Achiever Investments Pty Ltd v Newtone Pty Ltd
[2002] WASC 71
ACHIEVER INVESTMENTS PTY LTD -v- NEWTONE PTY LTD [2002] WASC 71
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 71 | |
| Case No: | COR:15/2002 | 27 MARCH 2002 | |
| Coram: | MASTER BREDMEYER | 17/04/02 | |
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Demand reduced in amount, but application otherwise dismissed | ||
| B | |||
| PDF Version |
| Parties: | ACHIEVER INVESTMENTS PTY LTD (ACN 057 726 119) NEWTONE PTY LTD |
Catchwords: | Corporations Statutory demand Defect in statutory demand Statutory demand not signed Offsetting claims |
Legislation: | Corporations Law, s 9 "defect", s 459E(2), s 459G, s 459H |
Case References: | Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669 John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716 Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACLC 1062 Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ASCR 37 Chanhill Pty Ltd v Century 21 Australasia Pty Ltd (1993) 12 ACSR 341 Classic Ceramic Importers Pty Ltd v Ceramica Antiga SA (1994) 12 ACLC 334 Dromore Fresh Produce Pty Ltd v W Paton (Fertilizers) Pty Ltd (1997) 23 SCSR 230 Eng Mee Yong v V Letchumanan s/o Velayutham [1980] AC 331 Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (1) (1994) 13 ACSR 455 Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (2) (1994) 12 ACLC 490 Lewkowski v Bergalin, unreported; FCt SCt of WA; Library No 7675; 26 May 1989 Morris Catering (Aust) Pty Ltd (1993) 1 ACLC 919 Royal Premier Pty Ltd v Taleski [2001] WASCA 48 Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 15 ACLC 1001 Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : ACHIEVER INVESTMENTS PTY LTD -v- NEWTONE PTY LTD [2002] WASC 71 CORAM : MASTER BREDMEYER HEARD : 27 MARCH 2002 DELIVERED : 17 APRIL 2002 FILE NO/S : COR 15 of 2002 BETWEEN : ACHIEVER INVESTMENTS PTY LTD (ACN 057 726 119)
- Applicant
AND
NEWTONE PTY LTD
Respondent
Catchwords:
Corporations - Statutory demand - Defect in statutory demand - Statutory demand not signed - Offsetting claims
Legislation:
Corporations Law, s 9 "defect", s 459E(2), s 459G, s 459H
Result:
Demand reduced in amount, but application otherwise dismissed
(Page 2)
Category: B
Representation:
Counsel:
Applicant : Mr G I Chitty
Respondent : Mr P Mendelow
Solicitors:
Applicant : Muries Lawyers
Respondent : Arns & Associates
Case(s) referred to in judgment(s):
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669
John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716
Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACLC 1062
Case(s) also cited:
Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ASCR 37
Chanhill Pty Ltd v Century 21 Australasia Pty Ltd (1993) 12 ACSR 341
Classic Ceramic Importers Pty Ltd v Ceramica Antiga SA (1994) 12 ACLC 334
Dromore Fresh Produce Pty Ltd v W Paton (Fertilizers) Pty Ltd (1997) 23 SCSR 230
Eng Mee Yong v V Letchumanan s/o Velayutham [1980] AC 331
Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (1) (1994) 13 ACSR 455
Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (2) (1994) 12 ACLC 490
Lewkowski v Bergalin, unreported; FCt SCt of WA; Library No 7675; 26 May 1989
Morris Catering (Aust) Pty Ltd (1993) 1 ACLC 919
(Page 3)
Royal Premier Pty Ltd v Taleski [2001] WASCA 48
Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 15 ACLC 1001
Turner Corporation (WA) Pty Ltd v Blackburne & Dixon Pty Ltd [1999] WASCA 294
(Page 4)
1 MASTER BREDMEYER: This is an application by the applicant to set aside a statutory demand issued by the respondent on 21 December 2001 for $419,284.22 for goods supplied.
2 The statutory demand was issued by Paul Theodore Arns, principal of Arns and Associates, for and behalf of the creditor on 21 December 2001. It was not signed. It was accompanied by a three-page affidavit of Gregory Leonard Mayne, the sole director and shareholder of the respondent. That affidavit was signed and witnessed and dated "the …. day of December 2001", the actual day having been omitted. Mr Arns has filed an affidavit stating that his failure to sign the statutory demand was due to inadvertence.
