Angus Imports Pty Ltd v Diesel Kid SRL

[2011] NSWSC 426

Supreme Court

New South Wales

Medium Neutral Citation:	Angus Imports Pty Ltd v Diesel Kid SRL [2011] NSWSC 426
Hearing dates:	13 May 2011
Decision date:	13 May 2011
Jurisdiction:	Equity Division
Before:	Barrett J
Decision:	Originating process dismissed with costs
Catchwords:	CORPORATIONS - winding up - application for order setting aside statutory demand - reliance on offsetting claim ground - whether "supporting affidavit" filed and served within 21 day period - "Graywinter principle" - no sufficient identification of any offsetting claim or its amount - proceedings dismissed
Legislation Cited:	Corporations Act 2001 (Cth), ss 459G, 459H
Cases Cited:	David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265 Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452 NA Investments Holdings Pty Ltd v Perpetual Nominees Ltd [2010] NSWCA 210; (2010) 79 ACSR 544
Category:	Principal judgment
Parties:	Angus Imports Pty Ltd - Plaintiff Diesel Kid SRL - Defendant
Representation:	Counsel: Mr A J Abadee - Plaintiff Mr J A C Potts - Defendant Solicitors: John de Mestre & Co Clayton Utz
File Number(s):	2011/00065193

Judgment

1. The plaintiff seeks an order setting aside a statutory demand served on it by the defendant. The demand relates to a debt or alleged debt of $172,398.25.

1. There is a threshold question whether the requirements of s 459G(3) of the Corporations Act 2001 (Cth) have been met. If they have not been met, there is no valid application under s 459G before the court and it is not open to the court to award the relief sought, whatever the substantive merits of the plaintiff's case may be: David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265.

1. The alleged non-compliance in this case is non-compliance with the requirement that, within the relevant period of twenty-one days, a plaintiff under s 459G file and serve not only an application but also "an affidavit supporting the application".

1. The affidavit that the present plaintiff relies on as being an affidavit "supporting" its application for an order setting aside the statutory demand is the affidavit of Mr Theo Onisforou of 28 February 2011. He is a director of the plaintiff.

1. That affidavit begins by referring to the plaintiff's role as a distributor in Australia of Diesel products and to its having done business in that respect with an Italian corporate group of which the defendant is a member. After referring to a recent sale of the plaintiff's business to another party and the consequent difficulty in obtaining access to records and information, Mr Onisforou says in paragraph 7:

"During 2010 I notified Diesel Italy and its solicitor Clayton Utz (in particular Jocelyn Kellam Partner) of the fact that I had substantial legal claim against the various Diesel subsidiaries, including Diesel Kids SRL for in excess of $4,500,000 for various breaches of contract, various acts of harsh and unconscionable conduct and various misleading and deceptive acts."

1. It is also relevant to quote paragraphs 8 and 9 in the affidavit:

"My computer records show that I sent 63 emails to Jocelyn kellam at Clayton Utz during 2010. The majority of that correspondence pertained to the Angus Imports claim against the various Diesel Italy companies including Diesel Kids SRL.

I say that I said to Jocelyn Kellam that it was not my intention to commence any proceedings on these claims until after the settlement of the sale of the business."

1. It may be gathered from paragraphs 7 and 8 that Mr Onisforou considers that the plaintiff has a claim against "various Diesel subsidiaries" or "various Diesel Italy companies", including the defendant, and that he sees the aggregate amount of all those claims as more than $4.5 million.

1. As to the causes of action on which the claims would be brought, Mr Onisforou refers to breaches of contract (in the plural) and acts of harsh and unconscionable conduct (also in the plural). Counsel for the plaintiff indicated that the references to various misleading and deceptive acts are not now relied on.

1. The unmistakable message paragraphs 7 and 8 convey is that, in seeking to have the statutory demand set aside, the plaintiff relies on the s 459H(1)(b) ground that the plaintiff has against the defendant an "offsetting claim" as defined by s 459H(5), that is, a genuine claim against the defendant by way of counterclaim, set-off or cross demand.

1. Beyond that, however, Mr Onisforou's affidavit tells the reader nothing whatsoever about any particular claim that the plaintiff considers itself to have against the defendant, as distinct from any other component of the "various Diesel subsidiaries" referred to in paragraph 7 or the "various Diesel Italy companies" referred to in paragraph 8. Nor is there anything about the amount or quantification of any particular claim that the plaintiff considers itself to have.

1. There are references to several breach of contract claims and several claims related to harsh and unconscionable conduct. Is the defendant implicated in the contract claims or the harsh and unconscionable conduct claims or both? If the claim or claims involving the defendant are breach of contract claims, which contract is involved, what are its terms and what conduct of the plaintiff, even if stated in a general way, amounted to breach? If the claim or claims involving the defendant are claims based on acts of harsh and unconscionable conduct, what are the acts, when were they committed and what makes them harsh or unconscionable? The obvious question of the basis on which the perpetration of harshness or unconscionability consists of or gives rise to a cause of action is also left unanswered.

1. None of these questions can possibly be answered by reference to the content of Mr Onisforou's affidavit.

1. The same problem arises in relation to quantification. In order to be a supporting affidavit for s 459G(3) purposes where reliance is placed on the s 459H(1)(b) ground, the affidavit must provide some means of ascribing an amount to the alleged offsetting claim: see paragraphs (a) and (b) of the definition of "offsetting total" in s 459H(2). And the closer the amount of the alleged claim is to the amount of the statutory demand, the greater the degree of precision that is required by the statutory scheme.

1. In this case, the affidavit, while referring to a sum exceeding $4.5 million for all claims against all relevant Diesel subsidiaries, says absolutely nothing about the sum attributed to any particular claim against the defendant.

1. The so-called " Graywinter principle" takes its name from the 1996 decision of Sundberg J in Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452. Many judges, including at appellate level, have written a great deal about it. Many of the cases are collected at paragraph 78 of the recent judgment of Lindgren AJA (with whom Beazley JA and Handley AJA agreed) in NA Investments Holdings Pty Ltd v Perpetual Nominees Ltd [2010] NSWCA 210; (2010) 79 ACSR 544.

1. Counsel on both sides referred to numerous cases in their submissions. There is, I think, no need to go to them. While shades of difference in emphasis and in the precise way the " Graywinter principle" is stated may be discernable in the case law, it is clear that the question whether the particular affidavit puts forward a claim that the plaintiff considers itself to have against the defendant in a way that causes the affidavit to be a "supporting affidavit" in relation to the claim is a question that is to be answered in each particular case according to the particular facts.

1. In this case, the affidavit of 28 February 2011, for the reasons I have given, does not articulate - nor does it even identify - any claim or the basis of any claim by the plaintiff against the defendant; and because no claim is identified, no sum can be seen to be associated with or attached to an identified claim.

1. The present is an instance of an affidavit that does not rise above what the decided cases have called "mere assertion". That is insufficient to make the affidavit a "supporting affidavit" for s 459G(3) purposes. Because there has thus been non-compliance by the plaintiff with s 459G(3), the court must dismiss the proceedings.

1. The proceedings are dismissed with costs.

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Decision last updated: 16 May 2011