Koffels take on Construction Giant Grocon, in Rescission of Contract Dispute

The Australian Financial Review

Broadcast:Tuesday 7 July 2009

Property developer Selwan Property Holdings is suing Grocon Constructors after the construction giant rescinded a contract for a $45.6 million Sydney development, the NSW Supreme Court heard yesterday.

Selwan is expected to argue today that it has a claim against Grocon for about $30 million in damages, representing part of the cost of obtaining new builders to completed a 41 –level Sydney CBD building on Cunningham Street.

Koffels Solicitors & Barristers is acting for Selwan and director Ross Koffel said his client considered the trial to be “a real David and Goliath battle”. Grocon spokeswomen Jane Wilson said the construction company was seeking to have the court established the recession was “valid and appropriate”.

Yesterday, Grocon alleged Selwan made misrepresentations about its capacity to pay the builder via funding provided by Capital Finance Australia, which induced it to enter the building contract in May 2003.

Under the contract, Selwan was to deliver Grocon a series of progress payments. The court heard the first serious dispute over these payments was in March 2005, followed by Grocon’s lawyers, Cusoff Cudmore Knox, gave notice to rescind the contract in October 2005. Grocon also alleged Selwan made misrepresentations about the ability of Selwan-related company Kimberley Securities, to pay a debt.

Selwan directors Nati Stoliar, Gabriel Lorentz and Peter Scown are also directors of Kimberley. Last month it was put into liquidation by the NSW Supreme Court in separate proceedings after Kimberley failed to delay an order to wind it up until after the Selwan matter had been heard. In the Kimberley matter, Judge Reg Barrett said there were “potentially very fertile lines of inquiry that will be available to a liquidator” in respect of transactions between Kimberley and Opportune, another company in which Mr Lorentz and Mr Stoliar were directors.

Yesterday, the court head that Opportune made part of a progress payment to Grocon in October 2005, shortly before Grocon rescinded its contract with Selwan