3 The applicant's first objection to the demand is that it has not been signed. Section 459E(2) provides:
"459E(2) [Contents of demand] The demand:
(a) if it relates to a single debt - must specify the debt and its amount; and
(b) if it relates to 2 or more debts - must specify the total of the amounts of the debts, and
(c) must require the company to pay the amount of the debt, or the total of the amounts of the debts, or to secure or compound for that amount or total to the creditor's reasonable satisfaction, within 21 days after the demand is served on the company, and
(d) must be in writing; and
(c) must be in the prescribed form (if any): and
(f) must be signed by or on behalf of the creditor."
4 Counsel for the applicant says that the failure to sign is a very major defect. He has referred me to the definition of "defect" in s 9 of the Corporations Law which reads:
"'defect', in relation to a statutory demand, includes:
(a) an irregularity; and
(b) a misstatement of an amount or total; and
(Page 5)
- (c) a misdescription of a debt or other matter; and
(d) a misdescription of a person or entity."
5 Counsel says the failure to sign the document is a graver defect than any of the four defects mentioned there.
6 The respondent relies on s459J of the Corporations Law which provides:
"SECTION 459J SETTING ASIDE DEMAND ON OTHER GROUNDS
459J(1) [Defect or other reason] On an application under section 459G, the Court may by order set aside the demand if it is satisfied that:
(a) because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or
(b) there is some other reason why the demand should be set aside."
7 The respondent relies particularly on s 459J(1)(a) and states that substantial injustice has not been caused to the applicant in respect of this defect. Neither counsel has been able to find a case precisely in point. I agree with the respondent's submissions. I consider the non-signing of the demand is a defect. The four defects mentioned in the definition of "defect" in s 9 are not exhaustive. The two and a half page affidavit in support which accompanied the statutory demand and its many pages of annexures could have left the debtor in no doubt that the unsigned demand was a very serious legal demand, and the applicant treated it as such. It sought legal advice and brought the application to set it aside under s 459G within the 21-day time period, accompanied by an 110-page affidavit of Mr Cox.
8 The respondent has challenged the admissibility of a number of the paragraphs, or statements in the paragraphs, of Mr Cox's affidavit of 11 January 2002. I preface my consideration of these objections by saying that I consider hearsay evidence is permissible in this jurisdiction, but it must be proper hearsay, ie, statements of information or belief should be supported by the sources and grounds of belief: see Seaman's Civil Procedure [37.6.2].
9 Paragraph 8 states:
(Page 6)
- "The turnover of the respondent was approximately $500,000 per annum based on sales of about 60,000 units per year. Those figures applied for the previous two years."
10 Those statements are made, I think, as at 1 May 1999 when the parties signed the distribution agreement. I propose to strike out that paragraph as not disclosing the plaintiff's sources of information.
11 Paragraph 12 begins:
"As part of the overall negotiations in respect of a merger or buy-out, Greg Mayne on behalf of the respondent agreed to discount the applicant's trading debt to the respondent by the amount of two price increases …".
12 The challenge is that the word "agreed" is a conclusion. The precise words should be used from which an agreement may, or may not, be inferred. I agree with that submission and I will strike out that paragraph.
13 Paragraph 14 begins:
"In or about August 2001 Greg Mayne of the respondent represented to me that all the expenses incurred in my trips overseas would be paid together with some recompense for the extra sales …".
14 The challenge is to the word "represented", that it is a legal conclusion and that the precise words used should have been given. I agree with the objection, but do not propose to strike out this paragraph. I will read the word "represented" as meaning "said".
15 Paragraph 16 states in summary that the applicant credited its stock back to the respondent in July 2001. The respondent thus had possession of the stock, but it was located in premises subleased by the applicant, the rent for which was paid by the applicant. Based on the fact that the stock occupied approximately 75 per cent of the floor space, Mr Cox has calculated the rent of this floor space for a period of five months: "75 per cent of floor space at $960 per month, x 5 = $4,800". The objection is that there is no supporting documentation for this statement. I consider the paragraph is admissible. The lack of supporting documentation, eg, receipts for rent paid, goes to weight. The applicant says that the respondent changed the locks to the office of the applicant and, thus, has denied the applicant access to its records. I consider this paragraph is admissible.
(Page 7)
16 Paragraph 17: The objection here is to the second sentence which says:
"My efforts on behalf of the applicant created sales for which the respondent receives all the income."
