Aussie Hoist Property Pty Ltd v Mulqueen

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FEDERAL COURT OF AUSTRALIA

Aussie Hoist Property Pty Ltd v Mulqueen [2018] FCA 1493

File number: NSD 408 of 2018
Judge: GRIFFITHS J
Date of judgment: 4 October 2018
Catchwords:

CORPORATIONS – application to set aside statutory demand – where the defendant loaned money to the plaintiff pursuant to an oral loan agreement – whether there is a genuine dispute as to the existence or amount of a debt – whether there is a genuine dispute about the alleged term of the oral loan agreement as to whether the loan is repayable on call – Held: application dismissed, with costs

EVIDENCE – admissibility of evidence in the context of an application to set aside a statutory demand on the basis that there is a genuine dispute about the existence of a debt – whether the plaintiff adduced sufficient admissible evidence to establish that it had a plausible contention which required investigation as to the alleged term of the oral loan agreement concerning repayment

Legislation:

Corporations Act 2001 (Cth), ss 459G, 459H, s 459J

Evidence Act 1995 (Cth), s 135

Cases cited:

Argyll Park Thoroughbreds Pty Ltd v Glen Pacific Pty Ltd (rec and mgr apptd) [1993] FCA 464; 11 ACSR 1

Bailes v Modern Amusements Pty Ltd [1964] VR 436

Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd [2013] NSWCA 344; 85 NSWLR 601

Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5

Citation Resources Ltd v IBT Holdings Pty Ltd [2016] FCA 1265

Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37 Spacorp Australia Pty Ltd v Myers Stores Ltd [2001] VSCA 89; 19 ACLC 1270

First Equilibrium Pty Limited v Bluestone Property Services Pty Limited (in liq) [2013] FCAFC 108

Geoffrey W Hill & Associates v King (1992) 27 NSWLR 228

GoConnect Ltd v Sino Strategic International Ltd (in liq) [2016] VSCA 315

Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund [1996] FCA 822; 70 FCR 452

John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250

MNWA Pty Ltd v Deputy Commissioner of Taxation [2016] FCAFC 154; 250 FCR 381

Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) [2004] NSWSC 527; 185 FLR 130

Universal Greening Pty Ltd v Sabine [1999] FCA 529; 17 ACLC 880

Date of hearing: 26 September 2018
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 90
Counsel for the Plaintiff: Mr M Bennett
Solicitor for the Plaintiff: Shaw McDonald Lawyers
Counsel for the Defendant: Mr M J Heath
Solicitor for the Defendant: O’Loughlins Lawyers

ORDERS

NSD 408 of 2018
BETWEEN:

AUSSIE HOIST PROPERTY PTY LTD (ACN 619 644 889) ATF THE AUSSIE HOIST (MLB) PROPERTY UNIT TRUST

Plaintiff
AND:

KELLY JANE MULQUEEN ATF THE MULQUEEN…

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Details
Case
[2018] FCA 1493
Decision Date

CaseChat Overview and Summary

Aussie Hoist Property Pty Ltd (AHP) sought to set aside a statutory demand issued by the Mulqueen Family Trust. The demand related to a loan of $301,052.40, which AHP alleged was repayable on demand. The primary issue before the court was whether there was a genuine dispute regarding the terms of the loan, specifically whether it was repayable on demand or not. The court needed to determine if AHP had provided sufficient evidence to establish a genuine dispute, which would allow the statutory demand to be set aside under section 459G of the Corporations Act 2001 (Cth).

The court examined the admissibility of evidence presented by AHP in support of its application. AHP relied on affidavits from several individuals, which the Mulqueen Family Trust argued were inadmissible as they contained hearsay, opinion, or conclusions. However, the court noted that the admissibility of evidence to establish a genuine dispute was distinct from its admissibility to prove the debt's existence or amount. In Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund, it was established that an affidavit supporting a genuine dispute need not include all evidence in admissible form. The court also referred to Tokich, where it was held that evidence inadmissible for establishing the debt could still be considered for determining the existence of a genuine dispute.

The court found that AHP had not provided sufficient evidence to establish a genuine dispute. The claims of estoppel and acquiescence were not supported by evidence of reliance or detriment. Consequently, the court concluded that AHP had not met its burden of demonstrating a genuine dispute over the loan terms. The interlocutory application was dismissed, and AHP was ordered to pay the Mulqueen Family Trust's costs.

