Annatom Pty Ltd v Cosenza and Denco Holdings Pty Ltd No. Scciv-03-442

[2003] SASC 162

ANNATOM PTY LTD  V COSENZA AND DENCO HOLDINGS PTY LTD

[2003] SASC 162

1. JUDGE BURLEY.             The plaintiff has applied for an order setting aside a statutory demand dated 19 March 2003.

2. In the schedule to the statutory demand the debt is described as follows:

   “Liability pursuant to deed of guarantee and indemnity dated the 28^th day of June 2001, demand having been made thereunder on the 25^th day of February 2003 - $205,280.62.”

3. The statutory demand was supported by the affidavit of Dean Cosenza affirmed on 19 March 2003.  In that affidavit Mr Cosenza says:

   “1I am the sole director of Denco Holdings Pty Ltd.  Denco Holdings Pty Ltd and I are creditors in respect of a debt of $205,280.62 owed by Anatom [sic] Pty Ltd (ACN 071 671 577) to us pursuant to a Deed of Guarantee and Indemnity dated the 28^th of June 2001.

   2I and Denco Holdings Pty Ltd made written demand for payment of the debt pursuant to the said Deed of Guarantee and Indemnity on the 25^th of February 2003.  No payment has been made.

   3I am authorised by Denco Holdings Pty Ltd to make this affidavit on its behalf.

   4I have inspected my own business records and those of Denco Holdings Pty Ltd in connection with the Debtor Company’s account with the Creditors.

   5The debt mentioned in paragraph 1 hereof is due and payable by the Debtor Company.

   6I believe that there is no genuine dispute about the existence or amount of the debt.”

4. The plaintiff relies upon the affidavit of Tom Tigani sworn on 7 April 2003.  The defendants have relied upon the affidavit of Mr Cosenza affirmed on 22 April 2003.

5. The plaintiff contends that the debt the subject of the statutory demand is genuinely disputed by it.

6. In his affidavit Mr Tigani said that in December 1998 Mr Cosenza agreed to lend to a company called Kingsford Olives Pty Ltd the sum of $150,000.00.  Mr Tigani asserts that on about 21 December 1998, Mr Cosenza entered into a loan agreement in writing with Kingsford Olives.  That agreement has not been tendered in evidence but some of its terms, without objection from the defendants, have been referred to in Mr Tigani’s affidavit. 

7. Mr Tigani asserted in his affidavit that the first defendant did not lend money to Kingsford Olives pursuant to the agreement entered into on 21 December 1998.  He said that the second defendant lent the specified sum of $150,000.00 to Kingsford Olives pursuant to a separate agreement.

8. It has not been disputed by the defendants that the second defendant was not a party to the loan agreement dated 21 December 1998. 

9. A copy of the guarantee relied upon by the defendants is Exhibit TT2 to the affidavit of Mr Tigani sworn on 7 April 2003.  The document is described as a Deed of Guarantee and Indemnity.  Mr Tigani and the plaintiff are described at the commencement of the agreement as guarantors and Mr Cosenza and Denco Holdings Pty Ltd are described as “the secured”.  The guarantee was executed on 28 June 2001.  By Clause 2.1 Mr Tigani and the plaintiff guaranteed the performance of Kingsford Olives Pty Ltd in respect of “a certain agreement between the secured and [Kingsford Olives Pty Ltd] whereby the secured has loaned the sum of $150,000 to the borrower at a rate of interest of 7% per annum calculated from 1 November 1998”.

10. In his affidavit Mr Cosenza said that the defendants seek to rely upon Exhibit DC1 to his affidavit and upon the Deed of Guarantee.  Exhibit DC1 is a document headed “Acknowledgement”.  It is as follows:

    “8/6/2001

    I Tom Tigani, do hereby acknowledge that as at 1/6/2001 the amount owing to Dean Cosenza and/or DENCO Holdings as per loan agreement inclusive of interest and costs accrued is $190,000 $183,000 dollars.

    Any further amounts will be calculated as from the 1/6/2001.

    I also further indemnify Dean Cosenza and/or Denco Holdings from any further claim, loss and costs that may be incurred as at the 1/6/2001.

    Signed:  TOM TIGANI

    Witness:”

11. The document has been signed by Mr Tigani and apparently witnessed by Mr Cosenza, who also inserted the date “28/6/2001”.

12. Mr Myszka, counsel for the defendants, argued that the acknowledgement (DC1) should be construed as an acknowledgement of indebtedness between Kingsford Olives and the defendants in relation to a loan agreement covered by the guarantee agreement.  I do not think that the evidence supports this contention.  The acknowledgement has the same date as the date of the guarantee agreement and therefore might be said to relate to the loan agreement covered by the guarantee agreement.  However, in my view, this is too tenuous a connection.  The acknowledgement itself is quite ambiguous; it might only be taken as an acknowledgement personal to Mr Tigani.  In addition, in the guarantee document, both Mr Tigani and the plaintiff are named as guarantors.  An acknowledgement made by Mr Tigani cannot, on an application such as this, be taken as an acknowledgement on behalf of the plaintiff who says that the debt is genuinely disputed.

13. As I understand the plaintiff’s case, whatever monies were advanced to Kingsford Olives, they were not advanced pursuant to a loan transaction as defined in paragraph 1.1 (d) of the guarantee agreement and that, consequently, the plaintiff is not liable under the guarantee.  In my view, on the facts before me, this is an arguable ground of defence to the claim of the creditor defendants that money is owing under the guarantee by the plaintiff to them.

14. I mention that by leave, the defendants put a further submission (in writing) after I had reserved my decision.  The plaintiff responded in writing to that submission.  It was based on the fact that the guarantee provided by Clause 3 that the guarantor was liable for the debt “as a principal and as a primary debtor”.  It was argued that “even if the guarantee does not support the primary loan” the plaintiff is nevertheless liable as a primary debtor. The answer to that contention is the same as that given by the plaintiff in relation to being liable as a guarantor: arguably, the plaintiff cannot be liable pursuant to a provision such as Clause 3 if the “loan transaction” referred to in paragraph 1.1(d) and referred to as “the said debt” in Clause 3, is not the loan transaction alleged by the plaintiff to have taken place.

15. I am of the view that the plaintiff has established that it genuinely disputes the debt and that the statutory demand should therefore be set aside.