- and to the estimate of approximately $500,000 received by the respondent from sales in the UK, South Africa, Germany and France as a result of the applicant's efforts
17 The estimate of sales will be struck out, as no source is given for the belief. The word "representation" is objectionable as a legal conclusion. But I propose to allow it and to read it as if it said "said".
18 Paragraph 18 - in this paragraph Mr Cox claims a commission for estimated units sold overseas:
"The respondent sold approximately 144,000 units at $2.33 per unit and given the amount of time and effort spent by me, I have claimed to a 30% commission on these units which, based on my experience of 20 years in marketing, I believe to be conservative."
19 The objection is that there is no evidence to support the allegation that the respondent sold 144,000 units overseas; that there is no evidence to support a 30 per cent commission on these units. I agree with the first point, but not with the second. I consider there is no source given for the plaintiff's belief that the respondent sold 144,000 units overseas and I will strike out that part of the affidavit. On the other hand, I consider his 20 years' experience in marketing sufficient basis to say a commission of 30 per cent is reasonable, although I know that this figure is disputed by the respondent's Mr Mayne.
20 Paragraph 20 - the first sentence of this paragraph reads:
"As a direct consequence of the amount of time I spent developing the overseas market, the Australian distributorship of the applicant started to suffer and did not grow sufficiently."
21 The objection here is that this allegation is not supported by any evidence. I think that is true, but it goes to weight rather than to admissibility and I consider it admissible.
22 The applicant in Mr Cox's affidavit has sought to set up a number of genuine disputes and/or offsetting claims. An "offsetting claim" is
(Page 8)
- defined in s 459H(5) to mean "a genuine claim that the company has against the respondent 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)". I emphasise that the definition means that the offsetting claim must also be a "genuine" claim.
23 Hayne J, as he then was, in Mibor Investments Pty Ltd v Commonwealth Bank of Australia (1993) 11 ACLC 1062 at 1066 said:
"These matters, taken in combination, suggest that at least in most cases, it is not expected that the Court will embark upon any extended inquiry in order to determine whether there is a genuine dispute between the parties and certainly will not attempt to weigh the merits of that dispute. All that the legislation requires is that the Court conclude that there is a dispute and that it is a genuine dispute."
24 In Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACLC 669 at 671 McLelland CJ in Eq said:
"It is, however, necessary to consider the meaning of the expression 'genuine dispute' where it occurs in s 459H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the 'serious question to be tried' criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the Court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit 'however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be' not having 'sufficient prima facie plausibility to merit further investigation as to [its] truth' (cf Eng Mee Yong v Letchumanan [1980] AC 331 at 341), or 'a patently feeble legal argument, or an assertion of facts unsupported by evidence'."
25 Young J in John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 12 ACLC 716 at 718 said:
"With great respect, I would differ from this approach. There may be cases, and indeed it may be the majority of cases, where the court will look not only to an assertion of a dispute, but some sort of material short of proof which backs up the claim
(Page 9)
- that is made that the amount is disputed. It is clear that what is required in all cases is something between mere assertion and the proof that would be necessary in a court of law. Something more than mere assertion is required because if that were not so then anyone could merely say it did not owe a debt.
On the other hand, if proof of a claim was required then one would be doing the very thing that one is not to do, and that is to try this sort of dispute in the Companies Court. What more than assertion is required is something that may differ from case to case. In Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No. 2) (1994) 12 ACLC 490 I indicated that so long as the claim is not fictitious or merely colourable and is genuinely believed to exist one can ordinarily take that as sufficient. That is something more than mere assertion."
26 By way of background, I note that on 1 May 1999 the applicant signed a distribution agreement with the respondent. The respondent is the manufacturer of moulded plastic drinking containers, some of which have an airlock seal. They include stubby holders and wine coolers. Under the agreement, the applicant became the respondent's sole distributor for these products in Australia and New Zealand. The applicant was required to pay $500,000 for the exclusive distribution rights, payable by an initial payment of $250,000 and thereafter four instalments. The applicant was, of course, also required to purchase stock from the respondent. The applicant had trouble paying its account to the respondent for stock received. The respondent said it was owed $65,665.36 as at 1 July 1999 and $175,181.38 as at 31 March 2000.
27 On 31 August 2001 the applicant's directors, Adam Cox and Ray Stribling, wrote to the respondent in these terms:
"We are writing to you in reference to our recent discussions concerning Achiever Investments non-compliance of stock payments. It is with much disappointment that we are informing you officially of our inability to meet our current payment obligations to you.
This being the case we request that you accept our proposal to credit back all our current stock holding thus reducing our total amount owing to you.
