there is no evidence supporting the submission that “[t]he start of it is to get rid of all the spoils and it is flow on effect from there.” Nor is there any evidence supporting a subsequent submission made by the counsel for Civil Transport to similar effect—that “delays are cumulative and impact other issues”. According to Mr Libdy’s evidence, he was frequently present on the Kogarah site. It would have been open to Civil Transport to adduce evidence from Mr Libdy, or alternatively from other Civil Transport or Civil Tec personnel familiar with the work on the Kogarah site, describing in general terms whether (and, if so, how) the daily number of trucks supplied by ResourceCo for the removal of site spoil from the Kogarah site impacted on the progress of the Landmark Subcontract works on that site. Civil Transport did not adduce that evidence. Deficiencies in the evidence cannot be overcome by counsel for Civil Transport giving evidence from the Bar table.

Third, the submission that Civil Transport has “been told” that the liquidated damages claim is “their problem because of the delays in respect of the removal of spoils” does not advance Civil Transport’s contention that it has a genuine offsetting claim against ResourceCo. Civil Tec’s scope of work under the Landmark Subcontract was much broader that the haulage and disposal services that it engaged Civil Transport to provide, and that Civil Transport in turn engaged ResourceCo to provide, for the Kogarah site. Counsel for Civil Transport described the haulage and disposal work undertaken by ResourceCo and Civil Transport as a “small portion” of Civil Tec’s work for Landmark. Civil Tec’s response to the show cause notice issued by Landmark denied that Civil Tec bore responsibility for the delays, which are now the subject of Landmark’s claim for liquidated damages. In those circumstances, the mere fact that Civil Tec has asserted that its related company Civil Transport is liable to Civil Tec in respect of those same liquidated damages does not establish that Civil Tec has a genuine claim against Civil Transport, let alone that Civil Transport has a genuine claim against ResourceCo.

For all of the reasons explained above, the evidence adduced in these proceedings fails to establish a genuine offsetting claim by Civil Transport against ResourceCo.

Even if I had determined that the evidence adduced by Civil Transport established a plausible contention about an alleged breach of contract by ResourceCo failing to provide a specified minimum number of trucks to the Kogarah site, causing delay to the work and exposing Civil Transport to liability to Civil Tec, I would have held that Civil Transport had failed to establish that $525,000.00 was the genuine level of the offsetting claim. In light of the evidence referred to at [132] above, and the absence of any evidence from Mr Libdy explaining (rather than merely asserting) a causal connection between ResourceCo’s alleged breaches and all or any of the delays that gave rise to Landmark’s liquidated damages claim against Civil Tec, the notion that Civil Transport has a genuine offsetting claim against ResourceCo at a level equivalent to the amount of Landmark’s claim is spurious.

That is not to say that Civil Transport was required to prove in these proceedings that alleged breaches of contract by ResourceCo caused a specified number of days’ delay to the Landmark Subcontract works which accounted for a specified amount of the liquidated damages claimed by Landmark. I accept the submissions made by counsel for Civil Transport that this was not required. However, Civil Transport was required to demonstrate that there is a real basis for the quantum of $525,000.00 that it asserts, and that this is not fictitious or fanciful. [20] I reject Civil Transport’s submissions to the effect that it was not required to do anything to establish the genuine level of its asserted offsetting claim because the claim relates to liquidated damages that have been certified and “passed down”. I repeat my observations at [136]-[140] above.

I also reject Civil Transport’s submission that it would be prejudiced by having to articulate its contention about the extent of ResourceCo’s responsibility and liability for delay because Civil Transport is facing a liquidated damages “upstream”. The task of adducing evidence to establish a genuine claim by Civil Transport against ResourceCo, and the genuine level of that claim, at the same time as Civil Tec denies liability to Landmark (which would entitle Civil Transport to deny liability to Civil Tec) may be a delicate one, but it is possible. The delicacy of the undertaking does not justify this Court accepting Civil Transport’s mere assertions concerning the elements of the alleged offsetting claim and setting aside the statutory demand on that basis. I reject Civil Transport’s submission that these issues concerning the genuine level of its alleged offsetting claim are matters going to the merits of the claim and its quantum which would be determined on a final hearing, which should be disregarded for the purpose of determining Civil Transport’s application to set aside the statutory demand.

I acknowledge Civil Transport’s alternative submission that the level of the offsetting claim was $235,000.00, on the basis that it had adduced evidence of Landmark’s notices of delay issued to Civil Tec in respect of only 47 days rather than the 105 days in respect of which Landmark has claimed the total sum of $525,000.00 as liquidated damages. As I have already explained, neither the contemporaneous communications between Landmark and Civil Tec about delay to the Landmark Subcontract works nor Mr Libdy’s evidence identify any plausible connection between the delays identified by Landmark’s notices and Civil Transport’s complaints about the number of trucks provided by ResourceCo for the Kogarah site. It follows that Civil Transport’s formulation of its alternative estimate of the level of its alleged offsetting claim is untethered to the substance of the offsetting claim that it sought to propound against ResourceCo in response to the statutory demand.

For all of those reasons, Civil Transport has not established any genuine offsetting claim—at the level of $525,000.00 or at any other level—against ResourceCo. The evidence summarised above, considered as a whole, points overwhelmingly to the conclusion that the claim has been recently manufactured for the purpose of defeating the statutory demand, and I so find.

For all of those reasons, I am satisfied that there is a genuine dispute about the amount of the debt to which the statutory demand relates, but I am not satisfied that Civil Transport has a genuine offsetting claim against ResourceCo.

Accordingly, the orders of the Court are as follows:

The parties indicated that they wish to be heard in relation to costs.