The court ruled that AHP's arguments regarding estoppel and acquiescence were irrelevant, and clause 19.3 of the Trust Deed did not preclude the Mulqueen Family Trust from enforcing its rights regarding the loan. The court determined that AHP's objections to evidence were valid, and the admissibility of certain paragraphs in the affidavits was restricted. Ultimately, the court found that AHP's evidence did not meet the threshold for establishing a genuine dispute.

Orders

Orders of the court

1. The originating process filed on 21 March 2018 be dismissed.

2. The plaintiff pay the defendant’s costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

By an originating application dated 20 March 2018, the plaintiff seeks to have set aside under s 459G of the Corporations Act 2001 (Cth) (the Act) a statutory demand dated 1 March 2018 on the basis that there is a genuine dispute under s 459H about the debt which is the subject of the statutory demand.Summary of background matters The statutory demand relates to a loan from the defendant to the plaintiff. The plaintiff is the trustee of the Aussie Hoist (MLB) Property Unit Trust (the Property Trust). The statutory demand identifies a debt in the amount of $301,052.40 which is alleged to be owing to the defendant. Ms Mulqueen is the trustee of The Mulqueen Family Trust. Ms Mulqueen affirmed a brief affidavit dated 12 April 2018 in support of the statutory demand. The central issue is whether there is a genuine dispute regarding the terms of the loan and, in particular, whether or not it is repayable on call. Before addressing this issue, it is desirable to summarise some background matters which reveal the complexities surrounding the commercial relationship of the parties. I shall refer to the plaintiff as AHP and to the defendant as the Mulqueen Family Trust. Ms Mulqueen consented to become the trustee of the Mulqueen Family Trust on 16 June 2009. AHP was incorporated on 9 June 2017 and the Property Trust was established by way of a trust deed, which nominated AHP as its corporate trustee (Trust Deed). Upon incorporation of AHP and the establishment of the Property Trust, the following matters occurred:(a)the Mulqueen Family Trust became a 50 percent shareholder of AHP;(b)three persons (Mr Craig Winwood-Smith, Mr David Abreu and Mr Michael Mulqueen (Ms Mulqueen’s husband)) were appointed directors of AHP; and(c)the Mulqueen Family Trust was allotted 50 of the 100 units as an Initial Unitholder under the terms of the Trust Deed. The primary purpose of the incorporation and establishment of AHP and the Property Trust was to enable the purchase of a property in Victoria (the Victorian Property) and for a related company, Aussie Lift & Shift (MLB) Pty Limited (ALSM), to operate its business from the Victorian Property. On or about 8 August 2017, settlement occurred on the purchase of the Victorian Property. The three directors of AHP have a history of co-directorship and shareholding over the past nine years, primarily in respect of businesses that hire and sell personal and materials platforms for use generally in the construction industry. On 10 August 2017, AHP and ALSM executed a commercial property lease for the lease of the Victorian Property. Since that time, there have been several disputes between Mr Mulqueen, Mr Winwood-Smith, ALSM and AHP regarding directorships, unpaid loan accounts and unpaid debts. Many of these issues remain unresolved. On or about 16 January 2018, Mr Mulqueen was made redundant as an employee of ALSM, however, he remains a director of both that company and AHP. As at 28 February 2018, AHP’s balance sheet recorded a loan due to the Mulqueen Family Trust in the amount of $283,023. This is the loan which is the subject of the statutory demand dated 1 March 2018.