(Page 10)
- We are fully aware of our contract obligations with Newtone and realize the implications this will cause, effectively making our contract null in [sic] void."
28 Mr Mayne, for the respondent, replied to that letter in a letter dated 3 September 2001:
"I hereby acknowledge receipt of your letter dated 31st August 2001 where you state that you cannot comply with your distribution agreement with Newtone Pty Ltd as T/F The Online Unit Trust.
Accordingly, as you are in default of the terms of our distribution agreement the agreement has been terminated as of the 3rd of September 2001."
29 Mr Cox denies receiving that letter at that time, but I think it matters little. The stock was credited back to the respondent. A similar letter terminating the contract, again with effect from 3 September 2001, was sent by the respondent's solicitors on 16 November 2001.
30 The first matter raised in Mr Cox's affidavit as an offsetting claim is in pars 13, 14 and 19. Mr Cox said that in August 2000 he went to the United Kingdom on a trip which lasted approximately 27 days, and included trips to France and Germany, to negotiate distribution rights. He said he paid all the expenses himself in the United Kingdom, but the respondent paid for his expenses in France and Germany. He said that in August 2001, that is, a year later, Mr Mayne told him that all the expenses incurred for his trips overseas would be paid for by the respondent. Mr Cox has estimated that he spent approximately $17,000 on air fares, living expenses, cost of freight and telephone calls relating to negotiations in the United Kingdom and has rendered an invoice for that sum, which is annexure 9 to his affidavit. As previously stated, he says he does not have access to the source documents due to the respondent changing the locks on his office. That invoice is dated, like all the other invoices for offsetting claims which the applicant has rendered, in early January 2002, ie, after the statutory demand was served. That does not necessarily reflect badly on the credit of Mr Cox because, between the defaulting letter of 31 August 2001 and the statutory demand of 21 December 2001, the parties were in negotiation for the applicant to buy out the respondent completely and, thus, become the manufacturer and distributor, or for the two of them to enter into a joint venture whereby a new company would be formed which would be both manufacturer and distributor of the
(Page 11)
- products. I mention that the applicant's and respondent's premises are apparently side by side at 50 Achievement Way, Wangara.
31 Mr Mayne, at pars 20 and 22 of his affidavit, states that Mr Cox wanted to attend a trade show to be held in Birmingham in September 2000 to promote the ThermalMate product. Cox said he may be able to get valuable contacts and establish a distribution network within the United Kingdom and Europe. Mr Mayne agreed to assist by paying Cox's travelling expenses. Cox travelled with a Mr Mike Romyn. Mayne arranged that Romyn would use his credit card to pay for the travel and accommodation expenses of Mr Cox and himself and that Mayne would later reimburse Romyn for that expenditure. The trip lasted two and a half weeks and Mayne reimbursed Romyn for an amount of approximately $9,000 for expenses that he and Cox incurred on the trip to France and Germany. Mayne concedes that Cox may have paid some expenses for himself while in France and Germany. I consider Mr Cox's claim for $17,000 is plausible and raises a genuine offsetting claim.
32 The second offsetting claim is a claim for commission based on sales achieved by the applicant of the respondent's product on these overseas trips. At par 14 of his affidavit Mr Cox says that Mayne said that he would be recompensed for extra sales which the respondent received as a result of Mr Cox's efforts in Europe. At par 18 he claims a commission of 30 per cent commission on the units sold as a result of his efforts in Europe. He has estimated that as amounting to $70,416. Annexure 8 is an invoice recording that claim. As previously stated, I have struck out part of par 18 so that the basis of this calculation is not now given.
33 Mr Cox, at par 26 of his affidavit, denies that he entered into any agreement of the kind alleged. He says that the amounts claimed are extravagant and that since 1999 the total sales of the respondent in the United Kingdom and Europe have been approximately $318,000 gross. The profit earned on those sales was approximately $32,000. He said the claim for 30 per cent commission sales is quite absurd. The respondent's net profit on each ThermalMate item sold is less than 30 per cent. To offer a 30 per cent commission to a salesperson would result in a net return well below the cost of sales. I am not required to resolve that conflict of evidence in this jurisdiction. I consider the claim for a 30 per cent commission on those sales is a plausible contention worthy of investigation and, as such, amounts to a genuine dispute. I will allow the claim for $70,416 as a genuine offsetting claim.