Evidence

Evidence Before The Court

The defendant objected to various paragraphs in inter alia Mr Winwood-Smith’s two affidavits and the affidavit of Mr Abreu. Those objections were based upon the relevant paragraphs being opinion/conclusion/hearsay. The defendant submitted that if the paragraphs were admitted for the purposes of establishing the Court’s jurisdiction to hear the originating application, the Court should make a ruling under s 135 of the Evidence Act 1995 (Cth) (Evidence Act) that the paragraphs are not admissible for the purpose of establishing the terms of the loan alleged by the plaintiff. As noted above, there was no dispute between the parties as to the existence of the debt, its amount, that the parties to it are the plaintiff and the defendant and that there is no written document recording the alleged terms. The issue is whether there is a genuine dispute about the alleged term relating to repayment. In Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund [1996] FCA 822; 70 FCR 452 (Graywinter), Sundberg J summarised the following minimum requirements that had to be satisfied by the supporting affidavit required under s 459G(3)(a) of the Act:(a)The affidavit must state material facts which show that there is a genuine dispute.(b)The affidavit need not include, in admissible form, all the evidence that supports the contention of a genuine dispute.(c)Neither a mere assertion that there is a genuine dispute nor a bare claim that the debt is disputed will suffice. His Honour also held that if the supporting affidavit did not meet the minimum requirements, the Court did not have jurisdiction and this could not be overcome by filing a supplementary affidavit after the 21 day period had expired. Justice Sundberg held, however, that where the minimum requirements had been met, material relied upon in the supporting affidavit could be supplemented by affidavits filed after the 21 day period had expired (but they cannot raise a new ground – see [61] below). In Tokich, White J held at [21] that evidence which may be inadmissible as hearsay or opinion to establish a fact relevant to indebtedness would not on that account be inadmissible to establish a fact relevant to whether there was a genuine dispute about indebtedness (citing McClelland J in Geoffrey W Hill & Associates v King (1992) 27 NSWLR 228 at 230). Justice White added at [22] that, although a mere assertion that a debt is denied is insufficient, evidence in the form of conclusions as to primary facts which would be inadmissible as proof of the relevant facts under either ss 76 or 135 of the Evidence Act may be admissible as evidence that there is a dispute as to the existence or amount of the debt, and as to whether that dispute is genuine (citing Young J in John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 at 253). Importantly, at [25], White J acknowledged that whether evidence is sufficient to establish a genuine dispute is a different question from whether the evidence is admissible for that purpose.

Decision

Reasons for decision

Finally, the evidence adduced by AHP falls well short of providing even an arguable basis for its claims relating to estoppel and acquiescence. As Mr Heath pointed out, AHP has had ample opportunity to provide evidence of reliance and detriment, but has failed to do so. AHP’s contentions concerning these matters are unsupported by sufficient evidence. Conclusion For these reasons, I am not satisfied that AHP has discharged its burden of demonstrating that there is a genuine dispute. Mr Bennett acknowledged that, if there was no repayment term as contended for by AHP, the loan was repayable on the giving of reasonable notice. The interlocutory application will be dismissed. The plaintiff must pay the defendant’s costs, as agreed or assessed.

Ratio Decidendi

Legal Principle Established

The defendant submitted that AHP’s reliance on estoppel and acquiescence was irrelevant and that cl 19.3 of the Trust Deed did not preclude the defendant from enforcing its rights in relation to the Relevant Loan. Consideration and determination The parties were in substantial agreement as to the relevant legal principles. Their disagreement related to the application of those principles to the particular facts and circumstances here. It is convenient first to address the parties’ objections to evidence, focusing in particular on paragraphs which directly relate to the alleged express term of the oral loan agreement. The parties were agreed that their respective objections could be determined on the basis that the current hearing is an interlocutory proceeding. (a) Rulings on evidence The defendant objected to various paragraphs in inter alia Mr Winwood-Smith’s two affidavits and the affidavit of Mr Abreu. Those objections were based upon the relevant paragraphs being opinion/conclusion/hearsay. The defendant submitted that if the paragraphs were admitted for the purposes of establishing the Court’s jurisdiction to hear the originating application, the Court should make a ruling under s 135 of the Evidence Act 1995 (Cth) (Evidence Act) that the paragraphs are not admissible for the purpose of establishing the terms of the loan alleged by the plaintiff. As noted above, there was no dispute between the parties as to the existence of the debt, its amount, that the parties to it are the plaintiff and the defendant and that there is no written document recording the alleged terms. The issue is whether there is a genuine dispute about the alleged term relating to repayment. In Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund [1996] FCA 822; 70 FCR 452 (Graywinter), Sundberg J summarised the following minimum requirements that had to be satisfied by the supporting affidavit required under s 459G(3)(a) of the Act:(a)The affidavit must state material facts which show that there is a genuine dispute.(b)The affidavit need not include, in admissible form, all the evidence that supports the contention of a genuine dispute.(c)Neither a mere assertion that there is a genuine dispute nor a bare claim that the debt is disputed will suffice. His Honour also held that if the supporting affidavit did not meet the minimum requirements, the Court did not have jurisdiction and this could not be overcome by filing a supplementary affidavit after the 21 day period had expired. Justice Sundberg held, however, that where the minimum requirements had been met, material relied upon in the supporting affidavit could be supplemented by affidavits filed after the 21 day period had expired (but they cannot raise a new ground – see [61] below). In Tokich, White J held at [21] that evidence which may be inadmissible as hearsay or opinion to establish a fact relevant to indebtedness would not on that account be inadmissible to establish a fact relevant to whether there was a genuine dispute about indebtedness (citing McClelland J in Geoffrey W Hill & Associates v King (1992) 27 NSWLR 228 at 230).