(Page 12)
34 The applicant's third claim also arises out of Mr Cox's trips overseas. At par 20 of his affidavit he stated that, as a direct consequence of the amount of time he spent developing the overseas market, the Australian distributorship of the applicant started to suffer and did not grow sufficiently. As a consequence of that, he appointed a manager in New South Wales, Martin Costello. The costs associated with the employment of Martin Costello amounted to $48,818.05 and at annexure 10 he has invoiced the respondent for that sum. The applicant's counsel has sought to justify this claim as a quantum meruit. It is not asserted that there was any oral agreement reached between Cox and Mayne for reimbursing the applicant for losses to his business occasioned by being overseas. I consider this claim is inherently improbable and not based on any known cause of action and is not a genuine offsetting claim. It is not, in my view, a plausible contention worthy of investigation.
35 The fourth claim relates to five months' rent of 75 per cent of the floor space of the applicant's premises and is a claim for $4,800. Mr Cox states that it was agreed that the applicant's stock be credited back to the respondent in July 2001. The respondent, thus, had possession of the stock, but it continued to be located in the premises leased by the applicant, the rent for which was paid for by the applicant. He has submitted an invoice for this sum:
|
|
37 Mr Mayne has responded to this claim in par 25 of his affidavit. In the third sentence of that affidavit he says, "As at 3 September 2001, being the date of the termination of the distribution agreement, the applicant began to pay all rent and outgoings in relation to the applicant's business premises." I consider that a typing error. The "applicant" there should probably refer to the respondent. I am going to allow this claim in part. I consider the starting date for this claim for rent of 26 July 2001 is a bare assertion contradicted by the applicant's own letter of 31 August. Despite Mr Mayne's protests, I consider that the remaining four months amounts to a genuine offsetting claim in the sense that it is a plausible assertion worthy of investigation. I thought the applicant, even with the locked office, could have produced some evidence of having paid the rent,
(Page 13)
- eg, a letter or affidavit from his landlord. However, I note that the respondent has produced no documentation for its assertion that it has paid the rent over this period. I will allow this claim in the sum of $3,840 (4m x $960).
38 The fifth claim of $76,254.75, being a rebate of 30 cents per unit of stock purchased, is based on par 12 of Mr Cox's affidavit. I have struck out that paragraph as inadmissible and this claim thus falls away.
39 The sixth claim is of $94,672 for Mr Cox's wages, to be offset against the moneys owed to the respondent. The basis of the claim is found in par 17 of Mr Cox's affidavit. He says there:
"Since the commencement of the negotiations in the UK and other countries in May 2000, I have spent approximately half of my working time on developing overseas markets. My efforts on behalf of the applicant created sales for which the respondent receives all the incomes. This was acceptable to me at the time because of the representation made by Mayne that the applicant would receive credits for the work and expenses when the applicant's trading debts equalled the credits. The new company and the applicant would obtain an interest in that and therefore receive reward for my efforts … I have calculated the amount the applicant ought to have been paid for the time I worked for the benefit of the respondent without reward on the basis that I would be duly compensated in due course after the formation of the new company, or otherwise, and rendered that statement to the respondent on behalf of the applicant."
40 The statement is found at annexure 7 and contains various sums making up the total of $94,672. They include, for example:
"50% rebate of wages based on 8 hour day calculated at $75,000 pa - 252 days @ $144 per day … $36,288.
After hours work carried out at 3.5 hours average per day for an average of 2.5 days per week 140 days @ $252 per day … $35,280.
International work carried out based on normal daily rate $288 per day plus government approved daily living away allowance of $235 per day
(Page 14)
- UK/France/Germany - August/September 2000 - 27 days @ $523 per day … $14,121."
41 There is no evidence that the respondent agreed to remunerate the applicant for Mr Cox's work in this regard, nor any agreement to remunerate the applicant at the rates charged. In the absence of some agreement, par 17 does not support a quantum meruit claim. I have already said that Mr Cox has a genuine offsetting claim for travel expenses whilst overseas in the UK and Europe, and for a 30 per cent commission on overseas sales achieved by the respondent as a result of his efforts. I consider his claim in par 17 fanciful and implausible, and it does not amount to a genuine offsetting claim.
42 In summary, I consider the following offsetting claims are genuine:
| $17,000 |
| 70,416 |
| 3,840 |
Total | ________ $91,256 ________ |
| $419,284.22 |
| 91,256.00 |
Balance | ___________ $328,028.22 ___________ |
44 I will hear the parties on the orders to be made and costs.
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